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Public Spending Cuts in the UK To Drive Cloud Computing Adoption

Cloud Industry Froum (CIF) : 23 June, 2010  (Technical Article)
The Cloud Industry Forum has commented on UK government spending cuts and how this will drive innovative approaches in IT including wider adoption of cloud computing technology
Last month, Chancellor of the Exchequer George Osborne announced that the coalition government would be cutting £95 million from public sector IT spending this year. He also implemented a freeze on ICT projects valued at £1 million or more and scrapped Becta, the non-departmental agency tasked with promoting government use of IT.

However, according to Andy Burton, Chairman of the Cloud Industry Forum and Chief Executive of Fasthosts, "IT remains a critical vehicle for the efficient delivery of services to the public. What we are seeing with the immediate reduction announced in May and the subsequent squeeze in the Budget has been to dramatically transform the IT procurement landscape in the public sector."

"Whilst these spending cuts may at first seem concerning for public sector IT chiefs and IT suppliers, we are confident that the advance of Cloud Computing (the delivery of online, secure, scalable and resilient IT services on a pay-as-you-use basis) will be a tremendous enabler to ensure that required IT solutions can still be implemented but without the significant capital costs associated with the more traditional supply models. Local and central government have more technical options available to them today than in years gone by, and as such the thoughtful application of cloud based services offer a credible and affordable way to save costs and scrutinise the ways in which IT is procured and delivered. There is no doubt that the financial constraints imposed today will give added impetus to the adoption of Cloud based computing services."

"The role of the Cloud will be crucial where departments that either don't have solutions in place yet, or need to upgrade their infrastructure, will need to make decisions on the basis of what will drive efficiency and optimise their IT expenditure," he continued.

Responsibility for government IT procurement has also been moved from the Treasury to the Cabinet Office as part of a shake up of UK IT spending.

Three senior UK business leaders will be involved in the running of this new group. They are Tate & Lyle chairman Sir Peter Gershon, Tesco executive director Lucy Neville-Rolfe and Dr Martin Read, a non-executive director for insurer Lloyd's. Read was in charge of a 2008/2009 review into government back office and IT operations.

Cabinet Office minister Francis Maude MP in a statement last month said: 'We want a slim but strong centre that can drive down the cost of government, so protecting as best we can the crucial front line services on which our citizens depend. By taking this really tough stance on inefficiency and waste, we can tackle Britain's massive budget deficit and bring order back to the country's finances, whilst protecting vital frontline services.'

Last year, public sector IT analysts Kable estimated that the total government IT spend for the 2008/2009 fiscal year was £17 billion.

Andy Burton continued: "According to recent findings by IDC, Cloud IT services are currently worth £10.7bn globally and is estimated to grow to around £27bn by 2013. These are staggering predictions and something for the industry and general UK economy to be excited about.

"The economic and innovation implications that arise as a consequence of the Budget are profound for both private sector businesses and public sector organisations looking to deliver a world-class agile and secure infrastructure without the capital expenditure traditionally required. In a nutshell that means cost-savings and greater efficiency, and that in turn will drive Cloud adoption," he concluded.
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