Study: U.S. gov't could save billions with cloud computing, open source

A budget crunch could push federal agencies to look for ways to save money

The U.S. government could save billions of dollars by moving to more open-source software, cloud computing and virtualization, a recent study suggests.

Over three years, the potential savings would be $3.7 billion for using open-source software, $13.3 billion for using virtualization technologies, and $6.6 billion from cloud computing or software as a service, the study said. It was published by MeriTalk, an online community about IT and public policy; Red Hat Inc., an open-source software vendor; and DLT Solutions Inc., a value-added reseller of Red Hat and other IT products.

"After years of boosted funding, federal IT managers are facing a new challenge -- the budget crunch," the study said (download PDF). "With a grave economic outlook and a new administration in office, federal agencies will be forced to do more with less."

Looking at 30 federal agencies, the study assumed that every agency is starting from scratch with new technology. So instead of buying new software, agencies could save money using open-source instead of proprietary software, virtualization technologies instead of new servers, and cloud computing instead of buying software and hardware.

The numbers are based on federal agency budgets, using assumptions from other studies about federal computing resources.

"Looking at the programs in the 30 agencies' IT infrastructure budgets, it was not possible to determine if the programs were already using the technologies," a MeriTalk spokeswoman said. "As such, we had to assume that agencies are starting from scratch. The report highlights the potential savings opportunity for each technology, with the idea that using virtualization, for example, enables agencies to reallocate that funding for higher-priority projects."

The study seems to make some large assumptions about how much money federal agencies can save, said Susie Adams, chief technology officer of Microsoft Federal. The study "really tries to simplify a very complex problem," she said.

Microsoft Corp. agrees that agencies can save money using cloud computing and virtualization, but open-source software is "just another business model," Adams said. Agencies should explore the entire cost before making a decision about open-source software, she added.

"In today's world, especially in the government, we're really looking at a mixed-source environment," Adams said. "We believe that what we should be doing is creating software that's more interoperable with this mixed environment. We're committed to that."

Critics of the report may be able to quibble with the numbers, but the big message is that federal agencies should be looking at new ways to save money with IT investments, said Peter Tseronis, deputy associate chief information officer at the U.S. Department of Energy. The study, plus ongoing conversations about federal IT spending at, highlight the need for federal agencies to look at new ways of doing business and to think strategically about long-term IT investments, he said.

"The infrastructure itself needs to be sound -- it needs to be stable," Tseronis said. "If you don't have a solid base, it's not going to matter what's on your desktop."

For example, cloud computing could represent a paradigm shift in the way federal agencies pay for IT infrastructure, he said. But Tseronis said he hopes agencies will work together on projects, not set up their own little cloud "enclaves." Sharing of services should be a major goal, he said.

"We're spending a lot of money, and that's no news to anybody," he said. "How are we going to say in four, five ... years from now, 'Wow, look at how our budget went down?'"

Copyright © 2009 IDG Communications, Inc.

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