MARKET STRATEGY: Serving digital governments
06 July 2015 |
The digitisation of the public sector in many countries around the world means that governments’ methods for running IT services and storing data are undergoing major transformations. Carriers have the chance to play a central part in driving these changes.
The cloud is bringing about fundamental changes in the way that national governments seek to manage IT services. Some are under pressure to migrate their services at the earliest time possible in a bid to further streamline their operations, improve efficiency and cut costs.
In recent years, these factors have begun to spark a change in governments’ overall mindsets towards telecoms services as they move away from the traditional model of purchasing dedicated hardware towards more flexible cloud strategies – and carriers clearly have a lot to gain by ensuring they are poised to put these transformations in place.
Some national authorities have proactively initiated strategies aimed at boosting cloud adoption. In the US, the government implemented a “cloud-first” policy over four years ago that required agencies to evaluate cloud options for IT before making new investments. Across the pond, the UK government similarly adopted a policy in May 2013 that public-sector bodies must consider a cloud option first when buying IT products and services.
A fifth of enterprise revenues already come from government clients for most telcos, and often significantly more, according to Ovum. And six of 10 central-government organisations surveyed by Ovum globally plan to increase their ICT spend in the coming year – with the biggest spikes in investment happening in cloud computing and mobile-data services.
One carrier that sees major opportunities in the changing market, both in the US and elsewhere, is Verizon. “As [the US] government looks to consolidate their data centres and have more of an opex versus a capex approach to managing their applications and storing their data, we’ve made a lot of good moves to be ready for them with our cloud services,” says Michael Maiorana, senior vice president for public sector markets at Verizon Enterprise Solutions. “Government needs to transform how they offer services to their citizens and be more efficient in doing so.”
Services geared towards this transition include Verizon’s Secure Cloud Interconnect offering, which provides a private IP connection from a customer’s location direct to their cloud provider to help them safely link up. In addition, the company has a Government Network Operations and Security Centre – a multimillion-dollar facility that provides managed-network and security-service operations for civilian, defence and intelligence agencies.
Zayo also carries out government-related business in the US, providing services including cloud connectivity, dark fibre, Ethernet, IP and colocation. And Alastair Kane, European VP at Zayo Group, says the opportunity is opening up in Europe too. Indeed, research company IDC said late last year that surveys showed more than 50% of Western European government departments and agencies were using, piloting or evaluating cloud computing.
Although Zayo does not have a huge number of direct relationships with government entities in Europe, Kane says the opportunity will become more interesting as it expands into new territories and more government bodies are brought into the vicinity of the company’s network.
“What we’re beginning to see is an increased need to manage large amounts of data at a government level, and also to reduce costs,” says Kane. “We’re seeing government organisations move into large data centres, consolidating their data around those, offering cloud services to their end users, and making sure they optimise their budgets.”
The scene in Europe
In Europe, many observers view the UK as being at the forefront of developments in the public-sector cloud arena, backed by the government’s cloud-first initiative. “If we look at Europe, the UK is ahead of the game,” says Massimiliano Claps, an analyst at IDC. “It has created a standardised way of understanding what cloud is and some harmonisation in terms of accreditation.”
The UK’s policy is supported by its so-called G-Cloud framework, which aims to increase choice for public-sector buyers and enhance competition among suppliers – one of the programme’s key initiatives being an online marketplace for cloud-based IT services. Government figures show that G-Cloud spend totaled almost £600 million by April 2015, split roughly 50:50 between SMEs and large enterprises. Although still small compared to overall government spend on ICT, investment was 225% higher in the year to April than in the whole of the two previous years.
Earlier this year, the government also created Crown Hosting Data Centres, a joint venture with Ark Data Centres that provides a physical space for hosting computer servers and systems that are not in the cloud, and a unified approach to purchasing data-hosting services to improve efficiency and cut costs. This strategy ensures that departments can both maintain older systems while transitioning to cloud and offer a service when a cloud alternative is deemed unsuitable for security reasons.
Moves such as centralising procurement as an interim measure to adopting the cloud therefore open up further possibilities for carriers. The potential for new models is demonstrated by pan-European carrier Interoute’s direct involvement in supporting Ark Data Centres in the project through the provision of a low-latency network between Ark’s campuses in the UK counties of Wiltshire and Hampshire.
Jonathan Wright, VP in the service-provider segment at Interoute, says the centralisation of UK IT services is presenting big opportunities for the company. “You probably would have spent at least 10 times more effort going to individual government departments at one time in the past,” he adds.
Interoute is also an approved G-Cloud provider in the UK, and is becoming more involved in the government sector in general – with, for example, similar accreditation in Germany to that for working with the government in the UK. One benefit of partnering with governments is that contracts are often slightly longer-term, says Wright, with a tendency to buy in cycles of 3 to 5 years rather than 12 to 18 months for a “classic” wholesale play. They also tend to be loyal customers and look at more than just price points for services.
But there are significant challenges to migrating government services to the cloud. Many reports on the US market, for instance, have focussed on slow uptake by the federal government, despite its cloud-first policy. Last September, the country’s Government Accountability Office, an independent agency that works for Congress, reported that seven government agencies had jointly budgeted just 2% of their IT spend to cloud services in 2014.
Other figures from the time indicated that almost 90% of federal IT professionals were apprehensive about moving to the cloud. A perennial concern for governments is clearly with ensuring and improving security as they make such transitions while handling a large amount of sensitive data.
However, Verizon believes the situation is reaching a tipping point in the US because much of the legislation that has been a key barrier to public-sector cloud adoption has now been sorted out, and mindsets have needed time to adjust from traditional approaches. “You can’t just sell cloud services to the government,” says Maiorana. “You need to go through a rigorous security certification, and that takes a long time and a lot of investment.”
Verizon received the relevant FedRAMP authorisation last November, facilitating the migration of mission-critical government workloads to the cloud. And Maiorana believes that as more cloud providers achieve this certification, the transformation will speed up.
In the UK, Wright echoes this challenge in gaining accreditation. “You’ve got to be very determined and stick at it for a long time,” he says. He points out that the process can be even more complex for carriers that operate in multiple countries because of the need to look into factors such as how and where data are stored.
Observers also refer to the fact that much of the UK government’s transition has so far involved new applications rather than migrating old established systems, and core data such as that on tax could be difficult to move in the foreseeable future. “Legacy systems are an integration headache,” says Sheridan Nye, an analyst at Frost & Sullivan. “Migrating legacy applications to a cloud environment is good business for managed-service providers, but doesn’t always deliver the level of flexibility that native applications would provide.”
Orange Business Services, which works with many foreign ministries in different countries, says that there are issues with storing sensitive data outside domestic markets. Cor Sjerps, a principal consultant who leads the public-sector vertical at the company, says nonetheless that it is seeing movement in that area with regard to unclassified applications, and that one European foreign ministry that Orange works with is considering a cloud model in which some data is stored outside its home country.
But although fears about data security can cause significant hold-ups, the exercising of caution and rigorous accreditation systems mean that once many players achieve authorisation, things may speed up. And the requirement for robust security actually presents further opportunities for carriers, with Orange citing products such as firewalls and encryption technologies.
Claps says market players need to take a more proactive and flexible approach to cybersecurity through predicting and detecting threats rather than viewing it as a case of just keeping someone out of a certain device or network. There is potential for a much higher level of auditing for the public sector, he says: “Can you tell them where their workload is running and on which server?”
An advantage of working with governments is that the sector encompasses interests shared by the whole of society, so carriers can get involved in multiple business areas. One concept on the rise in recent years is that of smart cities, which enable carriers to partner with local governments to help fulfil all kinds of needs, from transport to disaster management.
Telefonica is strongly involved in this area in both Spain and Latin America, and Javier de la Plaza, the company’s public administration global director, explains that the carrier has the opportunity to support all services that smart cities run on and help governments to intelligently manage their data to do this.
“Initiatives such as traffic monitoring and the provision of insight for transportation authorities are popular with governments,” says Gartner in an analysis of smart cities from early this year. “These initiatives often use aggregated CSP [communication service provider] data about the movements of mobile phones, which creates a new revenue stream for CSPs.”
As governments become more connected across the board, demand is set to rise for data management and analytics to capitalise on real-time data streams.
Some providers are looking to partner with broader international intergovernmental bodies. For example, Orange Business Services teamed up with the European Space Agency at the end of last year to deploy and manage the organisation’s private cloud. And HP is running its Cloud 28+ platform that seeks to bring together service providers and a whole host of other parties involved in cloud services across the EU. Although not aimed just at governments, the network seeks to address the wider issue of linked-up services throughout the region in line with the EU Digital Agenda.
But Claps believes that take-up of services such as the cloud will consist of small steps forward over time for governments rather than a single overriding solution.
Ultimately, however, the public sector continues to have significant potential for telcos moving forward. Telecoms operators are already trusted for a number of other ICT services, and look well positioned to be national guardians of data sovereignty for governments.
21 June 2018 |
21 June 2018 |
20 June 2018 |