BasicGov / BLOG

There was a recent article in Government Technology about how the states of Utah and Michigan are building cloud infrastructure with plans to package it for use by cities, towns and schools.  In Utah, the plan is to provide a “hybrid cloud” which will be composed of a mix of hosted state services and commercially provided offerings delivered through a state run service catalog.

The state of Utah is banking on local governments being more comfortable putting their data in a cloud if they know the cloud is owned by an organization with similar privacy concerns.   The state of Michigan wised to go one step further and provide a nation wide public-sector cloud that will hopefully help alleviate the economic pain in that state coming from declines in domestic auto manufacturing and other factors.

This creates some very interesting market dynamics.  Utah may end up competing with Vivek Kundra’s cloud computing initiative and www.apps.gov and Michigan will end up competing with Force.com, Amazon, Google and other major cloud providers.

So what happens if the city of Detroit wants to move over to Gmail like Los Angeles did?

Will state run cloud computing be operated for profit?

It’s going to be an interesting 2010.

Change is good!

I recently did an interview with a local journalist about how we moved CloudBench from enterprise software to a SaaS business model (see BC Business article from interview, “The Accidental Innovator”). While we’re still learning how to explain the benefits of SaaS to our local government marketplace, there were some key lessons I learned as we moved from traditional software to a subscription-based product.

Lesson 1: Sometimes the safe, proven solution is the most dangerous for both customers and suppliers.  When we still ran an enterprise business, it was hard work to get customers live quickly.  This was frustrating for them because anyone who takes months – even years – to go live will eventually question their purchase decision.  And it was expensive for us, as more and more working capital was needed to span the time we were working for clients who weren’t ready to pay us.

Lesson 2: SaaS and cloud computing were already being adopted by businesses and consumers.  You didn’t need to be Nostradamus to predict that government would also adopt the technology.

Lesson 3: You can’t run a Hummer franchise under the same roof as a Toyota dealership.  Building a SaaS business alongside traditional enterprise software is a recipe for internal strife.  Enterprise revenues are threatened by SaaS’s dramatically lower cost and time to implement.  As the SaaS team wins more business, enterprise revenues are cannibalized and the staff on the traditional side of the business don’t know whether to switch jobs or change company.

So was the change easy?  No.  Would I do it again? Absolutely!