Are ‘Cloud Hubs’ the Way of the Future?

The pressure of moving government applications into a cloud-computing environment is rapidly building as government agencies look to cut IT costs. According to a new report, the concept of “regional community cloud hubs” among government entities will greatly change the way state and local government procure cloud services.

The report, Best Practices: Regional Community Cloud Hubs — The New “Trickle Down” Effect That’s Boosting State and Local Computing by IDC Government Insights defines regional community cloud hubs as one government agency — most likely at the state level — that could serve as a host facility and offer cloud-computing services to other government agencies (most likely local governments), which can then be shared. The host facility could then gain revenue by selling the cloud services to other government agencies, which in turn would help the host facility gain revenue to offset their own IT costs, according to the report.

If local governments buy the cloud services from the host facility instead of looking for cloud services on their own, the cloud services could be purchased at a lower cost.

Shawn McCarthy, an IDC Government Insights research analyst, said the concept of the cloud hub has already started to be used in states like Michigan and Utah and have been deemed successful.

“They’re dipping their toe in the water saying, this is the way we want to start offering these things,” McCarthy said. “The smaller governments seem interested because it allows them to get out of the infrastructure business, which can be very capital intensive and very maintenance intensive, so where we are is a toe over the starting line.”

McCarthy said for Utah’s case, the state began segmenting data storage for local government end users. By offering the data storage, some local governments showed interest in tapping into the available storage space. Eventually the state offered to host a server, which triggered more local governments to want to connect into the “hub.”

Local governments are interested in moving systems such as applications used to manage its human resources information to the cloud because updating an existing system may cost more, McCarthy said. As the market for cloud computing evolves, local governments may want to look to see if other entities, particular surrounding ones, have a human resources application both entities can share through the cloud.

But providing the cloud doesn’t have to be the responsibility of the state governments. Through the regional community cloud hubs, vendors can play an important role in providing cloud space. McCarthy said state governments (the host facilities) could make agreements with cloud providers for cloud storage, offer the same services to local governments who want to join the hub, and negotiate costs down.

Because there are different types of private clouds, state governments that act as the hosting facilities could either host the private cloud with or without the use of a cloud vendor, McCarthy said.

Although the concept of a regional community cloud hub is not quite a trend yet, McCarthy expects state and local governments to start adopting the practice within the next couple of years.