OMB details path to $2.7B more in data center savings

Agencies are on the hook over the next three years to once again try and cut the number of data centers they run.

The Office of Management and Budget updated the Federal Data Center Consolidation Initiative Aug. 1 requiring agencies to develop plans to reduce the governmentwide total by at least 52 percent by the end of fiscal 2018.

“The Data Center Optimization Initiative, released [Aug. 1], continues and builds upon this progress and ensures robust implementation of the data center provisions of the Federal Information Technology Acquisition Reform Act (FITARA),” wrote Tony Scott, the federal chief information officer, in a blog post. “The initiative requires agencies to implement strategies to consolidate inefficient infrastructure, optimize existing facilities, improve security posture, achieve cost savings, and transition to more efficient infrastructure, such as cloud services and interagency shared services.”

OMB will work with each agency to establish individual goals for data center closures in the next 30 days. These goals will be part of a strategic plan that agencies will update annually. The plans focus on six areas, including planned and achieved optimization metrics and closures, explanations of why certain goals weren’t achieved, and year-by-year calculations and targets for cost savings or avoidance.

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The first strategic plans are due by Oct. 1, and agencies will update them in April in each of the following two years.

Scott announced plans in November to update the FDCCI after seeing the number of data centers rise to 11,700.

This is now the third time the Obama administration is trying to consolidate and control how agencies manage data centers.

In 2009 and 2010, former federal CIO Vivek Kundra signed two memos requiring agencies to determine how many data centers they had and develop consolidation plans. The next federal CIO, Steve VanRoekel, updated consolidation targets in 2011 as the number of federal data centers continued to grow. VanRoekel also initiated PortfolioStat sessions in 2012 to focus, in part, on efficiency and effectiveness of data centers, not just straight closures.

OMB says since 2009 agencies have closed more than 1,900 data centers, reduced the real estate footprint of federal data centers by more than 1.2 million square feet, and has saved or avoided spending nearly $1 billion.

But continued pressure from the Government Accountability Office, House Oversight and Government Reform lawmakers and eventually FITARA pushed OMB to relook at all factors. Scott released a draft data center policy in March expanding the goals on data centers once again.

In FITARA, OMB is required to implement an initiative to optimize the usage and efficiency of federal data centers, which includes consolidating and maximizing server utilization and energy efficiency.

OMB and agency CIOs also must track costs resulting from implementation of data center consolidations and submit an annual report.

At the heart of the debate over the years has been cost savings. In March, GAO released a report that found 19 of the 24 agencies reported achieving an estimated $2.8 billion in cost savings and avoidances from fiscal years 2011 to 2015 with the departments of Commerce, Defense, Homeland Security and Treasury accounting for about $2.4 billion, or about 86 percent of the total. Lawmakers and GAO have said time and again that OMB’s focus should be first and foremost on savings or cost avoidance from closing data centers, and then optimization as a close second. In fact, Rep. Will Hurd (R-Texas), chairman of the Oversight and Government Reform IT Subcommittee, based his IT modernization bill on the concept of agencies could keep money from data center consolidations and other efforts and reinvest in new technology.

So to that end, OMB added a goal in the new FDCCI plan that requires agencies to save or avoid spending $2.7 billion by the end of 2018.

“Progress in optimizing and consolidating Federal data centers will yield substantial cost savings and avoidance,” Scott wrote. “As such, the Initiative sets a goal of reducing annual costs associated with federal data centers by at least 25 percent by the end of fiscal year 2018.”

OMB says it will track the savings and cost avoidance through the IT Dashboard.

Another major change is OMB is strongly encouraging agencies to use shared services to meet any new data center needs.

In six months, OMB is putting a freeze on agencies budgeting for any new or significantly expanding existing data centers.

Agencies can submit a written justification request to the federal CIO with an alternatives analysis and an explanation of how the new or expanded data center would meet the goals of the memo.

“Over the three year initiative, agencies are required to close at least 25 percent of their tiered data centers (i.e. large data center facilities) and 60 percent of their non-tiered data centers (i.e. server rooms),” Scott wrote. “This target will result in the closure of approximately 52 percent of the overall federal data center inventory and a reduction of approximately 31 percent in the real estate footprint occupied by data centers governmentwide.”

The General Services Administration’s Office of Governmentwide Policy will manage the shared services effort.

Over the last year, OGP has taken several steps to help agencies with their data center consolidation efforts. For instance, OGP developed a data center infrastructure management tool to help agencies identify and review utilization and energy consumption of IT equipment. OGP also created a qualification process for agencies to become service providers and developed common service models and financial models.

Additionally, the office is convening a data center community of interest to act as a forum for policy managers, data center program managers, facilities managers and representatives from OMB to collaborate on optimizing strategies.

For existing data centers, OMB expects agencies to consider cloud options as they close and consolidate. The administration says transitioning to the cloud is the government’s top priority, followed by shared services and finally optimizing existing data centers is their last option.