The Veterans Affairs Department spends more than $4 billion a year on information technology. But the details of that spend were limited. VA could say how much it was spending on the cloud or for application development, but couldn’t compare itself to public or private sector benchmarks.
Ryan Woodward, the Director of the Franchise Budget Office for Infrastructure Operations in the Office of Information and Technology at VA, said that all changed in the last year. By applying Technology Business Management (TBM) standards, VA now understands its IT spending two or three levels down and is driving better decisions and cost savings.
“We went from having basic cost data related to call centers or budget object codes or congressional projects to now having data about specific services we are providing, for example, compute, storage and networking. We are able to describe that in much more detail,” Woodward said on Ask the CIO. “We are also able to know the total cost of ownership for certain applications, which is very important.”
Woodward said having a better grasp of that data helps both internally and externally.
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He said knowing the cost for veteran-facing services helps leaders prioritize updates and changes to the applications or network.
“We are using TBM to compare our on-premise costs for applications and services to what we are seeing for applications which have migrated to the cloud. We are also using TBM to try to decide which applications need to go to the cloud at all. There are some business rules that you can apply to the selection of the migration of applications that make it most effective, cost-wise, and give you the best return on investment.”
The Office of Management and Budget began pushing agencies to use TBM standards in 2017, made it a cross-agency priority goal in the President’s Management Agenda and included in Circular A-123.
The goal of applying TBM standards is for agencies to get to that granular level of spending to better understand the value the investments are providing. OMB envisions using agencies’ TBM data as the backbone to the federal Capital Planning Investment Control (CPIC) process for technology. The current process can be inefficient and inaccurate, and agencies have been known to use data from non-authoritative sources and manually enter it into the CPIC dashboard.
Several agencies jumped on the TBM bandwagon more quickly, like the General Services Administration, the Education Department and VA.
Woodward said VA has been implementing TBM for the better part of two years, starting by seeing what data is available first and then filling in the gaps.
“One of the very basic first steps we took was pulling all budget lines and all labor costs by full-time equivalent and by contractors and mapping every single one of those and employees to the TBM taxonomy. That’s really a basic foundational exercise,” he said. “That forms the foundation for migrating to an IT financial management solution and start aggregating your costs in accordance with TBM taxonomy. You start to see total cost for platform or for storage once you have that initial mapping done.”
Woodward said the relationship between the CFO and CIO’s shop was an important collaboration to make TBM more valuable. For example, VA created a standard mapping structure for budget object codes to cost pools in the taxonomy, which made it easier to map the data to the categories.
“That’s where you can start automating this process of converting general ledger cost data into more useful, granular and transparent data that is being displayed in the TBM taxonomy format,” he said. “Once you have that down, then you can start conducting broader activities related to analyzing the data and trending the data over time for applications.”
Bob Carter, vice president of public sector operations at Apptio, which provided the software for VA, said that type of collaboration between the CIO and CFO is one of the most important success factors for agencies when applying TBM.
He said agencies who treat TBM as a compliance exercise will miss an opportunity to understand technology costs and return on investment.
“There are ways of getting insights and value along the way,” Carter said. “Some folks go around vendor management, others around contracting and others are looking for quick results around cloud. Those things can all be driven early on as you are building out the model and running IT like a business, as you get to the eventuality of taking full advantage of the [TBM] model.”
Woodward said the use of TBM resulted in a better understanding of how VA’s costs to use cloud services compare to private sector costs.
He said this data is helping VA decide which applications should go to the public cloud as well as understanding the return on investment for moving to the cloud.
“It’s helping us understand our costs in a more granular manner so there are some applications that for the near term will probably stay on-premise legacy infrastructure,” Woodward said. “Through our analysis with TBM and comparing our costs to [commercial] cloud costs, we are understanding the drivers of our costs better so we are able to optimize our on-premise spend while those things either wait to be migrated or stay on legacy infrastructure for the foreseeable future.”
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More specifically, Woodward said using the TBM data helped VA not invest in more storage equipment because there was either plenty available on-premise or the data or applications could be moved to the cloud.
While VA doesn’t have final savings totals yet, Woodward said the early analysis shows the agency is paying at least 10% less for commercial cloud storage.
“We recently migrated some important VBA applications from an off-premise third-party data center to the cloud and that was a big win for the agency because we saved many millions of dollars,” he said. “We were able to cut those costs by half, at least.”