Curt Kolcun, Microsoft's vice president for U.S. public sector, said that after security, cloud computing is what public-sector customers are asking about most. "And they roll into one another," he added. He believes the concerns of public-sector CIOs are very similar to those of bank, insurance company and health-care CIOs who have to deal with the Health Insurance Portability and Accountability Act or Sarbanes-Oxley regulations. "They want to know where the data is going to reside," he said. "Will it be in the U.S.? Will there be foreign nationals working at the facilities that handle their data?"

Kolcun and others believe that a hybrid atmosphere of public and private clouds will develop. Organizations that have started with shared services centers will move to internal cloud computing centers. Although the umbrella organization will still have to pay for and service equipment and software, they can act as a cloud service provider to their own agencies, which can avoid paying for hardware and software licenses and instead pay for computing resources as needed. The U.S. Defense Information Systems Agency recently announced such a program for Department of Defense (DoD) agencies.

Kevin L. Jackson, who has worked for the U.S. Navy and as an IT consultant, joined federal IT contractor Dataline Inc. in 2008 and started a blog on cloud computing in the public sector. "I believe cloud computing is going to grow very fast," he said. Jackson noted on his blog that DoD CIO John G. Grimes is already talking about it. Asked to predict the pace of uptake in the federal government, Jackson said, "This is a term that only came into vogue late last year, and already the DoD has a focused program on it. What kind of uptake is that?"

Steven Armentrout has a one-word explanation for why so many vendors are developing cloud computing strategies: Google.

Armentrout, president and CEO of Reston, Va.-based Parabon Computation Inc., which offers customers high-performance grid computing services, said the search giant has done a great job of demonstrating to the public how to put big computing power to good use. "Federal agencies are looking at that model and thinking, ‘We should be doing that with our resources,'" Armentrout said. "Certain federal agencies with mission-critical applications are saying, ‘We have to harness that power and flexibility for ourselves.'"

IBM is also helping large organizations and service providers develop internal clouds to offer their customers metered access to powerful computing resources. In some cases, IBM is working with governments that see cloud services as an economic development aid, said Willy Chiu, vice president of IBM's High Performance On Demand Solutions. For instance, the Wuxi Tai Hu New Town Science and Education Industrial Park in Wuxi, China, is being set up to support Chinese software entrepreneurs by allowing them to tap into a rich computing environment on a subscription basis.