Cloud: New Zealand Productivity Commission misses the goal while the Australians get it right

futureNew Zealand’s Productivity Commission released a report this week that included a bow shot across the Department of Internal Affair’s Cloud Programme, claiming that the government’s Cloud Programme may be slowing Cloud adoption, a key plank of what they see as a tool to unlock productivity. Meanwhile, across the Tasman, the Queensland government released its ICT Strategy Action Plan, that not only takes a more pragmatic look at Cloud adoption, it also makes some strong plays to support local ICT suppliers. Something that the NZ Productivity Commission report appears to have missed.

The Commission’s report can be found here.

I’m not going to cover it all, just the ICT aspects. For example, the Commission, getting it right, notes that we lack ICT Skills. I tend to agree, however it tends to be in certain slices of the ICT sector, such as development, where in other areas we have an over abundance of resource, such as Level 1 Support. The Commission says that:

“Computer science graduates could be encouraged to undertake a one-year programme in business studies, to prepare them for work in ICT-intensive firms. Closer collaboration among small firms and tertiary education providers could also improve the supply of “work-ready” ICT graduates.”

Half right and half wrong in my opinion. We are still holding on to this dinosaur notion that we can put a student into a three year computer science degree and expect them to be match-ready at the end, when we already know that the pace of technology is changing so rapidly, by the time they leave, their education is redundant. Academics refuse to do anything about this. Adding another year for Business Studies will simply exacerbate the problem. Give me a smart school leaver and six months and I will give you back a well-balanced ICT professional ready full-time work. The point is, we need to create ICT apprenticeships, not tie up students in a stuff classroom detached from the rest of the world for three or more years.

Now for the Cloud Computing recommendations:

“Cloud computing offers many benefits. Its products and services are “scalable”, which helps firms that are small and/or variable users. It expands choice and helps to intensify competition and drive down prices.

The Government has been a strong adopter of New Zealand-located cloud services but appears to be missing opportunities to use lower-priced offshore services. It should address data sovereignty, security and privacy risks associated with offshore cloud services through international negotiations, with Australia in the first instance.

The importance and rapid rate of change of cloud computing create regulatory challenges. The Government should pursue free-trade-in-data agreements with other countries, with the aim that data owners’ rights and responsibilities are not affected by the data’s physical location.”

Aside from the first sentence, this is just plain incorrect and confused. It is my experience that small to medium private firms in New Zealand are already heavily consuming offshore, and onshore, and are not paying any attention to Government “regulation” or direction. In fact, you’d be hard pressed to find a SMB that is not using Cloud.

In the Government Agency area the Commission alludes to, but misses, the problem. The Commission says that using offshore services represents a cost reduction, but we should note that doesn’t always translate to increased productivity, just lower operating costs. What you see here is “ICT Architecture by Accounting”, that being accountants defining what an ICT Service should look like by how much it costs…

In fact, Government Agencies are discovering that the Common Capability services that they are “mandated” to use, are never going to fulfill all their ICT needs. For example, their is almost no software as a service (SaaS) offering and that is where a lot of money is going right now. The Commission’s focus tends to be one of “iron and tin” (disk, servers, RAM, technical elements) rather than actual capability. A common problem that DIA perpetuates.

Agencies are moving to Hybrid cloud and in my experience their decision making process on which services to utilise depend on a number of factors, of which one is cost. It’s taking time, but Agency CIO’s are starting to understand the power of “ICT as a Service” which includes a stack of standard Cloud offerings and a new range of services that can be layered on top.

Where the government holds up adoption is simple. Mandating a service causes a distraction that must be overcome. Much time is spent circling the service to understand how it can be retro-fitted to an agency as opposed to taking business requirements and opportunity then examining the market to find the best solution. Don’t get me wrong, the local Cloud offerings are very good, just not for everything.

The Comission has a bit of a go at DIA for taking a risk approach, as I have said before, I think it is the best way. DIA are saying, here is the list of questions you should answer, if you are satisfied, consume whatever you like. Putting aside that is at variance with the “mandated” approach (hopefully they figure it out sooner or later), this is what most sensible companies do. Looking to change trade agreements to protect data is dinosaur thinking. If you want to protect your data there are a range of tools. Basically you can have all the security you can afford.

What the Commission fails to understand is that Cloud is just a tool that you utilise to unlock benefit on top. For example. Cloud Desktop as a Service would allow more people to work from home. We know from studies that people who work from home are healthier and happier. We know that it saves the company money. We know that on average, they are ten percent more productive.

And now for something completely different, but related.

Queensland Government released recently their ICT Strategy 2013 – 2017. Buried in that document is some really good stuff, but one of the areas I wanted to focus on is the push to get more local ICT companies responding to, and winning, government ICT contracts.

“Small to medium-sized businesses are an integral part of Queensland’s economic and social fabric, with the potential to provide innovative and flexible solutions for government. This plan creates the conditions to enable them to access government business more effectively than ever before. A set of guidelines will be implemented into the early market engagement process to make sure that SMEs are given the opportunity to provide better value for money options for government through the tendering process.”

  • At least one responding SME capable of delivering will automatically be short listed in the evaluation of ICT offers.
  • Government Information Technology Conditions (GITC) are simplified for SMEs.
  • Significant contracts will be unbundled where appropriate to minimise risks to government, improve value for money and harness innovative solutions. This means that SMEs can align their capability to stages of a project and be competitive through the process
  • Major consortiums cannot change sub-contracting arrangements relating to SMEs without the government’s express approval.
  • Government can directly engage SMEs in the provision of innovative solutions up to $500,000, which demonstrates value for Queensland in addressing government priorities.

It’s a good start and something that the New Zealand government should consider. Their is a lot of talk from Minister’s about supporting local ICT companies, but when it comes right down to it, little action. New Zealand ICT companies are world class (Xero and Wynard as two examples) and can more than hold their own against the multi-national mega-corps that are slowly dying, they just don’t realise it yet.



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