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Research Shows Plenty of Further Savings in Government Cloud Computing

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A report published this week by government IT information resource MeriTalk Cloud Computing Exchange says the savings seen by US government IT today by using cloud computing solutions falls significantly short of the potential savings estimated by its “Cloud Computing Exchange Calculator.”

MeriTalk, a research group, operates the Cloud Computing Exchange, which it describes as a “vertical community of Federal cloud leaders, project managers, industry, and other government IT community stakeholders.”

The report, titled “Cloudy with a Chance of Savings” says Federal agencies in the US are currently saving on IT at a rate of about $5.5 billion per year using cloud computing implementations, a hefty number that falls well short of the $12 billion in annual savings estimated by the group’s Cloud Computing Exchange Caclulator.

For service providers that address government customers, or are looking to pursue that avenue, the idea that there is $6.5 billion in cloud computing business currently sitting in internal Federal IT departments is an appealing bit of information.

Service providers have been contributing to the government cloud computing roadmap since the “Cloud First” initiative was launched by the current administration to push US government agencies toward cloud computing as a means of reducing overall IT spending. Earlier this year, we covered reports that the government cloud computing efforts would continue under the US government’s new CTO Todd Park.

The calculator is a tool offered at the MeriTalk website that provides government agencies with estimates for cost savings based on moving the IT environments for existing or new projects to cloud computing. As a result, the estimates in the new report are based on real budget data input by Federal agencies, related to real government IT programs, says MeriTalk.

The Cloud Computing Exchange Calculator tool is accessible from the MeriTalk website, and its design may be interesting to service providers. However, given its specific purpose, it wouldn’t be able to provide them with any analysis.

One of the shortcoming that crops in some of the overall cloud market opportunity predictions from analyst groups is that the “overall spending” estimates would presumably include workloads that have moved off more traditional environments (for service providers, this could mean a certain percentage of the cloud opportunity comes at the expense of their other products). That particular shortcoming would not be an issue in the case of the MeriTalk report, which is a comparison of specific projects.

Many government agency IT directors feel rushed by the Cloud First program, according to survey results released in January by SafeGov.org and the Ponemon Insitute.

MeriTalk issued the findings of its new study this week at the first-ever Cloud Computing Brainstorm, held Wednesday on Capitol Hill, an event hosted by Senators Tom Carper of Delaware and Scott Brown of Massachusetts, designed to bring together federal and state CIOs with executives from the IT industry to discuss cloud computing best practices and generally accelerate government’s path to cloud computing.

“At a time when we’re facing record budget deficits, it’s clear that the Federal government needs to do a better job of protecting our scarce taxpayer dollars and curbing wasteful spending on assets it doesn’t need,” said Senator Carper, quoted in the press release. “There’s probably no better example of this financial mismanagement than the $80 billion we spend each year on IT. The Obama Administration has made remarkable progress in its efforts to reduce unnecessary IT spending, but we still have more work to do.”

Talk back: Are you able to serve government agencies as customers? Is it a market you’re looking at pursuing? Does the prospect of billions of dollars in further cloud business affect your perspective on government customers at all?

About the Author

Liam Eagle has worked as a contributor to the Web Host Industry Review since its inception in 2000, and as editor since 2003. He has been editor of the WHIR's print magazine since its launch. His daily involvement in the gathering and reporting of Web hosting news and his regular interaction with Web hosting leaders gives him an uncommonly broad appreciation of the issues and tends facing the business. Through his WHIR blog, Liam spots Web hosting trends and offers opinions on the industry-wide impacts of major developments and the motivation behind big announcements. Follow him on Twitter @liameagle

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