Shared Service Cloud Centres: Canada’s Campaign to Cut Waste

The Canadian Federal Government recently announced plans to create a single IT department ‘Shared Services’ that will save $100-200m a year through consolidation-driven efficiencies. As highlighted in this fact sheet there is lots of ‘low hanging fruit’ for cost savings due to a spread of many different email systems, networks and data-centres.

Huge cost savings will be achieved through standardizing on single systems for functions like email, and by reducing the number of data-centres from over 300 to less than 20.

Cloud computing will be the technology that’s key to the success of this initiative. It provides the means to reduce data-centres this way, and Canada is following the lead of the USA where this same approach is being proven successful.

Under the leadership of Vivek Kundra the USA launched a ‘Cloud-first’ procurement policy to lead their own efficiency drive, under the umbrella of President Obama’s overall Campaign to Cut Waste. This was detailed in a ‘25-Point Implementation Plan to Reform Federal IT‘ (40-page PDF).

They’re achieving great progress. As highlighted in this Whitehouse update they’re already closing many data-centres and are on track to save $ 3 BILLION of taxpayer monies. This recent survey by NetApp reported American CIO’s have already reduced data center counts by 31% and saved 20% of their IT budgets based on consolidation thus far.

5-Point Cloud Consolidation Plan

Cloud Computing is the key mechanic for a shared service initiative because in simple terms it is literally a technology for enabling shared services – It provides the means for many different organizations to share the same infrastructure, for purposes of IT and cost efficiencies.

CIO’s can leverage Cloud computing to quickly drive cost savings in 5 key impact areas:

  • Infrastructure consolidation - As the Whitehouse news report highlights the principle challenge is that these vast numbers of data-centres typically only operate at hardware utilization levels as low as 25%, but they still consume all the associated real-estate and power costs. This means that as much as 75% of these costs is indeed wasteful spending, and can be eliminated by migrating the applications to Cloud computing which manages utilization much more efficiently. By doing so many of these data-centres can then be closed.
  • Application maintenance costs - Migrating older applications from their coal-fired hardware on to new Cloud platforms is known as ‘Legacy Modernization’, and it reduces costs in many ways. In addition to the above physical consolidation it can also reduce the staff costs associated with maintaining the applications in these older environments, one of the biggest costs. Migrating many applications into a single Cloud environment reduces the overall support burden for all of them.
  • Shared Services Architecture - These new approaches to designing how applications work in these new environments offers further IT efficiencies. Indeed the ‘Community Cloud’ model is key because it is literally a ‘Shared Services architecture’, meaning that rather than having many agencies each run a seperate and different instance of their own application for the same purpose, they can all instead reuse the same code base. This reduces software costs even further.
  • SaaS contract consolidation - This approach offers an equivalent, very simple and very powerful commercial model. The Government of Canada will find that they have multiple different software licence agreements, with vendors like Microsoft, and by consolidating these all into one will be able to negotiate bigger overall discounts and lower the associated administration costs. Furthermore by moving to Cloud systems they can leverage SaaS contract approaches, which streamline costs into a per-seat, utility model.
  • Integrated Service Delivery - Costs also arise due to other complexities in the IT environment. Every domain like servers, storage, applications and networks each has their own management systems, help desk and support teams, and furthermore even different suppliers each have their own web portals for managing their services. This multitude of service management systems not only creates unnecessary costs but also causes the complexities which hamper quick and efficient service.

In short as large organizations grow over many years they inevitably accumulate excess and unncessary capacities in a variety of areas.

Utilizing Cloud computing and best practices like ITIL to create Shared Service Centres leverages modern technology to achieve the large-scale consolidation required to trim these inefficiencies, simplifying and standardizing processes across infrastructure support areas, reducing costs, raising efficiency and responsiveness, and increases elasticity to handle future changes.

Building Shared Service Cloud Centres is the headline topic of our next webinar – Government Community Cloud.

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