The rate of technological advancement is accelerating by the year, and little by little, the federal government is actually starting to take heed of innovations from the private sector. If everything goes well, cloud technology will help propel government agencies forward into the future, making lives easier for citizens around the country. To talk about this trend towards cloud storage and computing is expert John Wood, chairman and CEO of IT firm Telos.

ABERMAN: Well, I know that this is something that you have been advocating for a long time: move to the cloud. It’s safer than keeping stuff on your old software, and on eight-inch disks in a drawer someplace place.

WOOD: Yeah, you know, it’s funny. Back in 2011, my chief security officer and I co-authored an article where we said that the cloud was more secure. And we were really advocating for our federal, state, local, educational, customer partnership, you know, that group of people, to really think about the cloud as a place to go. And it went over like a complete lead balloon, and it really wasn’t until 2014 when, arguably, the most security-conscious organization in the world, the CIA, made the decision that they were, in fact, going to move to the cloud, and that really kind of made us feel like we had something. We had a really good idea that people could work with.

ABERMAN: What is it like to be an entrepreneur who sees a trend, and is ahead of a trend? You know, as you were, talking about the cloud and cybersecurity, and securing this. Did you feel like Don Quixote?

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WOOD: Sometimes you feel lonely. I think, currently, I feel very good, because what you see now is that, there are so many good proof points out there. You see what is called C2S, the commercial cloud services, that’s the CIA’s version of the cloud. You see the Secretary of Defense, just a couple weeks ago, at the House Appropriations Committee, he pointed out that the DoD is going to the cloud, that they’ve seen what the CIA has been able to do, both from a data access and from a security point of view, and it’s, quote, very impressive. So, I think that acknowledgement by, if you will, a very large bureaucracy, that the cloud is a good place to go from a security perspective and from an access to modern applications perspective, I think it makes you feel good.

ABERMAN: I think a lot of people, if they’re not inside the industry, they’re uninformed, they look at things like Facebook data being given to Cambridge Analytica, or somebody’s photos being taken, and they tend to be concerned about having their data, quote, in the cloud, but it sounds to me like, from your perspective, that’s the exact opposite. We want our most sensitive data in the cloud. So, why is that?

WOOD: Well, I think, sometimes people look at privacy and security as the same. I think, in the issue of Facebook, and Cambridge Analytica, I think the issue is that it was not very clear to people how you can turn your privacy settings off, so that people couldn’t analyze your data. On the other hand, when you look at cloud providers from a security perspective, the reason we took the perspective that we did back in 2011 is that, they have taken the steps, and continue to take the steps, around investing in what is the most modern and the most secure technologies that are out there. I think that is the big difference.

Many of our government organizations who are our customers, their issue is, 80 percent of their information technology spend is around maintenance. And, what that basically says is, they have a lot of old systems out there, a lot of legacy systems out there. If they take the steps to move to the cloud, it can help those legacy systems improve their security postures. In the end, the most important thing to do is to move to a modern framework, a modern application. And I think that will also continue to make the security of their data better.

ABERMAN: The analogy that comes to my mind is, if I had a gold bar, I could keep it in my house, but it’d be a lot better to keep it in Fort Knox, a place where there are a bunch of people with guns defending it.

WOOD: That’s exactly the point. In the case of the cloud, they have the notion of a shared security model, and the shared security model, in its most simple form, says cloud providers are responsible for the security of the cloud. You, as the user of the cloud, are responsible for the security in the cloud.

ABERMAN: It would seem to me that, this moment to the cloud could have a profound change on how the government contract industry, a lot of companies, work, because the billing models for doing business in the cloud, you know, you buy on an as-needed basis, it rewards innovation. It rewards scale, it rewards efficiency. It’s as far away as I could imagine, from a time plus, or materials-type contracting. Do you get the sense that this town is ready to be entrepreneurial in this way?

WOOD: I think so. I think the proof points are there. I think that, from the executive offices perspective, when the President signed the cybersecurity executive order, two points were made clear. One was the adoption of the NIST framework, which is a common language that security professionals can use to lock down their security environments. He also mandated cloud first, which I think is very positive. In addition, they signed the IT Modernization Act, which is an acknowledgement of the need to modernize. And then, I think, the other point to be made here is, I think Congress is ready.

Congress, in the old days, back in 2012, instituted something called LPTA, low-priced technically acceptable, and to their credit, in both the House side and the Senate side, under the Defense Authorization Act, they were able to remove LPTA, low-price technically acceptable, as it relates to cybersecurity goods and services, for the simple reason that cybersecurity goods and services are scarce resources. So, the basic point I made when I testified was, if there’s a hack, and it’s the same hack, and one customer of mine is a commercial customer, and the other customer of mine is a government customer, my commercial customer would pay, on average, two to three hundred percent more for the same service, because they recognized the value of what we’re providing.

Earlier, you mentioned time material. There’s nothing efficient about time material at cost plus. And I do think that there’s an acknowledgement by the government about that. And so, now what they’re trying to do is, to apply, where does it make sense to do fixed price, where does it make sense to do consumption-based models like cloud models? And I think there are enough proof points out there, like C2S as an example, where people can see it works.

ABERMAN: Do you think this region is going to be significantly different in how it approaches technology five, ten years from now, as result of this migration to the cloud?

WOOD: Yes. The old model of proprietary databases, proprietary hardware, proprietary software, having to deal with maintenance revs, where you’re getting far behind, that stuff is gone. If you’re in the cloud, you’ll have the most modern technology available to you. And I think again, from a security point of view, it’s all good.

ABERMAN: So, my overall conclusion, John, is that this is going be a time that’s going to reward people who compete on value, not on price.

WOOD: Exactly. I mean, it’s the old days of best value, where people can look at things like past performance. People can look at things like, do we actually deliver what we say we’re going to deliver? And that’s how you build the trusted relationship with your customer.

ABERMAN: What I love about this is, not only are we seeing a technological change, we’re actually seeing a business model change. I’m very optimistic when I talk with you, John, and hear stories like this about the future for the region. Congratulations on your success so far, we look forward to great things in the future. That was John Wood, chairman and CEO of Telos.

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