Cloud Computing and the Drummond Report

Best practices in Transformation through Cloud Computing

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Table of Contents
Executive Overview The Drummond Report .............................................................................. 3 ITaaS IT as a Service ............................................................................................................... 3 Recommendation 16-10: Outsource to Innovate ........................................................................ 4 Business Transformation: Best practices & thought leadership ..................................................... 5 Data Center Efficiencies Shared Services Canada................................................................... 5 ITaaS Procurement...................................................................................................................... 6 Cloud Service Brokers ................................................................................................................ 6 GovCloud 2.0 .............................................................................................................................. 6 Cloud Services Architecture ........................................................................................................... 7 Hybrid SaaS Platform for Government Software as a Service ................................................ 7 Economy and Innovation Outsource to Innovate......................................................................... 8 Addressing Canadas Innovation Gap Innovation Best Practices............................................ 8 Government as Early Adopter Innovation in Procurement ..................................................... 9 New Cloud Innovation Models ................................................................................................. 10 Vendor Showcase & Keynote Agenda ......................................................................................... 11 Cloud 2.0 Showdown ................................................................................................................ 11 Salesforce.com - Social CRM for Government .................................................................... 11 Microsoft - GC Docs from the Cloud ................................................................................... 11 Big Data in the Data Center ...................................................................................................... 11 Ontario Cloud Ventures Showcase ........................................................................................... 12 About the Authors ......................................................................................................................... 13 Neil McEvoy .......................................................................................................................... 13

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Cloud Computing and the Drummond Report

Executive Overview The Drummond Report

The objective of this paper is to establish the link between Cloud Computing and the recent fiscal analysis for the Province of Ontario called the Drummond Report. The Drummond Report is the nickname given to a report commissioned by the Province of Ontario and carried out by economist Don Drummond, with a view to identifying a strategy for dealing with the growing deficit for the province, the largest in Canada. The report makes a number of cost-cutting recommendations to address the situation, and our paper will explain the latest developments in the field of Cloud Computing and how they can help realize these recommendations.

ITaaS IT as a Service
Fundamentally this white paper will describe the current evolution from traditional datacentre models to ITaaS IT as a Service, a process already underway at the IT department for the Province. As CIO Dave Nicholl explains in this article: The biggest challenge around virtualization has been moving from an I own it to an Im moving to shared services and Im buying a service model, according to Nicholl. But were making great progress because people believe that the model works, and I think weve proven that it works. He then illustrates a number of the business transformation benefits that are being achieved via these new strategies, such as removing 1,000 servers from an estate of 6,000, conducting a shared services consolidation to drive $100m annually in savings and consolidating around single applications for ERP, HR and so on. This white paper will document what they have achieved so far and how, with a view to sharing these as leadership best practices for other public sector CIOs to follow, and will also showcase what can be further achieved through new Cloud innovations.

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Cloud Computing and the Drummond Report

Recommendation 16-10: Outsource to Innovate

The Drummond Report details a number of cost-cutting measures, with the potential relationship specifically relevant to Cloud Computing highlighted in the following section:
Use Alternative Service Delivery Options for Information and Information Technology Functions While less visible in the publics eye than service delivery, information and information technology (I&IT) functions form the technological backbone of government operations. These functions include services such as a help desk, local and wide area network management, mainframe operations, web hosting, and the development of applications that can advance the governments business vision and provide flexible solutions to IT problems faced by all organizations. Previously, there were separate I&IT infrastructures developed by over 20 ministries. In the late 1990s, however, the government combined this hodgepodge of IT solutions into eight ministry clusters and one corporate cluster. Further efficiency and better value for money can be found by eliminating redundant services and centralizing common functions. Recommendation 16-10: The government should shift its service delivery of information and information technology (I&IT) from in-house to external sources, where feasible. The governments existing I&IT infrastructure already uses a blended approach of service delivery made up of both in-house and external service delivery that includes both small and large arrangements with vendors. This blended approach typically reflected decisions to keep certain functions in-house, which retains the I&IT expertise that comes with being a knowledgeable owner. In a constrained fiscal environment, however, outsourced contracts may make the difference between the continuation and the end of some services. Blended approaches to service delivery have been successfully adopted by British Columbia, Alberta and Saskatchewan. They have also been used broadly at the national level in the United Kingdom. The difference in outsourcing I&IT services is a choice of scope. Most jurisdictions explicitly engineer a solution to remain a knowledgeable owner in some areas, so policy, standards development and strategic/operational planning normally remain in-house. In the current fiscal environment, the Commission believes that government IT service delivery should be driven by considerations of relative value-for-money and effectiveness calculations. Simply put, governments cannot afford to remain the only centres of expertise when it comes to IT service delivery if more cost-effective options are available.

Drummonds conclusion is therefore that there is potential for cost-savings through outsourcing. This is true, and furthermore there is also potential for growing revenues through more innovation too Outsource to Innovate.

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Cloud Computing and the Drummond Report

Business Transformation: Best practices & thought leadership

This paper will document how this 16-10 section can be mapped to and implemented through the latest Cloud Best and future trends of Cloud Computing. Keynote topics will include: Data-center efficiencies and consolidation ITaaS procurement Cloud Service Brokers GovCloud 2.0

Data Center Efficiencies Shared Services Canada

Shared Services Canada is the recent Federal initiative to better share resources at this level of Government, however to fully maximize taxpayer cost savings there is also potential for collaboration across different levels of Government. This is particularly true for data centers, where there is considerable duplication of efforts and under-utilized capacity that could be consolidated to maximize efficiencies for all parties. Microsoft provides an executive briefing on the economics of this in their 22 page white paper, where key highlights include: The model indicates that a 100,000-server datacenter has an 80% lower total cost of ownership (TCO) compared to a 1,000-server datacenter. Based on our analysis, we see a long-term shift to cloud driven by three important economies of scale: (1) larger datacenters can deploy computational resources at significantly lower cost than smaller ones; (2) demand pooling improves the utilization of these resources, especially in public clouds; and (3) multi-tenancy lowers application maintenance labor costs for large public clouds. Finally, the cloud offers unparalleled levels of elasticity and agility that will enable exciting new solutions and applications. Dave Nicholl himself is a visionary in this regard and as described in this article last year called out for this multi-level collaboration, leveraging their new Guelph data center. Our report will detail what role Cloud Computing can play in these shared service scenarios.

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Cloud Computing and the Drummond Report

ITaaS Procurement
The ongoing maturation of the market means a marketplace of different Cloud options are coming online for Government buyers. However not only is the technology new to their organizations it even presents challenges in areas as basic but essential as procurement. Many are not prepared to consume IT as a Service. Our report will explain how this can be mastered in Canada, building on existing international best practices such as the latest CIO.gov Cloud document - Cloud Best Practices guide called Best Practices for Acquiring IT as a Service. Download the 44page PDF here), and in Europe the ENISA Procure Secure guide. Vendors are also documenting resources, such as Cisco and their recent white paper Enabling IT as a Service (11-page PDF).

Cloud Service Brokers

The next step in the ITaaS evolution is the implementation of Cloud Service Brokerage ITaaS procured from across multiple Cloud providers, aggregated and managed by an intermediary CSB market. CSBs help drive IT efficiencies through features such as:

Aggregating a catalogue of many 000s of applications Single sign-on for secure access across all of them Ordering automation, IT administration and reporting features to better manage
utilization

GovCloud 2.0
The opportunity for Ontario to leverage technology advancements to drive cost savings isn`t limited only to datacenters and hosting. It can also be used to transform processes themselves, the potential for which is clearly conveyed through the SOCITM Better Served report, which describes a Cost To Serve ratio which highlights how much it costs to meet citizen requests through different CRM channels:
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Face to face : 7.40 Telephone: 2.90 Web: 32p Cloud 2.0: ??

This clearly demonstrates that agencies who have not yet embraced modern technology for their business processes will be costing Government 20 times more than those who have, and are therefore where the bulk of real cost-savings could be found for Ontario. Furthermore with our focus on the trend of Cloud 2.0, well explain how increasing public participation in the process too can reduce this even further.

Cloud Services Architecture

The core remit of this white paper will be to explain how Cloud Computing can enable these transformations faster and cheaper than was possible before.

Hybrid SaaS Platform for Government Software as a Service

The technical backbone of this exercise will focus on the Cloud Best Practice we describe as Hybrid SaaS. This refers to a combination of the NIST best practice model called a Community Cloud and the SaaS (Software as a Service) delivery model, and how this offers the public sector the best of both worlds where they can access software and IT resources on a PAYG basis, but via hosting models that have the data hosted as locally as possible, including regionally (I.e. Ontario). Within this category there are further permutations, include: SaaS localization and encryption technologies Methods of using SaaS applications in a manner that achieves Government compliance. Hybrid Community Cloud hosting Local hosting companies installing and providing SaaS from local data-centers, with key aspects like secure WAN links addressed. Shared service overlay software architecture A single instance of traditional software that is made accessible to multiple client scenarios through additional overlay software.
Cloud Computing and the Drummond Report

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Economy and Innovation Outsource to Innovate

Equally if not more importantly is the potential benefit for the local economy that this increase in outsourcing to Cloud providers will deliver. As highlighted in this news article it has already been identified how outsourcing to save costs will also drive benefit for local suppliers and with the right programs this effect can be magnified and applied to greatly boost local ICT innovation and growth.

Addressing Canadas Innovation Gap Innovation Best Practices

The need for this is critically important. As many articles, experts and journals have described, Canada has a notorious Innovation Gap. The Conference Board of Canada recently described this as a 'D for Innovation' amongst many other analyst reports, and the depth and history of this is summarized in the Mowat 'Canada's Innovation Underperformance report': Its one of the most consistently under-performing attributes of Canadas economy.So reliably underwhelming is Canadas innovation performance that new studies decrying this fact are anything but surprising. Whether it be the latest benchmarking report from Canadas Science, Technology and Innovation Council (STIC 2011), another D grade on the Conference Board of Canadas periodic report cards (2008, 2010), or the assessment by the Council of Canadian Academies (CCA) scrutinizing the root causes of Canadas innovation performance (CCA 2009), the basic message has differed little from their predecessors decades prior (Britton and Gilmour 1978; Science Council of Canada 1979; Ontario. Premiers Council 1989). Our CCN is based on analysis of a number of innovation best practices, and then interpreting these into action plans specifically for the Canadian Cloud industry: The Federal Governments Building Canadas Digital Advantage Innovation Canada A Call To Action The CATA Innovation Nation business plan Cisco's Next Generation Cluster

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Cloud Computing and the Drummond Report

Government as Early Adopter Innovation in Procurement

The headline theme that emerges from all of them is the critical role Government themselves can play as a catalyst and driver of local innovation progress and growth, especially through leveraging their existing procurement programs. Indeed for Canada specifically it is proposed as a headline remedy, where their own Digital Advantage white paper describes 1) the root problem being a lack of ICT investment by the Canadian private sector resulting in a corresponding lower level of business innovation, and 2) the solution to this issue being the proactive adoption of new technologies like Cloud by the public sector as the required leadership to inspire others to follow. "Governments can play an important role in promoting private sector innovation and driving ICT uptake by acting as model users and leading by example, by being an early adopter and demanding purchaser of emerging and next generation technologies like Green IT and Cloud computing. The Innovation Canada: Call to Action report from a committee of high-profile business experts like Tom Jenkins of OpenText, also make exactly this same recommendation: Recommendation 3: To this end, public sector procurement and related programming should be used to create opportunity and demand for leading-edge goods, services and technologies from Canadian suppliers. Indeed they have built on this with a dedicated report specifically on this topic, entitled The Case for the Use of Procurement to Stimulate Innovation. In the UK they have also pioneered this technique, called Forward Commitment Procurement. Ontario is a flagship example of this approach; Dave Nicholl recognizes this important role of Government IT procurement, such as this recent procurement exercise for Cloud-based Unified Communications. In their case study of adopting Microsoft Private Cloud technology Dave comments: We really are a forward-looking organization, says David Nicholl, Ontarios Corporate Chief Information and Information Technology Officer. Theres no doubt that technological advancement will be a key characteristic of future economic growth and innovation, and Ontario is continuously looking at ways we can better communicate online with each other, with businesses, and with citizens.

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Cloud Computing and the Drummond Report

New Cloud Innovation Models

Cloud Computing is so important to the Canadian innovation challenge because it is both a high-growth global market opportunity, and also the technology is valuable primarily because it is an enabler of more innovation. This is eloquently explained in the Cisco white paper 'Cloud - What a Business Leader Must Know':
"Cloud accelerates your business by allowing you to transform ideas into marketable products and services with greater speed. Many enterprise-focused service providers have an opportunity to create higher-value, differentiated service offerings. They have unique capabilities they can leverage, including customer relationships, physical assets and operational excellence".

This product development capability can also be extended into a general framework for industry collaboration as a whole. As described in one of the innovation best practice documents from CATA:
CATA believes that market-oriented collaborations models should be evaluated and measures should be taken to incent more companies in Canada to act as anchor companies and to encourage more SME companies to cluster around large anchor ones with good reach into the global markets.

This is indeed a powerful idea and model, especially so in the Cloud Computing industry and era. Consider an organization like Salesforce.com who operate in Canada, employing hundreds of people, who are a global firm and most importantly who provide a product distribution platform for exactly this purpose, their Apps Store. Canadian firms can and do contribute to this as a method of global expansion, and furthermore its the ultimate catalyst for major economic growth. As the Radian6 acquisition highlights this acceleration pathway can even lead to a final exit for the startup, generating over $300 million new inward investment to the province of New Brunswick in this case, so this a strategy capable of substantial levels of this investment attraction. The objective of our Canada Cloud Network is to utilize these practices to help develop lots more Radian 6 type ventures, and via this particular campaign do so specifically within Ontario, via: Ontario SaaS Ventures Program A program to build a portfolio of more SaaS start-ups. Procurement Commercialization Work with Government to define how they can help fast-track these ventures, through `SaaS Spin-out` processes.
Cloud Computing and the Drummond Report

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Vendor Showcase & Keynote Agenda

The document will be further populated with sponsored input from vendors, and this also describes the speaking agenda for the workshop.

Cloud 2.0 Showdown

The headline review will focus on the Cloud 2.0 topic, looking at how two vendors, Microsoft and Salesforce.com, offer solutions for this capability. Salesforce.com - Social CRM for Government For Salesforce.com we will focus on how the public sector can utilize their core Cloud CRM and in particular their recent GovCloud announcement, which includes: A GovCloud Apps Store Dedicated multi-tenant GovCloud architecture Plans to train 1,000 channel integrators.

Microsoft - GC Docs from the Cloud For Microsoft we will focus on the recent Federal Government announcement about their plans to launch a GC Docs portal to underpin their Open Government plans. We will identify innovations at the Ontario Province level that already match these needs and how they can be implemented via a Shared Services Canada model to meet the project requirements, and how this can be achieved through a SaaS Spin-out process.

Big Data in the Data Center

The other headline topic is Big Data in the Data Center, referring to the hot topic of Big Data and how these tools might be applied within the data center environment, for costsaving analysis and consolidation purposes. Sponsors in this category include Sungard, who have recently announced Hadoop hosting services.

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Ontario Cloud Ventures Showcase

This vendor showcase will also include a section dedicated to Ontario Cloud start-ups. As part of this we will identify how the Cisco `Next Generation Cluster model can be applied to realize the goals described in the report `A National Strategy for High-Growth Entrepreneurship`. This report was covered in a Globe and Mail news article that best epitomizes everything that we are setting out to achieve via the Canada Cloud Network: Canada Time to Lead and `Own the Entrepreneurial Podium`.

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About the Authors

Neil McEvoy
Neil McEvoy is a Scottish entrepreneur who has been pioneering disruptive innovations in the Cloud Computing industry for over 15 years, including leading PSINet to domination of the European enterprise web hosting market, the launch of one Europe`s first pure-play ASPs (Application Service Providers) via a joint venture with Microsoft, the Unified Communication SaaS offering for British Telecomm, amongst many others. Most recently since immigrating to Canada he has launched the Cloud Best Practices Network and now the Canada Cloud Network. Connect on Linkedin, or send an email : neil.mcevoy @L5consulting.net

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