Adopting the as-a-service model has major implications for budget and procurement. Where data centers require periodic investments in hardware, moving to the cloud changes the equation. You’re replacing heavy upfront capital expenditures (CapEx) with ongoing operating expenses (OpEx). In place of maintenance and depreciation, you face continuing vendor relationships and planning adequately for the services you’ll use.
Moving to a cloud ecosystem of products and services calls for a new way of thinking about everything from storage and compute to budget and acquisition.
Is It Cheaper?
The short answer is no, said Sagar Samant, Associate Chief Information Officer at the General Services Administration’s (GSA) Federal Acquisition Service (FAS). Exchanging your on-premises system for cloud-based services adds value, but it probably won’t lower costs.
Instead, it allows agencies to better serve customers, adapt to policy changes, and update systems and security. Plus, they pay only for the digital services they need. “In the case of a government agency, the value lies in your mission,” noted Samant. It’s not a matter of cutting costs directly, he said, but of lowering the price of improvement.
How a Cloud Ecosystem Adds Value
“Even though cloud is not cheaper, the value it generates is much higher, from the mission perspective, than using the traditional data center,” Samant said. GSA began its cloud journey in 2011, as the first agency to adopt cloud-based email. In the intervening years, it’s become a bellwether for cloud in government. Samant said they’ve found four major areas of benefit.
Operational efficiency: “Because it’s all built on shared services, data sharing is easy, shared security is easy and we’re able to standardize a lot of processes to reduce duplication of effort,” he explained.
Faster delivery: “Cloud ecosystems, by their nature, allow you to build things faster, better and in a reusable architectural format,” Samant said. “At FAS, we were able to fulfill mission-critical features at a much faster pace than when we were in a traditional system.”
Flexibility: “The flexible nature of cloud systems allows us to build new features and products faster, keeping pace with our customers’ needs,” he said. That means an improved ability to respond to changes, including new administration priorities.
Improved security and resilience: Security is built into cloud platforms and services, and that improves recovery and resilience. “That increases our stability,” Samant said. “We have almost no downtime.”
Thinking Differently About Budget
There’s more to budgeting for a service-based approach than flipping the switch from CapEx to OpEx.
In setting up a data center, you try to anticipate the capacity you will need over the life of the hardware. With a cloud ecosystem, you can scale some elements up or down to meet changing needs, but there are fixed costs to keep the system running. “You need a strategic plan in place. You need to forecast the cloud-related cost for the next five to 10 years, and you need to be transparent with your customers about those costs,” Samant said.
“You also need to monitor your use as you’re moving forward, because technology changes, business priorities change,” he said.
Work With Your CSPs
Your relationships with cloud service providers (CSPs) are likely to be somewhat different from those with other kinds of vendors, and you’ll need to work with them to get the most out of your cloud.
“Cloud is not just about storage and compute,” Samant said. “It’s not just about moving your servers from a data center to the cloud. A cloud ecosystem offers tools, technologies and services, and agencies need to be smart about what services they’re buying.”
The key is to understand how your CSPs charge you so you can optimize your cost.
“Don’t just buy what the CSP is offering,” he cautioned. “Understand what you’re trying to do, whether you’re reimagining the business process, putting together a hybrid approach or just moving some components. Then ask the cloud service provider, ‘What are the tools and services you have that would address this?’ And then you do the math.”
To see more of our experts’ ideas on using cloud and cloud-based services to help your agency adapt to change, download our guide. “How to be a Pivot-Ready Organization.”
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