Government cuts to drive investment in cloud and outsourcing

Cloud computing and business process outsourcing (BPO) will become increasingly popular with government IT departments during 2011 as funding cuts start to bite, according to analyst firm Ovum.

In a report entitled 2011 Trends to Watch: Government Technology, analyst Jessica Hawkins predicts that consumption-based technologies that are delivered through the cloud will grow in use due to the cost-savings they can offer.

"Because cloud delivery means a lot of infrastructure is owned and operated by vendors and because payment is based on what you use, rather than just a flat-rate payment, it gives government departments the chance to make significant savings," Hawkins said.

"As such the cut-backs being imposed could actually have a bit of a benefit as they will force government IT departments to look into these new technologies, which can offer something that has more relevance to workers and users than current systems in use."

She added that moving to the cloud could also help departments reduce inefficiencies and waste by ensuring that they only run services that they need.

Hawkins conceded that some government IT leaders remain worried about security and privacy with cloud-based applications and networks, but said that the opening up of a government-wide network could overcome this.

"Because there will be compliance guidelines that departments will have to conform to in order to share their data across the network this might allay any fears that staff have over using this sort of technology," she said.

With regards to BPO, Hawkins noted that departments could save between eight and 10 per cent of costs by using dedicated vendors like Capita or Northgate as they will have processes in place to deliver the best level of service.

"Departments can gain a lot of benefits from BPO systems but they need to ensure they think of their long-term strategy when deploying these and that they talk to vendors to ensure they are getting the right system for their needs," she added.

Hawkins also predicted that procurement practices would become more stringent as cut-backs and increased public scrutiny of spending would force greater accountability for purchases.