Data center consolidation still providing contracting opportunities

December 1, 2013

Nearly four years after the federal government implemented the Federal Data Center Consolidation Initiative, agencies have closed 946 data centers. But clear results are hard to measure and there’s work still to be done.

Agencies’ inventory efforts have identified 7,000-plus data centers, a number that has shifted as the definition of a “data center” has changed. Agencies are using cloud computing and other techniques to reduce the number further and save costs.

Server virtualization, or the use of software to allow one machine to host multiple environments, helps agencies decrease the number of servers and lower power consumption and maintenance costs. It is the cornerstone of the consolidation effort. Some agencies that have implemented server virtualization have reduced the numbers of servers they need to function by up to 90 percent.

These investments are paying off in the form of newly available floor space, savings on energy expenses and operations and maintenance costs, improved visibility into information technology infrastructure and better use of IT personnel.

However, challenges to this progress still remain in the form of budgets, technology and agency culture. Agencies are having a tough time coming up with funds to invest in these initiatives, even in cases where return on investment is expected in three years or less. Legacy applications and databases can complicate transitions.

Many agencies claim that cultural issues are one of the biggest challenges to data center consolidation and optimization. When resources are freed up or data centers closed, employees may be forced to move or the nature of their positions may change.

To unearth opportunities, contractors should focus their business development efforts on existing customers. By working with existing clients, contractors have a view into their agency clients’ needs, existing IT infrastructure and available procurement avenues.

In most cases, agencies are purchasing products and services related to data center consolidation and optimization incrementally, regardless of the contract program they ultimately use to fulfill the requirement. Most data center requirements put out for bid are not whole-facility or sub-agency optimizations on a grand scale. Instead, agencies are inviting bids for specific components of these efforts, such as planning, moving a specific function to the cloud or implementing virtual desktop infrastructure for an office.

Angie Petty is a senior principal analyst at Herndon-based Deltek, which conducts research on the government contracting market and can be found at www.deltek.com.

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