The UK's new Lib/Con government has unveiled plans to cut £3.2 billion over the next five years from its current levels of IT spending which total around £16 billion. Meanwhile that figure is dwarfed by the U.S. federal government which currently spends around $76 billion a year on information technology, with $20 billion of that devoted to hardware, software, and file servers (Alford and Morton, 2009).
With IT public sector spending spiraling out of control, governments on both sides of the Atlantic are finally beginning to reconcile that you cannot dig your way deeper into dept in order to climb out of the fiscal hole we find ourselves in. Governments are left with little choice - either put a brake on spending today (and then perhaps at least have a say in what you decide to cut), or face a certain downgrade in credit rating that will be a much harder blow to the economy tomorrow.
The Dept Abyss
Of course, either choice is a bitter pill to swallow - but it is necessary. I believe that those in the know, in the civil services, federal governments and finance sector, have for a long time watched the figures mounting up in near disbelief, and they fully understand that no county can ignore for long the sort of deficit growth that we are currently experiencing (In the UK it's currently at 3 billion per week while the US debt increased by a total of 1.9 trillion in a single year for 2009).
Western governments have already had a glimpse of what lurks over the Greek abyss and are now in a cold sweat. And while the UK and US are not dependent like Greece, on the Euro printing presses controlled by Brussels, in some ways that actually makes things worse.
It means that an irresponsible government can borrow and spend well beyond its means, and then fallaciously rely on their ability to print money to pay off their debt if and when the marker is eventually called in. The problem is that printing money in the numbers required (around £890 billion for the total UK dept and $13 trillion for the US) inevitably results in inflation. As in the words of Milton Friedman, "inflation is taxation without legislation". The old, the very young, the middle class and small businesses that represent the backbone of western free-market economies will suffer the most as their purchasing power and savings rapidly evaporate.
Not a Sight to Reassure Nervous Credit Agencies - UK National debt: ONS
So the UK government is right to start now, while they still can. And there's no more appropriate place than the public sector - where there is a history of over-spending and bad decision-making that has seen costs spiral.
The landscape of government IT projects is littered with high-profile failures. The recent plans to create a single UK database of prisoner records is just the latest and is now weighing in at over a whopping £500 million in costs and probably won't end there.
If the US federal government figures we mentioned at the start are anything to go by, then we can say that roughly one quarter of total government IT costs are taken up by hardware/software/file servers. If true, then we can begin to appreciate the role that cloud computing can play in alleviating at least part of our budget crisis.
Cloud Computing - The Cost Saving Potential
By its very definition, cloud computing frees organizations from the costs of acquiring and maintaining IT systems, enabling them to more efficiently ‘consume' IT resources on a ‘just in time' basis instead. The cloud frees staff from the limitations of the desktop and even has the potential to increase enterprise productivity with the use of mobile-hosted applications that let staff work effectively outside of the office.
Cloud computing then, represents the ultimate playing field leveller - small and medium sized businesses can subscribe to scalable and powerful CRM, ERP or other computing resources and begin to compete with their larger rivals. And what's good for the free market is often an indication of what's good for the public sector - whether it's defense, healthcare or education. Cloud computing has the potential to put an end to the project cost overruns and provide a proactive response to the impending IT budget cuts.
The ISV Challenge - How to Compete with the Big Boys
For independent software vendors, the cloud story is panning out a little differently. The cloud industry is being quickly dominated by the big-boy vendors such as Microsoft, IBM, Google and Amazon who are using their clout to rapidly corner the cloud provision market.
The catch for the little guys is that's it's not that easy to efficiently implement a cloud offering. To build a cloud application for business use - especially if it's designed to run on mobile devices, isn't a simple undertaking. A cloud development effort begins with a Rich Internet Application (RIA) - a technology that to some extent remains below the media radar - but nevertheless represents the power at the very heart of the cloud revolution.
RIA is the ability to host powerful desktop computing over the internet. It works by finely balancing and distributing computing capabilities between the server and the client - and it relies on a clever communication structure which allows the client to call on the server when more complex tasks are demanded.
Software vendors looking to build a cloud application ignore the complexities of RIA at their peril.
To help, here are four tips that may come in handy for ISV's looking to build and deploy a cloud offering in the near future:
- Research what it really takes to build a Cloud application - don't be fooled into thinking that it's all about a cool-looking client interface. Like an iceberg, most of the RIA development effort is below the surface - with the server and communication layers. So fancy client-side tools such as Microsoft Silverlight or Adobe Air/Flex in reality are only part of the RIA effort.
- Mobile enterprise applications require more thinking out. For a cloud application to run on a mobile device, software vendors need to consider not just the smaller screen factor but also the fact that users will typically avoid complex tasks that can be more easily handled from the office desktop. Mobile applications therefore need to be imaginatively thought out and adequately prototyped to ensure simplicity of use and the ‘completion of tasks' rather than the straightforward one-to-one replication of back-office systems.
- Use an application platform rather than coding to standardize on skill-sets. As already mentioned, cloud applications based on RIA require the use of different teams and different programming languages to build the different server and client sides of the application. Using a dedicated RIA application platform that provides a single toolset for these tasks can save software designers valuable time and money and help ISV's get their product to market before the big vendors succeed in saturating the field.
- Don't forget about integration! Even once you've built a great cloud application - your customers are going to need to integrate their cloud data with their existing on-premise applications and back-office systems. Integration inherently improves the ROI of cloud data, so it's worthwhile offering some sort of integration capability. Using a proven integration platform with ready-made connectors to common enterprise systems such as Salesforce.com and SAP is a step in the right direction and will facilitate a fast and cost-effective integration that will appeal to many customers - especially those put off by the thought of another long, manually-coded project.