Can Public-Sector Procurement Reach the Clouds?

Can Public-Sector Procurement Reach the Clouds?
Michael Koploy is an ERP Analyst for Software Advice -- an online resource for business software reviews and comparisons. Michael focuses on news and trends impacting retailers and the supply chain. Michael is located in his hometown of Austin, Texas, where he grew up and went to the University of Texas.

Cloud applications are continuing to gain prominence with both enterprise and consumer-users. The US public sector, however, is an area where the Cloud has not been equally embraced.

Take into account high-profile Cloud failures, such as the LAPD abandoning its Google Apps deployment back in December, and it may seem like the public sector just isn’t ready for the Cloud yet.

Why is that? I got in touch with Alan Webber, Principal Analyst with Altimeter Group to get his thoughts on the state of the Cloud within the public sector. Webber agrees that government groups aren’t quite ready for the Cloud–data ownership, control and security are all very real issues to government IT decision-makers.

What unifies many of these public-sector groups is their lack of funds. Many are on strict budgets and, oftentimes, new technology solutions don’t fit into that. The greatest potential impact for the Cloud in the public sector may be in terms of cost-savings, thanks to the software-as-a-service (SaaS), subscription-based business models.

“Considering the current economic situations that public-sector groups are in, [cost is] the number one decision criterion these days,” says Webber. Webber points out that data stored anywhere–be it in the Cloud or via on-premise servers–can be involuntarily accessed.

One of the most exciting activities within the public sector is with both direct (e.g., raw materials) and indirect (e.g., government contracts) procurement. As government groups looks to cut costs across the board and reduce IT spend, one way they can do this is by deploying Cloud-based solutions.

There are two major trends happening today that can impact the prevalence of Cloud-based solutions within public-sector procurement. The first of which is the increasing prevalence of public-private partnerships, or P3s. These groups will need new software solutions, and the monthly subscription-based Cloud solutions will be particularly attractive. Secondly, it is becoming more commonplace for both municipal and federal groups of similar needs to adopt Cloud-based solutions together. An example of this is with school districts moving to a unified Cloud-based solution, rather than individual on-premise roll outs.

What can Cloud-based procurement vendors to do make their offerings more attractive to the public sector? For one thing, they can ensure that their products are specialized for the public sector, and not re-branded versions of their private-sector offerings. These products should take into account the peculiarities and idiosyncrasies of sourcing and procurement in the public sector. Additionally, Webber notes that a “private Cloud,” where the user maintains control of the architecture but keeps the accessibility and usability benefits of the Cloud, may be an attractive option for many public-sector groups.

I’ve gone into more detail on this discussion over on my site, so please drop a note on the original article–State of the Union: Public Sector and the Cloud–or contact me directly at

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