Cloud Procurement

Cloud brokers make sense

hands and cloud

The broker model is mutually beneficial for providers, agencies and taxpayers because it centralizes services and pricing, says Capgemini's Sean Rhody. (Stock image)

The rise of cloud computing offers some hope for agencies struggling to keep up with the rapid pace of change in technology while managing costs and improving end-user satisfaction. It can adapt to shifts in capacity needs, and many cloud service providers (CSPs) offer pricing models that can cut costs by charging only for the computing capability that is consumed.

Agencies have made inroads in creating private or hybrid cloud models and creating in-house infrastructures capable of supporting a cloud environment. And the Federal Risk and Authorization Management Program is designed to ease the burden of accrediting providers, which should speed the process of acquiring CSP contracts.

Point/Counterpoint

This article is part of an ongoing debate regarding the value of cloud brokers. For other points of view, see:

Greg Mundell: What's good about the cloud broker/integrator model?

Diana Gowen: The cloud broker concept is broken

However, regardless of the nature of cloud services, the model in which a government entity contracts directly with CSPs has challenges. Each CSP has its own approach to pricing, service levels, usage-tracking and billing. That is beneficial for CSPs, but the government has a responsibility to use its enormous purchasing volume to ensure that it receives the best pricing possible. That is difficult or even impossible in the direct model because pricing is largely privately negotiated.

Agencies also struggle with the management of multiple reporting systems, financial statements and operating models that result from the use of multiple suppliers. That diversity allows the government to secure the best services to meet mission needs, but because most software systems are a composite of hardware and software, multiple suppliers can become an operational challenge when the system misbehaves.

The General Services Administration's cloud broker model is designed to help address those challenges within the GSA market ecosystem. The model is based on the proven concept of a brokerage, which is, in fact, what GSA already does at a contractual and fiscal level.

The cloud broker model asks CSPs to participate in a government-sanctioned marketplace. Participation is voluntary, but it is beneficial for the CSP and for agency buyers. Among the many precedents for the approach are the travel industry's aggregation sites, such as Expedia and Travelocity. By using those sites, consumers ensure that they receive the best value from a wide selection of offerings while providers benefit from a broader audience for their services and the broker receives a small fee for the service.

Consumers ensure that they receive the best value while providers benefit from a broader audience for their services.

The cloud broker approach is similar. GSA would bring together suppliers and consumers, much as it does today, and by uniting them in an electronic marketplace, it would establish pricing arbitrage and transparency that would greatly assist the government in obtaining the best value from its purchasing power.

GSA has also proposed including third parties in the broker model. That would work if those third parties function as broker operators that augment and add capabilities to the contractual and fiscal management of the broker, which often would be GSA. That is the model used by Texas' Department of Information Resources. The broker operator provides the ordering, provisioning, operations and financial management capability, driving a standard definition of reporting with the CSP that eliminates redundancy and encourages all parties to work together to quickly resolve service issues.

Furthermore, the broker operator helps generate a proactive approach by providing indicators of service needs ahead of actual outages, allowing CSPs to avoid the financial impacts of performance challenges. The cloud broker model has proven to be successful. It augments traditional procurement models and provides value-added services that benefit the government and ultimately the taxpayers by putting an end to opaque procurement processes that often only benefit the service providers.

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