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Harnessing public cloud opportunities in the government sector AWS 2019
Harnessing public cloud opportunities in the government sector
Contents
Executive summary 2
What is public cloud? 6
1 The future of government and role of cloud 8
2 Benefits of public cloud 10
3 Government sector use of public cloud 13
4 What's holding the government sector back? 18
5 The public cloud transition journey 22
6 Recommendations for action 28
References 30
Our people 31
1Deloitte Access Economics
Executive summary
Change and uncertainty have always been
a part of the economy and the government
and other IT resources through a cloud
services platform via the internet with The cumulative
productivity
landscape. But the pace of change is pay‑as-you-go pricing.
increasing, and uncertainty is at new
Deloitte Access Economics’ research
highs. The government sector is facing the
challenge of growth in service expectations
into government sector use of public
cloud includes analysis of the sector’s
benefits of public
and its costs of delivery, amid constrained
resources and declining public trust. This
makes the case for a new approach to
performance relative to its policy
aspirations, a new survey of federal cloud to the
government sector
and state government sector decision
government service delivery, and is aligned
makers, and case studies with agencies
with a desire within the sector to embrace
that have successfully made a move to
new opportunities.
using public cloud. could already be
Digital technology has the potential to
support government in meeting the needs
of its citizens and policies are focused on
The benefits of public cloud are well
recognised. Government sector decision over $2 billion over
the last 5 years.
makers identified the main benefits
increasing its use over time. The Federal
as being improved agility in terms of
Government’s Digital Transformation
being able to better scale operations
Agency released a new strategy in
as needed, such as during times of
November 2018 with a vision for Australia
peak demand for agency services or
as one of the top three digital governments
applications, improved productivity, for
in the world by 2025.
example, achieved through time savings in
Public cloud, a digital services platform, analysing data or in streamlining processes,
can enhance government operations and improved services, reliability and
and support it in overcoming the data security (see Chart i). Further, public
challenges it faces in an increasingly cloud is a platform for the future, providing
complicated environment. Public cloud a foundation for a range of emerging
offers on-demand delivery of computing technologies ranging from artificial
power, database storage, applications, intelligence to virtual reality.
Chart i: Main benefits of cloud experienced by agencies surveyed
Improved agility - better able to scale operations as needed 79%
Improved productivity 71%
Better infrastructure and service/reliability/data security 61%
Easier adoption of exponential technologies
54%
(e.g. artificial intelligence, virtual reality)
Reduced technology costs 43%
Improved ability to process data 36%
Better interaction with customers 25%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Share of public cloud users surveyed
Source: Deloitte Access Economics, 2019
2Harnessing public cloud opportunities in the government sector
The government sector is a significant As shown in Chart ii, the most reported
The Federal Government, states user of public cloud, spending almost barriers to adopting or expanding the
and territories have existing $1 billion on public cloud in 2018 (IDC, use of public cloud were policy related
cloud policies or strategies. The 2018a). This is around 23% of total public – namely data privacy concerns and
government sector has performed cloud spending in Australia (IDC, 2018a), data sovereignty concerns, cited by 79%
relatively well in terms of use of and the cumulative productivity benefits of respondents. However, the Australian
public cloud. For example: of public cloud to the government sector Cyber Security Centre (ACSC) Protected
could already be over $2 billion over the Certification now granted to a range of
• When compared with business use last 5 years. public cloud providers enables greater
of public cloud, government sector certainty around the security of certified
expenditure is proportional to its There is significant potential for this value
entities, meaning that data can now be
to be even greater over time as take
share of the Australian economy stored and processed at the protected
up increases, and acknowledging that
(24%) (ABS, 2018). security classification level, which
traditional measures of productivity are
overcomes this barrier to public cloud use.
• Compared with international not as applicable to the government sector,
counterparts, the Australian where measuring the value of ‘service’ While some agencies have started the
government sector’s posture is not as straightforward as measuring move to public cloud, it was noted that
businesses’ inputs and outputs via costs leaders do not understand the full
towards using cloud for net
and revenues. capabilities that cloud offers, that is,
new IT services is ahead of
understanding the cases for public cloud
international comparators; There is potential for government sector
beyond data storage to more advanced
being more likely to consider cloud use of public cloud to grow; Deloitte
uses such as machine learning and the
among available options, while Access Economics’ survey of government
internet of things.
internationally, decisions are more sector decision makers has found that, on
average, public cloud accounts for only one A common theme discovered through
likely to be made on a case by case
quarter of an agency’s IT structure. A move both consultations and the survey of
basis (IDC, 2018b).
towards a more flexible and adaptable government sector decision makers
• However, government sector uses operating environment through use of is that insufficient knowledge of, or
of public cloud tend not to be public cloud will support government understanding about, using public cloud
sophisticated, with data storage sector productivity and its delivery of is holding agencies back. In fact, 73%
citizen-centric services. of agencies reported that leaders do not
and production/service operations
understand the extent of capabilities that
being the most reported use of
public cloud offers. Even when they do,
public cloud (82% and 68% of survey
agencies are lacking the skills to use cloud.
respondents respectively), indicating Almost two-thirds cite skills issues as a key
scope to use public cloud for more barrier to using public cloud (see Chart ii).
advanced applications such as
machine learning in the future.
Chart ii: Barriers of adopting or expanding use of public cloud by government agencies
Policy issues (data privacy issues, data sovereignty issues) 79%
Structural issues (e.g. need to comply with existing policies,
73%
leaders do not understand the full capabilities of cloud)
Skills issues (e.g. lack of cloud knowledge in the organisation,
61%
too expensive to retrain staff)
Financial issues (e.g. cloud too expensive) 48%
Procurement issues (e.g. locked in to an existing contract,
33%
difficult to find an appropriate vendor)
No need to change 6%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Share of survey respondents
Source: Deloitte Access Economics, 2019
3Deloitte Access Economics
There is a perception in the government
sector that government data centres or
But overall, surveyed government
sector leaders are overwhelmingly 94% of government
sector leaders agree
‘government cloud’ is the same as public in support of greater cloud take up;
cloud. It should be acknowledged that 94% of government sector leaders agree
government cloud can be a good first that procurement processes should be
resource consolidation step, but in order modernised and that government should that procurement
to unlock the full benefits of technology invest in upskilling its workforce to be
and cost savings over time, the government
sector is now on the verge of needing to
better prepared for public cloud. processes should be
modernised and that
Based on five case studies of successful
make the next step to public cloud.
transitions to public cloud, Deloitte
The lack of provision for additional Access Economics has identified the
operational expenditure in place of six key considerations for success government should
capital expenditure in an agency’s below. There is a clear need to increase
budget was also identified as a
challenge in adopting cloud. These
education around public cloud to help
address the understanding of its use,
invest in upskilling
barriers are similar to those experienced
by the private sector, namely inadequate
capabilities and how to successfully make
the transition. This will also help to manage
its workforce.
skills, legacy systems and costs of adoption. concerns around real or perceived risks
to using public cloud, and will assist in the
organisational change required around
finances and overcoming decision inertia.
To support a successful transition to public cloud,
government sector considerations should include:
Finding the right opportunity Financial considerations
Prepare for a move to public cloud There is a need to consider
– while contracts renewals are an the implications of a move to a
opportunity to consider future use consumption based pricing model
of public cloud, prior preparation and a need to educate the relevant
may enable an earlier or smoother staff managing these changes to
transition. government sector budgets.
Managing risks Upskilling staff
Public cloud has been used An understanding of the organisational
successfully in high profile and staff capability, skills gaps and the
sensitive situations such as by the change management is required.
Australian Bureau of Statistics for
Governance
the Australian Marriage Law Survey,
and the Australian Taxation Office for Agency leadership is critical for driving
logging tax returns. A considered risk change. There is a need to align skills
management approach is required to and processes to IT strategy and the
mitigate the residual risks of running agency’s operating strategy.
sensitive workloads in public cloud.
Supporting others
There is a need to understand data
rules in an agency’s jurisdiction and the The transition to cloud can be harder
management of preventable, strategic for larger agencies and those with
and external risks to the agency. more complex legacy systems.
Agencies can learn from success
in other agencies, and lessons and
skills learnt can be shared across the
government sector.
4Harnessing public cloud opportunities in the government sector
The following recommendations for
action are intended to guide public sector
leaders and provide concrete steps that
could be implemented to encourage
greater use of cloud, and ensure
technology can leverage and help drive
better agency and citizen outcomes.
• Central/whole of government policies to
be established and implemented, setting
a timeframe for the majority of systems to
be in the public cloud by 2025.
• Government sector leaders to bring forward
approaches to shift capital budgets to operating
budgets in fiscally sustainable ways.
• Review and implement government policies for
operating in the public cloud, especially around
risk sharing arrangements.
• Government sector to prepare for public cloud
by considering its existing and required skills.
• Use cloud as a platform for greater change in a
more outcomes-focused and data-driven decision
making environment, leveraging this for better
agency and citizen outcomes.
5Deloitte Access Economics
What is public cloud?
Public cloud computing is – Software as a Service (SaaS) A public cloud provider owns and maintains
Applications that run on cloud the network connected hardware required
the on-demand delivery of
infrastructure, such as client for services, while users provision and use
compute power, database relationship management systems what they need via a web application.
storage, applications and or communications mediums.
This differs from the government’s
other IT services through a – Platform as a Service (PaaS) exclusive private cloud, where services
cloud services platform via the The programming languages, and infrastructure are maintained
internet with pay-as-you-go libraries, services, and development on a private network and dedicated
tools the applications are built on to government sector use.
pricing. Services include: that exist on cloud.
– Infrastructure as a Service (IaaS)
Processing, storage, networks, and
computing resources that are provided
on-demand from cloud.
– Business Process as a Service (BPaaS)
Uses cloud tools to outsource processes
like payroll or supply chain planning to
specialist vendor or advisor teams.
1 Timeframe
Set a target to have the majority of
systems in the public cloud by 2025
2 Budget
Bring forward proposals to shift capital budgets
to operating budgets in fiscally sustainable ways
3
Implement government policies
Review or implement policies for operating in public cloud,
especially around risk sharing arrangements
4 Upskill the sector
Prepare for public cloud by considering
its existing and required skills
5
Decision-making shifts
Use public cloud as a platform for
greater change and leverage for better
agency and citizen outcomes
6Harnessing public cloud opportunities in the government sector
Government sector
use of public cloud
23%, almost $1 billion1
Public cloud of Australian public cloud
spending comes from
the government sector
Network Security BPaaS
SaaS
Compute Analytics
IT services
Storage Machine PaaS
Learning
IaaS
Database
Internet
of Things
Governance
Only 24% of the
average government
Top barriers
agency's IT structures
are in the public cloud 79% to public cloud
73%
61%
Structural issues
Policy issues
Skills issues
1. IDC (2018a)
7Deloitte Access Economics
1 The future of government
and role of cloud
Change and uncertainty have always The Commonwealth Science and Industrial
been a part of the economy and the Research Organisation (CSIRO) (2016) has About this research
government landscape. From the modelled four possible future scenarios
geopolitical environment of the cold with wide ranging potential impacts for the Deloitte Access Economics has been
war, to deregulation and public sector country (see Chart 1.1). engaged by AWS to conduct research
change in the 1980s and 1990s, through into government sector use of public
Change in the government sector has not
to internationalisation and the growth of cloud. The benefits to cloud are
been limited to changes in regulations and
trade and finance. widely discussed, so the focus of this
privatisation, rather, a more fundamental
But the pace of change is increasing, and shift in focus has occurred. Technology study is to identify the barriers to
uncertainty is at new highs. For example, has enabled the rise of business models cloud, and develop
while population growth has supported tailored to consumer preferences, and recommendations on how to drive
the growth of the size of the labour force, government likewise has shifted to being better take up in the future.
automation has resulted in the rare more citizen-centric.
This report is based on a survey of 33
occurrence of total employment levels
declining in occupations that are highly federal and state government sector
susceptible to automation. Countering decision makers around Australia
this, there has been significant job growth who were responsible for or were
in occupations where technology is less familiar with the cloud strategy in
likely to replace workers (Edmonds & their departments or agencies. The
Bradley, 2015). survey included perspective from
agencies both currently using public
cloud and those that had not yet
Chart 1.1 Australia in 2030 – four possible futures started their public cloud journey.
This report is structured as follows:
• Chapter 2 briefly outlines some of
the benefits associated with use of
Digital DNA Mining and dining public cloud
A shift to digital A second wave of
services and knowledge- the resources boom • Chapter 3 explores current use of
driven economy driven by growth public cloud in the context of
and urbanisation in government policies and compared
developing economies
with international experience
• Chapter 4 discusses the barriers
identified to cloud take up
• Chapter 5 provides guidance on the
transition to public cloud, through a
series of case studies
Clean and lean Weathering the storm
• Chapter 6 presents
Decoupling of Tensions caused by
economic growth climate change and recommendations for the
and environmental resource scarcity government sector to support
sustainability allows threaten to destabilise increased take-up and use of public
both to be pursued alliances and lead to cloud.
simultaneously econonomic stagnation
Source: CSIRO, 2016
8Harnessing public cloud opportunities in the government sector
In this uncertain environment, the role for 1.1 The role of digital The opportunities that public cloud can
government is changing. Government will offer are significant, and increasing, as
Digital technology has also had major
need to help people to transition to new cloud offerings evolve. In 2016, Deloitte’s
impacts on the government sector in
jobs as automation and economic change ‘Gov2020’ paper theorised that by 2020,
recent years. On one hand, technology
disrupts existing careers, it will need to find federal and state governments would be
has supported an increase in efficiency
ways to keep energy costs down as the using cloud computing for a significant
and enabled online services, from online
natural environment continues to change, portion of its functions. This would enable
form applications to licence renewals. On
and it will need to help upskill people to use large-scale shifts in government, such as:
the other hand, there have been some
digital tools as they become an increasingly
high profile issues, such as the ‘robo-debt’ • Mobile services – government would
important part of life.
recovery program and the problems make almost all services mobile, so
This is a difficult task, and people are experienced during the introduction of the people could remotely access services
expecting more of government than they myki system for public transport in Victoria. rather than going in-person to get a
have in the past. There is a demand for permit (for example).
But the benefits of digital are substantial,
more and better services, for instance the
and the government is focused on • D
ata-smart government – government
National Disability Insurance Scheme now
increasing its use over time. For example, would be using predictive modelling
provides personalised care for disabled
Digital Transformation Agency works to influence behaviour; for instance,
people. Increasingly crowded cities means
with agencies across government to analytics of utility usage can be used
more demand for better public transport
improve digital services and ultimately to show consumers’ usage compared
options. There is also demand for greater
people’s experience of these government with their neighbours, influencing lower
government investment in education
services. In November 2018, the Digital consumption over time.
and health.
Transformation Agency released Australia’s
• F
unding shake-ups – more of
Government resources are not matching Digital Transformation Strategy with a
government’s systems would be dynamic
the growth in expectations; the costs of vision for Australia as one of the top three
or pay-as-you-go systems meaning a
delivery are increasing, and population digital governments in the world by 2025.
reduction in costs.
ageing is shifting the taxpayer base. The The Federal Government, states and
Australian public service has shrunk to territories have existing cloud policies • F
lexible staffing – a significant portion
employing just over 150,000 people – the or strategies. of government staff would be tied to
lowest it has been since 2006 (Australian projects rather than departments, and
Public cloud in particular can be a valuable
Public Service Commission, 2018). While move to where they are needed, meaning
tool in meeting this goal and assisting
in 2007 there was one public servant for a more agile workforce.
government in overcoming the challenges
every 133 Australians, there is now just
it faces in an increasingly complicated However, despite cloud first policies,
one per 165 (Mannheim, 2018).
environment. Public cloud offers on- government sector take up of public cloud
At the same time, citizen trust in demand delivery of computing power, could be more extensive, meaning that
government is declining. Less than half database storage, applications, and other many of these benefits are still waiting to
(42%) of Australians now say they trust the IT resources through a cloud services be realised.
government to do what is right, compared platform via the internet with pay-as-you-
to 52% who say they trust business, go pricing.
and 56% who trust the United Nations
This enables a range of innovative
(Edelman, 2019). Since the destabilisation
services across the government sector,
of the Rudd/Gillard Government and
for instance, the Australian Taxation Office
ensuing uncertainty over political
has developed a platform that allows
leadership, social cohesion in Australia has
taxpayers to submit their taxes online,
declined 11% (Scanlon Foundation, 2018).
making the process more simple and
This environment presents challenges for
less time consuming both for individuals
government in achieving positive change.
and the government. Similarly, the NSW
Government has built a one-stop shop
for all citizens to access government
services. Service NSW (a whole of New
The benefits South Wales Government Service access
point that provides online, and in-person
of digital are offices that handle more than 800 types
of transactions) is able to help people
substantial, and with all their dealings with government,
from obtaining licences and permits, to
the government registering births or paying fines.
is focused on
increasing use.
9Deloitte Access Economics
2 Benefits of public cloud
Public cloud can bring big benefits for Chart 2.1 Why did your agency begin using public cloud?
agencies in the government sector. From
improved productivity and reduced costs,
to providing a platform for innovation and
access to exponential technologies, public To improve productivity in the agency 68%
cloud has the potential to change the way
that government operates and interacts
To cut costs 43%
with the people it serves.
This chapter outlines these benefits, and
To host a specific application 43%
the experience of these benefits by the
Australian government sector.
Need for greater processing capability 39%
2.1 Public cloud decision making
The survey of government sector decision
To increase data storage 32%
makers found that the most common
driver of adopting public cloud use was to
improve productivity (cited by two-thirds To comply with government policy/directive 29%
of respondents, as shown in Chart 2.1).
For 43% of agencies, cost cutting was a
Other reasons 14%
driver to moving to cloud and another
43% noted a move to cloud to host a 0% 10% 20% 30% 40% 50% 60% 70%
specific application. Share of public cloud users surveyed
Over time, the transition to cloud could also
see the government sector going beyond Source: Deloitte Access Economics, 2019
basic uses of cloud to hosting bespoke
applications, enterprise resource planning, the government sector to keep up with As our survey results indicate, agencies
or enabling next-wave technologies. these trends. that have already incorporated public cloud
have experienced a range of key benefits
CSIRO has started using next-wave Yet, given that some jurisdictions have
(see Chart 2.2). The most commonly
technologies in its research. Using public ‘cloud first’ policies, it is surprising that
identified benefit, cited by 79% of
cloud, CSIRO has developed a custom only 30% of respondents stated that policy
respondents, was improved agility, where
machine learning library to uncover compliance influenced their initial take-up
agencies could better scale operations
information in the millions of dimensions of public cloud. This indicates that drive
up and down as required. Emergency
from genomic data. These vast clinical for public cloud take up may have been
Management Victoria (EMV) and the NSW
datasets filter data in real-time to identify led from the bottom up rather than the
Rural Fire Service, for example, require
medically similar patient cohorts, and top down, and also demonstrates a clear
significant increases in computing power
compare their genomes to search for understanding of public cloud’s efficiency
during emergencies. EMV uses public
causative changes.2 benefits, rather than agencies moving to
cloud to provide a mobile application that
cloud purely as a compliance measure.
These advanced uses of cloud will become allows over 1 million Victorians to receive
ever more vital in enabling business digital 2.2 Benefits of a move to public cloud personalised information about developing
transformation and meeting the evolving incidents, and during large fire events, user
needs of citizens. Agencies are increasingly From specific, small innovations, to views of NSW Fire Service sites and apps
facing the challenge of providing services benefiting from the scale and elasticity can increase from 6 million to 14.1 million
that can scale efficiently, are cost-effective of cloud, to whole organisational change, within two weeks.3
and are ever more reliable. Public cloud will there are many gains that stem from
have a significant role to play in enabling integrating public cloud as part of an
agency’s IT structure.
2. AWS customer story
3. AWS customer story
10Harnessing public cloud opportunities in the government sector
Public cloud has also enabled improved intelligence to virtual reality. Previous public cloud has delivered cumulative
productivity for 71% of respondents, which research by Gartner (2018) has found the productivity benefits of $9.4 billion despite
is explored further in the following section key drivers of public cloud take up in the less than one third of businesses using
on economic benefits. government sector are increased efficiency paid public cloud services.
of service delivery and cost savings.
The third most identified benefit was There are a range of ways that agencies
improved services, reliability and data The survey findings reflect the positive can experience productivity benefits; for
security, identified by 61% of respondents. experiences detailed in the case studies example, IP Australia, an agency within
For Geoscience Australia, the service presented in Chapter 5, and also broadly the Department of Industry, Innovation
availability of one of its ‘mission critical’ align with the major technology drivers and Science which administers intellectual
applications increased from 90% when for businesses in adopting public cloud, property rights, uses public cloud to
hosted on-premises to 100% when using namely cost savings, agility in accessing process data, obtain insights, and make
public cloud.4 In a complex cybersecurity resources as required, and being able decisions faster compared to operating on
environment, public cloud can play an to instantly scale up and down. its legacy systems.5
important role in supporting government Importantly, the benefits of cloud are
Based on government sector expenditure
sector operations. Public cloud operators generally not coming at the expense of
on public cloud, which is around 23% of
are responsible for the security of their IT employment in the government sector.
total public cloud spending in Australia
infrastructure and implement technical and Only 18% of agencies reported a decrease
(IDC, 2018a) it can be estimated that the
physical measures to prevent unauthorised in IT staff after the implementation of
cumulative productivity benefits of public
access to data, including 24/7 monitoring public cloud. For non-IT staff, 93% of
cloud to the government sector could be
of IT assets and environments. Users can agencies reported no change in employ
in the order of $2.2 billion over the last
choose to encrypt highly sensitive content ment levels (with the other 7% unsure if
five years.
or use supported third party security this had changed).
solutions. Certified public cloud providers However, it is important to note that this
focus on the ongoing security of the cloud 2.3 Economic benefits of government is a rough estimate only, as traditional
to mitigate against cybersecurity risks. sector use of cloud measures of productivity are not as
Public cloud is transforming the whole applicable to the government sector, where
Further, public cloud is a platform for the
Australian economy. As part of a larger re measuring the value of ‘service’ is not as
future, providing a foundation for a range of
emerging technologies ranging from artificial search project, Deloitte Access Economics
has estimated that over the last 5 years,
Chart 2.2 Main benefits of cloud experienced by agencies surveyed
Improved agility - better able to scale operations as needed 79%
Improved productivity 71%
Better infrastructure and service/reliability/data security 61%
Easier adoption of exponential technologies
54%
(e.g. artificial intelligence, virtual reality)
Reduced technology costs 43%
Improved ability to process data 36%
Better interaction with customers 25%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Share of public cloud users surveyed
Source: Deloitte Access Economics, 2019
4. AWS customer story
5. AWS customer story
11Deloitte Access Economics
straightforward as measuring businesses’ Public cloud is also uniquely placed to sector, the ability to utilise these next
inputs and outputs via costs and revenues. enable next-wave technologies. Over wave technologies will unlock innovation
time, advances in technology will increase in citizen insights and the way the sector
That said, there is significant potential for
the ability to collect data, leading to is able to deliver services, resulting in
the benefits of public cloud in Australia
exponential increases in the volume potential efficiency benefits and a growing
to be even greater. As shown in Chart 2.3,
of data available for processing. economic impact.
public cloud expenditure in Australia in
2018 was $4.1 billion, expected to grow to Public cloud’s ability to process large and
$8.1 billion by 2022, with the government variable volumes of data is foundational
sector share of this valued at $1.9 billion to enabling technologies such as machine
in 2022. learning, drones, robotics, blockchain and
the internet of things. For the government
Chart 2.3 Public and private public cloud services spending
$9000
32%
$8000
$7000 30%
$6000
28%
$5000
26%
$4000
$3000
24%
$2000
22%
$1000
$0 20%
2017 2018 2019 2020 2021 2022
Private sector Government sector Government sector share of private sector spending (RH axis)
Source: IDC, 2018a. IDC definition of ‘government sector’ includes federal/central government, state/local government, education and healthcare sectors.
12Harnessing public cloud opportunities in the government sector
3 Government sector
use of public cloud
3.1 Current use Chart 3.1 Average surveyed agency’s IT structure
For the government sector across Australia,
public cloud represents new opportunities.
Through moving away from traditional IT
infrastructure towards a more flexible and
adaptable operating environment, this new
way of sourcing IT services provides the 6%
government sector with the ability to better
serve the needs of its citizens. On premise IT
Government sector use of public cloud 24% 35% Off premise IT – in government owned
reflects an amplified version of the and operated data centres
Australian public cloud situation overall; Pay as you go, hyper scale public cloud
the benefits of public cloud are potentially
greater, and the barriers are more complex. Outsourced local IT services
35%
The government sector is a significant
user of public cloud, spending around
$950 million on public cloud in 2018 (IDC,
2018a). When compared with business
use of public cloud, government sector
expenditure represents 23% of Australia’s
Source: Deloitte Access Economics, 2019
total public cloud spending (IDC, 2018a)6
and is proportional to its share of the
Australian economy (24%) (ABS, 2018).
Deloitte Access Economics’ survey
of government sector decision makers found Federal
Given that government sector agencies
tend to be large organisations with
significant legacy systems, this suggests
that, on average, public cloud accounts
for one quarter of an agency’s IT structure government
(Chart 3.1). Government data centres (35%)
their investment levels may be better than
expected based on these barriers.
and on premise IT (35%) account for the accounts for a
largest shares of agencies’ IT structures.
Federal government accounts for Agency size has a significant influence significant share
a significant share of public cloud
of public cloud
on its likelihood of using public cloud. As
expenditure in Australia. It is the third Table 3.1 shows, as the size of the agency
largest user of public cloud ($372 million increases, the share of its IT infrastructure
in 2018), behind the banking sector
($633 million) and the telecommunications
using public cloud decreases. The smallest expenditure in
agencies surveyed (those with between 100
sector ($392 million) (IDC, 2018a).
Across the government sector, take-up of
and 499 employees) used public cloud, on
average, for over half of their IT systems,
Australia.
public cloud varies. As shown through the while this declined to just 9% for agencies
case studies in Chapter 5, some agencies, with over 10,000 staff. This may reflect the
such as the Australian Bureau of Statistics, flexibility of smaller agencies in adopting
have started to experiment with public new approaches, relative to larger agencies
cloud and use it for specific applications. having more complex legacy systems or
Many are operating in a hybrid cloud organisational structures that may be a
environment, with a mix of on-premises, barrier to change. These findings correspond
private cloud and public cloud services. with the experiences canvassed in our
And others, such as the Queensland consultations with government sector
Building and Construction Commission, stakeholders (see Chapter 5) which indicated
have migrated major core services to public that smaller agencies are more agile and
cloud providers, or gone ‘all-in’. open to making a transition to public cloud.
6. This includes expenditure on IaaS, PaaS and SaaS. By some definitions, SaaS may not reflect a proactive decision by leadership to move to public cloud as the
underlying hosting platform may not be obvious. If this category were excluded, government sector expenditure on public could be around half of the total.
13Deloitte Access Economics
Table 3.1 Agency size and average Chart 3.2 Reported uses of public cloud by agencies surveyed
public cloud’s share of IT structure
Data storage 82%
Agency size Average Production/service operations 68%
(number of share of IT Big data analysis 39%
employees) systems in
public cloud Customer relationship management 36%
Financial operations/accounting 32%
100 to 499 51%
Artificial intelligence 29%
500 to 999 45% Human resources 25%
Other 21%
1,000 to 2,999 21%
Machine learning 21%
3,000 to 4,999 18% Marketing 21%
Internet of things 18%
5,000 to 9,999 12%
Personalising user interface 11%
10,000 or more 9% Blockchain 7%
Invoicing 7%
All respondents 24%
Robotics 4%
Source: Deloitte Access Economics, 2019 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Reflecting the early stages of government Share of cloud users surveyed
sector use of public cloud use, the majority
of agencies surveyed reported using cloud
Source: Deloitte Access Economics, 2019
for basic tasks. For example, over 80% of
respondents were using public cloud for
data storage and were less likely to be Chart 3.3 Current or near term plans for cloud deployment options
using the more advanced capabilities of
machine learning (21%) or personalised
user interfaces (11%). Australia n=31
This is mirrored in the private sector, Public (SaaS) Cloud Service
where the most common uses of cloud are (e.g.,Salesforce.com or Workday)
software applications (such as customer
relationship management, invoicing and Public (PaaS) Cloud service
marketing) and data storage (Deloitte (e.g., MSFT Azure PaaS or Heroku)
Access Economics, 2019).
Public (IaaS) Cloud service
However, this is expected to change over (e.g., Amazon EC2)
time as businesses invest more in cloud
0% 20% 40% 60% 80% 100%
and begin to utilise its more advanced
offerings such as hosting bespoke
applications, enterprise resource planning Worldwide n=910
and next-wave technologies. Some of these Public (SaaS) Cloud Service
functions may be less applicable for the (e.g.,Salesforce.com or Workday)
government sector relative to the private
sector (e.g. blockchain and robotics), Public (PaaS) Cloud service
though potential use cases may increase (e.g., MSFT Azure PaaS or Heroku)
over time.
Public (IaaS) Cloud service
An international survey of government (e.g., Amazon EC2)
sector decision makers found that in
Australia, around 40% of government 0% 20% 40% 60% 80% 100%
sector agencies were currently using Iaas,
PaaS and SaaS, while internationally, there Evaluating, Not currently Don't
Currently Have firm plans
was a stronger trend towards SaaS use using to implement but have no interested know
(IDC, 2018b). within 12 months firm plans
Source: IDC, 2018b
14Harnessing public cloud opportunities in the government sector
3.2 Government cloud policies
Government policy supports the transition
Australian government sector decision
makers are positive about the maturity Australian
government
of their cloud strategies (see Chart 3.4).
to cloud where possible. The federal
Globally, government sector decision
government, states and territories have
makers in Australia and overseas are
existing cloud policies or strategies.
These strategies, summarised in
most likely to consider their current sector decision
strategy as ‘managed’. However, when
Table 3.2, outline agency responsibilities
when using public cloud and provide
considering their strategy in the next
two years, Australian government sector
makers are
positive about the
guidelines on considering when cloud may
decision makers are more likely to perceive
be appropriate, as well as procurement,
their strategy as ‘optimised’, relative to
risk and other considerations.
These strategies tend to be broad in
their global counterparts (46% compared
with 39%) (IDC, 2018b).7 maturity of their
their scope and direction. While they
generally emphasise a strategy to migrate
IDC (2018b) research also finds that
government decision makers in Australia
cloud strategies.
current functions to public cloud where
are in fact most likely to describe their
appropriate, they leave much discretion
approach to cloud as ‘cloud also’, where
to individual agencies. In some cases,
cloud is considered among the options
implementation can be unclear or the
but not necessarily as the first option,
policy narrows the provider options
while internationally, cloud approaches
(Table 3.2).
are most likely to be described as ‘best fit’,
The strategies also commonly reference with decisions on a case by case basis (see
data security considerations; it is noted Chart 3.5). This suggests that the Australian
that Australian Cyber Security Centre government sector’s posture towards using
(ACSC) Protected Certification, now granted cloud for net new IT services is ahead of
to a range of public cloud providers, international comparators.
enables greater certainty around the
security of certified entities, meaning that
data can now be stored and processed at
the protected security classification level,
overcoming this barrier to public cloud
use. This is discussed further in section 4.3.
7. Managed: Description: Widespread
use of cloud is supported by proactive
business and IT leadership driving
decisions about cloud use, operational
policies, IT architectures, and contract
negotiation and monitoring. Mission-critical
workloads and applications are increasingly
implemented using cloud platforms and
services. Workload portability increases
while end users enjoy consistent
experiences across applications. Business
Outcome: Infrastructure and development
resources are more scalable, available, and
cost effective.
Optimised: Description: Company has
broadly implemented a cloud-native
strategy that is proactively managed and
is clearly driving business innovation
while improving IT operational efficiency.
Organizations' cloud strategies and policies
are consistently defined and implemented,
resulting in more robust and flexible IT
availability and lower costs and risks.
Business Outcome: Business innovation
and digital transformation exist throughout
the organization and partners, with a
clear understanding of true cost and value
(IDC, 2018b).
15Deloitte Access Economics
Table 3.2 Cloud policies by jurisdiction
Jurisdiction Policy Agency led aspects of cloud policies Government directives of cloud policies
Commonwealth Secure Cloud Agencies are responsible for their cloud Government has produced frameworks for agencies
Strategy (2017) migration strategies and security certifications to follow: a provider assessment framework,
of public cloud providers. Procurement responsibility and accountability framework,
of cloud services to be based on review collaboration platform, skills program and common
recommendations decided by agency shared platforms. Whole of government panels are
specific panels. to be used for government wide projects.
NSW NSW Government Agencies are responsible for their cloud The government has devised a procurement
cloud policy migration strategies and they bear the framework using The GovDC Marketplace for agencies
(2018) majority of security risk and responsibility to purchase services. The government has produced
when procuring public cloud solutions. a Registered Supplier List for public cloud providers
that have met overarching security certifications.
Government stipulates that health information must
not be transferred out of state.
Victoria Cloud Computing Agencies are responsible for their The government has produced guidelines on risk
Policy (2013) cloud migration strategies as well as assessment for public cloud procurement. Agencies
procurement processes. must adhere to cloud Victorian government computing
checklists, public record acts, security policies and
privacy policies.
Queensland Cloud Computing Agencies are responsible for their cloud Agencies must follow a ‘cloud first’ deployment
Strategy and migration strategies and the rate at which they model, where cloud solutions must be considered
Implementation transition from service provider to service first for any new IT procurements. The government
Model (2014) broker. Agencies are responsible for securing maintains a marketplace for ICT and cloud services for
their data and must produce a local supplier agencies using an authorised supplier panel. Whole
benefits test when procuring cloud services. of government cloud community skill share to enable
knowledge transfers between agencies.
South Australia Cloud Services Agencies are accountable for the security ‘Cloud first’ policy unless it does not deliver the
Policy (2015) of their data. best value for money or does not meet government
obligations.
Western Cloud Policy Agencies are responsible for their cloud Government has directed agencies that their first
Australia (2016) migration strategies and how ICT is managed preference for procurement should be to reuse or
and delivered. Agencies are to evaluate adapt existing systems if suitable. The Government
cloud and pay as you go option for all new or has developed GovNext, a common use agreement to
redeveloped services and projects. relocate 60 physical data centres into a pay-as-you-go
secure private cloud.
Tasmania Tasmanian Cloud Agencies may have residual small local Agencies must locate most of their information and
Policy (2015) ICT servers. services in the on-island Tasmanian Cloud.
All agencies are to have closed their existing data
centres and be progressively moving away from
owning ICT server and storage equipment.
Northern Cloud computing Agencies bear almost all the responsibility for Government procurement policies stipulate that a
Territory policy (2017) cloud related use, from migration strategies, to minimum 30% weighting to local content and agencies
procurement and securing agency data. are required to prepare an Industry participation plan
inviting at least one Territory enterprise.
Australian ACT Government Agencies acquire approval from the ACT Digital The ACT government has directed agencies to follow
Capital Territory Digital Strategy Service Governance Committee if a non-cloud a ‘Cloud first’ deployment model, with the aim of
(2016) based solution is selected. Agencies are migrating current assets and services into the cloud.
responsible for securing their data and ensuring Agencies are not to undertake bespoke builds unless
cloud providers meet business, regulatory and when a unique core capability must be satisfied.
policy requirements.
16Harnessing public cloud opportunities in the government sector
3.3 International experience Chart 3.4 Perspectives on maturity of current and expected cloud strategies
Globally, government sector use
of public cloud is still relatively low,
though internationally a greater share
of IT budgets are being spent on cloud. 50%
Australia
An IDC survey of 78 European government 46%
World
agencies indicates that only 9% of
40% 39%
respondent’s IT budgets are currently
being used on public cloud services, 32% 32%
expected to increase to 13% in the next 30% 29%
two years (IDC, 2018c). The higher use 25%
26%
may reflect better compliance of agencies 21%
20%
to governments that have ‘cloud first’ 20% 18%18%
16%
policies, such as the UK in where 14%
13%
14%
12%
publiccloud is specifically stated as the pre- 10%
ferred cloud deployment model (Govern
4% 4% 4% 4% 4% 4%
ment 3%
0%
Digital Service, UK Government, 2017). 0%
es
c
ic
le
ed
d
es
c
ic
le
ed
d
ho
ho
ise
ise
st
st
ab
ab
Private cloud use is twice as prevalent as
ag
ag
ag
ag
8
ni
ni
im
im
at
at
Ad
Ad
st
st
an
an
tu
tu
pe
pe
pt
pt
rly
rly
or
or
M
M
O
O
Re
Re
public cloud use, mostly due to perceptions
Ea
Ea
pp
pp
O
O
Maturity – Today Maturity – 24 Months from Today
on security, data privacy and the ability to
easily exit solution providers. In fact, 77%
of respondents reported that data centres
being located in-country was important or Source: IDC, 2018b
very important when considering potential
cloud service providers (IDC, 2018c).
Chart 3.5 Public sector posture towards using the cloud for net new IT services
The IDC survey also found that internal
cloud strategies in European government
agencies have been viewed as lacking
direction, with almost 40% of respondents
stating their current cloud strategy is
40%
either ad hoc or opportunistic. Only 13% of Australia
36%
respondents reported their current cloud World
strategy as optimized (IDC, 2018c).
30%
30%
Yet governments are starting to value 25%
the benefits that a transition to public 23%
cloud can bring, with 52% of respondents 21%
20%
expecting to see improvements in agility in
16%
2018, up from 22% in 2017 (IDC, 2018c). 14% 14% 14%
The latest available information on US 10%
Federal spending on cloud services
5%
highlights that it is comparable to European
expenditure, accounting for roughly 8.5%
0%
of the total ICT budget (IDC, 2016). The US Cloud First Cloud Also Cloud Last Best Fit We have no
When we need new When we need new When we need new When we select consistent approach
Federal government started a ‘Cloud First’ capability, capacity, capability, capacity, capability, capacity, deployment model to the selection
policy in 2010, yet saw slow up-take as functionality, we look
to Public Cloud-based
functionality, we look
to Public Cloud-based
functionality, we look
to Public Cloud-based
on a case by case
basis within a defined
of Cloud vs. other
deployment models
most agencies lacked an implementation solutions first solutions at the solutions only if we selection process
same time couldn't find other
plan or strategy. The replacement, ‘Cloud
Smart’ strategy aims to address adoption
issues that agencies faced under the
previous policy (Office of the US Federal Source: IDC, 2018b
Chief Information Officer, 2018).
It is hard to make direct comparisons of not far behind the top five countries’ double what was spent in Australia on
public cloud use across countries, but total expenditure on public cloud. For public cloud, its economy is around ten
by world standards, Australia is a fast example, while the US spent more than times the size of Australia’s.
adopter of public cloud9 and in fact, is
8. Private cloud refers to services and infrastructure which are maintained on a private network and dedicated to use by a certain group of users.
9. US was the largest market for public cloud services in 2018 (US$97 billion), followed by UK (US$7.9 billion), Germany (US$7.4 billion), Japan (US$5.8 billion) and China
(US$5.4 billion) (IDC data cited in Technology Record (2018). IDC (2018a) estimates Australian expenditure on public cloud in 2018 to be US$3.0 billion.
17Deloitte Access Economics
4 What's holding the
government sector back?
4.1 Barriers to adoption and Deloitte Access Economics’ survey
expansion of public cloud found that for government agencies, the
most reported barriers to adopting or
The government sector is facing
expanding the use of public cloud were
implementation challenges for public
policy related – namely data privacy
cloud, resulting in missed opportunities. This chapter explores the key
concerns and data sovereignty concerns,
Over time, if the government sector does
cited by 79% of respondents. This can barriers to government sector
not keep up with the pace of business use
reflect a disconnect between overarching use of public cloud. Namely:
of public cloud, it may struggle to meet the
policy and enabling policy, or perceptions
evolving needs of its citizens. The move to • understanding and skills gap
of risks which can be managed (see
public cloud has been likened to the digital
section 4.3). • risks – data privacy and sovereignty
transformation process for government,
with progress lagging behind the private Further, it was noted that leaders do not
• procurement policies
sector. Particularly in an election year, understand the full capabilities that cloud
‘big decision inertia’ can limit the appetite offers. The lack of provision for additional • budgeting
for change, however, it is in making the operational expenditure in place of capital
• organisational culture.
strategic decision to move to cloud that expenditure in an agency’s budget was
uncertainty can be reduced in the future. also identified as a challenge in adopting
cloud. These barriers are similar to
Firstly, the ‘burning platform’ for change is
those experienced by the private sector,
not evident for many agencies. While some
namely inadequate skills, legacy systems
high-profile moves to cloud have been the
and costs of adoption.
result of large scale issues with existing
systems, as experienced by the myTax
system and 2016 Census, these examples
have not influenced other agencies to
follow suit.
Chart 4.1 Barriers of adopting or expanding use of public cloud by government agencies
Policy issues (data privacy issues, data sovereignty issues) 79%
Structural issues (e.g. need to comply with existing policies,
73%
leaders do not understand the full capabilities of cloud)
Skills issues (e.g. lack of cloud knowledge in the organisation,
61%
too expensive to retrain staff)
Financial issues (e.g. cloud too expensive) 48%
Procurement issues (e.g. locked in to an existing contract,
33%
difficult to find an appropriate vendor)
No need to change 6%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Share of survey respondents
Source: Deloitte Access Economics, 2019
18Harnessing public cloud opportunities in the government sector
4.2 Understanding and skills gap cloud. It should be acknowledged that than 5,000 ICT graduates each year in
government cloud can be a good first Australia, and Australia’s ICT performance
A common theme discovered through both
resource consolidation step. Indeed, ranks seventh out of 16 countries
consultations and the survey of government
government cloud allowed government to on measures relating to consumers,
sector decision makers is that insufficient
tackle many of the data, governance and businesses, and workforce skills. In 2017
knowledge of or understanding about using
cultural challenges in an environment that there were just over 50,000 IT workers
public cloud is holding agencies back. In fact,
gave a level of comfort. However, in order in the public sector, but this will need to
73% of agencies reported that leaders do
to unlock the full benefits of technology grow significantly if cloud services are to
not understand the extent of capabilities
and cost savings over time, the government be better implemented (Deloitte Access
that public cloud offers.
sector is now on the verge of needing to Economics, 2018). Further, there will be a
There is a perception in the government make the next step to public cloud. need to upskill non-IT workers in the use of
sector that government data centres cloud, so that systems can be used by all.
Skills gaps in the IT sector are a problem
or ‘government cloud’ is the same as
for Australia more broadly. There are fewer
public cloud, when in fact this is a private
AWS initiative: cloud skills programs, AWS Educate and AWS The foundational purpose of the
Organisations looking to accelerate Academy, and a variety of local Educate Program is upskilling students
cloud adoption need employees with initiatives in Australia, like Kids in and academics across the K-12, VET and
cloud IT skills, and research from IDC Tech and the Young Women Leaders Higher Education sector. However, AWS
(2017) shows trained organisations are in AI program. also recognises the value of the Educate
80% faster to adopt cloud. However, a content portal for upskilling personnel
AWS Educate is an online portal with
study by TEKsystems (2016) indicates within public sector departments and is
content developed by AWS and other
68% of IT leaders do not believe their happy to work with relevant agencies to
leading educational institutions for
organisations have the required IT skills integrate the content into any existing
the purpose of upskilling students
in house to address their needs. In professional development ecosystems.
and academics on cloud technology.
response to the need for highly skilled The learning content is broken into AWS Academy provides higher
cloud IT professionals, AWS offers free education institutions with access to
micro credentials and in-depth career
access to over 340 online courses and formalised AWS authorised curriculum
pathways including basics topics like
through strategic partnerships with which aligns to and helps students
“Cloud 101” through to advanced
select digital training providers, and achieve AWS Certification. AWS
topics including “Machine Learning
over 40 classroom courses are being
Scientist”, “Cybersecurity Specialist” launched this program in 2017 and
delivered by AWS trainers. To further
and “Data Scientist”. Educate is currently have more than twenty
address the cloud IT skills gap, AWS
designed to support either self-paced enrolled institutions in Australia.
offers nine AWS Certifications to validate
learning or integration into other The program focuses on driving
technical skills and expertise, providing
learning delivery mechanisms, and educator enablement to deliver this
employers a way to identify talent.
includes yearly free cloud credits to curriculum, with the ultimate aim to
In order to develop the next generation support the practical implementation ensure student employment.
of cloud IT skills, AWS offers two global of learning. Source: AWS
Chart 4.2 Types of support non-cloud agencies need to start using public cloud services
Help with understanding how our current systems
80%
can be optimised through cloud
Information on hyper scale public cloud offerings 60%
Information on costs of transition to cloud 40%
Help with where to start in the transition to cloud 20%
General background information on cloud 20%
Technical support for specific queries 20%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Share of non-cloud users surveyed
Source: Deloitte Access Economics, 2019
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