While the extent of the public sector cuts has been a hot topic for debate in recent months, few commentators have questioned the need to reduce spending across the board. With a spiralling national deficit draining the economy, it should come as no surprise that the majority of Whitehall departments and functions are being affected by George Osborne's £81 billion austerity plan. Information technology is no different in this respect. Despite the key role played by technology in delivering public services, total IT cutbacks of around £1.1 billion are to be enforced between now and 2014.
The coalition quickly identified 300 IT projects which could either be scrapped or scaled back, and also announced plans to re-negotiate outsourcing contracts and reduce investment on public sector websites and marketing. But to its credit, the Con-Lib government has continued to seek IT efficiencies through alternative means. Recognising that budget reductions are no silver bullet, ministers have been quick to point out that targeted IT investment can also play a key role in supporting the economic recovery.
According to the findings of a recent Ovum study, the last few months has seen various Whitehall departments shift their IT into the cloud in a bid to generate savings without compromising performance. The IT consultancy noted that outsourcing is helping public bodies to slash expenditure, while also securing access to upgraded infrastructure.
As Ovum analyst Jessica Hawkins pointed out: "Governments should push beyond knee-jerk cost-cutting measures and adopt a long-term vision of how fundamental changes to the way they deliver services will bring efficiency. Many will look to their IT vendor to guide them through the new technologies that can help them achieve this, and vendors should be ready to do this."
With cloud investments at the top of the IT agenda, plans are already in place for a G-Cloud, which the government will use for centralised data sharing and public service provision. Initial savings of £1.2 billion per year are expected, although ministers believe the project could help deliver £4 billion in annual efficiencies by the end of the decade, as the current network of 8,000 data centres is consolidated into a mere 12 G-Cloud sites.
And due to the fact that services will be available on a pay-per use basis, public sector organisations will not be locked into lengthy, expensive service contracts. Local authorities, think tanks and other centrally-funded bodies will be able to access G-Cloud services almost instantly according to demand, providing valuable flexibility of choice for local authorities.
Whitehall has made little secret of its positive stance on cloud computing, with the outgoing government chief information officer (CIO) John Suffolk frequently waxing lyrical about the technology.
He recently alluded to its wider social and economic benefits, explaining that a variety of vendors can provide hosted IT – not merely the established industry forces. More companies can compete as the market expands, meaning more jobs and from a national perspective, greater output and higher tax receipts. From the buyer's point of view, hosted IT supply can outweigh demand, applying negative pressure on service costs.
Another public figure to speak in favour of the cloud this month was Mark O'Neil, CIO for the department for Culture, Media and Sport. He commented that 60 per cent of government IT spending is distributed among six major suppliers at present – suggesting that better value for money may be available in the future. Mr O'Neil described the cloud as being "fundamentally disruptive"; and due to its potential to reduce costs and improve performance, is ready to give legacy IT systems "a damn good kicking". However, issuing a word of caution, he warned public bodies against rushing head first into the cloud before taking time to properly consider and plan deployments.
Given the wealth of logistical expertise at its fingertips, Whitehall should be well-placed to weigh up the respective benefits of the various cloud technologies, and pinpoint areas where hosted IT can provide maximum benefit. And through its unrivalled communications machine, the government can play a key role in encouraging wider uptake of its own G-Cloud and other hosted solutions.
But does this mean the state is blazing a trail for the sector, and setting an example for other struggling nations to follow? Well, not necessarily. For some time the European Union has been actively promoting the benefits of hosted IT, and just this week, digital agenda commissioner Neelie Kroes reiterated the plea for all member states to become "cloud active".
Speaking at the World Economic Forum in Davos, he urged nations to be bold and take advantage of the technology as early as possible. Mr Kroes explained that work on an EU-wide cloud computing strategy is already underway, going beyond a policy framework, and the technology will play an increasingly central role in IT delivery moving forwards. Just last month, a report from EMC claimed that cloud computing could add a combined £645 billion to the economies of France, Germany, Italy, Spain and the UK over the next five years, creating 2.4 million jobs in the process. The firm said the cloud had become a business driver "capable of creating market and business opportunities, not just affecting a company's bottom line, but a country's as well".
Britain is clearly embracing cloud computing, across both the private and public sectors, but the technology is no secret weapon. It can help support operational practices, reduce costs, and give the bottom line some valuable breathing space, but it certainly won't be rebuilding the British Empire. As the decade progresses, increased investment in hosted IT may be needed simply to match the efforts of key trade partners on the continent. With low capital spending required, little risk and a high return on investment, governments around the world are making their own progress in the cloud - and it is vital for the UK's economic future that it keeps pace.