Obama Banks on Cloud to Hold Down IT Costs

With Congress in the mood to cut spending, the federal budget proposed by President Barack Obama relies heavily on cloud computing and data center consolidation to keep IT costs under control.

The Obama administration’s 2012 federal budget proposal sets aside $79.5 billion for IT spending for fiscal 2012, which begins Oct. 1.

This proposal would increase IT spending by 1.9% compared to fiscal 2010. The current fiscal year’s IT spending remains a work in progress as the federal government operates under Continuing Resolutions. The latest resolution gives it enough money to operate through March 4.

The administration says it’s able to keep IT spending essentially flat at least partly because of projected savings of $3 billion-plus from IT consolidation and a planned shift to cloud computing technologies.

The White House has been setting the new IT direction over the past year, and in recent months started putting hard numbers to the plan.

In December, the administration announced plans to close more than 800 of the government’s 2,100 data centers by 2015.

Earlier this month, federal CIO Vivek Kundra released a report outlining a “cloud first” strategy for federal agencies.

Kundra estimates that the federal government could shift some $20 billion of IT spending to cloud computing platforms.

Kundra’s report said the government “will be able to reduce our data center infrastructure expenditure by approximately 30%” through cloud computing.

Ray Bjorklund, a vice president at consulting firm Federal Sources in McLean, Va., questioned Kundra’s savings estimate, noting that it is based on commercial sector studies that he is skeptical “will really apply to the government.”

Commercial businesses can act quickly on IT changes, said Bjorklund, but government agencies have statutory requirements and are so complex that “trying to wave your wand and say we are going to achieve 30% savings is not that simple.”

Bjorklund added that data center consolidation is a potentially long process, and he wondered whether the government “IT workforce is ready, willing, capable and able execute on that, to meet that timeline.”

The federal budget discusses investment in “light technologies,” which Deniece Peterson, an analyst at government market research firm Input in Reston, Va., said can be essentially defined as cloud services, but may include virtualization and Services-Oriented Architectures that are also part of an underlying cloud foundation.

Peterson also analyzed the budget in a blog post.

Instead of offering a significant amount of new funding for new technologies, this is a budget “that requires reprioritization and reprogramming of dollars,” said Peterson.

Kundra has set the priorities and by establishing cloud as a top direction. “Other less-critical programs will either see cuts, smaller growth than anticipated or be simply put on the shelf to be addressed when those savings are eventually reinvested in projects with clearer, more defined ROI,” said Peterson.

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Managing Partner at meshIP, LLC

Brian Byrne is the founder and Managing Partner of Dallas based meshIP, a technology services firm offering cloud computing strategies and services. He is an accomplished executive with senior management experience in all facets of the technology, telecom, cloud computing, and SaaS industries. He has proven success in developing, financing and executing strategic plans as well as launching new ventures. His background includes a record of significant achievement in international business development and his credentials include a MBA in Marketing and Management Strategy from the J.L. Kellogg Graduate School of Management at Northwestern University, a MS from the School of Computer Science at DePaul University, and a BBA in Finance from the University of Notre Dame.

He is also the inventor of the patented meshDETECT, Secure Prison Cell Phone Solutions.

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