Israeli ministries slow to adopt AWS, Google cloud services

Two years ago Israel’s Ministry of Finance launched the Nimbus project with a budget of NIS 4 billion. Its aim was to help government ministries and companies move their public data to the cloud in order to develop more complete data systems and provide higher level and more advanced services.

The tender for the project was awarded to tech giants Amazon Web Services (AWS) and Google Cloud, which both committed to migrate to Israel and set up data centers at an investment of billions of dollars to serve the government ministries and avoid the current situation in which major data held by citizens, government workers and security personnel is kept overseas.

But at the moment, 30 months after AWS and Google won the Nimbus project, government ministries and government companies as well as hospitals continue to work with Microsoft, which lost in the tender process, and joint projects with Google and AWS are few. Delays in the launch of the cloud regions of the tender winners, protracted negotiations with software providers and tenders that have not been processed have created a situation that makes it difficult for government ministries to migrate to the public cloud and enjoy an available, secure and cheap service, which harnesses the latest artificial intelligence capabilities for the Israeli economy.

Much of the required software has not yet been approved

To allow government companies and ministries to move to AWS and Google, the Ministry of Finance Accountant General’s office led by Yali Rothenberg, which was responsible for the Nimbus tender, added several sub-tenders, including for a consulting company that would help the government ministries move to the cloud.

To work in the cloud environment, in other words, a software environment that requires remote servers provided by one of the tech giants, the government ministries require that applications for this environment are also used. These applications include data sheets, email services, information sharing and project management software and cybersecurity. Sources familiar with the matter have told “Globes” that the use of these applications on Amazon and Google’s clouds has not yet been approved, making it difficult to move forward.

Even after the tender winners have completed the long and complex construction processes involved in building data centers, it seems that much of the software required to work in the public cloud has still not been approved. This delay makes it difficult for government employees to work using the latest standards. In the field of office software, for example, government ministries continue to work with Microsoft Office products, the company which failed to win the Nimbus tender.

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One of the reasons for this is that the Accountant General’s office initially excluded office software from the tender so as not to give an inherent advantage to Microsoft and Google, which have a package of such software, at the expense of the other candidates, Oracle and AWS. Thus in practice government employees still use outdated versions of Microsoft Office and Outlook email software on a local cloud only.

A former senior official in one of the government ministries says that the perception among government computer experts was that Google winning the tender would encourage it to transfer its office software service (Google Workspace) to the services consumed through its servers in Israel, an information security requirement given by the cybersecurity network as a condition of the contract. But Google never promised this, and it did not ultimately happen. The cloud that Google launched in Israel almost a year ago, which is based on data centers in Petah Tikva, Bnei Zion and Modi’in, does not include email services and desktop software, which are used in Israel exclusively from servers abroad. At the same time, Microsoft itself is trying to introduce the cloud version of Office to government ministries, but this is also hampered because it is not provided by local servers.

The convenient contract with Microsoft

One of the obstacles government ministries must overcome in order to upgrade is the fact that Google and AWS do not offer customer management software (CRM software). AWS won the tender on the assumption that its commercial partner Salesforce would become the government’s CRM provider. But the Ministry of Finance’s procurement manager has not yet reached an agreement with Salesforce.

The one who profited again is Microsoft with its Microsoft Dynamics intelligence business applications. Microsoft has meanwhile won many upgrade contracts for government ministries, as happened, for example, in renewing the core system of the State Attorney’s office. In the field of data sharing and project management systems, the Ministry of Education continued connecting all its portals with Microsoft’s Sharepoint, and the Ministry of Health has also expanded its agreement with the company. The reason lies in the fact that Microsoft is an existing supplier of every product that is not on the public cloud, which makes concluding contracts with it a simple procedure that does not need to go through the procurement administration.

One of the factors for delaying the Nimbus project is the tensions between the Ministry of Finance, AWS, Google and the software companies. In order to persuade them to build the data centers in Israel, the Accountant General gave the cloud giants the opportunity to earn up to 20% of all the expenses of government ministries in each of the software that runs on them. This forces the software companies to cut prices for the government customers, and to which they are resistant. For comparison, companies that are engaged in the distribution of software, usually earn about 2% commission for the use of each application. At the same time, after two years of negotiations, “Globes” has been informed that the Nimbus application store, as well as the agreement making Salesforce software available to the government, is set for October at the earliest, after which, no further work with Microsoft Dynamics will be approved.

In cybersecurity too, government ministries await cloud protection applications. Although the cybersecurity tender was not included in Nimbus and is being held separately, the winning candidate has yet to be chosen from Check Point, Palo Alto Networks, Wiz and Orca. In fact, several government ministries have already begun to prepare for the transition to the public cloud, including the cybersecurity system with Google while the Ministry of Transport is with AWS. The government expects that after the launch of AWS’s Israel cloud region last week, the process will be speeded up and things will begin to move forward.

The Ministry of Finance said, “We in the Accountant General’s Division, together with our many partners in the project, are investing huge inputs for the success of the project and its advancement. Among other things, dozens of tender procedures are being promoted for the purchase of cloud services by suppliers who will commit to deploying their services on the infrastructure of the companies that win the Tier 1 tender. Thus, among other things, a central tender for the purchase of CRM services is expected to be published in the coming weeks and the Market Place for the purchase of third-party services is in the advanced stages of being set up ahead of the launch.”

Published by Globes, Israel business news – en.globes.co.il – on August 8, 2023.

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