Magazine article Public Finance

Cloud Systems Cast Shadow on Costing

Magazine article Public Finance

Cloud Systems Cast Shadow on Costing

Article excerpt

Cloud computing is revolutionising IT provision in public services. It promises to radically reduce costs through economies of scale and greater fl exibility, with some organisations claiming to have saved 30% or more from its adoption.

It is not surprising therefore that many public sector bodies are moving away from having their own data centres and their IT decisions are increasingly about 'sourcing' and the integration of cloud-based software. It is also why the UK government has adopted a 'cloud fi rst' policy since 2013. At the same time, more and more software suppliers are moving their applications to the cloud as it is easier to deploy, sell and maintain cloud solutions, with the expectation that by 2020 almost all organisations will be predominately using cloud technologies.

Cloud computing can, however, create problems for fi nance teams as it means that software and technology are purchased 'as a service', with expenditure potentially moving from capital to revenue. Plus, where charges are based on use, there may be less certainty over future costs. Th ere may also be VAT implications.

The use of cloud computing can bring new ways of working. This may include business process re-engineering, testing, training and data migration, as well as functionality and integration with other software. Costs arise from these activities, which can be performed by the provider, the customer's staff or third parties. Th ey may include administration, overheads, future upgrades and enhancements, as well as payment plans to smooth out large upfront costs or initial discounts. …

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