In the Post-"Cloud First" Era, Does the Public Sector Still Know How to Build Business Cases?

“Cloud First” has been the guiding philosophy for government IT projects since 2013. But despite its dominance, the policy is now under review, writes Romy Hughes, director, Brightman. While poor ROI or value is usually the reason for a change in policy, could this be the case with Cloud First? What is the reason for this U-Turn?

For most projects, I would still suggest that the cloud remains the best approach. Cloud can still deliver the highest return on investment when its positive impact across the organisation can be sufficiently quantified. But that is where the problem lies. After six years of “Cloud by default,” is the public sector even geared up to measure the ROI of their cloud projects?

Cloud is Not a Strategy!

The “cloud” is not a strategy; it is nothing more than a deployment decision. No project – IT or otherwise – starts with the predetermination of how it will be implemented.

You define the problem first, build a business case for solving the problem, scope out the objectives and then evaluate various solutions to achieve those objectives. While the cloud could be one of the proposed solutions, it should only be on the shortlist if it meets all the objectives of the business case. “Business Case First”, not “Cloud First.”

Ask the Wrong Questions, Get the Wrong Answers…

Any policy which mandates the solution to the problem before any other question has been asked was always going to put the public sector on the wrong path.

Cloud First has steered public sector IT projects away from the more fundamental questions that should be asked – such as “Is this the right project at all?” What is the objective of the project? What is the business case? Or more fundamentally, “What is the role of this organisation and how can I advance its objectives?” These questions are far more pertinent, and should come far earlier than “is this a cloud project or not?”

See also: “You’ve Got to Have Courage!” BP on the Business Case for Going “All-In” on AWS

Too often we have seen cloud projects deployed in the public sector for their own sake, instead of taking the customer-centric view and building the business case first. But this is not because the business case is not there; it is simply because it is much more challenging to build a business case for a cloud project vs a traditional one. There are a few reasons for this:

1: “Big Bang” funding isn’t appropriate for cloud projects: One of the major benefits of moving to cloud is “evergreen IT” and the ability to leverage Infrastructure/Platform or Software-as-a-Service approaches. With I/P/SaaS you can move away from the traditional, high risk “big bang” approach and make more iterative, lower-risk improvements instead. The challenge is that iterative improvements need iterative funding, which is very different to the “whole life cost” ROI analysis typically required by a traditional business case.

2: As-a-service IT requires “Funding-as-a-Service”: Building on the above point, using the cloud turns traditional capex expenditure on hardware etc. into an opex cost. These opex costs may, in the long run, increase the overall cost of running the service. These potentially higher costs are all-too-often glossed over if you are predetermined to use the cloud anyway.

3: Cost improvements are difficult to measure: The potential increase in operational expenditure of a cloud project is often not measured against resulting improvements in productivity and efficiency. As a prime example personnel costs may be lower as a direct or indirect result of transitioning to a cloud service, but these savings are often not reflected on IT’s balance sheet.

When compounded together these three points make the creation of a business case for cloud projects very difficult, but not impossible. But with Cloud-First now under review, it will be important for new cloud projects to take account of these nuances so they can build the business cases needed to get their projects over the line.

Context is King

As eluded to earlier, scrapping Cloud First does not mean the cloud does not deliver good ROI. In many instances it is still the right approach for most public sector projects. The cloud makes absolute sense if you are thinking about true transformation. If your data is in the cloud and you can use the power of cloud compute to improve productivity, then cloud computing makes a lot of sense. But this is about having a long-term business plan and strategy first. Successful cloud transformation (and “Cloud First”) in public sector only occurs when it is approached strategically.

Unfortunately, we don’t see this very often! Instead, Cloud First has encouraged public sector decision makers to be lazy in their decision-making process because it has taken away the need to start with the business case. They certainly cannot be blamed for this. If you are told you must use the cloud, and you have no strong feelings why the cloud would not meet the objectives of the project, why would you spend all that extra time building a business case which evaluates non-cloud alternatives which might not be any better?

Fundamentally, the public sector needs to go back to First Principles. Why are you doing the project in the first place? Start with WHY before moving to the WHAT (i.e. an IT project) and HOW (i.e. cloud or non-cloud). The review of Cloud First does not mean the public sector should turn away from the cloud, it just means a bit more work is required to build the business case. Cloud transformation remains a worthy goal for the public sector to pursue, but only when it forms part of a broader, strategic transformation plan with a solid business case behind it.