Public-Sector Procurement and the Cloud

by Michael Koploy on 2012-02-20

Cloud-based, software as a service (SaaS) programs are becoming increasingly popular within the private sector. But what about in the public sector? The security and data ownership concerns within these groups are much higher than their private-sector counterparts, and the idea of hosting information “in the sky” has held adoption back for many of these groups.

To check-in on the state of the Cloud within the public sector, I reached out to eGovernment and Government IT expert Alan Webber, Principal Analyst at Altimeter Group. Webber believed that the concerns of security, data ownership and control were all very real, but cost is one of the deciding factors within the public sector. Eventually, these groups will warm up to the idea of hosting solutions in the Cloud, it'll just take some time for decision-makers to feel confident the infrastructure is reliable and secure.

One of the busiest areas within the public sector is procurement and sourcing of both raw materials and government contracts. There is a large potential for cost-savings if public-sector groups adopt Cloud-based procurement systems that can streamline the process and expedite sourcing.

There are a few signs that the public procurement is warming up to the cloud. Mary Scott Nabers, a public procurement specialist from Austin, Texas told me that the rise of public-private partnerships (P3s) is creating a new opportunity for the adoption of enterprise systems in the Cloud. Additionally, she noted that there have been instances of municipal and federal groups banding together to purchase software systems (e.g., a school district purchasing a Cloud-based purchasing system rather than deploying multiple systems on-premise).

I feel that there are two things that vendors can do to make their offerings more enticing in the Cloud:

1. Focus on private Clouds. This will allow government groups to have more ownership of the network infrastructure, while still enjoying the other benefits that the Cloud allows (more accessibility, cheaper cost, etc).

2. Specialize offerings for the public sector. Vendors should focus on adding functionality to their Cloud-based procurement offerings that assist public-sector groups streamline and better manage the highly-regulated nature of public-sector procurement.

Do you think that public-sector procurement is ready to embrace the Cloud? Please drop me a note at michael@softwareadvice.com or help contribute to the discussion at: State of the Union: Public Sector and the Cloud.