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The New Zealand Productivity Commission, which as its name suggests advises the New Zealand Government on productivity issues, has issued a report warning that the government is over-cautious in its policies regarding its own use of cloud computing. The government’s inclination towards domestic cloud IT providers has created both economic and technical drawbacks, the Commission said.
Cloud IT is well established in the market, the Commission said, citing results from its own market research which revealed that 60 per cent of New Zealand businesses either use—or intent to use in the near future—at least one type of cloud computing application. The biggest consumers of cloud IT in the New Zealand enterprise market is the services sector, the research found.
And while the government has not been slow to adopt cloud services, it’s approach to that adoption has been flawed, the Commission said. “By favouring domestic cloud services, which are significantly more expensive than similar overseas services, the Government has missed opportunities for cost savings and technology demonstrations,” it said in a report issued Thursday. “The Government should address any data sovereignty, security and privacy risks associated with offshore cloud computing through international negotiations, with Australia in the first instance.”
It went on to say: “Government advice to its agencies on cloud computing is unduly risk-focused. The Government should review how well it is communicating its cloud computing policies and guidance, and seek to provide balanced advice and constructive support to its agencies.”
The Commission conceded that the rapid growth in cloud computing has created regulatory challenges for the government, particularly in relation to the location of stored data. But it seemed to suggest that the government should be open to greater flexibility in its regulation of this area, in order to increase the potential benefits of the cloud model for the New Zealand enterprise market.
“Flexibility over where data is stored and processed allows cloud computing service providers to be more efficient, and ultimately to provide services at lower prices for their customers,” it said. “Restrictions on where data is stored or the free flow of data between countries may be costly for those affected. They will have a disproportionately negative effect on smaller countries.”
As one of those smaller countries, New Zealand should look to strike agreements with other nations to allow for safe overseas movement and storage of data, the Commission said. “The Government should pursue free-trade-in-data agreements with other countries. A reasonable aim of such agreements should be that the rights and responsibilities of data owners do not vary with the physical location of their data. Bilateral negotiations with Australia could be resolved quickly, so should be pursued as a first step. Resolving such issues will help New Zealand firms adopt cloud computing.”
