Could Cloud Hosting Reduce U.S. Federal Spending by $12 Billion?

A new study shows that federal government CIOs and IT managers have cut IT costs by 7 percent because  of their adoption of cloud technologies.  

Meritalk, a community of government IT professionals, polled 108 civilian and Department of Defence CIOs, CTOs and IT Directors in April of 2012, asking them about their current cloud deployment. Based on next year’s IT budget of $78.9 billion, the results predict a saving of $5.5 billion. Total federal spending on the cloud is expected to be $8.7 billion or 11 percent of the total budget.

The most interesting figures are Meritalk’s extrapolation of what might have been saved had IT departments aggressively focused on cloud over the last three years. If government agencies had implemented programs of clouding steady- state applications and concentrating new infrastructure and development efforts on cloud technology, they could have made savings of $36.1 billion over the three years or $12 billion per year. To put that in perspective, $12 billion dollars is not far short of NASA’s budget, and is significantly more than the total cost of the Large Hadron Collider (which depends heavily on cloud computing).

DoD IT professionals believe that over the next 4 years IT budgets will decrease by $6 billion per year. If agencies delay making a move to the cloud, over the next few years there will be significant shortfalls, possibly  necessitating program cuts and reduced levels of service.

Currently, many government agencies are planning on moving collaboration tools and email into the cloud as a priority, before beginning to transfer administrative and mission applications. Much of the historical  reluctance about cloud computing among government IT professionals concerns doubts as to security and availability, but over recent years there has been a cultural shift, which, along with the necessity of dealing with stagnant budgets, has seen many agencies and departments shifting to a model which mirrors a lean startup philosophy for IT projects, including the use of cloud technologies to reduce infrastructure costs.

As the Department of Defence  institutes its IT Enterprise Strategy and Roadmap and other departments strive to adopt the best practices of enterprise IT departments, we can expect to see rapid growth in the deployment of cloud technology throughout the government, driving significant cost savings for the American taxpayer.