Melrose, Mass., is transforming its IT infrastructure into a profit center by building a secure, multi-tenant private cloud that can host multiple municipalities and organizations.

As is the case for many CIOs at the state and local level, Melrose CIO Jorge Pazos grapples with financial pressures and a demanding customer base. In 2007, the city began converging multiple data centers to save operating costs. As this process was getting underway, the financial crisis hit, demanding a bold approach that would be sustainable and able to accommodate growth.

Pazos believed that functional components in neighboring IT organizations could be pooled to meet the needs of multiple entities through centralized service delivery. The city began exploring how to leverage its IT infrastructure to host data center services for other municipalities — in effect offering nearby cities and towns data center and IT services via a private cloud.

Initially, these surrounding communities were reluctant to relinquish control of their IT assets and move to a service delivery model. But Pazos and the city effectively communicated the key benefits of sharing resources — including cost and time savings — and gradually the towns warmed to the proposition.

Working with Sunnyvale, Calif.-based NetApp, Melrose built a secure, multi-tenant private cloud to replace the legacy data center model. Part of the problem was that the data centers were in disparate geographic locations, the quality of each data center varied widely and ultimately there was no scalability. Additionally, data, compliance and operational demands were being placed on the technology that didn't match fiscal reality.

The regionalization of IT services has helped to reduce the time and money municipalities spend managing IT and shift the focus to consuming IT services. With a flexible IT platform in place, the regionalized private cloud enabled Melrose to connect 18 sites and extend services to hundreds of municipalities. Early customers included Essex, Mass., which in late 2011 entered into the first regional IT agreement in Massachusetts, agreeing that data center operations would be migrated from the town's facilities to a hosted environment on Melrose infrastructure.

By converting an unsustainable data center model and cost center into an efficient, scalable revenue center, Melrose has enabled new revenue streams to feed government investments, has reduced infrastructure and energy costs, and now has the ability to grow the service model quickly to support more constituents.