Regional hubs seen as next step in cloud computing

Regional cloud hubs will significantly change the way state and local governments procure computer services, according to a report published last month by researcher IDC Government Insights. The regional hubs, through which one government agency (often at the state level) offers computing services to other government agencies, have proven successful in Michigan and Utah, the report said.

Shawn McCarthy, a research analyst for IDC Government Insights, explained, "We believe that cloud hubs will see rapid growth, since the first multi-agency efforts have already shown a positive return on investment and solid service levels for cloud solutions subscribers."

The report noted that virtualized servers and efforts towards application standardization have merged many government solutions, decreasing requirements for data center space. In fact, IDC said, by the end of 2012 close to 40 percent of federal datacenters will be shuttered. Many state governments are following suit, often combing multiple datacenters into one or two large statewide operations. Remaining data centers often serve as a shared computing resource for multiple departments.

IDC said state-level governments are particularly well-suited to serve as regional hosts because local governments are looking for trusted cloud providers and for ways to cut IT costs. Through these cooperative arrangements, the government sites can leverage private cloud services including software as a service, infrastructure as a service, online storage, and security/security management as a service, among others. Being able to purchase services through high-volume state contracts can give local governments a substantial pricing edge, the report noted. In addition, moving to a shared service environment also helps local governments conform to broader data standards and gain access to streamlined reporting tools that can be hosted right on the shared system.

"In general, the larger government operations that already manage complex IT systems will evolve as the most likely regional hosts," continued McCarthy. "Smaller government agencies may choose to get out of most IT hosting and management operations, as long as they can find reliable, affordable and privately hosted solutions through the cloud."

According to IDC, these new cloud solutions often require zero to moderate capital expenditures and are developed in-house or are commercially developed private clouds, dedicated to government use and designed to meet specific government standards.

Among the potential beneficial consequences of a mainstream move to regional cloud services:

  • The host facility can turn a government agency cost center into a revenue center. By selling cloud solutions to other government organizations, host agencies can offset their own IT costs.
  • Local governments can buy cheaper cloud solutions than they might find on their own, and they may be able to reduce capital expenditures and overhead costs.
  • Cloud services will replace internal client/server systems as the main model for government application delivery.

The race is on to build shared regional datacenters and the largest portfolios of government solutions, the report stated.

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