Technology spend is rising across sectors, with the latest figures from Gartner suggesting that IT spend will reach $3.8 trillion in 2019. Due to the nature of public sector planning and optimization practices, government agencies are generally slower to adopt and mobilize emerging technologies. However, digital business and digital transformation are more important for government than other industries, according to a recent Gartner report on CIO priorities.
This increased focus on digitization is causing new thought processes and challenges for public sector agencies all over the world, due to the need for more critical compliance and governance policies to be set in place.
New technologies such as cloud have the potential to help drive digital transformation and streamline the way government operates, so cloud investments can and should be made. In fact, 19% of Gartner-surveyed CIOs say they are already prioritising more investment in cloud services and solutions. But it’s crucial that this is done with the backing of accurate analysis and in-depth understanding. The delicate nature of public sector spending and the heightened accountability of budgets mean that IT spend in this area is inevitably (and perhaps rightly) a source of scrutiny.
In the US, Apptio analysed publicly available IT spending data from approximately 90 US federal agencies, totalling more than $74 billion the last fiscal year. We found that as it stands, less than two percent of those agencies’ budgets ($858 million) were dedicated to cloud. The Small Business Administration was the highest agency spender on cloud, yet this was still just seven percent. While growth figures suggest this likely to increase in the coming years, this stands as a cogent reminder of how far there is to go in the public sector before organisations fully embrace the power of the cloud.
For a shift towards cloud to happen, public sector IT professionals need to focus on understanding the current state of IT spend first, by amalgamating all the costs from across the organisation. Only then can they truly assess the benefits brought by cloud and work out the best strategy for their department.
The current state of public sector cloud
The global cloud market is predicted to grow by 17.5 percent in 2019, up to $214.4 billion from $182 billion in 2018. The public sector, however, forms a noticeably small piece of the pie, with the entire UK public sector accounting for just $1.3 billion in cloud services spend in the last financial year, and the US $6.5 billion.
That said, this is still a significant year-on-year increase. In 2014-15, for instance, UK public sector cloud spend stood at just £421 million, while for the US in 2017 it stood at $4.9 billion. However, when compared to the private sector this growth is minimal. It makes sense, given the greater accountability necessary for public organizations, as well as the slower speeds at which they can move, but public services on both sides of the pond can benefit from being more forward-thinking when it comes to digital transformation.
Exercising caution towards large-scale technology innovation in the public sector is understandable. These organizations do not operate in the same way businesses do; they don’t have the same autonomy. And while private sector IT teams have many strands of cost to contend with, the story is even more complex within the public sector. Undertaking a project like cloud migration is a big decision, and without the necessary insight can seem like an impossible call to make.
Understanding your IT spend
To take control of digital transformation, public sector IT teams must fully understand their current state of IT spend. They need to know where they can be trimming back excessive costs, and where they can be investing. Cloud migration undoubtedly offers opportunity, but in the public sector more than any other, migration decisions need to be carefully considered before they can be undertaken. Too many ill-thought-out innovation projects have highlighted the need for good governance and a holistic understanding of technology costs.
Cloud is particularly complex, with multiple services and cloud providers creating a complicated bill thousands of lines long that is hard to understand without the right tools. Having access to these tools is the difference between remaining in a legacy environment for lack of good data, and moving forward into a cloud-first age that ultimately ends up saving significant time and money.
It comes down to the fact that innovation in the public sector needs to be combined with demonstrable insight. It’s public money being invested, after all. Where savings are made, the taxpayer’s money can be reinvested into value-additive projects that provide concrete benefits to healthcare, the civil service, education systems and other public services.
Benefits in the cloud
Cloud technology can offer increased collaboration, better security, greater reliability, and crucially, can create significant potential savings. Where clunky legacy systems are the current method of operation, there are inevitable disadvantages, such as data stored in silos making it harder and more time-intensive to perform accurate analysis. The cloud also typically requires fewer physical resources, making it a big sustainability play in addition to the other benefits it offers. Reliability and value for money are two key priorities for public sector IT teams, and it’s therefore hugely important that they are aware of these projected benefits.
Yet although there is appetite for cloud in the public sector, demonstrated by the ongoing growth in spend, failed uptake of new technology projects creates a backlash that reverberates. This possibility should certainly be weighed up against the tangible benefits of cloud before decisions are made. Key to this is understanding your own department’s current IT budget, including the costs associated with remaining reliant on legacy technologies.
Finding the right balance
One key thing to remember is that the cloud shift doesn’t necessarily have to be an all-in approach. It’s easy for organisations to get excited about the potential that the cloud offers and fail to realise that cloud doesn’t need to be an all-or-nothing investment. This is a key reason for getting that fully burdened picture of costs, as then decisions can be made based on a true understanding of all the costs involved, as well as how these map against organisational priorities.
For instance, on-premises infrastructure remains useful for teams to have direct control over their workloads, such as in rewriting and refactoring costs. It can also be useful to ensure the continued running of certain mission-critical applications. Cloud, on the other hand, provides convenience and scalability, in that once it is set up it can quickly adapt to fluctuations in demand, removing the need for manual monitoring. This means more time can be dedicated within teams to projects that are driving forward wider organisational goals.
There isn’t a one-size-fits-all approach when it comes to cloud. But based on the figures projected by Gartner, it’s clear that cloud is becoming much more important in almost every IT budget - as are associated cloud management services. This suggests that it should be a key public sector IT priority, especially where good management of technology costs can result in significant savings and efficiencies. Public money can feasibly be invested where it is clearly going to result in the public good – and if this is backed up by solid analysis and run with good governance, this should be the direction that public sector IT moves in.