The cost of government agencies switching to cloud computing continues to rise. File photo. Photo: 123rf
Internal Affairs is running tests to figure out how to track the escalating costs to taxpayers of cloud computing - but is tightlipped about what it has found so far.
The government has about 200 agencies under orders to shift their storage and processing to the cloud, and many have already made the move.
But it remains to be seen how efficient this is, and the process is not being closely tracked.
Some of the costs are more obvious than others, such as in software licensing fees. At 10 of the biggest spenders, fees are up 70 percent since 2018, driven up by the cloud shift.
These 10 agencies spent close to $300m on the fees last year. Many agencies - big and small - are spending about double what they were in 2018, when tech demands were simpler, security threats lower and the agencies processed data on their own servers.
Newly-released information from Internal Affairs (DIA) said $1.2 billion in total had been spent on cloud services since 2017, but this only covered agencies using the all-of-government (AOG) system - which many do not - and also did not cover transition and other costs.
To tackle the lack of visibility, Internal Affairs has used itself as a guinea pig, asking two of its own cloud suppliers for the department's own usage figures and spend.
The test "offered direct benefits in cost savings" by letting its IT group "easily view its cloud footprint and how it is broken down", the department told RNZ.
But it refused to give any details, "due to the ongoing nature of the work", said spokesperson Jeremy Cauchi.
The department is now taking the test wider, aiming to trial it at two other public agencies over the next three months, by going to their cloud suppliers to ask about usage and spending.
It would eventually decide whether to roll the new approach out to all public service departments, Cauchi said.
This would provide a much better look at the shift to cloud computing, when DIA "can calculate cloud costs related to licences and subscriptions [but] we do not hold other transition costs, such as one-offs related to projects and change management, data migrations, architecture, security, consulting, and professional services undertaken by individual agencies. These may be held by individual agencies or various suppliers".
An indication of the public money at stake can be seen in the rise of software licensing fees - many for cloud computing - at 10 of the largest spenders:
- Te Whatu Ora - software licensing fees in 2022-23 of $205m (it was set up in 2022)
- Police - $35m in 2018-19, with the fees rising to $62m in 2022-23
- Defence Force - $25m, $46m
- MSD - $27m, $37m
- MBIE - $15m, $27m
- Corrections - $11m, $26.6m
- IRD - $22m, $26m. IRD said cloud computing was among the new tech that "will drive efficient service models and a better user experience".
- Internal Affairs - $19m, $20m
- Justice - $8.6m, $17m
- Oranga Tamariki - $2m, 15m. Most of this rise was in 2022-23 when it migrated its payroll and finance systems to the cloud.
- DOC - $5m, $11m
- MPI - $4.6m, $10.4m
Some of these fees are not cloud-related. The rise comes when Te Whatu Ora, Justice and the courts, and police are only at the start of their shift to cloud computing.
Some smaller spenders also had big rises, with Worksafe's costs lifting by more than six times, from $400,000 to $2.6m. Others were steadier, with FENZ rising just a million since 2017 to $9m and Customs recording a smiler rise to $7m.
Internal Affairs said the all-of-government approach to procuring cloud services had secured 195 agencies discounts of 5-40 percent by pooling customer demand.
But a 2020 internal report on the risks warned the police that navigating discounts was difficult, and that costs tended to ramp up over time. The first three years might cost about the same as in-house provision of software, but then it "flips to being both significantly more costly for the enterprise and more profitable for the... provider".
It also said that focusing on costs too much - instead of making the most of the cloud's flexibility - would be a mistake.
The OIA showed agencies have been voicing their worries to DIA about the costs and complexities, with concern expressed by the Environmental Protection Authority to its minister triggering RNZ's OIA request.
The response showed worries were raised nine times in the past 11 months with DIA, and include:
- terms and contracts were too long or complex
- the benefits were unclear
- agencies were unsure about what tech they would need in future
- they were confused
- agencies "did not want to commit to a specific spend level"
- agencies had reached "peak cloud"
Internal Affairs refused to give more details.
"I am withholding all of these documents," Cauchi told RNZ.
He gave the grounds of protecting firms' commercial interest, officials' freedom to give frank advice, to protect privacy and to enable negotiations to carry on.
Many agencies in their annual reviews say that moving to the cloud has - or will - improve services to the public and security.
