Some interesting long-term trends are taking shape within U.S. federal government IT spending. The changes are sure to have an impact on agencies’ ability to comply with requirements set forth by the Data Center Consolidation Initiative (DCOI), which came out of OMB a little over 13 months ago. A new set of deadlines for DCOI are slated to kick in this fall. But are they properly funded?
We will go into significant detail on these issues during our upcoming Webcast, titled The State of Federal IT Spending: Looming Challenges for Fiscal Year 2018 on Wednesday, Sept. 13, at 11 a.m. EST. Hope you can join us.
Here’s a little preview.
Before exploring what impact these new spending patterns may have, let’s take a moment to look at the proposed FY 2018 Federal IT budget.
- The federal IT budget for Fiscal Year 2018 is set at $95.7 billion.
- "Officially" that's an increase of about 1.1% over FY2017's budget of $94.0 Billion. (As determined near the end of the fiscal year.)
- It’s worth noting that the original FY 2017 budget, set over a year ago, was fist set at about $89.9 billion. That means the FY 2018 budget really represents a jump of 6.3% over what was originally proposed for FY 2017.
Thus, this could be considered one of the largest year-over-year federal IT spending increases we’ve seen in recent years. The chart below highlights the difference between versions of the FY 2017 IT budget. Basically, the government spent about $4.6 billion more on IT than it was originally slated to spend. Some of that money was spent on security improvements, Defense Department programs, cloud migration, system upgrades and grants to help states improve their Medicare and Medicaid Management Systems.
The Growth of Legacy System Spending
Next, let’s look at how legacy system spending may be consuming an ever-larger portion of the federal IT budget.
Back in 2007, new development (or enhancement of systems) accounted for about 32.5% of the federal IT budget. For the next several years roughly one third of the annual federal IT budget was targeted at new development. But over the past three years, the amount of money dedicated to new systems has steadily declined. This year new development accounts for just 21.1% of federal IT spending. That means, in theory, older legacy systems are consuming an ever-greater percentage of the federal IT dollar.
We say “in theory” because we can only look at the IT budget numbers that are fully outlined in the budget. In FY 2017, nearly 26% of federal IT spending lacked sufficient details to tell us things like whether a line item is being targeted at new or legacy spending. Those budget entries also lack details on specific programs or enterprise architecture alignment.
This is the highest level of missing budget detail we have seen in some time. But since a good chunk of that missing information is from Defense Department programs, it’s not likely that the details will be forthcoming.
The chart below shows how the spending stacks up for FY 2007 vs. FY 2017.
Legacy System Spending Makes DCOI Compliance a Challenge for Many Agencies
With the requirements for DCOI kicking in this fall, federal datacenters will find themselves being evaluated on key metrics, including power usage effectiveness (PUE), effectiveness of their energy metering, level of virtualization, server utilization, facility utilization and more.
Instead of managing devices, IT directors will move toward managing pools of resources and looking for ever-greater efficiencies. Essentially, DCOI requires a change in core skill sets, and it applies measurement and goals in a way that, frankly, can’t always be met by older legacy systems.
Thus, agencies now find themselves in a situation where they need to upgrade, at a time when the government seems to be spending significantly less money on upgrades.
The agencies who are likely to find long-term benefit from compliance with DCOI requirements are those who deploy real-time analytics linked to automated workflow and provisioning – for things like
- Power Monitoring
- Environmental Monitoring
- Capacity Planning
- Server Utilization Monitoring
- Resource Management
- Workflow Management
- Cable Management
- Virtualization Integration
- ITSM Integration
- CMDB Integration
- Automated Infrastructure Management
Whether this can be accomplished under the current IT budget process remains to be seen. We believe it will be highly challenging for agencies to meet their goals with these types of spending patterns, and that will make for an interesting Fiscal Year 2018.
To learn more, we do hope you will join us for The State of Federal IT Spending: Looming Challenges for Fiscal Year 2018 onWednesday, Sept. 13, at 11 a.m. EST.