UK bets big on cloud computing

The UK government is in the second phase of implementing its ambitious cloud computing strategy, that will allow it to save 15-20 per cent on public sector information technology (IT) spend.

The government now spends £16.9 billion a year on public sector IT, of which the central government accounts for £6 billion. Indian IT services companies like Tata Consultancy Services, Wipro, Polaris, Mahindra Satyam and Take Solutions are already in talks with the government.

Bill McCluggage, the Deputy Government CIO and Director of ICT Strategy and Policy of the UK government, hopes his interaction with key IT players at the 19th Nasscom Leadership Summit will help him take important insights to his team in the UK.

“Last year, when we started this exercise, it was about the consideration and development of the concept. This year, it is about building capability,” said McCluggage.

McCluggage believes there are six departments where the government can immediately start looking at the cloud computing strategy. These are the Department for Work and Pensions, Her Majesty’s Revenue and Customs, the Ministry of Justice, Health and Department of National Health Services, and the Ministry of Defence.

“The reason why I have said these departments is because they are power houses in terms of the work that comes out of these departments. Her Majesty’s Revenue and Customs has already adopted cloud computing to some of their services. If you look at some of the spend by these departments, it makes sense for them to adopt cloud. For instance, the Department for Work and Pensions has close to £1 billion as spend. Similarly, Her Majesty’s Revenue and Customs has a spend of about £800 million,” said McCluggage.

McCluggage said the government was already heavily outsourced and, hence, driving value from these outsourced relationships will be the key aspect of the agenda.

“We have done a huge amount of work in 2010. We had eight teams leading this initiative from various departments and hundreds of people from the industry, and we will come out with core documents on what the full process will be. We introduced six foundation delivery partners who are working with six delivery mechanisms like emails, EDRM, record management platform, and collaboration work. We are working with series of departments who want to move forward with this kind of initiative. We are also in talks with local.”

McCluggage is clear that rather than the UK government coming out with reference for proposals and making vendors bid for these projects, he would like to hear more on offerings that are available.

“My earlier counterpart spoke about bidding, but I want it to be compete, compete and compete. I have seen a willingness from Indian IT vendors to get involved, but it is yet to happen on ground. Vendors are coming and asking us when they can build something. I would like to say, why are you waiting for us to tell what to build? Cloud is about you building this and then coming to us,” said McCluggage.

He is also clear the cloud computing mechanism the UK government will adopt will have three key aspects. “One, we should not be asked to make an upfront payment to create a system. Two, we will not sign into terms and be locked into for a set number of years and they should not ask for a committed volume growth.”

Analysts hope cloud computing to be the next big challenge and opportunity for the IT industry. It is up to the industry how they make the ‘pay-as-you-go’ concept a revenue-churner for them. The worldwide cloud services revenue is forecast to reach $68.3 billion in 2010 and $148.8 billion by 2014.

“The cloud is changing the way IT services/resources are being used and delivered. The cloud also seeks to assure several techno-commercial benefits to enterprises and users. It’s time for businesses to redefine their business models and business leaders to revisit their IT strategy to better reflect the changing role of the technology deployment,” said Pradeep Udhas, head of IT/ ITeS sector, KPMG in India.