Insight by Nutanix

Paying for cloud services requires agencies to endorse the consumption model approach

Chris Howard, the vice president of the U.S. public sector for Nutanix, said applications that benefit the most from cloud services are those that have spikes and troughs in their usage.

Since 2010 when the Obama administration launched its cloud-first policy, the momentum of applications and systems moved to public, private or hybrid cloud services has been growing.

Eight years after the cloud-first policy, agency spending on cloud computing services surged to $4.1 billion, according to analysis from Bloomberg Government. BGov says cloud spending grew by 9% among civilian agencies and by almost 30% among defense agencies from fiscal years 2017 to 2018.

The growth curve is expected to continue on the upward climb as the Trump administration finalizes its cloud smart strategy as well as new contracts for common back-office cloud services and shared services.

At the same time there are a host of challenges to consuming cloud services in way that is accessible and immediate.

Chris Howard, the vice president of the U.S. public sector for Nutanix, said as agencies continue to move the cloud, the way they use and pay for these services needs to be front and center.

“We are trying to bring the characteristics of the cloud to where ever it is the customer is going to deploy those IT assets, whether it’s in their own data center, a contractor owned data center or a public cloud company. It’s the consumption model that is important,” Howard said on the IT Innovation Insider show. “One of the benefits of the cloud we’ve realized is when you want an application or workload spun up in the cloud, it’s very easy and it’s fast to market. The agility and the speed to bring those applications so the users can access them is one of those characteristics. Another characteristic is how you consume it and how you pay for it, where you pay for what you use and that’s it.”

Howard said there are certain applications, ones that have spikes and troughs, that make sense to take advantage of the cloud and the consumption model that comes with it. At the same time, some applications may make sense just to modernize but keep on premise.

Dan Fallon, the senior director of engineering of the U.S. public sector for Nutanix, said this is why application rationalization is so important, and a growing trend across government.

“Part of what agencies can do is get the small wins and move the apps that are easy like the external facing things like web servers, email is a classic one. But then when you get into the apps that are on servers, still physical or even still on main frames, this could be a huge undertaking and a lot of budget dollars that may be required. These are the ones you leave for last,” Fallon said. “There is a growing trend of moving to containers when doing the cloud migration, but that does introduce extra complexity.”

As agencies move into these more difficult or complex applications, Howard said approaches such as managed service or shared services are starting to gain popularity. The Trump administration recently issued a new strategy for how agencies should move to back-office shared services, naming four agencies to lead human resources, financial management, grants management and cybersecurity.

“The main trend is agencies want out of the hardware business,” he said. “There are a couple of different ways to do that, and it doesn’t mean just a lift-and-shift to the cloud. Managed services can be accomplished in a lot of different ways. It can done on-premise at the customer’s site. It can be done in a co-location site and it can be done in the cloud. I think it’s about how you consume and what color of money makes the most sense for you. A lot of people are more flush with the operations money versus the capital investment money and that’s a big driver.”

Operational money, known as OpEx, is used mainly to keep legacy systems up and running. Howard said agencies can use that type of funding to pay for managed or shared services more easily.

“No matter what kind of contract you enter into, whether a managed service or shared service, you still want to make sure you have the flexibility to make change. You don’t want to be locked into something for 5 or 10 years that doesn’t give you the same level of innovation or cost protection,” Howard said. “No matter what you go into, and the consumption model generally allows it, allows you to turn it off and pivot when you have to so that is the key takeaway on what would make a successful contract.”

Fallon added there also is a technical side that agencies should consider along with the contracts piece. He said departments also should make sure they can easily move their apps and data between clouds or between a cloud and on-premise.

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