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Government policy-makers need to create a level playing field for cloud services procurement

Cloud services policies are being developed and iterated in all jurisdictions. However, policy-makers need to work harder to create a level playing field for cloud services adoption, mindful of the potential type I and type II procurement errors, says global analyst firm Ovum.
The latest opinion piece* states that government cloud services policies tend to be biased toward avoiding type I errors (i.e. the risk of buying a “bad” cloud service), so even for policies that are well-intended the playing field is tilted against cloud services. However, type II errors (i.e. the risk of buying or persisting with a “bad” in-house, shared or outsourced service when a cloud service would have been better) can create worse outcomes, leading to missed or delayed opportunities for productivity improvement and innovation in policy and service delivery.
“The logic of government cloud computing policy usually starts with the implicit assumption that cloud services are risky, ill-defined and unproven,” says Steve Hodgkinson, Research Director at Ovum and author of the opinion. “Cloud services adoption in government faces resistance caused by procedural, organizational and cultural inertia.”
Hodgkinson highlights three key points that could help policy-makers to question their assumptions and strengthen government cloud services policy:
(1)    There is no cloud – The first thing to be clear about is that there is no such thing as “the cloud”. This fluffy notion has no place in government ICT policy thinking. Policy should refer to a “cloud service” – a tangible service delivered on a professional basis by a trustworthy external service provider. Cloud services are just shared services that work.
(2)    Cloud computing and cloud services are different things – Cloud computing is the suite of technology innovations, including scalable infrastructure, virtualisation, automation, self-service provisioning portals and multi-tenant architectures used by a service provider to build and deliver a cloud service. A cloud service is an established bundle of processes, people, organization and technology which has been assembled and refined to deliver a well-defined and trustworthy shared service to many customers.
Hodgkinson often uses the phrase “cloudy is as cloudy does” to make the point that a cloud service should be judged by what it is today. In contrast, a plan to buy and install cloud computing technologies – for example, to build a so-called “private cloud” – is simply a promise that a service may exist in the future, if sufficient funding is available and implementation of the required processes, people, organization, and technology is successful and sustained over time.
(3)    Type II procurement errors are just as bad as type I errors, if not worse – Overall, we need to counterbalance the bias inherent in most cloud services policies toward avoiding a type I error. A type II error can be just as bad, if not worse. The risk of procuring a “bad” cloud service is relatively low and can be contained by well-established risk-management mechanisms and shorter contract terms. Type II errors in cloud service procurement risk a deferred or missed opportunity for productivity improvement and innovation in policy and service delivery.
“Ovum recommends that a government cloud services policy should aim to fairly state the potential transformational benefits of cloud services and create a level playing field for agency adoption, mindful of the practical and long-term costs to government of both type I and type II procurement errors,” he concludes.
*Government policy-makers should level the playing field for cloud services
To arrange an interview or for further information please contact Jennifer Duraisingam on +61 (0) 3 9601 6723, or email
Jointly awarded IIAR Global Analyst of the Year 2012, Ovum provides clients with independent and objective analysis that enables them to make better business and technology decisions. Its research draws upon over 400,000 interviews each year with business and technology, telecoms and sourcing decision-makers, giving Ovum and its clients unparalleled insight, not only into business requirements but also the technology that organizations must support. Ovum is an Informa business.