Cloud Computing Could Save The Country Billions of Dollars

The federal government plans to shut 40 percent of its computer centers over the next four years to reduce its hefty technology budget and modernize the way it uses computers to manage data and provide services to citizens.

Vivek Kundra, chief information officer for the government, said cloud computing could save the country billions of dollars. Computer centers typically do not employ many people to tend the machines, but analysts estimate that tens of thousands of jobs will most likely be eliminated.

The federal government is the largest buyer of information technology in the world, spending about $80 billion a year. The Obama administration, in plans detailed Wednesday, is taking aim at some of that by closing 800 of its sprawling collection of 2,000 data centers. The savings, analysts say, will translate into billions of dollars a year and acres of freed-up real estate.

The government is following the lead of private business. For years, companies have been using software that shares computing tasks across several machines in a data center. The task-juggling technology enables computers to run at far higher levels of efficiency and utilization than in the past, doing more computing chores with fewer computers and fewer data centers.

In an interview, Vivek Kundra, chief information officer for the federal government, explained that the data center consolidation was part of a broader strategy to embrace more efficient, Internet-era computing. In particular, the government is shifting to cloud computing, in which users use online applications like e-mail remotely, over the Internet. These cloud services can be provided by the government to many agencies or by outside technology companies.

Tapping cloud computing services, Mr. Kundra said, could save the government an additional $5 billion a year, reducing the need for individual government agencies to buy their own software and hardware.

Shawn McCarthy, an analyst at IDC, a research firm, said, “The data consolidation is really part of a much larger reworking of information technology by the government. You start with the technology plumbing, but the goal is more responsive and efficient government services.”

This week’s announcement, analysts say, is a significant step along that path, naming 178 data centers to be closed in 2012. It is the second step in the program. In April, 137 computer centers were singled out to be shut down by the end of this year.

But government officials say the federal agencies are moving faster than the initial plans, with a total of 195 closings now scheduled by the end of 2011. That would help lift the total to 373 data centers by the end of 2012.

The government, though late in starting, is on track for a particularly aggressive winnowing of its data centers, encouraged by the need for budgetary belt-tightening. “It is ambitious,” said Darrell M. West, an expert in government and technology policy at the Brookings Institution. “In an era of massive deficits, the federal government has to figure out ways to get more efficient. The data center consolidation is part of that process.”

The cost savings simply from running fewer data centers is estimated at more than $3 billion a year. There is an environmental impact too, since data centers are power-hungry. By one estimate, an average data center consumes the energy equivalent of 200 residential homes.

The data centers to be shut down are varied in size. One facility run by the Department of Homeland Security in Alabama covers 195,000 square feet, the size of more than three football fields. But some of the data centers to be eliminated are less than 1,000 square feet in size.

The total opportunity for savings is so large, Mr. Kundra explained, because for years each government agency tended to buy and build its own technology systems. Across the federal government, he noted, hundreds of different software programs are used for financial accounting and hundreds of different ones for human resources management. The population of federal data centers swelled from 432 in 1998 to more than 2,000 by last year.

“Redundant systems and applications sprouted like weeds,” Mr. Kundra said. “We need to shift resources away from duplicative systems and use them to improve the citizen experience.”

More and more services will go online, said Mr. Kundra, so the focus should be less on overall technology spending by government than on using technology more efficiently to deliver government services, especially collecting and presenting data in useful ways.

As one example, he pointed to the Web site Healthcare.gov. It enables people to compare health insurance coverage and pricing options offered by private companies and the government, and to compare quality scores for hospitals and nursing homes, based on government data.

The shift to modernized computer services has already started. For example, nearly 140,000 employees at the General Services Administration and Department of Agriculture have moved to cloud-based e-mail, Mr. Kundra said, saving about $42 million a year. Google provides the cloud e-mail for the G.S.A, while a Microsoft cloud service is used by the Agriculture Department.

Mr. Kundra declined to estimate the job impact of eliminating hundreds of data centers. The closings are determined by technology managers in the federal agencies. Data centers are not huge employers, as military bases are, for example. Yet even in the first wave of closings, Mr. Kundra said, “We have had some pushback from members of Congress, but tough decisions have to be made.”