While the U.S. government continues to tighten its belt, it’s learning that while some cost-saving efforts sound great in theory, in practice they’re not helping the pounds drop off.
Two of these cost-saving measures — shared services and consolidated data centers — are particularly good examples of this. And part of the problem is that agencies are simply looking at it from a technology viewpoint, rather than considering the people part of the equation.
Shared services is an enterprise-wide infrastructure investment that lets cross-functional groups share unstructured content. For example, a town might use a single geospatial database to store information about all areas by address, whether it’s from the engineering or the planning department. The advantage is that only one set of software and technical people are needed, and silos are reduced.
What’s not to like?
Consequently, in its continuing attempt to save money and be more efficient, the federal government has announced a shared services guide and catalog, hoping that agencies will look for ways to consolidate. But whether this will actually save American taxpayers any money, of course, remains to be seen – and the history isn’t good. In 2011, the U.S. Government Accountability Office (GAO) identified 34 areas where Federal Agencies overlapped, with billions of dollars in potential savings if they moved to a shared services model. Yet it’s still not happening – because it turns out that government IT is vulnerable to politics. Who knew?
While implementing shared services may seem like a no-brainer, it’s not always as easy as it sounds. But it’s less a technical issue and more one of people and procedures, writes Troy Schneider in Federal Computer Week — and that, in fact, a mandate could go over less well than a grassroots approach. It’s one thing when an agency identifies an available service that it does not currently have, and becomes customers of another agency’s service, he says. But if an agency already has its own solution, it may not want to give it up for a shared service that may be seen as a lowest common denominator.
The federal government is hoping to avoid that problem by progressing on two fronts. First, it has released the Federal Shared Services Implementation Guide, which outlines seven steps in implementing shared services. Second, the federal CIO Council released a catalog of available shared services called Uncle Sam’s List. It provides information on IT shared service areas, providers, and related existing contract vehicles. There are listings for approximately a dozen commodity IT service areas and a dozen support IT service areas — which could make it easier for departments to see what areas they might be missing, and feel more in control over the process.
All of this is part of the government’s effort to run its IT functionality more efficiently, which includes actually shutting down data centers. In February 2010, the Federal Data Center Consolidation Initiative (FDCCI) was created to reduce the number of federal data centers, which had grown from 432 in 1998 to more than 2,000 by 2010. Moreover, the government noted, on average these centers were using only 27 percent of their computer power. (To be fair, even the federal government wouldn’t want a data center with 100 percent utilization.) The plan was that, by 2015, about 1,200 data centers would be shut down — with 373 scheduled to be shut down by the end of 2012 – which would save about $3 billion.
The FDCCI has since been replaced by the Data Center Optimization Initiative (DCOI), which, as of summer 2016, requires that over three years, agencies must close 25 percent of their tiered data centers and 60 percent of their non-tiered data centers, writes Morgan Lynch for MeriTalk. “Overall, 52 percent of the data center inventory in the Federal government will be closed and 31 percent of data center real estate held by the government will be reduced. The initiative seeks to reduce the cost of Federal data centers by 25 percent by 2018. This will result in $2.7 billion in cost savings and avoidances.”
But progress on that isn’t going much better, writes Lynch is a different MeriTalk piece. “The Government Accountability Office (GAO) found that of the 24 agencies required to participate in the DCOI, 22 said they were making limited progress toward the 2018 performance targets,” she writes. In fact, only five agencies or fewer said that they met or exceeded one of the targets. “The GAO report, released Sept. 6, includes responses from agencies as of February 2017. As of April 2017, 17 of the 22 agencies weren’t expecting to meet OMB’s targets by Sept. 30, 2018,” she adds. Some members of Congress are calling to extend the deadline.
Moreover, closing the data centers isn’t saving as much money as planned. “Twenty-three out of the 24 agencies mandated to follow the Data Center Optimization Initiative reported $3.3 billion less in planned cost savings compared to the $4 billion reported in November 2015, according to a GAO report released May 18,” Lynch writes in a third article. “The 23 agencies reported about $656 million collectively in planned savings for fiscal years 2016 through 2018. This reduction in planned savings occurred because eight agencies reported less in planned cost savings in their annual DCOI strategic plans, as compared to the savings these agencies previously reported to GAO in November 2015.” In fact, of the $2.3 billion that was saved, $2 billion of it came from just the departments of Commerce, Defense, Homeland Security, and Treasury, she writes.
It will be interesting to see what sort of results the government gets from emphasizing the shared services program –and what sort of synergy it will get with the consolidation program. The ability to share services more easily might make it easier for departments to shut down more data centers. Or perhaps shared services will follow the consolidation model: Increased efficiency without actually saving any money. Only time will tell.
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