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May 3, 2012

Cloud Computing Saves Big Money for the Fed

Robert Gelber

According to a new report from MeriTalk Cloud Computing Exchange, the federal government has saved about $5.5 billion through the use of cloud implementations. With an overall budget of nearly $80 billion, that’s a reduction of 7%.

The findings were revealed last week at the inaugural Cloud Computing Brianstorm on Capitol Hill, an event co-hosted by Senators Tom Carper (D-Del.) and Scott Brown (R-Mass.).

MeriTalk study image

While these figures are impressive in their own right, the “Cloudy with a Chance of Savings” study, which polled 108 federal CIOs and IT managers, shows further cost reductions could be accomplished with a more aggressive cloud strategy. Using data provided by federal agencies, and MeriTalk’s cloud savings calculator, the authors estimate up to 15 percent of the overall IT budget could have been sliced over the past three years, bringing the total possible savings up to $12 billion. If the underlying assumptions and math add up, that’s $7.5 billion left on the table.

Currently, government agencies are devoting 11 percent of their combined $78.9 billion budget to cloud computing, which amounts to $8.7 billion toward various cloud-first initiatives.

Running through a number of scenarios and outcomes, the report presents the case that migrating services to the cloud has been integral in reducing the federal IT budget. As adoption increases, further savings are expected.

When asked to name key cloud applications, respondents pointed to collaboration tools (48 percent), email (47 percent) and administrative applications (43 percent). Conferencing software, mission applications and program management all received less than a 30 percent response. A full 70 percent of all respondents said they expect cloud-based applications to increase within the next two years. These figures paint a picture of cloud adoption that is incomplete, but primed for growth.

The report uncovered a number of challenges in implementing cloud applications, key among them security and service levels. Therefore, it may not come as a surprise to learn that IT leadership was the most opposed to cloud migration since they are the ones sitting in the front row when anything goes wrong.

To whit, a federal civilian IT director bemoaned the lack of “support efforts to standardize implementation and compliance requirements,” and shared that “early adopters are often punished by future regulations that are extremely difficult to retro fit.”

While a federal civilian IT supervisor cautioned overseers to “counterbalance any thoughts of savings with ensuring that the data is secure,” adding that “much of Federal data is in need of high, high security.”

Civilians and DoD members surveyed had differing outlooks as to the future of the federal IT budget. While civilians expect it to increase to $80.1 billion, their military counterparts predict it will drop to $72.4 billion by 2016. Prognostications aside, the actual number could have a significant impact on further cloud adoption. If the budget shrinks, agencies looking to trim the fat will likely look to the cloud for cost savings.

The federal budget has received some scrutiny from legislators looking to slash funding to help reduce the deficit. However, cost-saving measures like migrating to the cloud demonstrate that technological advances can add value while simultaneously saving money.

This sentiment was echoed by MeriTalk founder Steve O’Keeffe. “Cloud cuts cost,” he stated. “Cash-strapped citizens are ready to cozy up to cloud ch’ching.”

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