Exploring the opportunities and pitfalls of Cloud Computing in Australian local government - Municipal Association of Victoria Forum - 23 April 2013

1. Exploring the opportunities and
pitfalls of Cloud Computing in
Australian local government
Municipal Association of Victoria Forum
Spring Street Conference Centre
Tuesday 23rd
April 2013
© All rights reserved. Rob Livingstone Advisory Pty Ltd. Unauthorized redistribution prohibited
without prior approval. ‘Navigating through the Cloud’ and ‘Success is our story, let’s make it
yours’ are Trademarks of Rob Livingstone Advisory Pty Ltd.

2. Agenda

3. A perspective on Cloud

4. The most sensible Definition of
Cloud:
“Forget your technical definition of the
Cloud, ask your mom what the Cloud
is….
…and what your mother will tell you
about the Cloud is that it means it’s
not on my computer.”*
* Navigating through the Cloud Podcast Episode 23 in iTunes . Interviewed Dave Asprey – Global VP, Cloud Security, Trend Micro
Flickr.com
A Perspective on Cloud

5. Cloud-like Outsourcing:
If you sign a standard outsourcing contract with an
outsourcing vendor that has Cloud-like pricing (pay-as-
you-go) and Cloud-like capabilities and whether or not it’s
Cloud is largely a matter of opinion.
A Perspective on Cloud

6. The Public Cloud security and risk paradox
• One of the fundamental benefits of public cloud is the
removal of IT complexity.
• It’s invisible to the end user.
• Paradoxically, this presents those organisations
concerned about IT security, risk and governance with
a challenge because lack of visibility of what’s ‘under
the covers’ may present unacceptable risks if fully
disclosed and understood.
A Perspective on Cloud

7. The 4 flavours of cloud computing – basic attributes
Public
• No control
• No ownership
• You own data
• Apps stay behind
• You control all
• You may own
• You define
architecture
• You determine
your own security
position
• Combination of 2
or more models
• Can be more
complex
• Need to manage
interfaces,
integration
Private Hybrid Community
• Multiple agencies
share same private
cloud infrastructure
A Perspective on Cloud

8. The 3 key ‘classic’ Ingredients of Cloud
• You’re counting on SaaS vendor in order
to provide all the multi-tenancy for your
data.
• You hope they’ve written their applications
well, secure their databases, and so on ….
• You’re sharing the database with everyone
else.
A Perspective on Cloud

9. Hybrid will be the dominant form in the enterprise
“Within five years, it will be primarily deployed by
enterprises working in a hybrid mode”. - Gartner
Gartner "Predicts 2012:
Cloud Computing Is Becoming a Reality”
(Published: 8 December 2011 ID:G00226103)
A Perspective on Cloud

10. A Perspective on Cloud
POTENTAL TO …….
Create VALUE Lower COST
Hi Limited
Med Limited
Lo Limited

11. A Perspective on Cloud
POTENTAL TO …….
Create VALUE Lower COST
Hi Limited
Med Limited
Lo Limited
You can only reduce your cost to zero,
but transformational value is not capped

12. Inherent Risk Relationship with Cloud
Service Delivery and Deployment Models
http://www.coso.org
A Perspective on Cloud
COSO …..
“…providing
thought leadership
through the
development of
frameworks and
guidance on
enterprise risk
management,
internal control
and fraud
deterrence.”
http://tiny.cc/lwjqvw

13. Context

14. http://info.publicintelligence.net/GlobalTrends2030.pdf
December 2012
Context: Global influences

15. • Potential for cross-organisational collaboration to achieve joint
outcomes using cloud technologies a now reality.
– Question is, what is the appetite for a change from the organisational
perspective.
• The opportunities for LGs to maximise the upside potential of
disruptive, new and emerging technologies exists – will,
however require a coherent and deliberate ‘umbrella’ IT
strategy
• Fragmentation of existing IT systems, technologies & related
services across LG agencies contributes to duplication of
effort.
Context: Government
(Not in order of importance)

16. • Limited budget and resourcing at LG level to take on major IT
change.
• State and Federal Governments collaboration sits astride an
active fault-line with occasional earthquake. A well known
example being healthcare funding.
– Question is: How does this influence LG’s willing and/or capability to
embark on a LG state-wide structural change on how IT is used?
• LG IT is ‘operational’ and has no real funding for innovation
• Technology initiated disruptive change is the norm, and
responding to this volatility with legacy enterprise IT business
model is neither simple or risk free.
Context: Government
(Not in order of importance)

17. • Budgetary pressures, cost cutting, austerity, uncertainty contribute
to increasingly short term thinking and planning across all industries,
whether public, private or Government. (result of GFC and other
factors)
– Appetite and capability for making big, bold changes requiring
long term thinking.
– Innovation, speed, agility not easy
• For LG, shifting away from locally developed, bespoke, non-
integrated legacy IT systems with known cost and risk is not a trivial
exercise.
• Ratepayers are increasingly ‘tech savvy’ and increasingly expect
consumer style technology such as ‘apps’, etc
Context: Government
(Not in order of importance)

18. Context – Challenges facing Local Government
What are the key technology challenges facing LG?
1.Seduction of being spoilt for choice
2.Political reality
3.Governance
4.Standardisation

19. Context – Challenges facing Local Government
Challenge #1: Seduction of being spoilt for choice
•What’s the perceived value of a specific cloud offering, vs. the
actual value.
•Cloud lowers (or can eliminate) the barrier to entry to enterprise IT
systems
•The Cloud market is innovative, volatile and new products and
offerings are appearing on almost a daily basis
•Cloud allows stretched internal LG IT staff to be directed to ‘value
adding’ tasks, not just keeping the lights on.
•‘Pay as you go’ model removes the need for up-front capital
investment which is appealing for organisations that are capital
constrained.
•Real risk of a fragmented, inconsistent array of cloud applications
which are poorly integrated, which could compound the problem
•Showcasing a series of Cloud vendors without understanding the
key organisational drivers or requirements may not be in LG’s best
interests

20. Context – Challenges facing Local Government
Challenge #2: Political reality
•At what level of government should the LG technology strategy sit?
•What influence does LG have to elevate the discussion to the Australian
Local Government of Australia (ALGA) (national) level?
•Balance between local ‘loss of control’ and a coherent, well thought
through ‘umbrella’ IT and technology strategy needs to be struck to:
• Maximise ‘value’
• Maximise collaboration between LG councils.
• Minimise cost (Both short term and TCO)
• Minimise risk (or at least identify the risks & mitigate)
• Minimise risks associated with opportunistic vendor predation
• Develop and relevant vendor management strategy

21. Challenge #3: Governance:
•Map the inventory of legislative, policy or other compliance
mandates to your current and any proposed cloud solutions.
•Public cloud offerings may present a range of challenges to LG in
respect of the various statutes and regulatory mandates (eg:
Privacy using overseas cloud services).
•Recognise that cloud may not eliminate the need for effective IT
governance (eg: change control)
Context – Challenges facing Local Government

22. Challenge #3: Governance:
•Making sense of the myriad of cloud position papers, guidelines etc
across Federal and State governments no small task.
• For LG: Like drinking from a fire hydrant
•Based on the principle of “Here’s the guidelines, then proceed on an
informed basis!”
Context - Government

23. Challenge #4: Standardisation:
•Public cloud is built on the premise of standardisation. Build
once, use many times allows for greater efficiencies, hence
lower cost.
•The challenge lies in ensuring that, over the life of a specific
cloud system’s use, if it cannot be configured to meet a
changing environment (eg new legislation), LG may be forced to
adapt or abandon that cloud system.
•Understand where the real value in the standarisation of so
called, ‘commodity IT services’ using cloud lies. Eg: email, file
and network storage, etc
Context – Challenges facing Local Government

24. • Real opportunities will be identified through the systematic and
deliberate attention to what is possible, rather than looking for a
solution to fix a problem.
• Cloud can lower IT operational costs – but not always!
• Faster delivery of IT projects and related initiatives
• Increasing organisational agility through the configuration of,
rather than development (eg coding) of systems
• Universal access to smart systems using smartphones can be a
gamechanger in delivering services to ratepayers
• Improved coordination between LG services
• Cloud lends itself to pilot project / proof of concept trials for
innovative local initiatives with low penalty costs for failures.
Opportunities

25. Pitfalls
• Lack of clarity over what organisational problem needs solving
by the application of the latest ‘big thing’ in technology
• Fragmented, localised cloud systems could increase the
systemic (not technical) risk to LG
• Vendor predation and/or individual stakeholders ‘opinions’ are
no substitute to good, well informed commercial decision
making on new technologies.
• Adopting cloud without knowing your exit or ‘transition-out’
strategy at the start
• Inappropriate pre-purchase due diligence leading to real
problems
• Lack of visibility of total cost of ownership
• Legal and jurisdictional issues associated with overseas cloud
providers

26. • Integrating cloud systems with any others can be costly & complex
• Security – You are at the mercy of the provider’s standards
• Business Continuity
• Identity Management
• Forensics
• Contractual complexity
….. To name but a few
Pitfalls

27. • Recognise that Cloud computing is only one of a number of
new and emerging, potentially disruptive technologies
• Clarify what problems you’re trying to fix first, then identify the
potential solutions
• Do not necessarily, make public cloud your default position
• Due diligence is the weapon of choice in the fight against
future systemic risks.
What next?

28. W: www.rob-livingstone.com
E: rob@rob-livingstone.com
P: +61 2 8005 1972
M: +61 419 632 673
F: +61 2 9879 5004
Tw: @rladvisory
ROB LIVINGSTONE
- Fellow, University of Technology, Sydney
- Principal, Rob Livingstone Advisory Pty Ltd
ThankYou!
© All rights reserved. Rob Livingstone Advisory Pty Ltd. Unauthorized redistribution prohibited
without prior approval. ‘Navigating through the Cloud’ and ‘Success is our story, let’s make it
yours’ are Trademarks of Rob Livingstone Advisory Pty Ltd.