On September 21, 2011, the House Science, Space and Technology Subcommittee on Technology and Innovation held a hearing entitled “The Next IT Revolution? Cloud Computing Opportunities and Challenges.” Chaired by Rep. Ben Quayle (R-Ariz.), the hearing highlighted the economic benefits of cloud computing, including the cost savings that could be realized when switching to the cloud through increased productivity and enhanced sustainability. Witnesses included Michael Capellas, chairman and CEO of Virtual Computing Environment; Dr. Dan Reed, Corporate Vice President, Technology Policy Group, Microsoft Corporation; Mr. Nick Combs, Federal Chief Technology Officer, EMC Corporation; and Dr. David McClure, Associate Administrator, Office of Citizen Services and Innovative Technologies, General Services Administration (GSA).

In his testimony, Mr. Capellas projected cloud revenues of $50 million over the next three years, indicative of the significant opportunities that will come forth as technology building and expanding this method of computing. With wide-ranging implications for the U.S. economy, including job creation and improved productivity, both the government and private sector can benefit from utilizing cloud applications. Even with upfront investment costs, the total cost of ownership over a system’s life will allow additional savings to be realized. As a co-chair of the CLOUD2 Commission, Mr. Capellas encouraged Congress to review the commission’s 14 recommendations for best practices to migrate to cloud computing, which can be found in his written testimony.

Dr. McClure further highlighted the cost benefits of cloud computing within the federal government, stating that agencies would only pay for the resources they use based on demand, and could leverage the government’s buying power to further reduce costs. As he pointed out during the hearing, both GSA and the U.S. Department of Agriculture have reduced their email costs by 50 percent by moving to a cloud solution.

However, moving to a new technology solution is not without risks. In May 2010, the Government Accountability Office (GAO) issued a report on implementing cloud computing, stating that “Adoption of cloud computing will require federal agencies to implement new protocols and technologies and interconnect diverse networks and systems while mitigating and responding to threats.” An August 22, 2011 New York Times article cited the security concerns of agency officials with shifting to cloud computing.

Mr. Combs acknowledged during the hearing that cyber security threats are increasing, and hackers have become much more sophisticated in their methods. Security risk factors occur throughout an information technology system, from the data stored on individual PCs through the network to the data sitting on a server. However, according to Mr. Combs’ testimony, cloud computing may offer improved security by eliminating “stove-piped” systems and allowing more flexible and rapid deployment of security measures across the network.

Both Mr. Combs and Dr. Reed both expressed agreement that certain system architecture standards need to be put in place, so that vendor “lock-in” will not occur at the end of a contract cycle. By creating a standard for interoperability across the cloud computing architecture, market solutions will be able to advance cloud technology and innovations. As part of the administration’s 25-point plan for Transforming Federal Information Technology, GSA has been working with the National Institute of Science and Technology to develop the Federal Risk and Authorization Management Program (FedRAMP) program as well as standards that agencies can use when making cloud decisions.

According to a September 2011 GAO report on promoting innovation and transparency in the federal government, appropriations for FY 2010 for the E-Gov fund amounted to $34 million, which supported 16 projects including FedRAMP and the USAspending.gov website. These funds were designated as “no-year” funds, which mean that they could be carried over to future year spending. As of March 7, 2011, the carry-over amount equaled $2.6 million, which was redistributed towards funding the operation of systems supported by the E-Gov Fund, including USAspending.gov.

For FY 2012, the E-Gov funding request was again set at $34 million. Dr. McClure expressed concerns over the reduction in the administration’s request by both House and Senate appropriators. House appropriators have allocated $15.8 million to the E-Gov fund, and the Senate appropriators are allocating $7.4 million. The final amount appropriated will be determined in conference between the two bodies. A September 26, 2011 article in Federal Computer Week highlighted a report by the Sunlight Foundation, which examined problems with the USAspending.gov database containing about $1.3 trillion in misreported 2010 federal spending. While this is an improvement over the $1.5 trillion in unaccountable spending from 2009, it still shows a lackluster performance in transparency.

The House Committee on Homeland Security will be holding the next hearing on this issue on October 6, 2011. That hearing and others thereafter are critical to providing increased understanding among lawmakers of the usefulness, cost benefits, and risks of cloud computing. In an effort to further educate taxpayers and lawmakers, CAGW released an issue brief entitled “Cloud 101: A Brief Introduction.” In the next installment of the cloud series, CAGW will provide a checklist for cloud procurement.