The potential for saving money through data center consolidation among federal agencies is so great that the newly installed federal chief information officer has now challenged information technology managers to move further and faster to implement the Federal Data Center Consolidation Initiative (FDCCI). Federal CIO Steven VanRoekel revealed on Oct. 7, 2011, that he was “expanding the project to more aggressively consolidate our data center footprint.”
VanRoekel issued his directive on the same day that more than 25 federal agencies were required to report their data center consolidation plans pegged to the original program initiated by former federal CIO Vivek Kundra. By using data center criteria that defined such facilities as operations that occupied more than 500 square feet, Kundra calculated that there were about 2,100 federal data centers, and targeted 373 for closure by the end of 2012 and another 427 by 2015.
Under the new criteria, facilities encompassing as little as 100 square feet are counted as data centers, bringing the total to 2,800. VanRoekel wants to shutter 472 by the end of 2012 and another 528 by 2015 for a total of 1,000. Ultimately the expanded program could save as much as US$5 billion, according to VanRoekel, versus $3 billion under the original plan.
Calculations on data consolidation savings vary among government agencies such as VanRoekel’s office within the Office of Management and Budget, the General Accountability Office (GAO) and the General Services Administration (GSA). Also, the change in definition of a data center can be misleading in terms of a target.
“When they changed the criteria, they skewed the numbers somewhat in how much would be achieved. By broadening the base, the relative achievement actually goes down,” Angie Petty, senior principal research analyst at Deltek, told CRM Buyer.
Consolidation Remains High Priority
The data center closures under the new plan actually will amount to just 34 percent of facilities instead of 38 percent in the original proposal, according to Petty’s calculations.
“I agree with the effort to consider more ways to reduce costs by closing additional smaller data centers,” she said. “My concern stems from the fact that these new goals are being billed as increases to the former goals and that they represent a higher percentage of data center closures, which they do not,” she said.
Whatever the percentage of closures turns out to be, VanRoekel’s directive makes clear that data center consolidation will continue to be a major objective of federal information technology management.
For vendors, the consolidation initiative poses a tricky marketing situation in terms of selling servers and associated hardware and software. It would seem that large-scale data center consolidation would mean that the federal market for servers could decline significantly as agencies shift to more productive operations and migrate some IT tasks to centralized facilities. Initially, however, the market for such equipment may remain relatively flat.
“I think for vendors the situation will stay about the same for a few years and that the usual procurement patterns will provide agencies the opporunities to virtualize and maybe change the mix, such as utilizing blade servers,” Petty said.
“The normal agency replacement and refresh cycles should continue,” Zach Baldwin, FDCCI program manager at GSA, told CRM Buyer. “Servers with multiple tasking capabilities will still be needed.”
Still, agencies are likely to be more careful in acquiring the equipment and services needed for data center operations, including consolidation activities, now that those functions are under closer scrutiny.
The consolidation task is not easy, noted Cindy Cassil, director of IT systems integration at the Department of State.
Agencies could use some private sector support with “the tools that can help us manage applications,” including migration and data security, she told attendees at a recent data center consolidation forum sponsored by the Armed Forces Communications and Electronics Association (AFCEA).
Despite VanRoekel’s enthusiasm for the program, the FDCCI is a challenging enterprise and the payoff may be a while in coming, according to Steve O’Keeffe, founder of MeriTalk. Based on the reports filed by agencies in early October, that savings in 2011 amounted to only $14.6 million, by his calculations. Only six of 24 agencies reported actual savings, although most claimed to have made some progress in the last year or so in their data consolidtion efforts. Like most IT reforms, it will take some investment in the short term to realize significant long-term savings.
“The raw truth here is that data center consolidation is not easy. It’s not a quick fix. And, it’s not cheap. The recipe for success is complex,” O’Keeffe said.
“There is this rush to generate savings and reduce costs, but the reality is that the agencies don’t have a real fix on their costs — either computing costs or related costs such as energy, heating and cooling,” he told CRM Buyer.
“Many of the agency operations are customized for specific programs, so that makes the centralization goal very challenging. The objective shouldn’t be cutting for the sake of cutting, but to ensure that government IT investments generate real value and efficiency,” O’Keeffe explained.
“Now is the time for OMB to work with the agencies to build a realistic data center efficiency plan to deliver real results on government’s bottom line,” he urged.
Shifting Procurement Landscape
The data center consolidation strategy may have more to do with changing the landscape of federal IT procurement than whether an agency “consolidates” by using five rooms to house server facilities rather than 10.
“We think the initiative signals an insertion point,” Dan Kent, federal chief technology officer at Cisco, told CRM Buyer. “The data center initiative is really part of a phase in moving to a cloud environment, which is the end game,” he said. The first step is data consolidation, followed by virtualization and then, most likely, to private cloud configurations.
“I think the initiative should lead to standardization of federal activities. There are a lot more redundancies than just machines, such as in federal programs and IT applications, that should be discovered in this process,” Kent added.
His perspective tracks with O’Keeffe’s observation that federal agencies deal with a myriad of overlapping functions.
“I was aghast when I learned there are more than 600 human resource programs in the federal government,” O’Keeffe said.
“A lot of servers and related systems are old,” noted Kent. “The consolidation could result in procurement of improved servers designed to operate programs more efficiently. Some legacy systems can be improved but others will be retired — and the move to private cloud configurations may lead to procurement of both hardware and software.
“Eventually, federal investments in servers and associated equipment and software may dip as agencies become more efficient, he continued. “And equipment vendors may also find more markets with commercial data center providers who are chosen by federal agencies to run IT services on an outsourcing basis.”
In addition to equipment, vendors may find opportunities in providing support software and services to agencies struggling to migrate programs and modify applications to centralized configurations, Kent suggested. “We often partner with firms who can provide these capabilities to make an installation work.”