The Guardian | Wednesday 14 July 2010
The Guardian roundtable in association with Fujitsu
Remote control
The £16bn annual public sector IT budget is one of the areas earmarked for cuts. Can ‘cloud computing’
overcome security and data privacy concerns to deliver savings? SJ Pritchard reports on a recent debate
G
overnment plans to cut
25–40% from depart-
mental budgets – except
for health, education,
international devel-
opment and defence
– are prompting scru-
tiny across all areas of
spending, including IT.
The plans are forcing departments
to look at alternative ways of delivering
services, and new technologies that can
provide cost savings. One concept that is
attracting interest is “cloud computing”
(see panel, below right).
In essence, by running applications on
remote servers, connected over the inter-
net (the “cloud”) – rather than on local
machines – organisations can save money
and also become more flexible in how they
buy and run IT systems.
In response, the government is cre-
ating its own cloud computing service,
the G Cloud.
In a roundtable organised by Guard-
ian Public, and sponsored by IT services
company Fujitsu, senior managers from
government and the private sector asked
whether cloud technology can deliver
some of the efficiencies needed to cut
public sector costs.
The event was conducted under the
anonymity of reporting allowed under the
Chatham House rule to encourage frank
debate, so this report picks up themes that
were discussed, without attribution.
Savings
In the run-up to the election, both opposi-
tion parties committed to making cuts in
government IT spending.
Since then, the government has con-
firmed that ID cards will be scrapped, the
ContactPoint child protection database
subject to review with a view to termi-
nation, and the costs of England’s NHS
National Programme for IT are also being
re-examined.
Public sector IT projects have a poor
reputation for value for money and on-
time delivery. Whether or not it is fully
justified, departments will need to control
their spending on technology if they are to
meet financial targets.
Among IT professionals, cloud comput-
ing is seen as a way of cutting costs, some-
times drastically. Organisations using the
cloud reduce their capital investment and
the need for software licences, by paying
for the IT service as they go. As cloud com-
puting companies can pool expertise and
resources across a large number of custom-
ers, operating costs should also be lower.
Cloud computing for public sector IT
does pose challenges, however, especially
in the areas of security and data privacy.
In many instances, it is difficult, or
even impossible, for public bodies to use
standard, commercial cloud computing
offerings. In response to this the govern-
ment is developing the G Cloud along with
the Government Applications Store (GAS),
from which civil servants will be able to
download software or access services run-
ning on the cloud, much in the same way
iPhone owners can download applications
from Apple.
When G Cloud was launched, under
the previous government, its backers
claimed the strategy could save £3.2bn of
the annual, £16bn public sector IT budget.
But to do this, government departments
need to increase use of the cloud, and cut
back on departments’ and local authori-
ties’ own IT infrastructure.
The scale of the task is significant. The
government has 120 data centres, and there
is the potential to reduce this number.
As one attendee pointed out, by no
means all, and probably not even the
majority, of data centres offer the same
standards as the best private sector
facilities, either in efficiency, capacity or
in security.
The picture is even more mixed in local
government. With a new data centre cost-
ing around £35m, it is hard for the public
sector to justify the investment.
Cloud computing should, attendees
agreed, provide a way round this. Private
sector firms are willing to build IT infra-
structure up front, if they are confident
there are enough government users to jus-
tify the investment and the pricing allows
acceptable profit. Elements of the Aspire
IT contract, for HM Revenue and Customs,
are already provided this way.
As well as cost savings, supporters of
cloud computing say it will give depart-
ments better access to standardised
applications and common infrastructure.
Sam Friedrich
This should drive down the cost of IT
and make data exchange easier. Several
attendees pointed out that data sharing
remains a challenge in the public sector.
The way public sector bodies purchase
IT services is also an issue. In local govern-
ment some 400 authorities currently buy
around 100 applications from a dozen ven-
dors. In most cases each contract is negoti-
ated separately, with “a lot of taxpayers’
money wasted in the process”.
Providing standardised versions of
some key applications – such as enter-
prise resource planning or customer rela-
tionship management – would cut down
costs, and allow councils to choose from
a menu of pre-customised applications,
developed and tested by the vendors.
This would remove the need for each
council to buy the software and then
install and customise it, a process that can
take two to three years.
Supporters of the G Cloud hold it up
an as an ideal vehicle for delivering such
applications. Software companies, for
example, could provide customised ver-
sions of their applications for social care or
housing administration on shared servers
running in the cloud.
Cloud computing was also suggested as a
way to provide IT support for departments
or councils which want to move to shared
services, such as in human resources or
At the table
Rob Norris
IT transformation
director UK,
Fujitsu
Ian Osborne
Project director,
Digital Knowledge
Transfer Network
Mark Say (chair)
Editor,
GC Magazine
Ben Ticehurst
Head of business
transformation,
Peterborough city
council
Huge proprietary servers could be a
thing of the past, with offsite specialists
providing both the computing power and
crucial services Photograph: Alamy
What is cloud computing?
Cloud computing is a catch-all term for
IT services delivered over the web.
Companies or government bodies
can use cloud computing for email,
to run websites, store data or,
increasingly, run complex business
applications. But rather than install
the software themselves on their own
computers, on their own premises, the
“cloud” provider does this for a fee.
Google’s Gmail, Microsoft’s Hotmail
are consumer cloud computing
services, and there are specialist
offerings for government, such as the
data storage element of Fujitsu’s Flex
service for the central government.
Dr Katy Ring
Director,
K2 Advisory
Simon Norbury
Principal
consultant,
Red Pepper 52
Bill Limond
Director of
information
systems,
City of London
Des Livings
Deputy IT
director,
Department for
Culture, Media
and Sport
finance. It replaces the need to move the
physical data centre, and its servers and
staff, with a shared service provider.
“We can put up a ‘software as a service’
application for 20% less than a standard
application,” said one attendee. “And if
you are happy that the application is avail-
able only during office hours, for example,
you will save money.”
There are limits to the potential: most
departments will need to run some spe-
cialist software applications, and it may
not make financial or practical sense
to run these in a cloud, as the providers
would not achieve the economies of scale
needed to reduce costs. Organisations that
have tried cloud computing so far report
that it works best, where the technology
is largely standardised.
One attendee pointed out that his
employer already runs desktop software
applications through a cloud computing
service, and several others were using
online applications for areas of customer
relationship management. Some were also
looking at cloud services as an alternative
to current desktop office software.
In the private sector, cloud providers
can bring new services and applications
online quickly. As computing resources are
Richard Bull
Business unit
director for HMRC,
Fujitsu
James Gardner
Chief technology
officer,
Department
for Work and
Pensions
Merlin Hay,
Earl of Erroll
Parliamentary
Information
Technology
Committee,
House of Lords
David Wilde
Chief information
officer,
Westminster
city council
7
shared between applications and users,
the cloud also handles peak demand bet-
ter than conventional systems.
In government, this could reduce the
pressure on any department that has occa-
sional peak workloads. Examples cited
included handling tax returns and dealing
with a potential pandemic.
The G Cloud has already gone some way
down this route, by providing test and
development servers that departmental
IT teams can bring online remotely. Cur-
rently, departments are able to use these
servers free of charge.
Over time, it could provide a number of
alternative commercial models for public
sector bodies’ IT purchasing. The flexibil-
ity of the cloud allows for much shorter-
term arrangements than the typical five-
year contract, and for some services it
could do away with fixed-term contracts
altogether, moving to a per-transaction or
per-click way of paying for IT. This could
be attractive for local authority services,
such as environmental protection or park-
ing, where calculating a per-transaction
cost for IT services is relatively straight-
forward.
It would be much harder in areas such
as social care, which depend far more on
direct contact between council employees
and their clients, and where an individual
receives services from the authority for
years, and maybe even a lifetime. For those
services, a longer-term contract is likely to
remain the best option.
Attendees also pointed out that, under
current IT outsourcing programmes, two-
or three-year arrangements remain more
cost-effective than those lasting a year
or less. But cloud computing could cut
costs, allowing providers to use a “fixed
cost minus” structure, where the contract
costs fall each year as the system becomes
cheaper to run.
Barriers
There are significant obstacles to using
a cloud system. Information security
remains an issue and, according to attend-
ees, it is one that the development of the
G Cloud has not yet resolved.
On paper, a cloud only available to the
UK government should provide the rel-
evant assurances, but some attendees
said that in practice this is not always the
case, as there are some types of data that
simply cannot be shared: areas such as
defence and security, parts of education,
health and social care, and some categories
of financial information. Even details of
some buildings are too sensitive to share.
Providing services through a govern-
ment cloud does, at least, solve a problem
highlighted by one attendee, who wanted
to use a commercial cloud service for a
back-office system: cloud providers with
thousands of customers will not want to
customise their applications. Customisa-
tion is a service G Cloud could provide.
However, attendees also expressed
concerns that a government cloud could
become a barrier to innovation. “I’d be
very worried if it [applications] had to be
accredited by the G Cloud,” said one.
Slowing down the delivery of new
services, adding to costs and forcing even
systems’ non-secure data to meet overly
stringent security requirements were fore-
most among the concerns.
The solution, one attendee said, was for
departments or local authorities to carry
out their own classification of data, and
ensure that only those that needed the
highest levels of protection were stored in
the most secure, and expensive systems.
Lower security applications could well be
hosted in the cloud.
The IT industry firmly believes that the
public sector stands to make significant
savings through the cloud, even if only the
simplest and least specialised applications
are run that way. But the feeling was that,
although more could be done to encourage
cloud computing, forcing departments or
councils to use it is not the way forward.
Instead, the G Cloud should provide
the right services and organisations can
choose to come in.
Roundtable report commissioned and
controlled by the Guardian. Discussion
hosted to a brief agreed with Fujitsu. Paid
for by Fujitsu. Contact Tori Prince 020-
3353 2535. For information on roundtables
visit: guardian.co.uk/supp-guidelines