IDC Government Insights has released a new report, “Technology Selection: The Government Datacenter of the Future,” that explores how government datacenters are undergoing a once-in-a-generation shift, triggered by the rapid emergence of several key IT disrupters, as well as a set of catalysts from government organizations such as the Federal CIO Council, which has set specific targets for system consolidation and movement toward cloud services. As CivSource has reported, these shifts are also happening at the state and local government level in an effort to improve government services and maximize cost efficiency.

Government datacenters, and the agencies they serve, face a series of important IT decisions over the next two years. Today, agencies are reacting to their own internal budget limits and information technology needs, prompting many to look for cloud-based solutions that will allow them to stop providing some types of IT services (email, storage and backup, Web site hosting) and get these from cloud providers instead.

Some states, such as Utah, Michigan, and the states involved in the Western States Contracting Alliance, are offering hosted solutions to which counties and cities can subscribe. This allows the state governments to serve as cloud providers, and it allows local governments the chance to drop certain IT services from their locally hosted (and maintained) solutions. Along with offering services across state lines, state and local governments are adopting shared services plans and leveraging best practices from private sector enterprise architectures in order to upgrade legacy systems and cut redundant processes.

The state of Colorado today announced such a switch – they will be migrating to the web-based CGI Advantage(TM) ERP solution and transition operation of its current systems to the CGI Advantage cloud, operating in CGI’s secure data center. The total contract, contingent on future appropriations, is valued at $78 million over 12 years. The system uses the same kinds of enterprise resource planning (ERP) technology leveraged by large private sector companies, with some adaptations specific to public sector needs. With the service CGI will modernize, host and manage the state’s financial, procurement and budgeting system. Through its Managed Advantage program, CGI will also provide secure day-to-day operations management for the State’s primary financial system, including application maintenance, technical upgrades, disaster recovery services and client support.

The growing ecosystem around cloud services for public sector is prompting government agencies to rethink how they are structuring their data services and the associated facilities they use to host their IT solutions. As a result, government agencies are migrating from a single-stack, siloed approach to more integrated shared services. In the United States, IDC expects spending on public cloud services to increase at a compound annual growth rate of 18.5% through 2016, which is about four times faster than direct spending on IT infrastructure hardware and software.

The end result of this evolution will be fewer dedicated government datacenters,” said Shawn McCarthy, Research Director, IDC Government Insights. “But the remaining facilities will be quite large, serving multiple customers.”

Report data shows that governments are also looking at the locations of datacenters and considering moves to areas where energy costs are the lowest in order to keep overhead low. Datacenters typically run hot and rely heavily on cooling systems during all times of the year in order to keep equipment at optimal performance. Newer datacenters have recently started leveraging green technologies such as wind and solar to lessen the overall energy costs. Cloud based and web portal services also improve sustainability efforts by removing the reliance on paper-based processes.

Colorado officials noted their move to cloud will add more predictability to their budget decisions. “By leveraging CGI’s cloud, we can achieve much needed technical enhancements to the system and a more predictable operating cost over time,” said Kristin Russell, Secretary of Technology and State Chief Information Officer, State of Colorado.

At the state government level, being able to predict costs ahead of time is crucial. Most states are mandated to balance their budgets each year, and unpredictable cost structures can lead to surprise cuts or negative reprioritization. Cloud services offer an on-demand scaling capability supported by datacenter architectures that allow governments to ramp up if they need to episodically, and then revert back to normal use levels once an event has passed, rather than spending a lot up front to ensure extra capability just in case.

The growth of big data and open data are also impacting datacenter management in terms of storage and data use. Taken together, the IT shops in public sector may find themselves rushing to understand new technology and upgrade at the same time. “Changes are very iterative and they can take years to unfold, depending on the budgets and preferences of individual agencies. But the long term trends are highly apparent, and IT managers are advised to familiarize themselves with how datacenters are evolving, in order to take advantage of important new resources,” said Shawn McCarthy, Research Director, IDC Government Insights.