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Are Government Shared Service Providers Afraid of the Cloud?

by Andrea Di Maio  |  June 9, 2010  |  4 Comments

Yesterday I visited a large central government service provider, which offers infrastructure and basic software to almost all departments in its jurisdiction. This is entrenched in that jurisdiction’s strategy, although I am not clear whether that’s a mandate or not.

I was asked to present a condensed version of my standard pitch on cloud computing in government, and started from illustrating like cloud-based services may be both an opportunity for shared service organizations to broaden their own sourcing options, and a threat, as their clients may challenge their price performance ratios for commodity services by using cloud service players as benchmarks. The reaction was almost immediate, stressing the need for data to be located in the jurisdiction and claiming that they have accumulated sufficient experience to be better than any cloud service provider at matching their clients’ requirements.

The senior official who was there took a very defensive attitude and fought back, claiming that I had no first-hand experience to appreciate how different their jurisdiction is. Then he turned to his colleagues asking them whether they felt they may be overcome by commercial vendors. Actually this was not what I had implied, but very clearly he was eager to show off. Inevitably what emerged was that they are in the early phases of a data center virtualization effort. I was trying to tell them that, unless this clearly add value to their users, there was no reason to jump onto selling cloud-based services internally: however they would not really listen, trying to collectively prove that they are a truly excellent service organization.

I wonder whether most government shared or centralized service organizations would actually take the same attitude. Rather than looking at cloud computing as a smarter way for them to source their capabilities and reflect on what is best, they will adopt a me-too attitude and ultimately compete with vendors. Wouldn’t it be smarter to figure out what to let go which is not mission-critical and where vendors are likely to do better, and focus on where they can really still make a difference?

This may have to do with an ill-defined attitude toward self-preservation, motivated by the inability or unwillingness to change, together with a fundamental distrust of vendors and their ability to execute. While caution is in order and claiming that the cloud will take over the world is both a premature and incorrect statement, it is important for government shared service organizations to be ahead of the game and leverage vendor offerings as they nature.

Category: cloud  

Tags: shared-services  

Andrea Di Maio
Managing VP
15 years at Gartner
28 years IT industry

Andrea Di Maio is a managing vice president for public sector in Gartner Research, covering government and education. His personal research focus is on digital government strategies strategies, Web 2.0, open government, cloud computing, the business value of IT, smart cities, and the impact of technology on the future of government Read Full Bio

Thoughts on Are Government Shared Service Providers Afraid of the Cloud?

  1. […] This post was mentioned on Twitter by Andrea DiMaio, Arjen Hof, Toshio Matsuda, Migiel Gloudemans, JanWillem Boissevain and others. JanWillem Boissevain said: “@AndreaDiMaio: Are Government Shared Service Providers Afraid of the Cloud? – #cloud #gov20” […]

  2. It is interesting to see the hype for cloud services vs. the reality. I was at a very compelling presentation from the CIO of expedia. As he was sharing his experiences he made it very clear that they looked around for vendors with serious cloud offerings that could provide them a ROI and showcase 200+ server type customers. They did not find any vendors in the marketplace that could demonstrate what expedia was looking for and the ROI over existing Virtualization platforms was negative in the short run. State CIO’s listening to that presentation were validated that a State run cloud will be much better than what private sector can offer and nothing in the State network gets compromised.. There are always different ways to interpret technology waves. I think cloud is still in its early stages and real ROI is yet to come for large enterprises.

  3. Max Claps says:

    Interesting debate and I hear a lot of it in my conversations about shared services. I think there are various arguments that shared service providers make against cloud to protect their turf against cloud, instead of thinking of it as a smarter way to source services, security and data location and specificity of requirements are some of the most popular. Luckily there are other shared services that are more mature, for example in a recent conversation in Australia, the focus was on portability and the implications for transaction costs; the question was: if the private cloud, or the shared service provider, understands requirements better than commercial providers and can take care of interfaces among multiple government-specific systems and data portability, the cost of switching and modernize platforms could be lower. Of course this is to be proved, but at least it was a refreshing view compared to the usual, security, data location, compliance, reliability, …..

  4. […] på digital forvaltning og government 2.0 – ikke mindst i Europa. Han havde forleden en snak med stor, fællesstatslig serviceenhed, som selv drifter sine systemer. Der er ingen tvivl om, at Andrea opfatter den pågældende enhed […]

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