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September 23, 2015

Cloud obscurity hits public sector for £300 million

Hidden costs and failure to reduce IT complexity highlight public sector struggles.

By James Nunns

The vast majority of UK public sector organisations are being hit by unplanned cloud spending.

The unplanned spending is resulting in organisations spending over £300 million each year on maintaining cloud services and hidden costs related to maintaining their projects.

The unforeseen costs come as a result of external maintenance for hardware (41%) and system integration costs to ensure applications can share data (30%). This has resulted in additional costs of almost £258,000 over the past five years, per organisation.

The findings come from Sungard Availability Services research, which found that 82% had encountered some form of unplanned spend. The average payout is around £139,000 per year on maintaining cloud services.

The consequence of this is that 33% believe that cost savings have not been achieved, this is despite 53% citing cost saving as a key driver of adoption.

Cloud, in addition to being touted as a way to reduce costs, is also labelled as a way to reduce IT complexity, for 55% of UK public sector organisations, cloud has actually increased the complexity of their IT environment.

This compares to 45% of organisations across the UK, financial services (32%) and manufacturing (29%).

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Part of the complexity is coming from interoperability between existing IT estates and cloud platforms, this was cited by 44% as the biggest issue, while 71% claimed also claimed it had added a new set of IT challenges.

Keith Tilley, EVP, Global Sales & Customer Services Management, Sungard AS, said: "Cost and efficiency savings are top of the agenda for the public sector and cloud computing has the potential to dramatically reduce costs across health, education, central and local government and much more, if it is deployed in the right way.

"New strategies within the UK such as ‘Digital by Default’ and ‘Cloud First‘ combined with the Government’s ‘Digital Marketplace’ are vital in helping ensure that the public sector continues to adopt cloud whilst reaping its many business benefits.

"However, there is no silver bullet for adopting cloud computing and it is clear that the public sector has faced some significant challenges including interoperability, management and operational expenditure.

"The very nature of the public sector also means that highly sensitive data such as patient data, defence or security records are not always suitable for particular cloud environments.

"Therefore, whilst the public sector can indeed see incredible benefits from cloud computing including agility (58 per cent) cost savings (58 percent) and increased security (53 per cent), the cloud needs to be deployed on a case-by-case basis in line with business goals and the nature of the application or the workload."

Sungard AS questions 45 senior IT decision makers in UK public sector organisations with more than 500 employees, and average individual cloud implementation spend in 2014/15 of £390,000.

The results are part of a wider study of 400 interviews with IT decision makers.

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