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The country's CIO says a fourth of federal IT spending can be shifted to the cloud.

By Marjorie Censer
Monday, February 21, 2011; 14

The federal chief information officer is aiming to shift about one-quarter of agencies' IT spending to cloud -- or Web-based -- computing, in an effort to make the government more efficient and to save money.

The initiative represents another high-water mark for cloud technology, which has gained significant backing within the federal government in recent months. Last year, the Obama administration announced it would implement a "cloud-first" policy that requires agencies to give priority to cloud-based solutions.

The administration has said cloud computing allows more people to share a common infrastructure, reducing costs. Additionally, the technology is closely linked to the government's goal of dramatically trimming the number of data centers it uses, which now number nearly 2,100.

As part of the fiscal 2012 budget process, federal agencies have identified $20 billion in applications and services that they could move to the cloud, according to U.S. Chief Information Officer Vivek Kundra.

Agency estimates released by the Office of Management and Budget indicate that the Department of Homeland Security and the Treasury Department see the most potential. Each estimated the department could shift more than $2.4 billion in IT spending to cloud-based investments. The Defense Department, the Department of Veterans Affairs and the Transportation Department rounded out the top five.

Kundra said last week that e-mail is one area primed to move to the cloud first. In fact, both the General Services Administration and the Agriculture Department have announced plans to adopt Web-based e-mail. Other areas that make sense include services such as claims processing and data analytics as well as public-facing Web sites, Kundra added.

The "cloud-first [policy] is not about more spending," he said. "It's actually about cutting down significantly the wasteful spending that's been under way for decades."

Contractors with cloud offerings have wasted no time trying to move in on new business. Kevin Paschuck, vice president of the public sector at RightNow Technologies, said the company has been rapidly adding new employees.

RightNow, which helps agencies move to the cloud public-facing services, had 10 new employees start last week. These hires are calling federal agencies to pitch the ways that RightNow, which just months ago opened a new office in Reston, can help them meet the government's cloud goals, Paschuck said.

The $20 billion investment plan reflects "an acceptance of the cloud" within the government, said Steve Lawrence, vice president for federal sales at Quest, which builds private Internet-based networks and can help the government migrate to cloud computing.

"It's no longer something that we're talking about; it's something that we're doing," Lawrence added.

Kundra last week also detailed plans to shut down at least 800 data centers by 2015. Among the most affected agencies will be the Defense Department, which will slim down from 772 to 428, and the Interior Department, which will pare its 210 down to 120.

Ideally, "the federal government would have three major data centers across the country, what I would call three digital Fort Knoxes," said Kundra. "In order to get there, we've got to take pragmatic steps."

Kundra has moved to significantly remake the government's IT spending, including holding reviews of about three dozen large programs, some of which were canceled or significantly scaled back.

He credited this work, as well as the focus on saving money by closing data centers and moving services to the cloud, with holding federal IT spending flat in 2012.

Kundra said the government is keeping a close eye on additional potentially cost-saving technology. For instance, he said the strides in personal consumer technology could mean a shift in the way federal employees are supplied equipment.

One option, Kundra said, is providing subsidies to employees to allow them to buy their own personal technology that could be adapted for workplace use.

Additionally, he said the government is watching the rise of applications targeted toward performing specific tasks.

"We're seeing much lighter-weight apps, and we're seeing some of the most innovative solutions . . . cost a fraction of what we've been spending on federal IT," Kundra said.

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