The New Economics of Cloud Computing

October 20, 2009 by ADMIN

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By Kevin L. Jackson, Vice President at Dataline

In the The Economics of Cloud Computing, Gwen Morton and Ted Alford (Booz Allen Hamilton) have published an excellent economic evaluation of the federal government’s push into cloud computing.

Anyone interested in this market should definitely read it, analyze it, and believe it!

The conclusion acknowledges the value of cloud computing, but also offers these practical considerations:

It will take, on average, 18-24 months for most agencies to redirect funding to support this transition, given the budget process.
Some up-front investment will be required, even for agencies seeking to take advantage of public cloud options.
Implementations may take several years, depending on the size of the agency and the complexity of the cloud model it selects (i.e., public, private, or hybrid).
It could take as long as 4 years for the accumulated savings from agency investments in cloud computing to offset the initial investment costs; this time frame could be longer if implementations are improperly planned or inefficiently executed.

Final recommendations are:

OMB, GSA, and other organizations, such as National Institute of Standards and Technology (NIST), should provide timely, well-coordinated support-in the form of necessary standards, guidance, policy decisions, and issue resolution-to ensure agencies have the necessary tools to efficiently plan and carry out migrations to cloud environments. As the length of the migration period increases, the potential economic benefits of the migration decrease.
OMB and GSA should seek to identify those agencies with the highest near-term IT costs and expedite their migration to the cloud.
To encourage steady progress, OMB should establish a combination of incentives and disincentives; e.g., consider allowing agencies to retain a small percentage of any savings realized from cloud computing for investments in future initiatives. To monitor progress and heighten transparency and accountability, OMB could incorporate cloud-related metrics into the new government-wide IT dashboard.
Agencies should consider which of the high-level scenarios described in this article best suits their needs, with the understanding that regardless of scenario chosen, proper planning and efficient execution are critical success factors from an economic perspective.
Given the significant impact of scale efficiencies, agencies selecting a private cloud approach should fully explore the potential for interdepartmental and interagency collaboration and investment (consistent with emerging OMB and GSA guidance). This, in effect, leads to the fourth cloud deployment model-the community cloud. A community cloud is a collaboration between private cloud operators to share resources and services.
Agencies should identify the aspects of their current IT workload that can be transitioned to the cloud in the near term to yield “early wins” to help build momentum and support for the migration to cloud computing.

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Kevin L. Jackson is currently a Vice President at Dataline, LLC. Prior to this position, he served in various senior management positions including VP, Federal Systems for Strategic Computer Solutions, Worldwide Sales Executive for IBM and VP IT Projects Office for JP Morgan Chase & Co. Kevin also retired from the US Navy earning specialties in Space Systems Engineering, Airborne Logistics and Airborne Command and Control. He also served as a Contracting Officer Technical Representative and Project Manager for the National Reconnaissance Office.

Mr. Jackson received his undergraduate degree from the United States Naval Academy in Aerospace Engineering, a MA in National Security & Strategic Studies from the US Naval War College, and a MS in Electrical Engineering (Computer Engineering) from the Navy Postgraduate School.

Dataline is a leading transformational technology solutions provider to Department of Defense (DoD) and federal customers. Since 1990, our focus has been to integrate best-in-class technologies to provide robust, cost-effective Information Technology (IT) solutions for organizations of all sizes and missions of all criticalities.

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