Cloud and the future of Unemployment Sean Rhody, CTO Capgemini Government Solutions

Cloud and the future of Unemployment Sean Rhody, CTO Capgemini Government Solutions

Agenda Current State Frustrations Evolving Tax Solutions PaaS, SaaS, IaaS and you Changing the Model Q&A 1

Current State Frustrations Feet on the ground, eyes in the cloud 2

Where Are we today Transitioning from aging (COBOL) legacy systems Last decade has seen movement towards modular, best of breed systems Still saddled with the cost of infrastructure Power, Ping, Pipe and costs of data center resources Yearly licensing costs (22% per year = buying the license twice in 5 years time) Frequent major upgrades - the #1 major source of outages is change Pent up demand among citizens and employees I want to file from my Tablet / Phone / Starbucks Role is more IT Provider than Constituent Services And we hear that things are all rainbows and unicorns in the cloud

A Modular Tax Architecture

Cloud Computing Cloud Computing Services Five Main Characteristics: On-Demand Services they are available to use almost instantly when they are required Broad Network Access they are accessed using ordinary network connections, often already available Resource Pooling Multiple pieces of hardware can appear as one and more than one instance can run on a single piece of hardware Rapid Elasticity If more capacity is needed, this is seamlessly and quickly made available Measured Services Usage of these services is accurately metered, allowing you to pay only for what you use These services can be delivered at an Infrastructure (IaaS), Platform (Paas) or Software (SaaS) level. Services can be publically shared, private or a hybrid of the two. Typical Adopters Fast Moving Environment Likes to Experiment with New Business Solutions Variable Cost Model What Cloud can Deliver 10-50% Reduction in TCO Costs 50% Reduction in Power Costs 75% Reduction in Space Improved Carbon Footprint

Cloud Value Proposition Versus On Premise Solutions Speed to Value On Demand Capacity Proven Application Templates Rapid Delivery of Services Ability To Adapt, Scale and Contract Solutions Based on Business Needs Business Agility SLAs Match the Solution to the Business Dramatically Reduce Procurement Lead Times Minimize Integration Impact Respond to Changing Market Conditions Cost Reduction Elimination of CAPEX Greatly Reduce Operation Costs Automating and Scripting Services Based on Application Attributes Shared Allocation of Management and Operations Reliability and Privacy Highly Available, Resilient and Redundant Infrastructure Agile Right Size Provisioning 24 x 7 Operations Dedicated and Shared Options Single Integrated Experience Customized Solution Orchestration Optimizing the Application and Infrastructure End to End Solution Management Single Source Environment to Simplify the Solution Common Look and Feel

6 Main Benefits of Cloud Computing Trade Capital Expense for Variable Expense Lower Variable Expense Than States Can Do Themselves Increase Speed and Agility Increase Innovation When Experimentation is Fast and Low Risk Stop Spending Money On Undifferentiated Heavy Lifting Go Global in Minutes Deploy

Cloud Example (IaaS) -The Amazon Services Stack Management & Administration Web Interface Identity and Access Deployment & Automation Monitoring Console IAM Federation Billing Beanstalk CloudFormation CloudWatch Application Platform CDN Messaging Search Distributed Computing Libraries and SDKs CloudFront SES SNS SQS CloudSearch EMR SWF Compute Storage Networking Database Foundation EC2 EBS S3 ELB Route 53 VPC RDS Dynamo ElastiCache SimpleDB Regions Availability Zones Edge Locations AWS Global Infrastructure

AWS Regions and Availability Zones Customer Decides Where Applications and Data Reside

Evolving Tax Solutions Monolith to Modular

Understanding Cloud via Pizza

Translating Pizza to Taxation Portal Portal Portal Portal Filings Filings Filings Filings Appeals Appeals Appeals Appeals Doc Mgmt Doc Mgmt Doc Mgmt Doc Mgmt OS OS OS OS VM VM VM VM HW HW HW HW Network Network Network Network DC Services DC Services DC Services DC Services Traditional IaaS PaaS SaaS 12

And a consortium is something else again State 1 Taxpayer Portal 1 Applications State 2 Taxpayer Portal 2 Applications State 1 Taxpayer State 2 Taxpayer State 3 Taxpayer Portal Applications Data Data Data 13

Common Concerns Losing control of the data Who can now see it Is it protected Is it encrypted How can I take it back (Reversal) WHERE in the world is my data Staffing Concerns (what do I do with my team) Access Maintaining control over who can do what Disaster Recovery Damages loss of revenue vs cloud model Consortium Woes My State is different Is my data mixed in with theirs Who s really running that Where is it 14

PaaS, SaaS, IaaS and you

Revisiting IaaS, PaaS and SaaS Portal Portal Portal Portal Filings Filings Filings Filings Appeals Appeals Appeals Appeals Doc Mgmt Doc Mgmt Doc Mgmt Doc Mgmt OS OS OS OS VM VM VM VM HW HW HW HW Network Network Network Network DC Services DC Services DC Services DC Services Traditional IaaS PaaS SaaS 16

Examining the options Attributes Premise Modular Hybrid Cloud Consortium Multi-State Strategy Pricing Models N N N Y/N Y Traditional Traditional Mixed Utility Utility / Fee per Transaction Licensing Y Y Y/N Y/N N Support Staff Y Y Y N N TCO High High Mod Low Low Platform (infra) Required Flexible Architecture Y Y Y N N N Y Y Y NA Models None None IaaS IaaS, PaaS SaaS 17

Changing the Model CapEx to OpEx to Transactional

Pricing Elements Attributes Premise Modular Hybrid Cloud Consortium Hardware Y Y Y/N N N Software $$$ $$$ $$ $ $* Virtualization N Y/N Y/N Y Y / NA Support Staff Y Y Y N N Physical Plant Disaster Recovery Y Y Y N N Y Y Y / N N N Licensing $$$ $$$ $$ $ / NA NA Major Upgrade Costs $$$ $$$ $$$ $ / NA NA 19

Buying Services: CapEx to OpEx to Transactional Pros & Cons CapEx (Traditional) Pros Controlled environments (hw / sw) Data is safe Well known model Cons Requires repeated funding Requires Physical assets that age Requires Staff Invites excess capacity (poorly used assets) OpEx (IaaS, PaaS) No Capital Expenses (hw/ sw/maint) Operational Cost is much lower Costs based on usage, may provide greater savings No long term vendor lock in Unbounded costs based on consumption rather than assets, an unfamiliar model Providers take limited liability Data is stored outside State custody Recovery of data at termination may be challenging Transactional (SaaS) Fee per transaction model (e.g. - $X / form submitted) Well known costs (fee structure times # of taxpayers) No vendor lock in Unclear if vendors will adopt this model Complex to implicate for adjudications, case management due to lack of predictability, interactions You get what you get very limited customization 20

Other Considerations: NIST Reference Architecture (SP500-292) 21

Some NIST Model Considerations Do you need an Auditor You are the Cloud Consumer Are you the Cloud Service Management The Broker provides best value, not necessarily best price Broker takes on Risk the CSPs won t An SLA is only good if ALL parties participate Who owns the contracts and what are the benefits to it not being you Does this add any value to Taxation 22

Points to Consider What to do about existing assets and staff Can you move your existing system to the cloud What will that mean? Is the system ready? How will you manage it? Can you switch to an OpEx or Transaction model Can you make the move from a legal perspective Will you use a broker to get best value How will you define best value Do all levels understand the implications of OpEx / Transactional Can you adopt the Cloud Model and endure the loss of control 23

Closing thoughts and Q&A Cloud has the ability to reduce the costs of taxation systems Cost can be transferred from CapEx to OpEx or even to transaction Lower costs add perceived risks (ownership, privacy, SLA) NIST model may lead to best of breed cloud based taxation, supported by modular architecture In the Cloud, Vanilla tastes good extreme customization is the antithesis of lower cost. 24

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