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6 Ways to Rein In IT Spending

Virtualization and shared services can help contain IT costs in a tight economy.

Conflicting dynamics have led federal CIOs to face 2009 with a mix of trepidation and anticipation. With the deficit ballooning to $10.5 trillion and tax revenues shrinking in a tight economy, many agencies expect to trim spending, including areas within IT.

But as the tech-friendly Obama administration comes to power, there’s also optimism about increased technology spending in some areas — to support national health care, education and other initiatives championed by the president.

“What you’ll see is natural adoption of automation,” suggests David Wilson, vice president of product management at Telos, an Ashburn, Va., IT solutions and services provider. “You can’t continue to do things manually if you want to get efficient.”

So how can your agency control costs and find cost-cutting opportunities within its IT program? Here’s what a cross-section of federal IT officials and industry experts suggest:

Virtualization. Like their peers in the private sector, federal CIOs are looking to improve server utilization rates, consolidate data center footprints and slash energy bills through server virtualization. The Environmental Protection Agency, for instance, just launched a three-year server virtualization effort, which it expects will reduce its print, e-mail and file servers from 2,000 to fewer than 1,200 by the time it’s finished in late 2011, says Deputy CIO Linda Travers.

“There are some opportunities to reduce costs,” says Travers. “But our experiences are more often than not centered on cost avoidance.” So while the EPA must invest in software to support its virtualization initiative, the agency expects to pare its power bill by operating nearly half as many servers, she says. Overall, Travers expects her agency to avoid several million dollars in costs annually over the next seven years in energy, hardware maintenance, labor and software licensing expenditures.

To determine which applications to virtualize and what criteria to apply, the EPA project team has begun categorizing applications into tiers based on required availability of information, says Travers. After this analysis is complete, the agency will prioritize the apps and create a virtualization deployment schedule that EPA will use once it has built out its virtual environment in 2011, she says.

Although the agency has not yet determined the return on investment for virtualizing specific applications, says Travers, “we have analyzed the current spending patterns for computer rooms, servers and storage devices versus projected future spending scenarios.” As the EPA moves from a highly decentralized service delivery model to a centralized, hybrid approach, there will be substantial opportunities for hardware, software, energy and labor cost avoidance, says Travers.

Energy Efficiency. As energy costs have soared in recent years, CIOs have struggled to find ways to reduce their power consumption. This can be as simple as comparing the efficiency of new technologies when making purchases, says Robert Rosen, CIO of the National Institute of Arthritis and Musculoskeletal and Skin Diseases.

For instance, last summer Rosen’s division of the National Institutes of Health factored energy into its evaluation of storage area network directors.

The specifications from the two bidders included the power requirements for the devices’ normal operating conditions, says Rosen. “Capabilitywise, products from two vendors were very similar, but one of the products required twice as much energy as the other.”

Because the prices of the two systems were comparable, “we could save significant lifetime costs by choosing the more efficient brand,” says Rosen. “You have to take those things into account.”

Shared Services. One of the techniques used to drive efficiencies across agencies is establishing shared-services entities for centralized IT management. Five years ago, the Transportation Department created a services organization to centrally manage and support the bulk of the 12,000 desktop machines used outside of the Federal Aviation Administration, says former CIO Dan Mintz.

Achieving a higher level of security was one of the drivers behind the program, says Mintz, who left his post with the change in administration. “By having standard settings for the operating system — and eventually application software that resides on each desktop — we were able to provide more consistent protection,” he says. A key component to this was the implementation of the Federal Desktop Core Configuration.

In addition, centralized desktop management also makes it easier for DOT’s IT staff to simplify its desktop refresh cycles by having a common operating environment. Plus, the agency has emphasized the opportunity for DOT employees to work remotely more often, so the shared services organization has made transportable notebook computers the standard systems for frequent teleworkers, says Mintz.

So far, DOT manages 7,000 desktops through the program, with plans to bring another 4,000 machines under the shared-services umbrella by the end of 2011, says Mintz. Once the program is fully deployed, DOT estimates it will shave between 15 percent and 20 percent off its support costs.

Standardization. As agencies prepare for desktop refresh cycles, an increasing number also opt to standardize on common systems to reduce implementation and support costs. For its part, EPA recently began deploying 12,000 notebook systems with docking stations, which will let staff members work from the same systems in their offices or remotely. The effort, which began in October and should wrap up this September, will generate $100 million in cost-avoidance savings, says Travers.

For example, the agency, which has nearly 200 offices, won’t need as many desktop technicians (either on the federal payroll or under contract) to support machines, says Travers. Plus, as part of the initiative, the agency also has begun standardizing on high-end, multifunction printers to winnow its printer population and lower support and energy costs for those devices as well.

Enterprise Architecture. Over the past few years, agencies have devoted a lot of attention to establishing enterprise architectures that can consolidate information from multiple organizations, provide better services to citizens and operate more efficiently. “We have governmentwide initiatives that have agencies invest in a common way of doing business that reduces our overall operating costs,” says Karen Evans, who just left the Office of Management and Budget after a 27-year government career, the last six as administrator for e-government and information technology at OMB, where she oversaw a $71 billion annual IT budget.

For Evans, the Food and Drug Administration provides a striking and early example of how rationalizing business operations can drive down costs. Beginning in late 2002, the FDA, which has an annual IT budget of $200 million, established an enterprise architecture to help it consolidate servers and applications, streamline operations and standardize 85 percent of agencywide processes. The effort, which includes cutting its inventory of 778 servers in half by 2010, will help the agency avoid an additional $10 million in IT costs over the next five years.

Software as a Service (SaaS). Both public- and private-sector IT officials have raised privacy and security concerns with applications hosted and managed by third-party providers. Yet a growing number of CIOs, including DOT’s Mintz, say they’re experimenting with hosted apps when it makes sense to do so.

For example, Transportation hired a SaaS provider in early 2008 to host an external blog for then-Secretary Mary E. Peters. The total cost of the service runs the department less than $1,000 a year. It would cost DOT “a great deal more” to load the blog onto one of its servers and have an in-house systems administrator monitor it, Mintz says.

Systems that don’t contain personally identifiable information about people or organizations that require special protection are the first candidates for SaaS opportunities, says Mintz. As a result, the IT shop has begun considering some web services apps that could be hosted by third-party providers.

DOT plans to create a certification process for any potential SaaS provider it considers when the data does require additional privacy protection, he says.

Hosted software providers that segregate servers used for government applications from their commercial practice or have developed relationships with government agencies “that we look to for leadership in such certifications are likely to have an advantage in getting this kind of business,” says Mintz.

Feb 17 2009

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