By Jason Miller
Executive Editor
Federal News Radio

Federal financial and human resources systems are among the next government systems that will move to the cloud.

Vivek Kundra, federal chief information officer, said today that agencies run more than 500 financial and more than 500 human resources systems across government, and it’s an area ripe for savings by moving them to a cloud service provider.

“In the financial systems space, there are some really innovative companies, like Workday Human Capital Management that are looking to disrupt this space when it comes to financial systems,” Kundra said during an event sponsored by Politico and Microsoft in Washington. “I hope other companies and entrepreneurs…will think about cloud based financial systems so an agency as large as the Homeland Security Department can provision its financial systems in a similar way a start up fires up a financial system using QuickBooks.”

Kundra said with so many systems across the government, the potential for savings is great. He pointed to the General Services Administration and Agriculture Department’s decision to move each of their e-mail systems to the cloud. He said combined, the two agencies will see a savings of about $40 million.

“There are billions of dollars that could be saved,” Kundra said. “We are laying out a strategic landscape that’s going to allow us to disrupt, whether it’s HR systems, financial systems or whether we are looking at simple things like e-mail or more complicated workflow systems. The notion that we can bring together a number of agencies who have shared problems and in an area that is ripe for innovation and disruption.”

Kundra said the administration did that with the request for proposal GSA issued in April for email-as-a-service.

He said the type of vehicle could come about for financial and human resources systems.

“I envision in the future, in the next couple of years, where you will be seeing major multi-billion dollar RFPs that are cloud centric coming in and disrupting financial, HR and other platforms across the government and to give a strong signal to the private sector to make sure the privates sector are innovating and provide us with solutions that allow us to move away from the model of asset ownership and to service provisioning,” Kundra said.

Several agencies already are heading down this path or are considering it. For instance, the Labor Department and the Equal Employment Opportunity Commission outsourced to the cloud each of their financial systems to a third party vendor, Global Computer Enterprises (GCE). EEOC hired GCE in March under a five-and-a-half year contract worth about $10 million. Labor began using GCE’s cloud in January 2010.

The Nuclear Regulatory Commission recently issued a sources sought notice to move its financial management system to a new provider, and cloud computing is one option. Additionally, the Interior Department’s National Business Center runs a private cloud for its 15 customers using Oracle Federal Financials.

But Kundra said he expects the private sector to lead the way when in the financial and HR areas. This would be different than the Financial Management Line of Business started under the Bush administration, where agencies were encouraged to move to federal shared service providers for financial management and HR services. The private sector part of the LOBs never got a lot of traction across the government.

Kundra said agencies are exploring their options now will drive the private sector innovation.

“If we look at these individual procurements it’s essentially a race to the top that will culminate then to a governmentwide BPA or whatever vehicle that will make the most sense for each of the others,” he said. “The key here is to get agencies together [around the service] .”

Under the email-as-a-service BPA, GSA and OMB worked to get 15 agencies to commit to strongly consider using the blanket purchase agreement to move their email to the cloud. Kundra said the federal government also brought in state and local CIOs to make sure the vehicle meets their needs over the eight-month development period.

“In the same way in the financial systems arena, we’re going to do exactly the same thing. We are going to do that in the HR,” he said. “We need to start bringing the government to start pooling their purchasing power. We need to start saying where we are heading not three months from now, but over the next 5-10-15 years.”

A major component to any federal cloud effort is the FedRAMP cybersecurity process, led by GSA and the departments of Defense and Homeland Security. Under FedRAMP, GSA, DHS and DoD would certify the cloud service meets the low or moderate risk levels under the Federal Information Security Management Act (FISMA).

Kundra said the final FedRAMP standard should be ready in the next month or so.

“We are very close to finalizing the protocols,” he said. “We’ve already agreed on the technical aspects of what’s going on with FedRAMP.”

One of the biggest remaining questions is how to pay for FedRAMP now that Congress reduced the E-Government Fund by three-quarters. The 76 percent decrease to $8 million forced OMB to make decisions about how fast some initiatives could continue. The administration has been using the E-Gov Fund to pay for FedRAMP efforts.

Kundra said there was a meeting Thursday to figure out how to move forward in paying for FedRAMP. He said a fee-for-service model is under consideration as is having each agency contribute to the program.

Kundra said a decision on how to fund FedRAMP would be made “sooner rather than later.”

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