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Why does the public sector struggle to build a compelling business case for cloud? Romy Hughes, director at Brightman, explores the issue
For nearly a decade, ‘Cloud First’ was the mantra by which all new government IT contracts were to be judged. If your new project was not in the cloud, you had to give a good reason for doing so. But despite Cloud First’s dominance since 2013, the policy is now under review. While specific reasons for the review have not been made clear, I strongly suspect that the challenges of measuring the ROI of cloud projects may be a significant factor in this decision.
Forcing the public sector to use the cloud for every project, come-what-may, has always seemed like a strange approach. The ‘cloud’ is nothing more than a deployment decision. It is not a strategy in its own right. No project – IT or otherwise – should start with a predetermination of how it will be implemented. You define the problem first, build a business case for solving the problem, scope out the objectives and then evaluate various solutions to achieve those objectives. The cloud could be one of the proposed solutions, but only if it meets all the objectives of the business case.
In the right context
This is not to say the cloud is the wrong solution. In many instances it is still the right approach for the public sector. Cloud makes absolute sense if you are thinking about true transformation. If your data is in the cloud and you can use the power of cloud compute to improve productivity, then it absolutely makes sense. But this is about having a long-term business plan and strategy first. Successful cloud transformation (and ‘Cloud First’) in public sector only occurs when it is approached strategically. Unfortunately, we don’t see this very often!
Instead, Cloud First has encouraged public sector decision makers to be lazy in their decision-making process because it has taken away the need to start with the business case. They certainly cannot be blamed for this. If you are told you must use the cloud, and you have no strong feelings why the cloud would not meet the objectives of the project, why would you spend all that extra time building a business case which evaluates non-cloud alternatives which might not be any better?
Cloud First has been a distraction from many of the very real questions that should be asked of any new IT project – questions like ‘Is this the right project at all?’ What is the objective of the project? What is the business case? Or more fundamentally, ‘What is the role of this organisation and how can I advance its objectives?’ These questions are far more pertinent, and should come far earlier than ‘is this a cloud project or not?’
Too often I have seen cloud projects in the public sector mobilised for their own sake, instead of taking the customer-centric view and building the business case first. But this is not because the business case is not there; it is simply because it is much more challenging to build a business case for a cloud project versus a traditional one.
There are a few reasons for this:
1. Cloud projects needs iterative funding, not ‘Big Bang’: One of the major benefits of moving to cloud is “evergreen IT” and the ability to leverage Infrastructure/Platform or Software-as-a-Service approaches. With I/P/SaaS you can move away from the traditional, high risk ‘big bang’ approach and make more iterative, lower-risk improvements instead. The challenge is that iterative improvements need iterative funding, which is very different to the ‘whole life cost’ ROI analysis typically required by a traditional business case.
2. Cloud requires a ‘as a service’ mentality and funding structure. Building on the above point, traditional capex expenditure on hardware etc. becomes an opex cost, that may, in the long run, increase the overall cost of running a service. These potentially higher costs are all-too-often glossed over if your mantra is ‘Cloud First’.
3. Overall cost improvements are difficult to measure: The increase in Operational expenditure is often not measured against resulting improvements in productivity and efficiency (i.e. people costs may be lower as a direct or indirect result of the cloud, but this may be overlooked).
When compounded together these three points make the creation of a business case for cloud projects very difficult, but not impossible. But with Cloud-First now under review, it will be important for new cloud projects to take account of these nuances so they can build the business cases needed to get their projects over the line.
Fundamentally, you need to go back to First Principles. Why are you doing the project at all? If you cannot answer WHY you should not move to the WHAT (i.e. an IT project) and HOW (i.e. cloud or non-cloud). If you cannot identify and articulate the WHY, you will never be able to build the business case, and if you can’t build the business case, why are you raising funds for the project in the first place? The review of Cloud First does not mean the public sector should turn away from the cloud. Cloud transformation remains a worthy goal for the public sector to pursue, but only when it forms part of a broader, strategic transformation plan.