Cash-strapped regions hesitate to jump on cloud bandwagon

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This article is part of our special report ICT: Fuelling the economy.

The promise of a leaner, more efficient administration and innovative online services to citizens is making cloud computing an attractive solution for local governments. However, some are still reluctant to jump on the new IT bandwagon, fearing data protection issues and high investment costs.

In times of austerity, European regions are hesitant to invest in new e-government technologies such as cloud computing, even when they're being sold as a cost-cutting tool.

But Microsoft, like others in the online services industry, are keen to point out to studies that show the investment is worthwhile.

Oxford Economics, a leading economic forecasting consultancy, predicts that the EU's GDP could increase by €760 billion by 2020 if the EU matched US levels of investment in ICT. Germany alone expects the creation of 789,400 new jobs in the next five years from cloud computing.

“In times when public authorities are working on tighter budgets than ever before, cloud computing can help regions to increase efficiency and service delivery to citizens while cutting costs,” argues John Vassallo, vice president for EU affairs at Microsoft.

Ryan Heath, spokesperson for digital affairs at the European Commission, agrees that cloud computing offers opportunities for regions. "I don't think the cloud on its own can help regions to integrate, but it offers cash-strapped regional governments new and cheaper ways to collaborate and save money and share their best practices and so on," he told EURACTIV.

And indeed some regions appear to be ahead of the curve.

For example, the Regional Government of Catalonia in Spain has re-engineered its IT infrastructure towards cloud computing for 140,000 civil servants. The move helped reduce costs by 75% and is part of a wider effort to deploy private cloud solutions, including a new data centre to support more than 300 government institutions.

Flanders: A success e-story

In Belgium, the Flanders region launched in 2005 a platform called MAGDA – Maximum Data Sharing Between Administrations.

MAGDA handles all data-exchange between the Flemish, federal and local administrations and makes sure that they don’t ask citizens to provide information that they have already given to the authorities.

“We started back in 2005, when money wasn’t that big a problem. But we made everything very cheap,” said Geert Mareels, e-government manager for the Flemish region.

The first project did not cost more than €600,000 and there were only three people in the team. Now they need around €2 million per year to maintain and develop the programme. Plus, all partner agencies have to invest in digitising their own procedures.

“But I do think e-government and ICT prove every day that they’re worth the investment,” Mareels said.

Moving government services to the cloud allowed Flanders to significantly lower its administrative costs, Mareels said. In one project on distributing child benefits, they replaced over 250,000 paper dossiers with electronic ones, using cloud computing.

Similar results have been achieved for enterprises, regarding the forms needed to participate in government procurement procedures. “The administrations now can collect this data – VAT and social security – themselves, without asking companies to fetch out a form in another government agency,” Mareels said.

While other regional governments are cutting spending, Flanders plans to add new cloud services, such as the launch of a website displaying all enterprises in Flanders on an interactive map.

Mareels expects this to help regions integrate better and promote smaller businesses or inform them about public works projects or traffic disruptions.

The money issue

Despite ambitious projects, the other Belgian region, Wallonia, has not yet got that far. It has a “master ICT plan” to fuel its ambitions, but it doesn’t have funds to pay the bill.

Walloons have set themselves targets for 2018, whereby they want 80% of companies to use cloud computing. But when immediate needs such as welfare benefits, housing, healthcare or pensions are calling, the shine of an investment in new concepts such as cloud computing rubs off.

More favourable procurement conditions for cloud computing services could help, said a technical advisor to the Walloon government. “We need a clear direction on what could be done. If not, governments tend to focus on simple money-saving solutions,” he said.

The Flemish government agrees that some expenses should be given priority when it comes to investing in cloud. “A medium ICT-project easily costs €200,000 or more. And for that price the government could build a social housing building or buy new equipment for a school,” Mareels said. “We have to think what is worthy for the region”.

EU help

The EU can help reduce the financial burden by setting the right legislative framework that will make it safer and reduce risk to encourage investments, said the Walloon official.

But British cloud computing experts in the UK said they moved forward on their own, without waiting for the EU.

It is a matter of trusting the efficiency of the cloud, said the UK government in a statement. “This moves government from attempting to be the architect of bespoke digital solutions to a consumer of widely available and constantly improving mass-market products,” the statement reads.

The UK likes to highlight the London’s ‘Love Clean Streets’ online portal that allows Londoners to upload pictures of illegal dumping of graffiti by using a free phone application. The portal allows administrations to know about the graffiti and makes citizens more involved in their communities.

“This is a classic example of a public-sector cloud service that helps make other public services more efficient,” according to Microsoft, which has devised the IT tool.

Data sharing reluctance

But cloud computing has still to gain the trust of local governments.

A year ago, the Danish municipality of Odense wanted teachers to use a Google Apps online office suite with calendar and document processing. This was meant to register information about lesson planning and student assessments.

The plans of the municipality were waved off by the Danish Data Protection Agency, which ruled that the use of cloud computing in that context did not respect the consumers’ right to data privacy.    

Peter Deussen, senior researcher at the Fraunhofer Institute for Open Communication Systems in Berlin, stressed that any challenges such as this one can easily be solved.

Data privacy issues can be resolved by separating personal and non-personal (open) data, he said. Secure documents storage can provide seamless interaction between administrations, enterprises and citizens, optimise governmental processes by delivering documents in a timely manner, and enable inter-administration processes by electronic exchange of documents, he said.

'Cloud computing' describes a range of infrastructure, software, data or applications residing in the 'cloud' – that is to say, off your own premises and accessed via the internet.

A 2010 study by the University of Milan estimated that cloud computing has the potential to create 1.5 million new jobs in Europe over five years.

While businesses and governments tout the benefits of cloud computing, EU regulators have been more wary, as further use of cloud systems would mean a large swathe of public and commercial data would migrate to servers possibly located outside the EU.

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