Cloud computing, data center consolidations save feds $3.6B

Efforts to reduce or control IT spending may be working, says government report

A five-year-old effort by the U.S. government to cut IT costs through data center consolidations, cloud computing and other technology changes may be paying off, according to a report Tuesday by a government watchdog agency.

In 2010, the federal government embarked on a plan to cut IT spending by consolidating data centers, moving to cloud computing and sharing more services among agencies. The government budgets about $80 billion annually on IT.

Over the past four years, these efforts have saved the U.S. about $3.6 billion in IT costs, either in direct reductions or by avoiding new costs, said the Government Accountability Office in a new report.

The government achieved some of the reductions through a "cut and reinvest" strategy that requires agencies to propose 10% IT reductions, and then pitch reinvestments of those savings in IT projects that result in considerably higher savings. There were 26 agencies involved.

The federal agencies with the biggest cost savings were also the largest: The Department of Defense, Department of Homeland Security, the Treasury Department and the Social Security Administration. Those four agencies accounted for about 70% of the savings.

Data center consolidations are responsible for about half of the overall IT cost reduction. The savings came from reduced hardware needs thanks to consolidation, which includes data center closures, increased use of virtualization, consolidation of licensing agreements, expanded use of electronic analysis tools, migrations to Web-based management platforms and moves toward the government's "cloud first" policy.

If the GAO found fault with anything, it's that the agencies can do a better job in estimating savings (they may be underreporting them) and develop better plans for reinvesting savings.

Copyright © 2015 IDG Communications, Inc.

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