You wouldn't typically combine the words 'Government' and 'Innovation' in the same sentence, but actually it's the ideal way to highlight some of the most essential and exciting points about Cloud computing.

Although the technology can lower operational costs by moving processes 'into the Cloud', up to 90% in some cases of government adoption, it's not the full extent of the benefits. It can also go hand in hand with 'Open Transformation' of the processes themselves, utilizing "Crowdsourcing" approaches to fully leverage all aspects of what modern technology offers.

Cloud Bursting Efficiency
The key ROI dynamics of Cloud are elasticity and new technology adoption.

IT organizations can improve their cash flow by avoiding lots of unnecessary hardware capital costs, and they can break 'Innovation Gridlock' by opening up Web 2.0 type environments to users and developers to increase the capacity of how much new technology is successfully pioneered and adopted.

This makes it especially relevant to Web applications, which have an extremely variable usage pattern, in comparison to their legacy counterparts. Typically these are their core business systems which sit behind the firewall and have a fixed headcount profile of internal staff users, a predictable IT scenario, but instead web sites must contend with the fact that they can sit idle for days and then in one hour experience a huge surge in traffic which then dies away again.

The Terremark case study is a headline example of how Cloud is ideal for this. The American government is moving their hugely popular USA.gov site to an Enterprise Cloud facility to enjoy "Cloud Bursting Efficiencies" and reduce costs by up to 90% by doing so.

Not only that but they are also gaining new Identity Management technologies into the mix, multi-factor authentication tools required for GSA compliance. As the online 'Digital Identity ecosystem' continues to mature, such as increasing adoption of Open identity standards these types of capabilities will become increasingly important and out of reach of most gov IT teams. Outsourcing to Cloud providers will be the smarter option.

Open Innovation
Vivek Kundra, White House CIO, recently received the industry accolade of number two in the 'Cloud Top Ten' for pioneering this type of evolution.

As he writes recently this is not just about technical advances or even the cost savings, but equally important is the adoption of new best practice business models too that the technology can enable. This is going hand in hand with Cloud platform investments to radically re-invent just what government IT is and what it's capable of.

In particular this includes 'Open Innovation', through the Open Government program his colleague Beth Noveck leads. This is Barak Obamas initiative to transform government agencies to become more open and accountable to the public via online web reporting, such as the numerous examples provided via the Whitehouse innovations gallery.

As her own flagship project illustrates, the Peer to Patent portal is not just about more open reporting for people to passively look at, it's actually about re-engineering the process itself to transform it from 'closed' to 'open', in terms of who and how others can participate.

Open Innovation is the best practice defined by Henry Chesborough of Berkeley, essentially describing "Open Source Business", new approaches to business models operated by sites like Innocentive, where they use "Crowdsourcing" techniques to create new types of R&D organization. Rather than hire lots of employees, they simply use the web site and voluntary inputs from the public, transforming the process from a closed to an open version that is faster, cheaper and produces better outcomes.

Beth provides a detailed case study of the thinking behind her project in this 40 page Harvard white paper. She describes how the agency was building up a huge backlog of patent applications due to a 'closed' approach where only staff from the USPTO could review, contribute and decide upon applications.

Not only did this cause a bottleneck due to the number of resources being utilised but also in terms of the volume and quality of subject matter expertise being applied. With no involvement from outside contributors, such as experts from the scientific community, then awards were being granted for applications based on very limited and often inaccurate knowledge.

By moving the workflow online to a Web 2.0 environment they have been able to "open up" the workflow to a distributed community of experts from across many different organisations, and apply collective efforts to increase both quality and speed. Automating these workflows and integrating them into online communities means they can greatly reduce the administrative bureaucracy and so ultimately be aligned against governments various 'Red Tape Reduction' type initiatives, helping to achieve "Fast-Track Government".

• [berkman] [2b2k] Beth Noveck on White House open government initiatives
• Sunshine Week Partners With Helium to Encourage Citizen Journalists to Write About Open Government and Freedom of Information Issues
• "Shaping Government Clouds" Just Released