ITAC Online - The Cloud Computing Issue - August 2011
In ITAliCs

Building on a Tradition of Excellence

Karna Gupta, President and CEO, ITAC Karna Gupta, President and CEO, ITAC

It is with great pleasure and enthusiasm that I address you as President and CEO of ITAC, via this month's newsletter.

Over the last six decades, ITAC has been providing excellent policy and advocacy work.  I look forward to building upon this legacy and making our position in the industry even more compelling.  It is a privilege to have been given a platform from which I can showcase our Canadian ICT talent and to have the opportunity to make Canada a local and global technological powerhouse.

ITAC represents an extremely diverse ICT community – spanning telecommunications and internet services, ICT consulting services, health, microelectronics, hardware, software, electronic content, and more.  In my day-to-day work, I look forward to drawing on my many years of private-sector experience in a number of these areas; and I am equally impassioned by the idea of learning about other technology sectors and how they contribute to a vibrant ICT sector and the economy as a whole.

I feel very fortunate to be joining ITAC at a time when technology is truly being seen as an answer to a variety of fiscal and social challenges being faced by our country.  The launch of Canada’s Digital Economy Strategy, for instance, will affirm a number of the policy proposals ITAC has been pushing forward over the past several years.  The Treasury Board's current Strategic Review of operations and government spending will also highlight ways in which technology can make our country more efficient, productive and, as a result, more competitive and prosperous.

With this in mind, it seems fitting that this month's issue of ITAC Online is focused on Cloud Computing as a technological tool that can contribute to a very broad and profound transformation of government operations.  In the pages below, you will read about three of the many ITAC members who are doing industry-leading work in this area.

Reading about these companies made me ponder on how they fit into the grander tech eco-system in Canada; and how, when our community works together toward a common goal, there is nothing beyond our reach.  Together, we have the potential to turn Canada into an unrivalled country where new, innovative companies can flourish.

What needs to happen first, however, is the creation of an adoption model for innovative technology solutions – one that will allow both private and public sector organizations in Canada to easily and naturally adopt innovative technologies as quickly as our ICT community can create them.  Taking Cloud Computing as an example, we must look to the Canadian government to be a model adopter and long-term user.  This will lead to the incubation and commercialization of more Canadian technology companies.  Every time a truly great company is born, it creates an equally great spill-over effect resulting in specific centres of technological excellence.  This is what our country needs; and thus the creation of such an adoption model will stand as my top priority as President and CEO of ITAC.  It is undoubtedly a mammoth undertaking, but considering the potential within our member community, it lies within our reach.

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Putting the business issues first

David Woelfle, Chief Technology Officer, HP Canada David Woelfle, Chief Technology Officer, HP Canada

As cloud technologies evolve and become increasingly secure and reliable, cloud adopters must shift their focus from the technology-related issues, to the business issues driving these technologies forward.  This is the message David Woelfle is working to spread, and as Chief Technology Officer for HP Canada, he has an excellent platform from which to do it.

David says the benefits of adopting cloud technologies are straightforward:

“It’s all about sharing workload to make a more efficient consumption of resources, taking advantage of economies of scale,” he said.  “Because capacity has become relatively cheap and very concentrated, we’re back to an era much like we were with mainframes when they first came on the scene – where applications don’t consume a very significant portion of a platform anymore.  Cloud automates the process of cutting up a platform and sharing it out, to make it much more rapid and flexible.”

David says there are two key business outcomes a user is trying to achieve in adopting a cloud solution.  First, the rapid provisioning and de-provisioning of capacity (i.e., the user wants to be able to spin up an application, run it while they need it, turn it down when they don’t need it, and free that infrastructure capacity for someone else to use until that original user needs it again).  Secondly, the user wants to balance their workload between what they want to keep in-house and what they want to push out into a public or provider model.

“We spend a lot of time talking about hybrid models, which we see as being the norm for the foreseeable future, where a certain amount of capacity is contained and private, and a certain amount is public,” David said.  “In fact, we’re developing a set of capabilities called CloudBurst which allows people to work internally then ‘burst’ out when they need more capacity off one of our cloud service engines.  In the end, it’s all about flexibility.”

He says the key behind the decision to go public or private is economics.  If you have an unpredictable workload with bursts of busy times followed by periods of downtime, you may not want to buy the hardware for your system, and so a public cloud offering may be the way to go.  On the other hand, if you have a consistent workload, it’s probably more efficient to own your hardware on a permanent basis.

Three other foundational issues which David says must be considered by any cloud adopter (and which tend to stand as the most significant differentiators among vendors) are security, privacy and reliability.

“Many public cloud providers, for example, don’t offer much in terms of Service Level Agreements, and they make no commitment to where the data is or how it’s protected.  It’s an open, public service,” David explained.  “Does that mean it’s bad?  No, it means it is what it is.  There are uses it’s appropriate for, and there are uses it’s not appropriate for – especially when working with government.”

HP recently partnered with the Australian government on their “G Cloud” initiative, which is essentially an engine that enables data sharing among a number of the government’s smaller departments, bringing them together into one environment, so that they can take advantage of the economies of scale.  It brought the Australians automation and the flexibility necessary to handle short-term workloads and development projects, where they would have previously been forced to look elsewhere for the capacity.

“We are able to provide the Australian government with the capacity and new capabilities they desire, while adhering to all their privacy and security legislation,” David said.

Turning to the Canadian federal government, David says the most obvious starting to point in terms of cloud adoption is the government’s e-mail system.

“With approximately 450,000 mailboxes, the Canadian government has a pretty inefficient construct because each department has its own system,” he said.  “If I turned that into a service, the economies of scale – even for half of it – are very significant.  If you could capture it all on one service, it would be amazing.  The savings would be real and huge.  That’s why mail is the most popular SaaS right now – it’s easy to figure out, the math is obvious, and it’s quite compelling for most organizations.”

David says there is a huge opportunity for the Canadian to cut costs and increase productivity through the adoption of cloud, because there is a lot of software that is used by the government for only a small fraction of the year.  But first, the government needs to figure out how to take advantage of the cloud appropriately.

“My advice to government: put the business issues first.  At this point, the tech issues are relatively straightforward.  I don’t want to understate the tech issues, but they’re manageable, and in many cases, they mean making decisions between public solutions and solutions provided solely for government because of the need to meet certain standards.

“The real issue is how to create the business adoption model within government – requiring policy, operational and process changes – to make them say they need to change the way they manage budgets.  The government is going to want to transfer who owns capital within which particular budget, and while the newly formed Shared Services Canada agency could be a good foundation for that, all of these things are going to have an impact on how the business of government is going to operate.  And that’s the hard part.  All the challenges we’ve seen governments around the struggle with are business challenges, not technological challenges.”

David says the Canadian government is in a very fortunate position from which to adopt cloud solutions, with a breadth of public and private sector success stories around the world to learn from.  The first step is simply to develop business strategies that are just as innovative as the technology products they are used to acquire.

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With proper planning, adopting the cloud is easier than ever

Darryl Humphrey, Senior Manager of Cloud Computing, Analytics, Deloitte Darryl Humphrey, Senior Manager of Cloud Computing, Analytics, Deloitte

Deloitte has a holistic perspective on cloud computing.  It not only analyzes the technology driving cloud, it is also a consumer and vendor of it.

Darryl Humphrey is Deloitte’s Senior Manager leading Cloud Computing in Canada.  He says we’re just now reaching a point where adopting cloud technologies is viable for just about any enterprise.

“The idea of IT transformation as a service enhancement and cost reduction mechanism has been front and centre for the past decade,” Darryl said.  “But in the past two years or so, cloud has truly reached the point of enterprise robustness.  It has left the ‘early adopters only’ phase, and we can now look at solid data that will help governments and corporations make informed decisions on how and when to adopt cloud technologies.”

Even considering the leaps and bounds industry has made in the security and reliability of cloud technologies, however, Darryl says adopting these technologies still requires a very thorough analysis of the risks it poses to your organization.

“You have to look at where the service is coming from and any legal issues associated with that, who is providing the service, what your role is in that service, as well as what the costing model is,” he said.

“Much of what we hear about data breaches in the cloud these days includes only the numerator.  We hear about how many companies are affected and how much data was breached, but we rarely hear the other side of the coin – the denominator – that the vast majority of the data that was stored in that data facility wasn’t touched at all.  A proper risk analysis will consider the likelihood of your data security being breached while in a cloud against how secure your own systems are.  So the question is: are you really making a riskier move heading in this direction?”

Deloitte has been in the cloud business for nearly a decade.  The company has worked with several other federal governments and large corporations who have made (or are making) the shift to cloud based systems.  The key to a successful transition, Darryl says, is to understand exactly how you’re going to capture the benefits of the transition.

“If you have a data centre with 10,000 servers, for example, and by moving to the cloud you get rid of 5,000 – well if you have a 15 or 20 year contract on that data centre floor space, then you haven’t saved much, because the majority of costs are in maintaining/leasing that space.  Those servers may also have a seven year amortization rate attached to them, so there are tax and accounting implications to freeing up those servers.  This is more acute in the corporate world, but even in government, these assets are amortized according to certain policies, so any adoption strategy needs to include a hard look at how you can best reap the value from adoption.”

As a consumer of cloud technologies, Deloitte also maintains several of its own private clouds.

“We do this for our own purposes, but also as development centres for clients’ testing and proof of concept work that they don’t want to do in their own environments,” Darryl said.  “We now have private clouds using technologies of all the major hardware and software vendors.  That’s allowed us to take a different role in our relationships with customers, because we can set up a number of business strategies all with different levels of risk tolerance to them, and because every business strategy has a tech component to it, we can do scenario play in our own environment to help clients understand how different cloud configurations will work for them.  For example, we can spin up an Enterprise Resource Planning (ERP) program in a little less than an hour, start to finish.”

As for the Canadian federal government’s adoption of cloud, Darryl sees them adopting a hybrid model over the coming years.  But what’s most interesting to him about the government’s adoption of cloud technologies is not necessarily on the adoption side:

“The Canadian government is in a uniq1ue position to work with the business community to facilitate  the use of cloud services and technologies to enhance competitiveness.,” he said.  “If it can free up material amounts of server capability, the federal government could work with the vendors to creatively establish an incubation ground for companies lacking access to infrastructure, preventing them from having to go out and raise, say, $10-million just to get their infrastructure in place – let alone develop their product.  If these companies could go to a public-private service and in fact gain those services in order to provide theirs to the market, we’re talking about something that could really help companies out during the start-up phase and significantly drive the productivity of the Canadian business sector.  Some people within government may see that as a ‘no-brainer,’ because they’ve been charged with increasing the amount of innovation in the private sector and creating a truly knowledge-based economy.  They will have to be careful not to become a competitor, though, which will take quite a bit of forethought.”

For now, what’s important to Darryl is that organizations of all sorts realize how much potential cloud holds in terms of the provision of shared services both internally and externally.

“For the first time, we can reliably abstract capabilities away from the physical servers, and that just gives us a level of flexibility we’ve never had before,” he said.  “It’s an imperative that every public organization of any size makes an informed decision on when, and when not, to use these technologies, and that’s a multi-variant problem – it’s not just about cost savings.”

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Grounding the cloud

Alison Brooks (top), Director of Public Sector Research, IDC Canada and Nigel Wallis, Research Director, IDC Canada Alison Brooks (top), Director of Public Sector Research, IDC Canada and Nigel Wallis, Research Director, IDC Canada

When you’re head’s in the clouds, sometimes visibility is a problem. Similarly, there remains a certain “fogginess” around different aspects of cloud computing – what are the benefits, the risks? Who should adopt and how?

As a provider of market intelligence and advisory services for the information technology, telecommunications and consumer technology markets, IDC Canada is well positioned to provide its clients with the information they need to navigate the cloud.

Alison Brooks is Director of Public Sector Research for IDC Canada. She says that most of the benefits of adopting cloud solutions are obvious – more efficient use of resources, reduced over-head costs, and perhaps most obvious, the move from “cap ex” (high upfront capital costs with traditional on-premise infrastructure) to “op ex” (operational costs). What will help further drive cloud adoption is an emphasis on educating potential adopters, and the responsibility to do this, Alison says, resides with the vendor community.

“Not to be ‘punny,’ but there is a ghostly nature to what we think of as the cloud,” Alison said. “It’s up to people within industry to be a bit more black-and-white and give it some tangibility – by explaining ‘This is the value prop… this is the ROI we got in the US…’ – because people still think of it as this abstraction and we need to conceptually and tangibly move beyond that.”

Demystifying the cloud as much as possible is increasingly important in Canada, as the government moves toward finding ways to cut operational costs.

“As the government becomes more earnest in trimming fat at all levels, the whole notion of only paying for what you use is going to become very attractive,” she said. “But it’s impossible to innovate if your operational costs keep escalating.”

Alison and her colleagues at IDC see cloud computing as one tool within a suite of technologies that are capable of bringing longstanding and meaningful transformation to government operations. She says our government officials cite two key concerns as barriers to cloud adoption.

“The biggest concern is always security. About 70 percent of our respondents state security as their number one issue,” she said. “The second is integration with in-house systems and performance issues. So again, I think there is an educational element that is incumbent on the vendors, to manage expectations and dispel fears or concerns clients have.”

Nigel Wallis is Application Solutions Research Director with IDC Canada. He agrees that education is an area where much more can be done to help ease adopters into the realm of the cloud. For now, when dealing with clients like the Government of Canada, he says we will see the use of private cloud systems in order to ensure data retention, regulation, and so on. While this certainly makes sense from a privacy and security perspective, it means the government will miss out on some of the benefits of going public.

“In the public cloud, for example, everything moves faster,” Nigel said. “With SaaS, you’re up and running anywhere between two and four times faster. The difference can be 12 to 18 months for a traditional implementation, versus three to four months for a SaaS implementation. That time-to-value is a massive differentiator.

“Looking at the federal government’s payroll refresh right now, one could ask, ‘Is this really the best way to do things? Should the government really customize an entirely new application, or might it be smarter to take an existing application and just configure it?’ The latter would cost less on systems integrations, quality assurance and testing, and consulting, plus the application would be up and running much faster.”

Nigel says the government’s shift to cloud-based solutions will be slow and gradual. In the meantime, some significant business model shifts have already begun to take root within Canada’s vendor community.

“Over the last four years, even with upheaval in the market, the pure cloud players have steadily kept growing their revenues – and their market valuation keeps going upwards. That’s interesting, because the economics internally for cloud vendors aren’t that attractive at first. You have the capital costs of the data centre and sales force, and then you get paid per user per month. So while it’s profitable long term, it can be difficult on the short term,” Nigel explained. “In contrast, if you look at a large traditional IT vendor, they sign a big upfront deal worth millions, then receive trailing payments for maintenance as time goes by. But now, we’re seeing cloud-based vendors with over $2-billion in annual revenues due to their ability to win big enterprise contracts across North America. They matter in the enterprise, and this cuts into revenues, profit and growth for the traditional on-premise vendors. In response, nearly all IT vendors companies have had to invest in the cloud even though it’s not the best short-term investment. If they don’t cannibalize themselves, someone else will. So while cloud is growing the overall market, it’s driving down the marginal profit for traditional vendors. It’s a very interesting and compelling environment – especially for start-ups.”

As a result of the federal government’s relatively slow rate of cloud adoption, and the changes Canada’s major ICT vendors are undergoing to include cloud solutions in their offerings, Nigel says the government and industry will be in an interesting position as they do business together down the road.

“In five years, vendors will constantly be responding to RFPs saying: ‘Well, we could do it on-premise in your data centre, but it will cost two or three times more than if we could run it out of our data centres. We could create a private cloud option so that the government data sits in a separate server, but as soon as you want it customized your way, it’s going to cost much more.’ And that will change the way government makes up its mind,” he explained. “The federal government won't change the IT architecture for defense, tax, health, etc., but there are a lot of areas in which it will.”

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ITAC Events

September 20, 2011

“So many paths…” - An ITAC / CWC Speakers Series event

September 20 - 21, 2011

Alberta ICT Showcase featuring ITAC Board of Directors

September 20, 2011

ITAC Board of Governors Dinner - featuring Preston Manning

September 27, 2011

ICT as Smart Grid Enabler

October 19 - 20, 2011

ITAC 17th National Executive Forum on Microelectronics


For a full event listing, and to register for ITAC events, go to: itac.ca/event_cal

ITAC News

Karna Gupta, New President and CEO of ITAC

Karna Gupta, a widely respected senior executive with over 30 years experience in the Canadian and international information and communications technology industry, has been named the next President and Chief Executive Officer of ITAC, effective August 25, 2011.

Read the complete news release here: http://itac.ca/media_details/2190

ITAC Partners with Radford on Compensation Survey Update

ITAC has entered into a partnership agreement with Radford, an Aon Hewitt company, as its provider of choice for Canadian compensation data.  Radford's compensation surveys provide the pay data needed to help your company design and implement comprehensive programs to help you meet your goals in hiring and retaining key talent.

Through this partnership, ITAC members may participate in the Radford Global Technology and Global Sales Surveys in Canada only or in all countries of operations.  A number of leading Canadian technology companies rely on Radford as their primary survey source to deliver the market insight required for making informed global compensation decisions.

More information about this partnership and Radford surveys is available on the ITAC Compensation Survey page.

ITAC Continues to Collaborate with PWGSC on Software Licensing Supply Arrangement

After several months of close collaboration with the federal government on a new vehicle for purchasing software, Public Works and Government Services Canada (PWGSC) released a Software Licensing Supply Arrangement on February 1, 2011.

While the initial “pilot” phase for this SLSA is well underway, ITAC continues to work with PWGSC to make the SLSA as mutually beneficial to both industry and government as possible.

If you are a member of the software industry and have feedback on this SLSA, or the process surrounding it, we encourage you to get in touch with us.  Please contact Linda Oliver at loliver@itac.ca.

Subscribe to the WCIT 2012 in Montreal Newsletter

In October of 2012, the 18th World Congress on Information Technology will take place in Montreal, Canada.  The theme of the congress is “The New Digital Society,” an event that will explore fulfilling the promise of the Digital Age.

The industry’s foremost thought leaders, senior government officials, academic and international institutions and global media will converge in Montreal to discuss how the world can continue to benefit from the information technology and communications technologies.

The WCIT 2012 Organizing Committee invites WITSA members' to subscribe to the WCIT 2012 Monthly Newsletter.

You are invited to subscribe to this newsletter and encourage your members to also subscribe:
http://www.wcit2012.org/index.php?option=com_rsform&Itemid=28&lang=en.

Other News and Events

Federal Government Creates Public Agency to Make More Efficient Use of ICT

The federal government has created a new public agency, Shared Services Canada, to better manage how the government acquires ICT products and services.

The government will move to one email system, reduce the overall number of data centres from 300 to less than 20, and streamline electronic networks within and between government departments.  This will improve services to Canadians, make ICT more secure and reliable, and save taxpayers' dollars in line with the Government of Canada's plan to return to balanced budgets.  All resources associated with the delivery of email, data centre and network services are being transferred from 44 of the more IT-intensive departments and agencies to this one new agency.

ITAC fully supports the government's move to make its ICT spend as efficient as possible.  We believe the federal government should be a leading user of technology - a model for organizations across all industry verticals to follow.  To do this means investing in the ICT solutions our industry's members offer, and reaping the benefits of their ability to create truly innovative products and services.

Liseanne Forand, currently Senior Associate Deputy Minister of Human Resources and Skills Development and Chief Operating Officer for Service Canada, has been named President of Shared Services Canada, effective August 4, 2011.

Access the full government news release here: http://news.gc.ca/web/article-eng.do?mthd=tp&crtr.page=1&nid=614499&crtr.tp1D=1.

2011 Canadian IT Leadership Awards Nominations Deadline Extended

Now in its second year, the ComputerWorld Canada IT Leadership Awards recognize prominent professionals and up-and-coming stars whose work has had significant positive impact on the contributions of information technology to an organization.  Unlike other award programs, ComputerWorld Canada’s IT Leadership Awards recognizes the different complexities and issues for small to medium business as well as large enterprises.  Therefore, the Awards are divided into two separate categories: Small Medium Enterprise (under 499 employees) and Large Enterprise (over 500 employees) covering private, public and broader sector nominations.

The nomination deadline is now August 18, 2011 at 5:00pm EST.

Nominate yourself or a colleague today, for up to three of the award categories that recognize outstanding achievements by individuals.  Award Categories include: IT Leader of The Year , IT Manager of the Year , IT Rising Star of the Year , IT Educator of the Year, IT Mentor of the Year , CATA WIT IT Mentor of the Year.

For more information, and to submit an entry, visit: http://www.itleadershipawards.com

ITAC Members Receive Discounted Registration Rate at GTEC 2011

The 2011 GTEC conference, “Connected Government – Working Together to Better Serve Canadians,” will take place October 17-20, 2011, in Ottawa – and ITAC members will receive a discounted early-bird rate of $795.00!  (Simply enter the promo code: ITAC01.)

GTEC brings together leading public and private sector experts to collaborate on serving citizens better through innovation and technology. Our conference, exhibition and Distinction Awards program celebrate the best of breed technology, and best practice leadership in Canadian and international government.

Given the need to work horizontally across departments and jurisdictions to improve service delivery and diminishing budgets, the pressure on governments to leverage efficient, secure, and reliable technologies has never been higher. In 2011, GTEC will help you prepare for the tsunami of change ahead by gathering delegates from across Canada to collaborate and participate in a variety of policy discussions.

Fore more information, visit: http://www.gtec.ca/.

The Catalyst Canada Honours - October 18, 2011, in Toronto

The Catalyst Canada Honours celebrates individual champions of women in business.  Recognizing that what’s good for women is good for business, these exceptional leaders are personally and visibly committed to the advancement of women and serve as powerful role models for Canadian corporate leaders.

Please join us on October 18, 2011, to recognize The Catalyst Canada Honours 2011 champions.  Contact Jessica Dolmer at canadahonours@catalyst.org to reserve your table now.

Dinner Chair: Bill Downe, President and CEO, BMO Financial Group
When:  6:00 p.m. Reception, 7:00 p.m. Dinner and Ceremony, 9:00 p.m. Evening Concludes
Where:  The Fairmont Royal York, 100 Front Street West, Toronto, Ontario

WITSA Global Public Policy Summit 2011 – November 6-8 in Guadalajara, Mexico

MexicoIT, along with the Mexican Information Technology Industry Association (AMITI) and the Mexican Chamber for the Electronics, Telecommunications and Information Technology Industries (CANIETI), welcomes delegates to the WITSA Global Public Policy Summit 2011, to be held from November 6th to 8th, 2011, in the beautiful city of Guadalajara, Mexico.

Join 500 ICT executives, government officials and policy makers from more than 40 countries to share and learn how to promote the use of ICTs in public policies to overcome social exclusion and improve economic performance, employment opportunities, quality of life, social participation and cohesion.

The WITSA Global Public Policy Summit 2011 is the right place to understand how ICTs, properly used, can be a valuable tool to extract economic and environmental benefit from the increased demands in the new society.

Find more information here: http://www.gpps2011.org/site/

Access the Funding Portal

Every year, Canada's three levels of government invest about $12 billion in grants and contributions, but many companies report that they have little understanding of how to access these resources.

On July 11, 2011, an online bilingual service called THE FUNDING PORTAL launched across Canada to help businesses secure public funding through four easy steps: Find It, Apply for It, Score It and Advance It.

THE FUNDING PORTAL website features TFP Search™, a high-powered search engine that allows users to instantly search all Canadian public funding programs.
Users complete their applications in secure online workrooms and can have their drafts evaluated by the Portal's Expert Review Panel to gain valuable feedback through a TFP Scorecard™.

THE FUNDING PORTAL boasts Canada's top funding experts, including: Marielle Piché, the former Executive Director of the Industrial Research Assistance Program (IRAP); Dr. Kevin Goheen, a respected expert on tax credits (SREDs); and Dr. Sherif Barakat, a recently retired Vice President, National Research Council of Canada (NRC).