Milwaukee CIO turns to cloud computing, mainframe outsourcing and thin clients amidst budget cuts

MILWAUKEE – Milwaukee County’s CIO, Dennis John is facing huge budget cuts for his 2010 budget which requires cutting 400 IT and related jobs. In response he is planning increased use of cloud computing, outsourcing mainframe staff, as well as replacing some 4,500 desktops with thin clients beginning next year. This plan is in reaction to a predicted $2 million budget cut being planned by the county according to an article in Network World.
The county had planned to replace 900 PCs a year at a cost of $1,000 per machine, but the best the county can afford now is 150 new PCs a year. “We have been neglecting our PC replacement program dramatically,” John said. “Some users are on PCs that are six and seven-years old.” Moving to thin clients would save the county more than $400,000 over five years, he estimated.
This thin client upgrade is part of a bond issue that will see a partial rebate provide by he Federal Stimulus Act approved by Congress earlier this year.
The foundation for moving to a thin client model was already put in place by earlier county decisions to adopt server virtualization.
Increased use of web-based application delivery via the Software-as-Service (SaaS) models are opening the door to the new strategy to further save money. Last year the county started using human resources applications hosted by Ceridian Corp.
John said that SaaS becomes more economical when other costs associated with internal systems, such as the storage and disaster recovery, are weighed. John does have concern about large cloud-based e-mail provider’s ability to have an exit strategy for abandoning the county current platform.
Alex Yarmulink, CIO of Midwest Airlines, a company that has changed ownership two times this year and is now integrating with Frontier and new owner Republic Airlines told WTN News that there are risks and larger costs associated with in-house hosted systems such as Microsoft’s Exchange. Between hardware investments and staffing, Yarmulink said that an IT department can add or delete 1000-2000 e-mail boxes with just a sign of the pen and these cloud based services offer their organization greater flexibility. It would not leave them with unused server assets and if the need arises to crease users that can be done in less than 48 hours with no addition of hardware of staff.
Midwest’s revenue management system is an example of a SaaS application used in-house by Midwest and Frontier Airlines. “It would be much easier for them to move our Revenue Management than the other way around,” Yarmulink said.
Yarmulink thinks that many CIOs are asking the wrong question. “Rather than asking what is my exit strategy, the real question should be how do I mitigate risks? There is nothing to be skeptical about based on the ability to exit contracts, and export data. You are not going to exit the cloud,” Yarmulink said.
Milwaukee County’s plan to adopt thin clients “is probably fairly far out in front,” at least among county governments, said Tom Manielli an analyst at IDC, who sees a lot of positives to it. “From a maintenance perspective, you no longer have to send a tech with a cart to a desktop to do fixes.” And with improving hardware and virtualization, the end users “probably won’t notice a big difference” from using a PC, he said.
Thin client usage remains small, but Gartner Inc. forecasted earlier this year that thin client terminals and diskless/repurposed PCs will comprise 10% of all professional client devices by 2014. Ray Bjorklund, a vice president at consulting firm Federal Sources Inc., in McLean, Va., said he expects that the federal government will increase its adoption of thin client and cloud technologies. “It’s a trend that makes pretty good economic sense and even better operational sense,” he added.
While thin clients can help cut cost, John and his IT department face a particularly tough time ahead. The budget proposal will outsource the mainframe personnel, but the county still hosts the environment. The outsourcer will be required to give hiring priority to affected workers. The budget document indicates that some 13 staff positions may be impacted by the change and that outsourcing the tasks could save $450,000.
This article was based on reporting by Patrick Thibodeau appearing on Network World.