Cloud Strategies for Public Sector in Central and Eastern Europe

Transcription

1 Technology, Media and TelEcommunications Cloud Strategies for Public Sector in Central and Eastern Europe kpmg.com/cee KPMG in Central and Eastern Europe

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3 Table of Contents Foreword 4 Introduction 6 1. What is Cloud Computing? 8 Introduction and Basic Definitions 2. Benefits of Using Cloud Computing Services Aspects Related to the Use of Cloud 30 Computing Services in Public Administration 4. Examples of Measures Aimed at Implementing 40 Cloud Computing Services in Public Administration for Selected Countries 5. Main Risk Areas Related to the Use of Cloud 52 Computing in the Public Sector 6. Research Surrounding Cloud Computing 56 Trends in Central and Eastern Europe (CEE) 7. Main Conclusions for Public Administration 78 Concerning the Implementation of Cloud Computing Appendix 1: 86 Case Studies: Use of Cloud Computing Services in Public Administration Bibliography 96 Acknowledgements 99

4 4 Cloud Strategies for Public Sector in Central and Eastern Europe Foreword 2013 KPMG Central and Eastern Europe Ltd., a limited liability company and a member firm of the KPMG network of independent member firms

5 Cloud Strategies for Public Sector in Central and Eastern Europe 5 The concept of cloud computing, where various IT resources including processing, data storage, applications, etc. are available via the Internet network, has revolutionized the approach to the implementation of IT functions for consumers, business and public administration. Member firms across KPMG s global network have been closely monitoring the impact of cloud computing on the business world, publishing a number of global thought leadership reports on this subject. The Lisbon Agenda outlined challenging goals for public administration across the European Union for providing various e-government services via electronic channels, for both private citizens and business entities. The current economic crisis in Europe has impacted the budgets of all the EU member states, and clearly governments are less able to allocate significant financial resources towards building up IT solutions for e-government platforms, as well as electronic service platforms for local authorities and other public organizations. Therefore, cloud computing should be considered as a very attractive strategy for the development of modern digital public administration, considering its cost efficiency. Cloud solutions can be implemented at much lower Captital Expenditure (CAPEX) rates, and following their integration, administrative agencies would only be paying for those resources they require. Cloud computing can significantly eliminate issues faced by all IT departments, at both central and local authorities, associated with capacity, purchasing, and maintenance of an IT infrastructure or data processing center. However, the application of a cloud solution requires a significant change in the perception of the overall IT strategy and its role in the functioning of public administration. In addition, one has to remember that the cloud approach stimulates innovations that drive business, administration and social developments. Therefore, we believe that governments throughout Central and Eastern Europe (CEE) should take note of the experiences that business and public administration have had with cloud solutions, in order to define their national public cloud strategies.

6 6 Cloud Strategies for Public Sector in Central and Eastern Europe Introduction 2013 KPMG Central and Eastern Europe Ltd., a limited liability company and a member firm of the KPMG network of independent member firms

7 Cloud Strategies for Public Sector in Central and Eastern Europe 7 Cloud computing could fundamentally change the approach organizations, both public and commercial, take in how they utilize their IT resources. It may also change the way in which organizations operate and communicate with the outside world. Perceptions surrounding cloud computing have started to change from a method enabling cost reduction to a solution stimulating innovation and considerably improving an organization s efficiency. At the moment, most public organizations purchase and own IT software and hardware, which is and will continue to be a considerable capital expenditure. Cloud computing enables such organizations to access resources that could be needed at any given time, significantly eliminating issues associated with capacity, purchasing, and maintenance of an IT infrastructure or data processing centers. In order to reap all the benefits related to transition to a cloud computing-based solution, however, requires a change in the perception of the IT role in the functioning of public administration. Capitalizing upon the opportunities that cloud computing offers appears particularly important for public administration due to: the complexity and scale of the organization, organizational distribution, potential IT resources redundancy and duplication of IT functions, as well as the need for greater cooperation and information exchange between individual public administration units. Within the context outlined above, the first section of this paper is an attempt to define cloud computing, identify cloud service delivery models and their features. Subsequent sections of the report focus on the benefits of using cloud computing, primarily contrasting this approach with the traditional model of provisioning IT resources. Aside from focusing on the benefits, the report describes the risks associated with migration to the cloud. The document also contains a selection of case studies from various public administration units in other countries using cloud computing, as well as analysis of several foreign government cloud computing strategies. In addition to case studies from other countries, this paper presents an overview of cloud computing in public administration units within Central and Eastern Europe (CEE), presents the current status of implementation in CEE as well as the region s approach to the cloud. The last section of the document contains general recommendations concerning the approach to implementing cloud computing and developing a strategy for this area based on the analysis and experience gained by KPMG s Technology, Media and Telecommunications Industry practice.

8 8 Cloud Strategies for Public Sector in Central and Eastern Europe 1 What is Cloud Computing? Introduction and Basic Definitions

9 Cloud Strategies for Public Sector in Central and Eastern Europe 9 At present, there is no single definition for cloud computing. What unites the definition, currently used by the market, is several similar and key characteristic of cloud computing such as: network access, resource pooling, flexible resource allocation and release. What differentiates cloud computing services is the fact that they can be provided as support for the organization s IT infrastructure as well as that of an external provider/supplier. Depending on the type and extent of resources made available by the service provider, there are three models of cloud computing: Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS). Cloud computing solutions, depending on the organization s specific needs, enable in sharing IT resources within the organization (also known as the private cloud) or sharing IT resources between different, independent organizations (also known as the public cloud). Definitions of cloud computing One of the organizations that has developed their own definition of cloud computing services is the American National Institute of Standards and Technology (NIST), which describes cloud computing as: a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g. networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. A similar definition is given by Gartner Inc. (referred hereafter as Gartner), who defines cloud computing as: a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service [to external customers] using Internet technologies. The entire IT infrastructure, made available to the user by a service provider through Internet connections, is commonly referred to as the cloud. The cloud architecture consists of a network of IT-related resources including: servers, mass storage devices, operating systems, software, etc.

10 10 Cloud Strategies for Public Sector in Central and Eastern Europe Figure 1.1: On-premises computing vs. Cloud Computing model On-premises Cloud computing CUSTOMER CUSTOMER Users Users IT services Hardware, Software and Data VENDOR Licences and support cost Internet IT services VENDOR Hardware, Software and Data Subscription pay-as-you-go The essence of the cloud computing model is to ensure access, by the service provider, to a pool of IT resources that can be dynamically allocated and made available to users via the Internet. The user can request or free up resources depending on the client s actual demand. The actual resource consumption such as consumed computing power units, the size of used disk space, together with actual time for which resources have been reserved for, are the basis for calculating the fee for the service.

11 Cloud Strategies for Public Sector in Central and Eastern Europe 11 Characteristics of cloud computing services At the present stage of development, an integral part of the cloud computing definition refers to the essential characteristics of this solution. Both the NIST and Gartner list five essential characteristics of cloud computing services, as shown in the diagram below. Figure 1.2: Characteristics of cloud computing services On-demand self-service Rapid elasticity Characteristics of cloud computing services Broad network access Resource pooling Measured service On demand self-service Resources are made available to the user from lean or fat platforms via the Internet. Broad network access Resources are made available to the user from lean or fat platforms via the Internet. Resource pooling Cloud resources can be pooled and made available to share between multiple users; the user may have no knowledge or control over the exact location of the provided resources. Elasticity Resources can be virtually assigned and reassigned to best fit the actual user needs; from the user s perspective, resources, made available by the service provider, appear to be unlimited and tailored to the user s needs. Measurability (pay-as-you-go) Resource use is automatically controlled. The cost of the service depends on: the type of resource (e.g. virtual mass storage, virtual machine), the size of the resources used, and the time the resources were used for (reserved), rather than the physical infrastructure.

12 12 Cloud Strategies for Public Sector in Central and Eastern Europe Types of cloud computing service delivery models There are four basic deployment models of services in the cloud private cloud, public cloud, community cloud, and hybrid cloud. Private cloud Cloud resources are provisioned for exclusive use by a single organization. The cloud infrastructure can be owned, managed, and operated by internal units of the organization or by an external provider. Responsibility for these activities can also be divided among the parties. Cloud resources can be located on or off the premises of the organization. Figure 1.3: Private cloud models Internal cloud Private cloud Organization A Organization A Organization B Organization C IT services IT services IT services IT services Internet Internet Internet Internet User A s internal IT assets VENDOR IT IT IT IT affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

13 Cloud Strategies for Public Sector in Central and Eastern Europe 13 Public cloud Cloud resources are provisioned for open use to the general public (i.e. anyone who has access to the Internet can request resources they need from the resource pool provided by the service provider). Public cloud resources can be owned, managed, and operated by external commercial, governmental or academic organizations; responsibility for these activities can also be divided among the identified parties. Public cloud resources are always located on the premises of the cloud computing service provider. Figure 1.4: Public cloud model Public cloud Organization A Organization B Organization C IT services IT services IT services Internet VENDOR IT

14 14 Cloud Strategies for Public Sector in Central and Eastern Europe Community cloud IT resources are provided for exclusive use by a specific, clearly defined community of users. These users have similar requirements (e.g. in regards to security, procedure, etc.). Community cloud resources can be owned, managed, and operated by one of the organizations that make up the community or by an external service provider. Responsibility for these activities can also be divided among the parties. Community cloud resources can be located on the premises of a member or members of the community or on the premises of the external service provider. Figure 1.5: Community cloud model Community cloud Community of users Organization A Organization B Organization C IT services IT services IT services Internet Internal/external service provider IT

15 Cloud Strategies for Public Sector in Central and Eastern Europe 15 Hybrid cloud Hybrid cloud resources are a combination of two or more individual types of clouds (i.e. private, public, or community), which remain separate entities, but are bound together through standards or proprietary technology that enables data and application portability between clouds. Figure 1.6: Hybrid cloud models Hybrid cloud Organization A Organization IT services IT services Internet Internet IT resources dedicated to the community IT IT IT Private cloud Public cloud Types of service models Typically, there are three basic models of cloud computing services. The distinction between these service models is based on the type of cloud s IT resources provided and managed by the service provider, while defining the user s scope of freedom to determine the method and purpose for using the resources. The models are: Infrastructure as a Service (IaaS) Platform as a Service (PaaS) Software as a Service (SaaS) The figure below shows the differences between the cloud computing service models by indicating the division of control over IT resources between the service provider and the user.

16 16 Cloud Strategies for Public Sector in Central and Eastern Europe Figure 1.7: Division of control for particular IT resources between the service provider and the user in different types of cloud computing models IaaS PaaS SaaS On premise Infrastructure as a Service Platform as a Service Software as a Service VENDOR S CONTROL DATACENTER DATACENTER DATACENTER DATACENTER IT resources under vendor s control NETWORK AND FIREWALL NETWORK AND FIREWALL NETWORK AND FIREWALL NETWORK AND FIREWALL VIRTUALIZATION VIRTUALIZATION VIRTUALIZATION VIRTUALIZATION OPERATING SYSTEM PROGRAMING ENVIRONMENT OPERATING SYSTEM PROGRAMING ENVIRONMENT OPERATING SYSTEM PROGRAMING ENVIRONMENT OPERATING SYSTEM PROGRAMING ENVIRONMENT IT resources under user s control APPLICATIONS DATA APPLICATIONS DATA APPLICATIONS DATA APPLICATIONS DATA INTERFACE INTERFACE INTERFACE INTERFACE HUMAN RESROURCES HUMAN RESROURCES HUMAN RESROURCES HUMAN RESROURCES USER S CONTROL Infrastructure as a Service (IaaS) Under this model the user gains access to computing power, storage, networks, and other fundamental computing resources. Through the use of these resources, the user can run their necessary software, which can include an operating system or applications. The user cannot manage the cloud resources made available, but has control over the operating system and installed by user applications. The user also has limited control over selected networking components such as host firewalls. Platform as a Service (PaaS) Here, the user has access to infrastructure resources, on which the user can run or develop their own applications using programing languages, libraries, services, and tools provided by the service provider. The user cannot control or manage cloud resources, i.e. network, servers, operating systems or mass storage, which are resources made available to the user. Control is limited to the applications developed by the user. The user also has the ability to configure the environment in which the application runs.

17 Cloud Strategies for Public Sector in Central and Eastern Europe 17 Software as a Service (SaaS) In this model the user uses applications provided by the service provider. The applications run on the provider s IT resources. Access to such applications is made available through a range of web-based tools (e.g. application available through a web browser) or via a program interface. The user cannot control or manage cloud resources such as the network, servers, operating systems, mass storage, or even individual applications, with the possible exception of some configuration settings on the shared application. The previously described three service models are widely used with respect to cloud computing services. However, the rapid development in this area has resulted in the emergence of other new services, which are derived from the already described model types and also provided in the as a Service model. The following can be used as examples of these new services: Software + Services (S+S) This is a modification to the SaaS model. Unlike the typical SaaS, S+S allows the user to use a shared application offline, i.e. the user has the option to install the software onto their computer. Business Process as a Service (BPaaS) This is another modification of the SaaS model. Within BPaaS, the end-user is provided with an application adapted to the needs of realizing business processes. As a general rule, the service is built on the BPO (Business Process Outsourcing) model, which, in essence, transfers certain functions or business processes taking place within the organization to a third party. Unified Communication as a Service (UCaaS) Similar to the above mentioned services, UCaaS is also based on the SaaS model. Within UCaaS, unified communication is provided based on the service provider s cloud resources.

18 18 Cloud Strategies for Public Sector in Central and Eastern Europe 2 Benefits of Using Cloud Computing Services

19 Cloud Strategies for Public Sector in Central and Eastern Europe 19 Using cloud computing services means not only a change in providing the necessary IT infrastructure and functionalities, but also a change in the way the entire organization functions. Cloud services impact the manner of execution and run-time for IT system-based processes. Organizations, using cloud services, can more flexibly and in real-time adjust on an as-needed basis the volume of IT resources and access to them. They can also minimize the time needed to implement new solutions or functionalities. Hardware and IT infrastructure is continuously, dynamically developing, and as such, the latest innovative solutions require a continuous capital commitment, which not all organizations can afford. Using cloud computing services allows organizations to manage IT resources while affecting their cost structure (capital expenditures vs. operating costs). Various governments, which have developed and implemented cloud computing strategies, reported achieving significant benefits. The UK s government estimates the potential benefits, from only G-Cloud & Application Store, to reach approximately GPB 180 million by The US government s strategy strongly emphasizes the positive impact of cloud computing, e.g. performance, efficiency and innovation. Indicators of the typical benefits and advantages of cloud computing Implementing a cloud computing model allows for a potential increase in an organization s operational efficiency. When compared to the traditional model of using IT services, cloud computing can significantly reduce costs, i.e. lowering investment expenditures in the IT infrastructure and the costs associated with its maintenance and expansion. Moreover, implementing this solution allows for the achievement of a number of business benefits that are difficult to quantify, but which are very important, as they contribute to improving the organization s efficiency and increasing the service levels provided by it. Figure 2.1: Increase in the operational efficiency Increase in the operational efficiency Changes in the organization Cost optimalization

20 20 Cloud Strategies for Public Sector in Central and Eastern Europe Benefits attributed to changes in the organization are often difficult to quantify, but may have a significant impact on the achievement of results desired by the organization. Among these benefits is minimizing downtime, i.e. lack of access to solutions and systems in the organization. Usually, this is a result of ongoing work related to repairs, hardware infrastructure maintenance, or software updates. Other benefits worthy of mention are better fulfillment of the organization s mission, quicker turnaround in offering new solutions to customers, greater enhancement of service standards, and increasing customer satisfaction, as well as increasing an organization s efficiency. Cost optimization is mainly due to the possibility of limiting investment in hardware infrastructure and software licenses and the ability to reduce the required human resources in IT. This is due to the fact that the organization does not have to invest in its own IT infrastructure, but uses it in the service model, and does not need to constantly have the infrastructure changed to handle the maximum demand. In the cloud computing model, costs are proportional to the actual needs, i.e. in accordance with actual use. Changes in the organization In the event that an organization starts using cloud computing services, the end-user is a beneficiary of the changes that occur. Some of these changes may not always be quantified, but they certainly contribute to improving the organization. These changes can be grouped into three categories, as depicted below. Figure 2.2: Increase in the operational efficiency through changes in the organization Changes in the organization Changes affecting the use of IT resources Changes affecting the organization s efficiency Changes affecting the organization s image Changes affecting the use of IT resources Better use of IT department s potential Up to 70% of costs generated by organizations IT departments are due to the completion of activities related to resource management. In the case of cloud services, the burden of hardware and, to some degree, software infrastructure management, i.e. ensuring minimal downtime operation, configuration set-up and maintenance, general maintenance and updates, etc. is on the service provider. This allows a shift in the IT department s potential to focus on issues related to the organization s mission and research into innovative services and solutions to be implemented. Access to the latest technologies and the ability to make changes in IT systems without having to take into account the investment cycle Computer hardware and software quickly lose their market value. This is due to the rapid development of information technology e.g. older hardware is replaced by models with higher performance parameters, while the functionalities offered by software are subject to continuous innovation. Purchases for IT infrastructure in the traditional IT service model are

21 Cloud Strategies for Public Sector in Central and Eastern Europe 21 associated with relatively high capital expenditures. Replacing or making major modifications to IT systems before the end of the investment cycle is often not possible. The cloud computing model allows the client greater capability and flexibility in infrastructure management. Service providers make the necessary IT infrastructure updates, taking advantage of economies of scale, and they rationalize the use of resources and the costs of maintaining infrastructure by distributing the burden among clients. Limiting the risk of IT investments as a result of reducing vendor lock-in The traditional IT service model, especially in the context of complex entities with IT resources, is often linked to vendor lock-in. Vendor lock-in is the dependence on products from one provider or technology, and technological and organizational constraints associated with any changes to the provider, such as the high costs of migration to alternative solutions. These are typical situations in the case of the use of a dedicated system/application that has been specifically developed to meet the organization s needs. Very often, any required changes to the system/application can be made only by its provider. Ensuring appropriate service standards provided by cloud service providers, using cloud computing can significantly reduce the risk of dependence on a single vendor and the potential costs associated with changes in solutions. Reducing downtime/lack of system access Implementing a cloud computing model should allow for: reducing the time required to configure and expand IT resources depending on the type of the service, these tasks are partly performed by the provider; eliminating the need to manage the physical elements of the system these tasks are performed by the provider; shortening the service s downtime in the event of an incident providers specializing in cloud services usually have more physical infrastructure resources than a single organization. As a result, they can offer different levels of service quality translating into the minimization of time when service is unavailable; accelerating the procedure related to purchasing and updating the necessary software. In the cloud computing model, these processes require minimal interaction with the vendor. The service provider is also responsible for ensuring the stability of the system, i.e. performing operations related to incident prevention. As a result, the costs associated with any repairs are borne by the service provider. Changes affecting the organization s efficiency Business agility One of the major benefits, which the organization potentially achieves by implementing a cloud computing model, is the elasticity of shared resources. Organizations using cloud computing solutions, in a situation where it becomes necessary to increase the capacity of IT resources, can start using them almost immediately. Expanding an IT system, an often expensive and time-consuming process in the traditional IT resource management model, can prevent the organization from undertaking certain tasks or projects. Using IT resources in the cloud computing model not only allows the organization to take full advantage of all opportunities impacting the development of the organization, but also minimizes the risk of a decreased level of provided services and customer satisfaction.

22 22 Cloud Strategies for Public Sector in Central and Eastern Europe Reducing the use of hardcopy documents Providing services in the cloud reduces or eliminates hardcopy documents and the costs associated with them. Services available in the cloud allow for a large portion of administrative procedures to be handled without having direct contact with another person or duplicating papers between the organization and a client. Applications available in the cloud can submit an electronic request, which may be transmitted electronically at any time during processing to respective representatives of the organization. Access from anywhere in the world Cloud computing enhances the capabilities of end-users e.g. in terms of mobility. Applications and services, offered in the cloud computing model, do not require installation so they can be used via the Internet using a wide range of access devices. Remote access to an organization s resources is potentially possible for both its employees and customers. Facilitating the development of the organization in different locations Using the cloud computing model provides the opportunity to develop the organization in different locations without having to invest in additional IT infrastructure. After connecting to the Internet, a newly-established facility automatically obtains access to necessary resources. Furthermore, the integration of systems implemented in the cloud considerably facilitates the transfer of IT resources in case of the organization s relocation. Changes affecting the organization s image Increasing levels of satisfaction for the organization s end-customer Some organizations cannot afford to invest in the best solutions needed to provide services to their customers. Changes to the cost structure, resulting from the deployment of solutions based on cloud computing, enable access to the required technologies and solutions by organizations with limited investment opportunities. Furthermore, the time required for their implementation can be much shorter, and their reliability at a significantly higher level. These organizations can thereby provide a higher standard of services to their customers; they can better adapt to their needs and, consequently, achieve a higher level of customer satisfaction. Going Green Reducing the demand for power and increasing the use of shared hardware helps to reduce negative impacts on the environment. Reducing greenhouse gas emissions from the production of energy needed to power IT devices and reducing other emissions generated during the production, transportation, and recycling of hardware components, resulting in a lower carbon footprint, a consequence of activities carried out by the organization. Implementing cloud computing solutions allows organizations to build an ecofriendly image, taking into account corporate social responsibility (CSR). Optimization of costs resulting from using cloud computing Implementing a cloud computing model is associated with a significant change in the cost structure of the organization. This type of implementation has an effect on both capital expenditures and operating costs.