Budget Cuts Push Some to Embrace Cloud Computing

IT managers find the toughest problem is convincing users to switch applications.

Budget cuts in recent months have reduced the city of Miami's IT payroll from 102 to 80 positions, a significant contraction that could have easily led to drastic service cuts and internal morale problems.

But instead of succumbing to melancholy as more and more vacant positions were left unfilled, Miami's IT managers began looking at the possibility that cloud computing technology could be used to maintain popular services -- and to generate revenue for the city.

The first payoff from the effort: Miami 311, an online application that lets residents monitor the status of requests for services such as pothole repairs, removal of abandoned vehicles or investigations into reports of code violations.

The city is also assessing the cost-effectiveness of developing potential revenue-generating online applications, which could include custom data aggregation and mashup services that would be sold to businesses.

Budget cuts "have caused us to start evaluating everything," said James Osteen, Miami's assistant IT director.

Miami's situation represents the new world for IT managers: looking closely at cloud services to offset cuts necessitated by flat or shrinking budgets. Most are finding the potential for savings, but they're also encountering user acceptance problems.

Lincoln Property Co. in Dallas started using Google Inc.'s Gmail hosted e-mail service several months ago, after re-evaluating the Novell GroupWise collaboration software it had been using.

Lincoln CIO Jay Kenny said there was general dissatisfaction with GroupWise, so the real estate company replaced it with Gmail during a hardware refresh.

An internal total-cost-of-ownership study reached virtually the same conclusion as a recent study by Forrester Research Inc. -- that Gmail costs about $8.50 per user per month, compared with about $25 per user per month for in-house systems like GroupWise, Kenny said.

He acknowledged, though, that a good chunk of the company's 1,000 e-mail users aren't happy with the move to the cloud.

An internal survey found that 35% of users find Gmail worse or much worse than GroupWise, compared with 65% who said that the hosted offering is the same, better or much better.

"Change management is the biggest piece" of a migration, said Kenny.

Ted Schadler, an analyst at Forrester, said he would expect similar results if the company had migrated from GroupWise to, say, Microsoft Exchange, based on typical user resistance to change of any kind.

How cloud technologies will fare against Microsoft's offerings, IBM's Lotus Notes and other companies' cloud-based versions of widely used collaboration tools remains to be seen. But one thing is certain: IT managers want to learn all that they can about the cloud.

For example, Michael Fitchett, IT system development coordinator for the city of Chesapeake, Va., recently sought information from Los Angeles' IT department about its move of some 30,000 users from GroupWise to Google Apps.

"We're constantly probing the TCO on every one of our systems," said Fitchett.

This version of this story was originally published in Computerworld's print edition. It is a condensed version of a story that originally appeared on Computerworld.com.

Copyright © 2010 IDG Communications, Inc.

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