Fed IT Budget Chokes Spending, Eliminates Data Centers

Obama seeks to implement best practices used at top private-sector companies.

President Barack Obama's 2011 budget proposal, released last week, would flatten federal IT spending and require federal agencies to consolidate IT operations.

The IT budget is getting far less attention than the administration's plan to scrap NASA's program for a manned mission to the moon, but its call to implement the best practices of successful private-sector data centers could lead to a radical transformation of federal IT operations.

The focus on revamping government IT shouldn't surprise budget watchers.

Over the past year, the Obama administration has hired the federal government's first CIO, moved to better take advantage of Web 2.0 technologies and solicited advice from executives at leading technology development companies and user organizations.

In fact, just two weeks before releasing the budget plan, Obama hosted a meeting of top executives from social networking firms, software companies and retailers to gather ideas for improving outdated federal IT systems.

The confab included tech heavyweights like Microsoft CEO Steve Ballmer and Facebook co-founder Chris Hughes, along with Liz Claiborne CEO William McComb and Staples CEO Ronald Sargent.

In its budget documents, the Obama administration is unsparing in its criticism, contending that government IT operations have a history of not delivering the type of productivity and performance gains "that are found when IT is deployed effectively in the private sector."

Government IT officials must study and implement practices that private companies have created to improve efficiency and cut costs, the documents say. The proposal also calls on agency IT managers to use Web 2.0 tools like social networks to collaborate on best practices with experts in the private sector.

"The rise in social media and Web 2.0 technologies has proven that no single organization has a monopoly on good ideas," the administration says in the documents.

The budget also allocates money to fund the use of Web 2.0-style tools to make it easier for citizens to access government data and interact with federal agencies.

The overall IT budget proposal would boost spending by only 1.2%, to $79.4 billion. The increase is slightly less than the White House's inflation forecast for fiscal 2011, which begins Oct. 1. In comparison, the U.S. spent some $45 billion on IT in 2001.

Cost-cutting measures would include a reduction in the number of data centers run by federal agencies. The budget plan doesn't specify how many of the current 1,000 data centers the administration hopes to close, but it does point out that the government had just 432 in 1998.

The plan also calls for centralizing the delivery of some IT services to multiple agencies by using cloud computing technologies.

"There won't be a lot of wiggle room for new technologies," said Deniece Peterson, an analyst at government market research firm Input Inc. in Reston, Va. She added that about 70% of the money spent on government IT today is just "to keep the lights on."

Peterson said IT managers will likely begin to address the administration's concerns with small projects, but over the long term they will probably face more White House pressure for results than in the past.

She noted that the White House last year created an "IT dashboard" that rates IT projects and their performance at various agencies.

Putting such a spotlight on the performance of government IT operations is a means of "embarrassing agencies to perform," she said, noting that whereas IT failures could put a private company out of business, "the ramifications of failure are not as pronounced in government."

Copyright © 2010 IDG Communications, Inc.

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