How Government Agencies will Adopt Cloud Services

While most commentary about managed cloud services tend to focus on the advances in commercial enterprise applications, government agencies are also making noteworthy progress. In particular, the advent of regional community cloud hubs is a phenomenon that's worthy of further exploration.

According to their latest market study and related report, IDC Government Insights believes regional cloud hubs will significantly change the way state and local governments procure online computing services.

These regional cloud hubs, defined as one government agency offering computing and storage services to other government agencies, have proven successful in the State of Michigan and State of Utah. In addition, the IDC's research provides a framework for building similar regional cloud solutions.

According to Shawn McCarthy, research analyst, IDC Government Insights, "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."

Cloud computing is rapidly changing the way government organizations consume computing resources. This comes at a time when virtualized servers and efforts towards application standardization have merged many government solutions.

IDC says that as solutions merge, less data center space is needed. In fact, by the end of 2012 close to 40 percent of federal data centers will be shuttered. Many state governments are following a similar path, often combing multiple data centers into one or two large statewide operations. Remaining data centers often serve as a shared computing and storage resource for multiple departments.

Why State Government is Leading the Way

While any level of government can, in theory, offer services to any other government office, state-level governments are often most qualified to serve as regional hosts -- offering government-to-government services to other state agencies or to local municipal government entities.

Local governments are already looking for trusted cloud providers -- and for ways to significantly reduce their growing IT costs. Through these cooperative arrangements, the government sites are able to leverage private cloud services including software as a service, infrastructure as a service, online storage, and security as a service, among others.

Being able to purchase services through high volume state contracts can give local governments a substantial pricing edge. 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," said 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."

Business Model for Regional Cloud Hubs

According to IDC, these managed 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.

As a result, this evolution has the potential to trigger the following game-changing consequences:

• For the host facility, it 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 data centers and the largest portfolios of government solutions.

The IDC Government Insights report features two U.S. states, Michigan and Utah, both well on their way to building cloud hubs that can be used by multiple government agencies at various levels of government. In addition, the report highlights several regional multi-state cloud computing efforts.

Managed Cloud Service Provider Deployment Plans

 As more multinational business executives and IT managers consider embracing managed cloud service offerings, many are wondering how the service provider landscape is evolving -- and where providers plan to differentiate their capabilities.

Much of the initial market insight focused on the key emerging trends, but now we're starting to see more detailed analysis.

A new market study by Infonetics Research details operator plans for managed cloud services -- including their strategies and approaches to offering services, how services will be delivered now and in the future, and top applications of each type of cloud service including: Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS).

Their latest worldwide study resulted in the report entitled "Cloud Service Strategies: Global Service Provider Survey," where Infonetics analysts interviewed 20 incumbent telco, competitive, data center operators, and cable operators that offer cloud services -- now, or they plan to by 2013.

Investing in New Service Delivery Platforms

"Service providers around the world have embraced the cloud concept in earnest and are heavily investing in new services and service delivery platforms based on their particular areas of expertise. Internet content providers are leading with SaaS, data center and co-location operators are adding IaaS to their product portfolios and investing in additional infrastructure facilities, and traditional telcos are building on their existing networks and adding a range of services," said Sam Barnett, Infonetics Research's directing analyst for data center and cloud.

Highlights from the Cloud Service Survey Include:

• 70 percent of respondent operators are investing in cloud services in anticipation of demand.
• The top operator strategies for offering cloud services are bundling cloud services with network connectivity services and offering cloud services over Ethernet or IP VPN services.
• Many of the smaller data center providers participating in Infonetics' survey plan to keep their business uncomplicated by moving from simple collocation support offerings to IaaS via the addition of computer and storage hardware, rather than getting into the complexities of offering OS software platforms.
• 95 percent of respondent operators offer IaaS now.
• More sophisticated offerings like platform as a service, or PaaS (formed by the addition of server operating systems such as Windows, Linux, and Unix) and software as a service, or SaaS (such as e-mail and security services offered by telcos and ICPs like Google) are currently offered by fewer operators, but will grow significantly by 2013.

All the Infonetics survey respondents are knowledgeable purchase decision-makers at service providers in EMEA (Europe, Middle East, Africa), Asia Pacific, and North America that together represent 20 percent of the world's telecom carrher revenue and 21 percent of the world's telecommunications service provider capital expenditure (capex).

Global Cloud Index: the Evolution of Data Center Traffic

As 2011 comes to a close, many busy executives and IT managers will be pondering the continued adoption of cloud applications within their organizations. How can a business be adequately prepared for the anticipated increase in demand for managed cloud services? Moreover, what are the key related market indicators that are shaping the future of emerging business technology deployments?

The Cisco Global Cloud Index is an ongoing effort to forecast the growth of global data center and cloud-based IP traffic. The forecast includes trends associated with data center virtualization and cloud computing.

From 2000 to 2008, peer-to-peer file sharing dominated Internet traffic. As a result, the majority of Internet traffic did not touch a data center, but was communicated directly between Internet users. Since 2008, most Internet traffic has originated or terminated in a data center.

Data center traffic will continue to dominate Internet traffic for the foreseeable future, but the nature of data center traffic will undergo a fundamental transformation brought about by cloud applications, services, and infrastructure.

By 2015, one-third of data center traffic will be cloud traffic.

Global Data Center IP Traffic: Already in the Zettabyte Era

The Internet may not reach the zettabyte era until 2015, but the data center has already entered the zettabyte era. While the amount of traffic crossing the Internet and IP WAN networks is projected to reach nearly 1 zettabyte per year in 2015, the amount of data center traffic is already over 1 zettabyte per year -- and by 2015 will quadruple to reach 4.8 zettabytes per year.

This represents a 33 percent CAGR. The higher volume of data center traffic is due to the inclusion of traffic inside the data center (Typically, definitions of Internet and WAN stop at the boundary of the data center).

The global data center traffic forecast, a major component of the Global Cloud Index, covers network data centers worldwide operated by service providers as well as private enterprises.

Traffic Destinations: Most Traffic Stays Within the Data Center

In 2010, 77 percent of traffic remains within the data center, and this will decline only slightly to 76 percent by 2015. The fact that the majority of traffic remains within the data center can be attributed to several factors:

• Functional separation of application servers and storage, which requires all replication and backup traffic to traverse the data center.
• Functional separation of database and application servers, such that traffic is generated whenever an application reads from or writes to a central database.
• Parallel processing, which divides tasks into multiple smaller tasks and sends them to multiple servers, contributing to internal data center traffic.

The ratio of traffic exiting the data center to traffic remaining within the data center might be expected to increase over time, because video files are bandwidth-heavy and do not require database or processing traffic commensurate with their file size.

However, the ongoing virtualization of data centers offsets this trend. Virtualization of storage, for example, increases traffic within the data center because virtualized storage is no longer local to a rack or server.

How does the transition of workloads from traditional data centers to cloud data centers effect the typical IT environment? Find the answer to this question, and learn more about the implications, by browsing the Cisco Global Cloud Index forecast data.