Government shared services could fall to cloud

Gartner finds ‘marked increase’ in cloud adoption plans.

Global government organisations may turn away from traditional shared services arrangements to new models like cloud computing and stronger supplier partnerships this year, Gartner predicts.

The analyst firm surveyed 213 IT executives from national, state and local government organisations in the US, Europe and Asia Pacific for its Government IT Sourcing Survey Highlights 2012 report, released this month.

Analyst Massimiliano Claps identified a “marked increase” in government IT executives who expected to adopt cloud computing services within the year, despite concerns over privacy, security, data location, and the maturity of solutions.

National governments were particularly bullish, with 41 percent planning to consume software from the cloud, or as part of an “anything-as-a-service” offering this year, compared to 27 percent in 2011.

Claps said shared services arrangements may lose favour among government organisations due to “governance challenges” and emerging competition from the cloud.

Certain national governments that adopted shared services achieved “less than satisfactory results”, he said.

Australian state governments have recently come under fire for troubled shared services arrangements, with Queensland and Western Australia forced to overhaul their models in the past 18 months.

NSW Finance Minister Greg Pearce last week told the Australian Financial Review that the state would also consider scrapping at least two of its shared services organisations, including BusinessLink and ServiceFirst, which both offer business and ICT services.

“It is a legacy of the previous Government that there is more than one shared service provider,” Pearce told iTnews on Thursday.

“Reform programs across the world have shown that there is no ideal number. The important thing is that we learn from past mistakes of previous governments and industry in implementing reforms and harnessing new technologies in NSW.”

Although Pearce said the NSW government hoped to use cloud computing to “[deliver] shared services more efficiently”, Gartner’s Claps said shared services may be displaced by the public cloud altogether.

“[Shared services] risk being displaced by public cloud computing offerings that offer lower total cost of ownership and allow much leaner end-user choice,” Claps said.

Claps said governments should not make purchasing decisions on cost reductions alone, urging organisations to work towards enticing suppliers to come up with innovative approaches that reduce cost and time to delivery, and fill competency gaps.

He argued for cultivating supplier relationships that were more “active, ongoing and visible”, echoing comments made earlier this year by Greg Farr, chief information officer of Australia’s Department of Defence.

Claps called for “a broadly based culture of stewardship and partnership” between government IT executives and suppliers to achieve better outcomes.

“Otherwise, conflicting client-supplier relationships focused only on contract compliance bear a higher risk of not delivering value for money,” he warned.