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Exploring the opportunities and pitfalls of Cloud Computing in Australian local government


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Exploring the opportunities and pitfalls of Cloud Computing in Australian local government - Municipal Association of Victoria Forum - 23 April 2013

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Exploring the opportunities and pitfalls of Cloud Computing in Australian local government

  1. 1. Exploring the opportunities andpitfalls of Cloud Computing inAustralian local governmentMunicipal Association of Victoria ForumSpring Street Conference CentreTuesday 23rdApril 2013© All rights reserved. Rob Livingstone Advisory Pty Ltd. Unauthorized redistribution prohibitedwithout prior approval. ‘Navigating through the Cloud’ and ‘Success is our story, let’s make ityours’ are Trademarks of Rob Livingstone Advisory Pty Ltd.
  2. 2. Agenda
  3. 3. A perspective on Cloud
  4. 4. The most sensible Definition ofCloud:“Forget your technical definition of theCloud, ask your mom what the Cloudis….…and what your mother will tell youabout the Cloud is that it means it’snot on my computer.”** Navigating through the Cloud Podcast Episode 23 in iTunes . Interviewed Dave Asprey – Global VP, Cloud Security, Trend MicroFlickr.comA Perspective on Cloud
  5. 5. Cloud-like Outsourcing:If you sign a standard outsourcing contract with anoutsourcing vendor that has Cloud-like pricing (pay-as-you-go) and Cloud-like capabilities and whether or not it’sCloud is largely a matter of opinion.A Perspective on Cloud
  6. 6. The Public Cloud security and risk paradox• One of the fundamental benefits of public cloud is theremoval of IT complexity.• It’s invisible to the end user.• Paradoxically, this presents those organisationsconcerned about IT security, risk and governance witha challenge because lack of visibility of what’s ‘underthe covers’ may present unacceptable risks if fullydisclosed and understood.A Perspective on Cloud
  7. 7. The 4 flavours of cloud computing – basic attributesPublic• No control• No ownership• You own data• Apps stay behind• You control all• You may own• You definearchitecture• You determineyour own securityposition• Combination of 2or more models• Can be morecomplex• Need to manageinterfaces,integrationPrivate Hybrid Community• Multiple agenciesshare same privatecloud infrastructureA Perspective on Cloud
  8. 8. The 3 key ‘classic’ Ingredients of Cloud• You’re counting on SaaS vendor in orderto provide all the multi-tenancy for yourdata.• You hope they’ve written their applicationswell, secure their databases, and so on ….• You’re sharing the database with everyoneelse.A Perspective on Cloud
  9. 9. Hybrid will be the dominant form in the enterprise“Within five years, it will be primarily deployed byenterprises working in a hybrid mode”. - GartnerGartner "Predicts 2012:Cloud Computing Is Becoming a Reality”(Published: 8 December 2011 ID:G00226103)A Perspective on Cloud
  10. 10. A Perspective on CloudPOTENTAL TO …….Create VALUE Lower COSTHi LimitedMed LimitedLo Limited
  11. 11. A Perspective on CloudPOTENTAL TO …….Create VALUE Lower COSTHi LimitedMed LimitedLo LimitedYou can only reduce your cost to zero,but transformational value is not capped
  12. 12. Inherent Risk Relationship with CloudService Delivery and Deployment Modelshttp://www.coso.orgA Perspective on CloudCOSO …..“…providingthought leadershipthrough thedevelopment offrameworks andguidance onenterprise riskmanagement,internal controland frauddeterrence.”
  13. 13. Context
  14. 14. 2012Context: Global influences
  15. 15. • Potential for cross-organisational collaboration to achieve jointoutcomes using cloud technologies a now reality.– Question is, what is the appetite for a change from the organisationalperspective.• The opportunities for LGs to maximise the upside potential ofdisruptive, new and emerging technologies exists – will,however require a coherent and deliberate ‘umbrella’ ITstrategy• Fragmentation of existing IT systems, technologies & relatedservices across LG agencies contributes to duplication ofeffort.Context: Government(Not in order of importance)
  16. 16. • Limited budget and resourcing at LG level to take on major ITchange.• State and Federal Governments collaboration sits astride anactive fault-line with occasional earthquake. A well knownexample being healthcare funding.– Question is: How does this influence LG’s willing and/or capability toembark on a LG state-wide structural change on how IT is used?• LG IT is ‘operational’ and has no real funding for innovation• Technology initiated disruptive change is the norm, andresponding to this volatility with legacy enterprise IT businessmodel is neither simple or risk free.Context: Government(Not in order of importance)
  17. 17. • Budgetary pressures, cost cutting, austerity, uncertainty contributeto increasingly short term thinking and planning across all industries,whether public, private or Government. (result of GFC and otherfactors)– Appetite and capability for making big, bold changes requiringlong term thinking.– Innovation, speed, agility not easy• For LG, shifting away from locally developed, bespoke, non-integrated legacy IT systems with known cost and risk is not a trivialexercise.• Ratepayers are increasingly ‘tech savvy’ and increasingly expectconsumer style technology such as ‘apps’, etcContext: Government(Not in order of importance)
  18. 18. Context – Challenges facing Local GovernmentWhat are the key technology challenges facing LG?1.Seduction of being spoilt for choice2.Political reality3.Governance4.Standardisation
  19. 19. Context – Challenges facing Local GovernmentChallenge #1: Seduction of being spoilt for choice•What’s the perceived value of a specific cloud offering, vs. theactual value.•Cloud lowers (or can eliminate) the barrier to entry to enterprise ITsystems•The Cloud market is innovative, volatile and new products andofferings are appearing on almost a daily basis•Cloud allows stretched internal LG IT staff to be directed to ‘valueadding’ tasks, not just keeping the lights on.•‘Pay as you go’ model removes the need for up-front capitalinvestment which is appealing for organisations that are capitalconstrained.•Real risk of a fragmented, inconsistent array of cloud applicationswhich are poorly integrated, which could compound the problem•Showcasing a series of Cloud vendors without understanding thekey organisational drivers or requirements may not be in LG’s bestinterests
  20. 20. Context – Challenges facing Local GovernmentChallenge #2: Political reality•At what level of government should the LG technology strategy sit?•What influence does LG have to elevate the discussion to the AustralianLocal Government of Australia (ALGA) (national) level?•Balance between local ‘loss of control’ and a coherent, well thoughtthrough ‘umbrella’ IT and technology strategy needs to be struck to:• Maximise ‘value’• Maximise collaboration between LG councils.• Minimise cost (Both short term and TCO)• Minimise risk (or at least identify the risks & mitigate)• Minimise risks associated with opportunistic vendor predation• Develop and relevant vendor management strategy
  21. 21. Challenge #3: Governance:•Map the inventory of legislative, policy or other compliancemandates to your current and any proposed cloud solutions.•Public cloud offerings may present a range of challenges to LG inrespect of the various statutes and regulatory mandates (eg:Privacy using overseas cloud services).•Recognise that cloud may not eliminate the need for effective ITgovernance (eg: change control)Context – Challenges facing Local Government
  22. 22. Challenge #3: Governance:•Making sense of the myriad of cloud position papers, guidelines etcacross Federal and State governments no small task.• For LG: Like drinking from a fire hydrant•Based on the principle of “Here’s the guidelines, then proceed on aninformed basis!”Context - Government
  23. 23. Challenge #4: Standardisation:•Public cloud is built on the premise of standardisation. Buildonce, use many times allows for greater efficiencies, hencelower cost.•The challenge lies in ensuring that, over the life of a specificcloud system’s use, if it cannot be configured to meet achanging environment (eg new legislation), LG may be forced toadapt or abandon that cloud system.•Understand where the real value in the standarisation of socalled, ‘commodity IT services’ using cloud lies. Eg: email, fileand network storage, etcContext – Challenges facing Local Government
  24. 24. • Real opportunities will be identified through the systematic anddeliberate attention to what is possible, rather than looking for asolution to fix a problem.• Cloud can lower IT operational costs – but not always!• Faster delivery of IT projects and related initiatives• Increasing organisational agility through the configuration of,rather than development (eg coding) of systems• Universal access to smart systems using smartphones can be agamechanger in delivering services to ratepayers• Improved coordination between LG services• Cloud lends itself to pilot project / proof of concept trials forinnovative local initiatives with low penalty costs for failures.Opportunities
  25. 25. Pitfalls• Lack of clarity over what organisational problem needs solvingby the application of the latest ‘big thing’ in technology• Fragmented, localised cloud systems could increase thesystemic (not technical) risk to LG• Vendor predation and/or individual stakeholders ‘opinions’ areno substitute to good, well informed commercial decisionmaking on new technologies.• Adopting cloud without knowing your exit or ‘transition-out’strategy at the start• Inappropriate pre-purchase due diligence leading to realproblems• Lack of visibility of total cost of ownership• Legal and jurisdictional issues associated with overseas cloudproviders
  26. 26. • Integrating cloud systems with any others can be costly & complex• Security – You are at the mercy of the provider’s standards• Business Continuity• Identity Management• Forensics• Contractual complexity….. To name but a fewPitfalls
  27. 27. • Recognise that Cloud computing is only one of a number ofnew and emerging, potentially disruptive technologies• Clarify what problems you’re trying to fix first, then identify thepotential solutions• Do not necessarily, make public cloud your default position• Due diligence is the weapon of choice in the fight againstfuture systemic risks.What next?
  28. 28. W: www.rob-livingstone.comE: rob@rob-livingstone.comP: +61 2 8005 1972M: +61 419 632 673F: +61 2 9879 5004Tw: @rladvisoryROB LIVINGSTONE- Fellow, University of Technology, Sydney- Principal, Rob Livingstone Advisory Pty LtdThankYou!© All rights reserved. Rob Livingstone Advisory Pty Ltd. Unauthorized redistribution prohibitedwithout prior approval. ‘Navigating through the Cloud’ and ‘Success is our story, let’s make ityours’ are Trademarks of Rob Livingstone Advisory Pty Ltd.