Outsourcing of email with hosted services like Google’s Gmail and Microsoft Office 365 is fairly common now. But until recently, major application outsourcing was rare. Today, some government agencies looking to take advantage of the many benefits hosted applications can offer have begun migrating major applications to the cloud.
Multiple factors appear to be driving the trend, but continued budget struggles are chief among them. Because cloud computing provides a consumption-based model for the cost of computing resources, it can significantly reduce expenses.
“Both state and federal agencies are being pushed to reduce costs,” said Rob Enderle, president and principal analyst of the Enderle Group, a Silicon Valley, Calif.-based advisory firm. “The end result is that many of them are seeing cloud as a good alternative to traditional implementation processes.”
“Government desires more agility at a lower total cost of ownership, which the cloud offers,” said Doug Charles, CEO of Capgemini Government Solutions. “This, along with a growing confidence [in cloud] both commercially and in the government, will allow the government to further hasten its adoption of cloud technologies.”
Orlando, Fla., is moving core business applications to the cloud, deploying a hosted ERP system from Workday. “This is about strategically positioning resources,” said the city’s CIO, Rosa Akhtarkhavari. “We still manage and control our data and applications, but we don’t have to worry about upgrade costs or large capital expenditures.”
Photo: Getting Down to Business. Orlando CIO Rosa Akhtarkhavari says the city is deploying a hosted ERP system from Workday to reduce operating and maintenance costs. The city opted for cloud-based ERP after moving its email system to a hosted platform three years ago.
Orlando moved email to the cloud in 2010, and the success, savings and lessons learned during that deployment encouraged the city to explore moving additional applications to the cloud. “We felt we were ready for bigger things,” Akhtarkhavari said.
Before choosing a cloud-based ERP system, the city carefully considered total cost of ownership. “Financially it made more sense to go with cloud because of the low operational costs and the easy ability to maintain the system,” Akhtarkhavari said. “Additionally in-house resources, already operating at capacity, are not significantly diverted. Downtime concerns are also minimized when upgrading cloud solutions.”
Orlando officials worked closely with information security and compliance experts to explore any potential problems with labor standards or internal audits before choosing Workday. For instance, the system needed to comply with state confidentiality provisions that protect human resources information for law enforcement personnel. They also looked at security from several different aspects. “We wanted to ensure the solution was robust, allowing stable and secure integration utilizing methods evaluated and acceptable to the city,” said Akhtarkhavari.
Besides potentially lowering ownership costs, cloud-based technology may let short-staffed government agencies deploy systems they otherwise would not have the resources to implement.
“Where you don’t have the expertise, it’s well worth it to pull in the right people to help you out,” said David Roth, IT director of Minneapolis. “That allows you to focus on your own core competencies and let someone else handle everything else.”
Moving applications to the cloud also makes it easier for government agencies to keep pace with new technology, because maintaining the latest versions and upgrades becomes the vendor’s burden.
The King County, Wash., Prosecuting Attorney’s Office recently began moving its prosecutors to a cloud-based system from St. Louis-based Karpel Solutions. The application, called ProsecutorbyKarpel, is a browser-based criminal case management program that includes integrated scanning and document generation, electronic filing with courts, e-discovery, court calendaring, sentencing management, evidence tracking, investigation tracking and more.
“An on-premises solution would have taken months to order, configure, etc.,” said Bill Kehoe, King County CIO. “With the cloud-based SaaS [software as a service] system, once we signed the contract, we were able to start configuring the system immediately. The time needed to start the project was decreased by months.”
The county’s old mainframe-based case management system was making it difficult to manage modern-day business challenges. “In some cases we were using yellow sticky notes to schedule cases,” Kehoe said. “We never felt comfortable upgrading our mainframe system, so we were working around it. We had a bunch of side systems, which was a crazy way for a modern, top-notch prosecuting attorney’s office to operate.”
Looking to improve the situation, Kehoe and others advocated for funding, secured a commitment and put an RFP together. The county selected Karpel as the vendor, but had not yet determined whether to go with an onsite COTS system or a SaaS-based product.
“That set off an interesting chain of events,” said Kehoe. “I was pushing for SaaS, but others wanted COTS based on concerns about security, network connections, etc. I put together some technical leads from various disciplines in IT and went through each area of concern to compare an on-premises COTS model with a SaaS model.”
Kehoe said the team ultimately determined that the SaaS model would save a substantial amount of money, primarily in the buildout of infrastructure. “We then looked at security, disaster recovery and several other areas and determined the SaaS solution met our requirements for each of those areas or went above and beyond them,” he said.
Kassie Tadsen, case management and strategic program manager for the King County Prosecuting Attorney’s Office, said they were wary of moving to the cloud application at first because of the sensitive data that the office handles. “We also weren’t sure how it would work technically with 10 interfaces to build with internal county systems,” she said. “But eventually all our concerns were addressed and the offering was too good to pass up. It was a huge decision for us, but we think it was the right decision.”
Tadsen estimates that the county has saved hundreds of thousands of dollars in infrastructure costs by going with the cloud-based product. “It also took a huge chunk of things off my plate,” she said. “For example, their disaster recovery plan is much better than ours. Karpel has the ability to get us back up and running much faster than the county could in the event of a disaster.”
The new system was launched in June and is expected to create significant case management efficiencies. Meanwhile, the money the county saved on infrastructure costs allowed the department to invest in new laptops for each prosecutor as well as other technologies that will help them become more efficient and less paper-dependent.
Kehoe said King County is now looking at moving other areas to a SaaS model. “Cloud first is now the strategic direction for the county,” he said.
Minneapolis is currently in contract negotiations to move its 311 system to a cloud-based model. Last summer, the city came under fire when it was determined that a call to its 311 system cost $9.15 per contact, making it one of the most expensive 311 systems in the country. At the same time, the city wanted to migrate to a more current system.
“Every major upgrade costs hundreds of thousands of dollars to undertake when you figure in everything,” Roth said. “Given financial challenges, it made sense to shift to a cloud-based model.”
But before deciding on SaaS, the city looked at all of its options and did a measured assessment to ensure that the cloud-based solution had merit beyond lower costs.
“With the cloud-based model, we will get the best and newest solutions without having to carry that burden,” said Roth. “The provider does all the upgrades, supports the hardware, etc. We are not gaining resources in government today, so we need to figure out where can we do things and do them cost effectively.”
But while Roth said cloud is a good option for 311 and other noncritical functions, the city has no plans to migrate 911 or other critical systems to the cloud. “We want to keep critical functions local,” he said. “Cloud is not a solution in all cases.”
Minneapolis CIO Otto Doll agreed. Despite the 311 conversion, Doll said a move to cloud-based applications is not part of the city’s overall IT strategy. “We prefer to keep things in-house and maintain control,” he said.
Photo: Minneapolis CIO Otto Doll says large-scale movement to the cloud isn’t in his city’s future.
Doll said the city has also heavily modified and personalized many IT functions, making them difficult to fit into the cloud model.
“Our ERP systems, for example, are greatly modified and customized, so in many cases we can’t get the same type of solution using cloud,” he said. “Some jurisdictions will find it easy to shift to cloud, while others like us may not be able to make that move no matter how attractive it is.”
Though migrating to a cloud-based environment offers government agencies many benefits, experts warn that agencies should take precautions.
Bright Ideas for Cloud Success
Government agencies looking to shift major applications to the cloud may face a number of obstacles, including overall resistance to change, funding approval, and cultural concerns around the existing workforce. These best practices may help make the transition smoother:
Consider Strategy. A jurisdiction should start by considering whether cloud fits into its overall strategy. “You have to have a good understanding of what’s important to you,” said Minneapolis CIO Otto Doll. “Making one-off decisions is a recipe for making a mess over time.” Doug Charles, CEO of Capgemini Government Solutions, agreed. “An agency should consider its entire portfolio and create a strategy for cloud adoption. Not everything can be put into the cloud, and not everything should be. A clear ROI/business case should be developed for any migration. Consideration should be given for transition and training, and realistic plans for retirement of systems should also be put in place.”
Do Your Homework. “If you don’t do the upfront work, you won’t be successful,” said David Roth, IT director of Minneapolis. “Keep an open mind, and do your due diligence to make sure it’s the right fit.” Secure a Dedicated Partner. “Strong partnerships are crucial to successful projects,” said Orlando CIO Rosa Akhtarkhavari. “IT, the executive sponsor, the implementation team — they all must work hand-in-hand with the same goals. A strong partnership with the vendor is also essential.” Akhtarkhavari said that when Orlando worked with Google to implement email in the cloud, the partnership they formed was invaluable. “Whenever issues arose, including weekends and nights, we called Google. Within five minutes, Google had resources working to resolve the matter. Ensure your cloud vendor recognizes you are a partner, not just a revenue source.”
Secure a Clear Contract. “No matter how careful you are, there always seems to be some confusion at some point when undertaking projects like this,” said Roth. “If you are not on the same page with the vendor, there can be issues. Make sure to get a service-level agreement in place with the vendor so you know what metrics are going to be measured, what your recourse is, etc. Nothing should be left to interpretation.”
Start Small. An agency new to cloud may benefit by picking a non-mission-critical project to migrate. “Starting small allows you to try it out,” said Steve Middlekauff, Unisys’ North American health and human services practice director. “Then take those lessons learned to the next project and build from there. Look at legacy-based applications that are antiquated and a drain on the organization in terms of dollars and resources. Move those applications into a hosted environment first to shift that burden of ongoing support, then go from there.”
The idea of outsourcing is certainly not new in government. “Over the decades, outsourcing has always been in play,” said Steve Middlekauff, North American health and human services practice director for Unisys. “At times it expands, and then it contracts again when new CIOs come in with different philosophies about protecting data. But with each cycle it seems to evolve, getting further down the path of a more virtual world.”
The latest push toward outsourcing appears to be driven not only by the economy and cost pressures, but by a shift in citizen expectations as well.
“People want a different way to engage,” Middlekauff said. “They have new expectations about instant response, and they want to access services that are always on.”
“Expectations of service by citizens have definitely transformed,” agreed Maury Blackman, CEO of San Ramon, Calif.-based Accela. “Government agencies are looking for better ways to engage with their citizens. They have to move quickly, and cloud may be the best way to enable them to do that.”
The shift is causing some vendors to modify their approach to the market. For example, Accela, a longtime provider of Web and mobile apps to government, is evolving its business model to provide managed services. The firm recently launched a suite of cloud-based business applications for smaller governments called Civic Cloud.
“When we started the company we wanted to become an application service provider for government, but we were ahead of our time,” Blackman said. “Government agencies were not using Web browsers much yet; they were still using client/server technology. They were also hesitant to let their data go offsite. Today, the mood in government has definitely changed.”
Broader private-sector use and success with cloud in the last few years has helped government build acceptance to the approach as well.
“Government is following business’ shift to the cloud,” said Akhtarkhavari. “Large, in-house systems are no longer practical for most government businesses. A few agencies are holding back, but I don’t think it will last. The direction and momentum is clearly toward cloud solutions.”