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Case study - Procuring cloud services from commercial providers and a cloud marketplace

The Procurer

We are an international organisation with 20 Member States dealing with large amounts of scientific data, developing satellite-based technologies and services, and promoting European industries. Our procurement process is designed to achieve the best possible trade-off between the objectives of technical excellence, economy and industrial policy as defined in our procurement regulations. It is also implemented so as to give tenderers the guarantee that the competitive procedure will
be conducted in complete fairness and that their offers will be evaluated with the greatest care and total impartiality. The implementation of the procurement procedure is a joint task of the technical team in initiating services and the procurement department. A major task of representatives of the procurement department is to ensure that the rules and procedures, established in order to achieve the objectives stated above, are strictly observed.


Why the cloud?

We have been procuring cloud services from commercial clients since 2008 to increase our computational & storage resource capabilities. In 2011, our orgainsation joined an international initiative setting up a federated cloud marketplace
for science with the aim of making our data available to different communities who could upload their data and IPRs on the cloud and therewith use our data in new contexts. Cloud would allow our users to find data, peers, IPRs to create
jointly values (science & business).

How we procured cloud services

Commercial Procurement actions

We have been procuring cloud services from commercial clients since 2008. The budget authority, in many cases the cost centre, delegates the implementation of the departmental and project objectives to a project manager who defines
the technical specifications and budget. Once finalized, the procurement office starts the procurement procedure. This procedure works very well due to the fact that our organisation has strong technical skills in cloud computing and a skilled
procurement office that has been able to deal with the aspects related to cloud computing.

Procurement from a federated cloud marketplace

In 2011, our organisation joined an international initiative to set up a federated cloud marketplace for science. Our endgoal was to make our data available to different communities who could upload their data and IPRs on the cloud and use
our data in new contexts. Cloud would allow our users to find data, peers, IPRs to create jointly values (science & business). A standard frame contract scheme was used for this. This contract specifies the procurement of services, rather than
technical tasks. Currently no purchases have been made via the existing service contract. 
» Looking to the future we have identified both short-term and long-term actions. Short-term actions are related to the negotiation of appropriate terms and conditions with the cloud marketplace operators and to further procurements
to explore data-intensive applications. In the long-term we plan to take part in joint procurement actions as they can reduce the cost of developing specifications & contracts and improve purchasing conditions due to combined capacity.


What we learned

What worked well:

» Our well-established procurement process works well for cloud procurement.
» Competences required to write the ITT/RFQ are present however, some procurement areas specific to the cloud are yet to be defined, such as bringing the instrument data into context with IPRs allowing the transformation of data into information on the cloud.
» Service contracts based on KPIs are the best way to procure cloud services. The frame contracts request services instead of detailed technical specifications and allow a very implementation of cloud services.
» The definition of service specifications has always been by the fact that our organisation mainly procured. There is not the same level of confidence for SaaS/ and this is why we joined the partnership to establish a federated cloud marketplace for science.
» The monitoring of the provided cloud services is done an in-house system.

What didn’t work well:

» A new procurement scheme is required to delegate cloud resources to our user communities, for their own purpose.
» Our community (the majority are from Europe & US) is not prepared to allocate parts of their research grants to use cloud computing. The research procurement systems in place are designed to specifically support IT procurement, rather than procurement of IT services.
» In service procurements we can not specify how the service is being performed, but only what is being delivered (KPIs). Since most scientific environments maintain their own IT environment, cloud computing as-a-service is a difficult environment to procure services for, in particular estimating the associated costs.
» Accounting of cloud resources and comparing costs.
» It is difficult to establish a procedure to enable a dynamic interaction of shared data and IPRs which caters for distribution of profits made from cloud services amongst partners. This is due to the procurement process being based on a publicly funded R&D model.
» Cloud marketplaces still require further development and a standard legal and contractual framework is required.

Wish list:

» We would like to set up a new ecosystem based on a federated cloud allowing the dynamic establishment of value chains delivering information (science and/or business). The open exchange of thematically related value chains allows the
creation of thematic environments supporting interactions, which in a rigid project structure would not arise.
» The ecosystem can become the reference point for the science and private sector community driving the future R&D and industrial initiatives in Europe.
» Industry bringing data & IPR in a commercial environment and making profit would need to provide financial feedback to the data and IPR providers. A financial accounting system beyond IaaS would be required for this.
» Harmonisation of procurement schemes of the European public research organizations, will help in getting a marketplace started and reach a critical mass. Demandside agencies have a large European and global science community being affiliated to their data. Based on the experience of these agencies other agencies could gradually be integrated.
» A contract template for cloud services, a transparent catalogue of services and a catalogue of cloud service providers.
» A standard legal and contractual framework for cloud marketplaces.
» The procurement process that we envisage for the cloud marketplace reflects the one adopted by App Stores or Playstore. The value offering are data, tools, and always new IPRs.
» The presence of an independent cloud broker at all levels (e.g. IaaS, SaaS, PaaS, skills brokerage, Information brokerage). This should speed up the purchase from a cloud marketplace.