Federal agencies’ data consolidation savings prove difficult to calculate

Data center consolidation is a major initiative across many federal agencies. Thanks to cloud integration efforts, it is no longer viable to maintain such a large number expensive, expansive data centers for disparate departments. By consolidating, agencies can save a tremendous amount of money, and become more efficient in the process.

This much is clear. What is less clear is the precise impact that data center consolidation is having on agencies' bottom lines. As a recent Government Accountability Office report highlighted, departments believe they are experiencing major savings, but the specific totals are difficult to calculate.

Data center consolidation benefits
The GAO report noted that of the 24 agencies participating in the Federal Data Center Consolidation Initiative, 19 organizations reported approximately $1.1 billion worth of cost savings and avoidances between fiscal years 2011 and 2013. Three agencies – the Treasury Department, Department of Homeland Security and Department of Defense – accounted for nearly three-fourths of these savings, totaling approximately $850 million.

These savings are projected to increase to $2.1 billion by the end of fiscal year 2015, according to the report. This brings the total cost benefits from the Federal Data Center Consolidation Initiative to $3.3 billion, $300 million higher than the Office of Management and Budget's original goal. By the end of fiscal year 2017, the total savings are projected to reach $5.3 billion.

Calculation challenges
Obviously, these are impressive figures, emphasizing the value that agencies can reap by embracing data center consolidation efforts. However, the GAO report also highlighted the fact that many departments have struggled to accurately determine how much they have saved through these programs.

Notably, six of these agencies reported little to no savings from their data center consolidation efforts, despite the fact that these organizations combined to close as many as 67 data centers. While it's possible that this effort simply did not deliver cost benefits, the far more likely scenario is that a lack of clarity prevented these departments from accurately identifying benefits. 

As InformationWeek noted, many agencies struggled to accurately ascertain their resource usage when their data centers were based in shared facilities. A large number of service-level agreements, contractual issues and complex organizational structures further prevented organizations from accurately estimating their savings and expenditures in this area. 

The GAO pointed out that perhaps the most commonly cited issues when it came to determining data center consolidation cost savings was the difficulty of acquiring power usage statistics. Reducing power usage is one of the biggest advantages of data center consolidation, and consequently the inability to gauge these dips in usage inevitably obscures this key benefit. 

Consolidation issues
However, the GAO report found that agencies' data center consolidation challenges extended beyond calculation difficulties. As Sen. Tom Carper (D-DE) noted, a lack of transparency can have real-world consequences.

"As the saying goes, you can't manage what you can't measure," he said. "Without accurate tracking and reporting of performance measures, we run the risk of not achieving the full potential savings."

Rep. Gerald Connolly (D-VA) agreed with these sentiments.

"The report reinforces my concern that more than four years after the launch of the FDCCI, we are losing sight of the initial long-term strategic goals of the initiative," he stated.

These issues suggest that federal agencies may need to make changes to the way they approach data center consolidation. The complexity of optimizing and understanding these efforts is confounding many departments' IT teams and leaders. It may therefore be in these organizations' best interests to pursue third-party assistance as they move forward with data center consolidation plans. Consulting firms with robust public sector experience can provide leadership and management services to maximize the efficiency and effectiveness of these efforts.