Danique Quaedvlieg
WHAT EFFECT DOES CLOUD COMPUTING HAVE ON
GOVERNMENTAL INSTITUTIONS?
Degree Programme in International Business
2018
1
WHAT EFFECT DOES CLOUD COMPUTING HAVE ON GOVERNMENTAL
INSTITUTIONS?
Quaedvlieg, Danique
ZUYD University of Applied Sciences
Degree Programme in International Business
January 2018
Supervisor: Verboeket, Victor
Number of pages: 25
Keywords: Cloud Computing, software, public sector, government
____________________________________________________________________
The purpose of this paper is to inform the reader on Cloud Computing and its effect
on organizations in the public sector.
2
MANAGEMENT SUMMARY
Cloud Computing, which refers to a model where data centres provide hardware and
software services, has become popular for organizations as an inexpensive, scalable
software model. Cloud Computing technologies can be implemented in a variety of
architectures such as Infrastructure as a Service, Software as a Service, and Platform
as a Service. A distinction can be made between privately managed cloud systems or
public cloud services. This research paper mainly focuses on public cloud, which
allows users to access the cloud-based interfaces via web browsers. Due to the rapid
development of storage technologies and the Internet, organizations experience many
benefits of using Cloud Computing such as easy accessibility, scalability and
sustainability. On the other hand, the main issues of Cloud Computing come from the
risk of moving a business’ confidential data to the cloud, which can attack privacy
and data security. These challenges are tough, especially for organizations in the
public sector as they deal with extremely confidential data. The fear of unauthorized
access by third parties is therefore the highest risk for governmental institutions.
Nevertheless, Cloud Computing does offer many opportunities for governmental
institutions such as improved service delivery and reduced operational costs. The US
Government Department of Health and Human Services, the US Government Federal
Labor Relations Authority, and the city of Los Angeles recently moved to
cloud-based solutions to manage their data more effectively. From this review, it
could be concluded that Cloud Computing can bring positive effects to organizations
in the public sector. Improved collaboration, scalability, saved costs, and easy
accessibility are the top benefits that the three institutions experience in Cloud
Computing. However, organizations and especially governmental institutions should
always deeply examine six steps that help figuring out whether an organization is
ready for cloud migration or not. These six steps include learning from use cases and
attending seminars, the assessment of vital resources for daily operations,
establishing a cloud pilot project and experiment with it, determining whether
existing applications and data can move to the cloud service, establishing goals and a
cost/benefit analysis, and realize continuous control and improvement.
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TABLE OF CONTENT
MANAGEMENT SUMMARY ........................................................................................ 2 TABLE OF CONTENT .................................................................................................... 3 LIST OF FIGURES........................................................................................................... 5 LIST OF ABBREVIATIONS ........................................................................................... 6 1 INTRODUCTION ........................................................................................................ 7 1.1 Research objective ................................................................................................ 7 1.2 Research questions ................................................................................................ 7 1.3 Research methodology matrix .............................................................................. 8 1.4 Limitations of the research.................................................................................... 9 2 LITERATURE REVIEW ........................................................................................... 10 2.1 Cloud Computing defined ................................................................................... 10 2.1.1 Public cloud .................................................................................................. 12 2.1.2 Private cloud ................................................................................................. 12 2.1.3 Hybrid cloud ................................................................................................. 12 2.2 The benefits of Cloud Computing from an organizational perspective .............. 12 2.2.1 No up-front investment ................................................................................ 13 2.2.2 Easy access ................................................................................................... 13 2.2.3 Reduced business risks and maintenance expense ....................................... 13 2.2.4 Scalability ..................................................................................................... 13 2.2.5 Sustainability ................................................................................................ 14 2.3 The issues of Cloud Computing from an organizational perspective ................. 14 2.3.1 Data security and privacy ............................................................................. 14 2.3.2 Replication time ........................................................................................... 14 2.3.3 Regulatory issue ........................................................................................... 14 3 CLOUD COMPUTING AND THE PUBLIC SECTOR ........................................... 16 3.1 Governmental risks ............................................................................................. 16 3.2 Governmental opportunities................................................................................ 16 4 CLOUD MIGRATION STRATEGY ........................................................................ 17 4.1 The six-step cloud migration strategy ................................................................. 17 4.1.1 Step one: Learning ....................................................................................... 17 4.1.2 Step 2: Organizational assessment ............................................................... 18 4.1.3 Step 3: Cloud pilot........................................................................................ 18 4.1.4 Step 4: Cloud-readiness assessment ............................................................. 18 4.1.5 Step 5: Cloud roll out strategy...................................................................... 18 4.1.6 Step 6: Continuous cloud improvement ....................................................... 19 5 GOVERNMENTAL CLOUD COMPUTING IN PRACTICE.................................. 20 4
5.1 City of Los Angeles, California ......................................................................... 20 5.1.1 The project.................................................................................................... 20 5.1.2 The solution .................................................................................................. 20 5.1.3 The advantages ............................................................................................. 20 5.2 US Government Federal Labor Relations Authority ......................................... 21 5.2.1 The project.................................................................................................... 21 5.2.2 The solution .................................................................................................. 21 5.2.3 The advantages ............................................................................................. 22 5.3 US Government Department of Health and Human Services ........................... 22 5.3.1 The project.................................................................................................... 22 5.3.2 The solution .................................................................................................. 22 5.3.3 Advantages ................................................................................................... 22 6 CONCLUSION AND RECOMMENDATIONS ....................................................... 23 LIST OF REFERENCES ................................................................................................ 24 5
LIST OF FIGURES
Figure 1 - overview of layers in cloud computing (Colman, 2013)
Figure 2 - the Six-Step Cloud Migration Strategy (Wyld, 2010)
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LIST OF ABBREVIATIONS
SaaS – Software as a Service
PaaS – Platform as a Service
IaaS – Infrastructure as a Service
CPU – Central Processing Unit
CRM – Customer Relationship Management
EHR – Electronic Health Records
TCO – Total Cost of Ownership
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1 INTRODUCTION
The interest in Cloud Computing has grown rapidly in the past years. Organizational
benefits such as increased collaboration and improved accessibility of resources is
one of the reasons for this. However, risks and concerns of data security and privacy
may hold back the movement to the cloud of organizations in the public sector. This
report reviews the benefits and possible issues from a customer perspective with a
deep dive into governmental institutions of the public sector. Furthermore, a six-step
guideline to cloud migration is examined and US Government institutions are
reviewed.
1.1 Research objective
The aim of this report is to examine and answer the central question: “What effect
does Cloud Computing have on organizations in the public sector?”
1.2 Research questions
After the research is done, the goal is to answer the main question. This question is
very general and is therefore divided into sub-research-questions in order to answer
the central question above.
1. What is Cloud Computing?
2. How can organizations benefit from Cloud Computing?
3. What are possible issues that organizations can experience with cloud
computing?
4. What are the risks and opportunities of Cloud Computing for the public
sector?
5. What steps should governmental organizations take when migrating to the
cloud?
6. How do US Government institutions leverage Cloud Computing?
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1.3 Research methodology matrix
Research topic 1.What is Type of research Cloud Desk
Type of data Source Qualitative
(Marinescu, 2016)
Computing? (Armbrust,
et
al.,
2010) (Cloudtweaks,
2010) (Colman, 2013)
(Jadeja
&
Modi,
2012) (IBM, 2017)
2. How can organiza-­‐ Desk
Qualitative
(Zhang,
tions benefit from Boutaba,
Cloud Computing? (Velte,
Cheng,
&
2010)
Velte,
Elsenpeter,
&
2012
)
(Salesforce , 2018)
3. What are possible Desk
Qualitative
(Jadeja
&
Modi,
issues that organiza-­‐
2012) (Velte, Velte,
tions can experience & Elsenpeter, 2012 )
with Cloud Compu-­‐
ting? 4. What are the Desk
Qualitative
(Paguette, Jaeger, &
Wilson, 2010)
risks and opportuni-­‐
ties of Cloud Compu-­‐
ting for the public sector? 5. What steps Desk
should governmen-­‐
tal organizations take when migrating to the cloud? Qualitative
(Wyld, 2010)
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6. How do US Gov-­‐ Desk
Qualitative
(Kundra, 2010) (City
ernment institutions of Los Angeles, 2010)
leverage (Google Projects
Cloud Computing? Highlights , 2010)
(Federal Relations
Authority, 2010)
(Department of
Health and Human
Services, 2010)
1.4 Limitations of the research
At first, the idea was to research Cloud Computing business cases of organizations in
the public sector such as hospitals, banks, and governments. The aim of the research
was to map the issues that these organizations experience when considering to move
to the cloud in order to examine the risk of moving strictly confidential data to the
cloud. However, the non-accessibility to these confidential cases limited the research
and therefore, the so-called ‘practice part’ of this paper addresses the benefits of
Cloud Computing rather than the risks involved with it.
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2 LITERATURE REVIEW
The literature review will elaborate on the definition of Cloud Computing together
with its benefits and possible issues.
2.1 Cloud Computing defined
Cloud Computing is stated into different definitions. There are definitions that define
Cloud Computing as a somewhat updated version of utility computing
(Marinescu, 2016). The other, broader definition states that Cloud Computing refers
to data centres that provide hardware and software services that are in the cloud and
can be assessed by clients as they pay for it (Armbrust, et al., 2010). This research
report takes the definition of the last one. Hardware, software and services are
running on their own servers at a certain location owned by organizations such as
Google or Oracle.
Cloud Computing contains several layers that provide some kind of service to the
end user represented as Software as a Service (SaaS), Infrastructure as a Service
(IaaS), and Platform as a Service (Paas).
Figure 1 - overview of layers in cloud computing (Colman, 2013)
Infrastructure as a Service
IaaS is the layer closest to the hardware and can be described as a fully outsourced
service. Examples of companies that provide infrastructure services are Google,
IBM, and Amazon. Instead of buying infrastructure that might not be used for
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months, users can buy the infrastructure according to the requirements at any
particular point of time. This can be described as a “Pay as you go” model ensuring
that the user only pays for what is used. Users then have access to IT Infrastructure
and resources that might be very costly if purchased completely. Thus, dynamic
scaling, reduced costs, access to superior IT resources, and usage based pricing are
some of the benefits of IaaS (Cloudtweaks, 2010). According to Colman (2013), Iaas
is the most flexible Cloud Computing model and allows for automated deployment
of storage, networking, processing power, and servers. IaaS tends to offer more
control over infrastructure than Saas or Paas services.
Software as a Service
For consumers, SaaS is the most widely know form of cloud service. SaaS moves the
management of software and its deployment to a third-party service. Use of SaaS
applications reduces the total cost of software ownership by eliminating technical
staff requirement to manage, install, and upgrade software. SaaS applications are
usually provided on a subscription or “Pay as you go” model (Colman, 2013). The
most familiar SaaS systems are storage solutions such as Dropbox, customer
relationship management systems such as Salesforce, and productivity management
applications such as Google Apps.
Platform as a Service
According to Colman (2013), PaaS functions typically provide a platform on which
software can be developed and deployed. Users of PaaS are able to focus on the
application development of their product or service together with the business side of
scalability as PaaS providers handle the work of dealing with servers and network
infrastructure. Rather than investing in hardware, businesses can make use of
scalable resources as they need them with the “Pay as you go model”. An example of
PaaS is SalesForce.com’s Force.com. It provides services to develop, test, deploy,
host and maintain applications in an integrated environment and therefore supports
the creation of applications (Cloudtweaks, 2010).
When deploying a cloud computing solution, it has to be decided what type of cloud
should be implemented. Below, three types of cloud computing will be described as
public cloud, private cloud, and hybrid cloud.
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2.1.1 Public cloud
Public cloud users need to pay only for the time they use the service, which reduces
the operating cost on IT expenditure. However, since all applications and data run on
the public clouds, they are more sensitive to malicious attacks, the public cloud is
less secure compared to other cloud models (Jadeja & Modi, 2012).
2.1.2 Private cloud
The term private cloud refers to internal data centres owned by organizations
themselves, not available to the general public. As explained by Jadeja and Modi
(2012), private cloud solutions make it easier to manage security, maintenance and
upgrades and also provide more control over deployment. Furthermore, applications
and recourses are managed by the organization itself.
2.1.3 Hybrid cloud
Hybrid cloud can be referred to as a combination of public cloud and private cloud.
According to IBM (2017), “a hybrid cloud uses a private cloud combined with the
strategic integration and use of public cloud services”. By making use of a hybrid
cloud, organizations are able to keep critical applications and sensitive data in a
traditional data centre owned by the organization while taking advantages of public
cloud resources for the latest applications (IBM, 2017).
2.2 The benefits of Cloud Computing from an organizational perspective
Due to the rapid development of the Internet and storage technologies, organizations
experience many benefits of using Cloud Computing.
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2.2.1 No up-front investment
As described in the first part of the literature review, Cloud Computing uses a
pay-as-you-go pricing model. Organizations do not need to invest in expensive
infrastructure as it simply rents resources from the cloud service provider according
to its own needs (Zhang, Cheng, & Boutaba, 2010). This means that companies enjoy
exactly as much space as needed and will not be charged for the space they do not
use.
2.2.2 Easy access
Software provided as a service hosted in the cloud are typically web-based. Due to
this, the software application can be accessed from any device with Internet
connection being it a smartphone, laptop, or tablet.
2.2.3 Reduced business risks and maintenance expense
By outsourcing the service of infrastructure to cloud providers, organizations shift
business risks such as hardware failures to infrastructure providers, who have often
more expertise when it comes to managing these risks. Moreover, maintenance
expenses can be reduced as organizations can save money on staff training costs and
hardware maintenance (Zhang, et al., 2010).
2.2.4 Scalability
If an organization experiences a huge increase in the amount of storage it needs,
cloud computing can help to manages this. Rather than having to buy and install new
equipment, additional storage can be bought (Velte, Velte, & Elsenpeter, 2012 ). As
mentioned before, costs are based on consumption and organizations would not have
to pay as much as they would have to do if they had to buy new equipment.
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2.2.5 Sustainability
According to Salesforce (2018), cloud infrastructures support environmental
proactivity while powering virtual services rather than physical hardware. Cloud
Computing eliminates paper waste and commuter-related emissions. Furthermore, it
improves energy efficiency. Cloud Computing is more environmentally friendly and
results in less carbon footprint.
2.3 The issues of Cloud Computing from an organizational perspective
Even though Cloud Computing shows many benefits to IT departments, it also brings
issues that need to be addressed. In the numeration of issues below, ‘cloud’ is
referred to as public cloud.
2.3.1 Data security and privacy
Handing over confidential data to another company can be seen as a risky thing to do
for organizations. Many people therefore hesitate to move to cloud services, as they
are not able to control their company’s information. The challenge is to ensure that
only authorized institutions can access the data. By using Cloud Computing,
organizations rely on third parties (Jadeja & Modi, 2012).
2.3.2 Replication time
According to Jadeja & Modi (2012), time and cost are key aspects for the replication
time of data resiliency.
2.3.3 Regulatory issue
According to Velte, Velte, & Elsenpeter (2012), global government regulation might
be what cloud computing needs. Without regulations, it could be easy for cloud
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service providers to handle one’s data unsecurily. Potentially, this can raise multiple
jurisdiction issues regarding protections requirements.
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3 CLOUD COMPUTING AND THE PUBLIC SECTOR
3.1 Governmental risks
Cloud Computing is increasing awareness among governmental IT strategies. A
significant amount of risks is associated with the use of this disruptive technology.
From a government perspective, both intangible risks, such as public access and the
confidence in technology features and tangible risks, such as the risk of infrastructure
failure or unauthorized access should be taken into account when moving to the
cloud (Paguette, Jaeger, & Wilson, 2010).
3.2 Governmental opportunities
On the other hand, Paguette, Jaeger & Wilson (2010) found that Cloud Computing
provides remarkable opportunities for organizations in the public sector such as
governmental institutions. Lowered energy consumption, improved service delivery,
and reduced governmental operations cost are examples of benefits that Cloud
Computing can provide to the public sector.
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4 CLOUD MIGRATION STRATEGY
Government organizations are advised to examine 6 steps that need to be taken into
account when moving to the cloud. First of all, IT leaders should define how Cloud
Computing could fit into their organization in order to support their overall business
strategy (Wyld, 2010).
4.1 The six-step cloud migration strategy
Figure 2 - The Six-Step Cloud Migration Strategy (Wyld, 2010)
4.1.1 Step one: Learning
The first step in the Cloud Migration Strategy is learning the basics of Cloud
Computing. This can be done in various methods such as reading cases of similar
businesses that move to the cloud, attending webinars and seminars, or talking with
vendors.
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4.1.2 Step 2: Organizational assessment
The second step in the Cloud Migration Strategy is assessing the current
organizational IT baseline. It is essential to examine current IT needs and capacity
utilization. Furthermore, it is important to look at what resources are vital for daily
operations in order to establish this baseline. After assessing the baseline, the
organization can look at whether to continue to host “excess” capacity in the data
centre or to move to public cloud services.
4.1.3 Step 3: Cloud pilot
The third step in the Cloud Migration Strategy is to focus on one specific project to
be executed. As is seen in any new business technology, organizations tend to
experiment deeply with Cloud Computing and this is extremely important in order to
become familiar with the pros and cons of this technology.
4.1.4 Step 4: Cloud-readiness assessment
After internal assessment and external research, the next step in the Cloud Migration
Strategy is to establish an overall organizational cloud-readiness assessment. An
important aspect here is whether public-, private-, or hybrid-cloud best fits the
organization. Furthermore it is important to determine whether existing applications
and data can move to the cloud service.
4.1.5 Step 5: Cloud roll out strategy
The fifth step in the Cloud Migration Strategy is to roll out the organization’s cloud
strategy. This strategy should contain the progress, cost/benefit analysis and goals of
the project. This step is extremely important since this phase can be seen as a
“test-phase” for Cloud Computing.
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4.1.6 Step 6: Continuous cloud improvement
The final stage of the Cloud Migration Strategy is the stage in which the organization
regenerates to move its applications and relevant data to the cloud service and/or
internally hosted cloud. The movement to Cloud Computing will provide government possibilities to collaborate and communicate. However, operational rules
should be implemented in order to manage the privacy risk. An example of this is the
decision of who can access what documents and what type of access is given
(Wyld, 2010).
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5 GOVERNMENTAL CLOUD COMPUTING IN PRACTICE
According to Kundra (2010), fragmentation of systems, poor project execution, and
the struggle of legacy technology in the Federal Government of the United States
have presented barriers to achieving the productivity and performance gains for the
public sector. Therefore, the Federal Government’s Cloud Computing initiative was
developed to potentially reduce waste, lower operating costs, and to increase data
centre efficiency and utilization rates. This chapter addresses three of the Cloud
Computing projects for governmental organizations in the United States of America.
5.1 City of Los Angeles, California
5.1.1 The project
In 2009, Los Angeles faced a deficit of 400 million US dollars of the crisis. As a
related result, the city’s IT staff experienced frustrations around the in-house IT
systems. The aim was to find and select a new IT and email provider in order to run
day-to-day operations more efficiently (City of Los Angeles, 2010).
5.1.2 The solution
After reviewing 15 possible replacements for the in-house system, the city decided to
sign a 5-year contract with Google Apps as it aimed to have all its employees
working with cloud-based email. At the same time, the institution started to
implement
additional
Google
Apps
within
the
Premier
Edition
suite
(Google Projects Highlights , 2010).
5.1.3 The advantages
As a result of employees becoming familiar with cloud-based applications, 5.5
million US dollars are saved over a period of 5 years. Another advantage of the
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implementation of cloud-based Google Apps is that the city is now able to offer each
city employee space, and can add new users without facing issues about hardware
availability on city servers. Furthermore, accessibility to work data from any mobile
device with Internet connections is being realized. At the same time, video
conferencing, simultaneous review and editing of documents by multiple people are
made possible by this solution (Google Projects Highlights , 2010).
According to City of Los Angeles (2010), it was found that before the
implementation of Google Apps, council members were concerned of bringing
governmental data outside direct city control. However, from a security point of
view, the movement of confidential data to the cloud exceeds contractual issues. Full
data ownership of all the data on the servers is retained by the City of Los Angeles.
Besides that, vendors are obligated to request access to the data. As recommended by
the members of the council, the hurdles had to be tackled before implementation.
5.2 US Government Federal Labor Relations Authority
5.2.1 The project
The Federal Labor Relations Authority’s case management system was not
supporting its mission. Besides the high software licencing costs, the current system
was not able to keep up with expected growth and users faced repeated delays in
searching activities (Federal Relations Authority, 2010). A shared electronic case
management system allowing citizens to obtain data electronically was what the
institution wanted to implement.
5.2.2 The solution
The Federal Labor Relations Authority aimed to make current IT operations and
infrastructure more responsive to business needs while taking regulatory compliance
into account. For this, Intuit’s Quickbase system was selected.
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5.2.3 The advantages
One of the advantages of implementing Quickbase was its short implementation
period of 10 months and a reduction of TCO by 6 million US dollars over a period of
5 years. On top of that, the cloud-based solution provided the institution with more
rapid development of 25% compared to the traditional deployment time.
Furthermore, collaboration capabilities and user interface have resulted in improved
work efficiency (Federal Relations Authority, 2010).
5.3 US Government Department of Health and Human Services
5.3.1 The project
The US Government Department of Health and Human Services has succeeded in a
project supporting Electronic Health Records with the use of Cloud Computing
(Department of Health and Human Services, 2010).
5.3.2 The solution
HHS leverages a cloud-based CRM solution provided by Salesforce.com as it
supports regional extension centres with the selection and implementation of
Electronic Health Records. The project leader found that a cloud-based service
would be the best option for a scalable and inexpensive solution.
5.3.3 Advantages
The key advantages that HHS experiences are increased collaboration with other
institutions and ability to update the system as Regional Extension Centers start
using it.
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6 CONCLUSION AND RECOMMENDATIONS
Cloud Computing is rapidly developing as it changes the IT landscape of many organizations. The objective of the research is to answer the question: “What effect
does Cloud Computing have on organizations in the public sector?”
Despite significant challenges such as the risk of public access, the confidence in technology features, and the risk of infrastructure failure and unauthorized
access, many governmental organizations see opportunities such as lowered energy
consumption and improved service delivery.
Putting theory into practice, three different US Governmental institutions
were examined in their projects of the Cloud Computing transformation. From this
research it was discovered that all of the three institutions leverage the benefits of
Cloud Computing. The US Government Department of Health and Human Services
implemented Salesforce CRM as a solution for its regional extension centres and is
now experiencing increase collaboration. The US Government Federal Labor Relations Authority implemented cloud-based Quickbase to make current IT operations
and infrastructure more responsive to business needs with a result of 25% improvement compared to the traditional deployment time. The City of Los Angeles selected
a new cloud-based IT and email provider in order to run day-to-day operations more
efficiently and therefore implemented Google Apps Premier Edition suite. As a result, the council members do not have to deal with hardware issues anymore. On top
of that, 5.5 million US dollars have been saved.
All in all, it can be concluded that Cloud Computing can bring positive effects to organizations in the public sector. Improved collaboration, scalability, saved
costs, and easy accessibility are the top benefits that organizations experience in
Cloud Computing. However, organizations and especially governmental institutions
should deeply examine the risks of Cloud Computing. To any company that is considering moving its IT operations to the cloud, it is advised to study Wyld’s (2010)
six-step migration strategy in order to examine whether Cloud Computing would be
a good fit for the organization.
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