Digital Strategy

Forman: FDCCI cost savings are 'smoke and mirrors'

Mark Forman

Mark Forman, whose role as administrator for e-government and IT at the Office of Management and Budget was a precursor to the federal CIO position, warns that real savings require far more than simply shutting down servers.

Projected cost savings under the Office of Management and Budget's Federal Data Center Consolidation Initiative vary, with OMB estimates ranging from $3 billion to $5 billion and the Government Accountability Office recently predicting $2.4 billion in savings.

But Mark Forman, former administrator for e-government and IT at OMB, said those numbers are "smoke and mirrors" unless federal agencies also "consolidate away the complexity" of client/server applications.

That is where the big savings are in data center consolidation, Forman said, but it is a change he's not sure federal agencies will undertake.

"The only way out here is to re-platform these applications into common operating environments or consolidate applications and leverage economies of scale on similar applications," Forman told FCW. "The opportunities for consolidating are huge, but complexity drives cost, and most of that cost is labor. It's only if applications are ported to a common environment do you get economies of scale where operations could be automated. That is where theoretical big savings are. But few agencies appear willing to go through the stress and risk of having their mission applications migrate to a standard environment."

Federal agencies have closed 382 agency data centers under FDCCI and aim to close or consolidate roughly 1,200 of the nearly 2,900 identified data centers by 2015. However, Forman said the predominant approach to data center consolidation will result in little net savings.

Data or applications from one server are typically shifted to another without any consolidation, resulting in a "new contract or task order for the application's management," he said, adding that about 80 percent of systems administrators were contractors when he was at OMB.

"The more you try to run differently designed applications in a common data center, the more you need administrative software and people to help you run it," Forman said. "From the agency perspective, if I have a mission-critical application and I'm going to move it into a facility with multiple applications, am I going to trust people there who know nothing about this application to run it? No, and the people savings probably aren't going to be there."

He added that it is hard to convince agencies that own the systems and applications that performance will not suffer under consolidation. "That trust bond you have with a legacy contractor can be strong," Forman said. "Some applications go back to Cobol, [to] 1974."

Thus far, individual agencies have not reported specific cost savings resulting from consolidation efforts, said David Powner, director of IT management issues at GAO. And according to a Nov. 26 article from GCN (a sister publication to FCW), many industry experts feel agencies efforts to truly optimize are "moving at a snail’s pace."

Furthermore, Powner acknowledged the possibility that some agencies will experience a slight increase in costs initially. He cited as an example the Department of Homeland Security, which recently built two new data centers that should allow it to close most of its 43 existing centers.

"We're still in the mind-set that if data center consolidation is done right, there [are] savings to be had here," Powner said, noting that the $2.4 billion estimate is not out of reach. "We have a lot of underutilization of servers and a lot of unused capacity all over the place."

Reader comments

Fri, Dec 21, 2012

Federal entities have a tough time rationalizing their app portfolio within each Dept, Agency, and office; let alone across the federal landscape. While I don't think government should be run like business in all aspects, this is one are (app rationalization, in which it would make a difference to the taxpaying citizens and our federal workforce - rationalization leads to significantly lower costs and better productivity. Unfortunately, the government has little incentive to embark on the app rationalization and modernization efforts: there is nearly no competition and no profit motive within government. However, if you want to see success, and see it relatively early, then the federal government needs to take shared services seriously; that being the back office systems that are 90% common to all government entities: HR, payroll, accounting, procurement, etc... Rationalize and modernize those systems, into modern, virtualized, and cloud-based environments and you will see significant cost reductions and improvements to services. It's already been proven to some extent by the existing shared service providers today.

Mon, Dec 3, 2012

Mr. Forman is right on the money! I have supported the DoD the majority of my career, and stove-piped systems/applications, together with "territorial wars," are an ongoing problem. Enterprise systems will reduce major overhead........Remove the stove-piped environment, people, and start saving taxpayer $$$!

Fri, Nov 30, 2012 Jack

Excellent Article, indeed there needs to be a discussion about complexity. Increasing complexity increases cost, risk and change management requirements.

Fri, Nov 30, 2012

There are future costs and risk with common operating environments, which the use of virtualization can minimize. There will always be some issues with commonality and variability in regard to applications and data that abstraction can help manage, but the issues of aligned business process will always remain. What’s important is separating who’s real from who’s faking—everyone thinks they’re special, have unique environments and requirements.

Fri, Nov 30, 2012

Mr. Forman pushed that approach when he was at OMB and most if not all the efforts in that area failed. Not because of the IT, but because the data and definitions and statutes governing agency mission differed enough to make things not work. For example, there was an attempt to have a single "change of address" portal on usa.gov that simply could not work because all the bodies that could use it defined things differently. And when pushed as to why, pointed out valid mission related reasons why. So there is still not a single change of address portal for federal agencies and the idea of consolidating to the program level ignores how frequently this will get in the way.

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