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US government saved $3.6 billion on cloud and data center consolidation

US government saved $3.6 billion on cloud and data center consolidation

ID-100185798By now, the cloud is hardly some new concept to be approached with caution. In fact, adoption is growing so fast, that nearly two-thirds of global tech professionals say they expect their companies to run 100 percent of their IT in the cloud by 2020.

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. 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, according to the most recent report released by the Government Accountability Office (GAO).

Twenty-four of the 26 federal agencies participating in the Office of Management and Budget’s (OMB) information technology reform initiatives reported achieving an estimated total of $3.6 billion dollars in cost savings and avoidances between fiscal years 2011 and 2014. About $2.0 billion of the savings and avoidances were from data center consolidation and optimization efforts.

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.

  • Where are the reinvestment plans?

However the GAO report also noted that most agencies failed to meet requirements to submit reinvestment information, with their plans falling substantially short of 2014 targets.

Most agencies did not follow the rules from the Office of Management and Budget to submit reinvestment plans, specifying how they planned to reuse cost savings from cutting back lower-priority projects as part of their fiscal 2014 budget submissions.

That led OMB to overestimate total savings from the effort by more than half. White House budget officials expected agencies to cut $7.6 billion and repurpose at least half that amount. Instead, agencies collectively proposed $3 billion in savings and planned to reinvest about $2.1 billion.

Similarly, not all agencies have been tracking their progress in actually reinvesting the new-found savings into worthier projects.

  • What GAO recommends

The GAO recommended government agencies to complete their IT savings reinvestment plans and improve tracking of performance. Until agencies complete their ongoing reinvestment plans, they will have a hard time ensuring the population that their considerable savings are being used in the most efficient and effective manner possible.

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