Cloud Computing is such a compelling area for government investment because it offers multiple dimensions of business benefit, one of these being the ability to play an accelerating role in economic stimulation, critically important in our current climate.

The technology can reduce the operational costs of IT but it can also provide for new ways of working, making available new SaaS applications that can directly enable exciting new growth programs, like Cisco's idea of 'Next Generation Clusters' aka 'Innovation Clouds'.

Cloud Innovation Hubs
Cost savings and new ways of working are each equally powerful business benefits in their own right, but it's their combination that generates a powerful compounding effect known as ''Multi-Factor Productivity' (MFP)'.

It's this MFP variable that Cisco stress in a new white paper intended to identify Government best practices for economic development programs, called Next Generation Clusters (14-page PDF). Ambitiously they set out to suggest an upgrade to the original cluster model developed by Michael Porter, a foundation for modern government economic development, and do so by proposing it needs modernized in the following main ways:

• From geographically-based to community-driven
• From locally processed innovation to open, borderless innovation
• From technology-driven to technology-enabled

In essence this updates the model to reflect the new era of Web 2.0 global collaboration, and with this in mind they also identify the insight that often governments simply treat technology as one of the sector industries to develop, rather than also harnessing it as a tool to accelerate the underlying innovation processes themselves.

Cloud Application Solutions
As described in this Salesforce.com white paper, Cloud computing platforms offer exactly these tools, providing web 2.0 site features to cater for the 'Open Innovation' processes required to build these types of online clusters.

Microsoft also offers an equivalent 'Innovation Process Management' solution. Based on their Sharepoint content portal this can be delivered via Cloud service providers and offers an extensive range of customizations to tailor it for more intensive enterprise scenarios, such as

• integrating the ideas portal with back-end portfolio budgeting processes.
• adding grant management applications

This Cloud software platform is powerful because it can be reused for multiple business requirements, such as prioritizing and organizing software development and for planning and management of major capital expenditures, meaning any level of sophisticated 'Idea-to-Launch' cycle can be developed.

Sustainable i-Communities
Cloud computing therefore offers the ability to accelerate the MFP effect, because it's both an industry and also an innovation platform. It can grow new ventures, R&D and industry revenues, and furthermore be used to enhance the innovation capacity of the nation as a whole.

The multiplying effect can be further amplified by linking it into existing government initiatives already directed towards Sustainable Innovation.

For example the ICSP is a Canadian initiative for implementing Sustainable Community at the municipal level, channelling a $13 billion 'Green tax' into environmentally-friendly infrastructure projects. It's cascaded down from the federal level to provincial and then ultimately municipal governments through a process of creating ICSPs - Integrated Community Sustainability Plans.

The core idea is to involve the public in the development of their own holistic local strategies, where social media is the ideal format for engaging the public into this type of mass collaboration.  Furthermore providing them the equipment to do so is itself a target for this type of municipal investment.

As identified in this third Cisco white paper 'Network-Powered Growth' (15-page PDF) authorities can build Smart Communities that encourage "network-powered social innovation", a cutting edge best practice recently identified by the Canadian federal government.