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Federal Agencies to Slash Number of Data Centers

Federal Agencies to Slash Number of Data Centers

As technology improves, the federal government's need for numerous data centers decreases. The government has a plan for dealing with this change: the Federal Data Center Consolidation Initiative, which is expected to reduce the number of data centers it uses by about 40 percent.

By John K. Higgins
12/19/12 5:00 AM PT

The U.S. government's program to consolidate federal data centers presents an opportunity for improving IT management that goes well beyond the objective of just trying to tidy up data center operations and save a little money.

As a result of the Federal Data Center Consolidation Initiative (FDCCI), the number of government data centers will shrink sharply from its current level of about 3,000 centers to about 1,800 by 2015 -- a reduction rate of 40 percent. Eventual savings could be in the range of US$5 billion. The ability to implement a change of that magnitude is largely the result of a confluence of IT developments that have matured at about the same time.

"Once every 20 years or so, significant technology shifts occur, which cause a ripple effect -- deeply affecting business processes across organizations. The end result of all of these changes is that government data centers are entering a period of radical change," according to a recent IDC report on the future of government data center deployment.

Federal agencies are now experiencing the early stages of the latest technology shift that has been triggered by the rapid emergence of several key IT disrupters, ranging from growth of mobile devices to the rise of quality cloud services, the report said.

All of these factors combined are prompting government agencies to rethink how they are structuring their data services and the associated facilities they use to host their IT solutions. As a result, government agencies are considering migrating from a structure featuring a single stack of data center components in a siloed -- or dedicated -- arrangement, to more broadly based and integrated shared services.

Trend Clearly Under Way

"Changes are very iterative and they can take years to unfold, depending on the budgets and preferences of individual agencies. But the long term trends are highly apparent, and IT managers are advised to familiarize themselves with how data centers are evolving, in order to take advantage of important new resources," said Shawn McCarthy, Research Director at IDC Government Insights, and a coauthor of the report.

Consolidation, of course, doesn't mean elimination: instead, agencies will continue and even significantly expand data management activities -- but in a more efficient way by eliminating under-performing and redundant data centers and combining capabilities with others to maximize utilization and economies of scale.

"Understand that it's not, in reality, full data centers that will be consolidating. Some data centers have closed immediately, but the real goal is that applications will be consolidating, leading toward a situation where less data center space will be needed. As that happens, the remaining data centers will become more high-tech in nature," the report said.

That leaves the question of where does the consolidation occur? Some agencies will simply combine operations within facilities they continue to own and manage. Some will collaborate with other agencies, but will still utilize government facilities.

A third option has been highlighted by a recent decision and contract award from the Centers for Medicare and Medicaid Services (CMS). The agency has selected eight contractors to help it create a virtual data center (VDC) to handle an array of agency IT and data-management tasks. One of the goals is to meet the requirements of the FDCCI. CMS is looking eventually to establish a group of "geographically dispersed, world-class data centers owned and operated by a broad pool of industry partners but under the control of a single procurement vehicle."

The near privatization of data center activities envisioned by CMS, however, may not fit other agencies. "It's one trend, but it's not the only trend," McCarthy told the E-Commerce Times. "The end result of this evolution will be fewer dedicated government data centers."

Regardless of the options, the IDC report concluded that the federal data center landscape will change in various ways, including the following:

  • There will be fewer dedicated data centers, but the remaining facilities will be quite large, serving multiple customers.
  • Software solutions will consolidate around specific business functions, with organizations making those functions available as hundreds of discreet services that can be tapped into, via the cloud, by multiple applications and multiple agencies.
  • Hardware will be increasingly rack based, hot-swappable, progressively powerful and standardized, and designed to support heavily virtualized software.
  • Data center buildings will be located in regions where real estate prices and the costs of electricity are lower, and they will be designed to maximize passive cooling and heating. Energy efficiency will be boosted greatly while tapping into alternative energy resources such as wind, solar, nuclear, wave energy, and geothermal solutions.

Financial and Operational Goals

From a financial perspective, the IDC report concluded that currently the general IT trend is that most government agencies want to curtail depreciation associated with their IT investments. Machines and software usually decline in value after purchase, while facilities need long-term maintenance and investment.

"The new data center trend leverages the concept of avoiding the purchase of things that depreciate," the report said. This approach already is having an impact on government computing. Shared services and cloud solutions take government IT away from capital investments and toward operational investments.

On the functional side, the IDC analysis said that consolidation of data center operations will also require that agencies focus on broad-based enterprise IT architecture that incorporates department-wide missions and functions. As a corollary, "no major IT overhaul should be done without also examining and refining current business processes," IDC said. When an organization's mission evolves or changes, such processes can become stale, with unnecessary steps and layers. If agency IT managers take the time to visualize current business processes with a flowchart, and consider how those processes can be streamlined as part of long-term changes to an enterprise IT architecture, the business impact can be improved.

Change Poses IT Challenges

However, the evolution to more productive data center utilization, while potentially beneficial, poses some challenges. The federal data center consolidation program "is an ambitious goal by the federal government and holds great promise tied to other enabling technologies, including virtualization and cloud computing," Ed Meehan, managing director, Accenture Federal Services, told the E-Commerce Times. Accenture is one of the companies eligible for participating in the CMS virtual data center project.

Implementing the CMS contract, and similar federal agency projects, won't be easy. "Top challenges facing our clients include developing effective migration strategies and developing frameworks and methods to effectively measure the value created through consolidation as it relates to business outcomes," Meehan said.

Lockheed Martin, is another CMS project participant, as well as the lead contractor for a recently awarded data center consolidation contract from the Department of Labor. "Lockheed Martin is focused on implementing all aspects of consolidation. We not only bring important virtualization, enterprise security and governance foundations to the table but also crucial systems engineering, architecture, training, and implementation capabilities," Glenn Kurowski, vice president of the health and life sciences group at Lockheed Martin, told the E-Commerce Times. "All of these are needed to achieve efficiency at the level our customers need."

Security is another major challenge in all federal IT deployments. Regulations covering data security and use will limit government IT organizations from using many well-known service provider data centers, such as hosters and public cloud capabilities.

"The large data, storage, and information sharing requirements of government entities, however, will spur a significant build-out of government-targeted mega-data centers in the next five years," IDC said.


John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.


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