While agencies aim to improve efficiency and deliver greater return on investments, they are looking increasingly to strategic sourcing and shared services a means of leveraging the government's buying power. Tracking spending through agency mandated contract vehicles, we tend to end up with piecemeal impression of the impact these acquisition trends are having on the market. As luck would have it, the Office of Federal Procurement Policy (OFPP) has a registry of interagency contracts. However, according to Jack Kelly, Senior Policy Analyst for OFPP, the status has not been recently updated. The current extent to which agencies are leveraging shared service contract vehicles isn’t entirely clear, but Kelly suggested that the Strategic Sourcing Leadership Council (SSLC) is likely to get engaged in activities to review and update the interagency contract registry. In short, we can expect strategic sourcing and shared services to continue shaping federal spending.
OMB Mandates Shared Services for Financial Systems
On March 25, the Office of Management and Budget (OMB) released a memo directing all executive agencies to use shared service solutions for future modernizations of financial systems. The guidance outlines the evaluation process the Treasury Department will use to assess existing Federal Shared Service Providers (FSSP). It also describes the steps the Treasury’s Office of Financial Innovation and Transformation (FIT) will take to review new agency proposals for aligning with this mandate.
Building on the Federal Information TechnologyShared Services Strategy (as well as OMB’s review of financial systems from June 2010), the memo from federal controller Danny Werfel explains that “the cost, quality and performance of Federal financial systems can be improved by focusing government resources on fewer, more standardized solutions that are implemented and operated by experienced staff.” In addition to streamlining the variety of solutions currently deployed across the government, the use of FSSPs will help to reduce the time it takes to implement systems and to improve data quality. As part of this guidance, OMB is encouraging agencies complete market research to evaluate solutions and complete analysis of alternatives from both FSSPs and commercial SSPs. Werfel suggests taking vendor past performance and advantages of existing partnerships into consideration when assessing solutions.
The guidance makes it clear that agency-specific solutions will be discouraged. Still, there is some room for “rare” exceptions. Agencies would need to demonstrate exceptional circumstances (e.g. unique requirements or adequate scale) through alternatives analysis that establish the agency-specific approach is clearly preferable in terms of best value for the Federal Government. Should an agency be approved for an agency-specific solution, they still need to participate in government-wide benchmarking and governance.
Moving forward, OMB will work with agencies to explore modular updates for financial system, to target enhancements and to prioritize funding for modernization proposals. OMB will be working with agency Chief Financial Officers (CFOs), Chief Information Officers (CIOs) and FSSPs to identify common standards and requirements. Two offices within OMB, the Office of Federal Financial Management and the Office of Federal Procurement Policy, will work with agencies to align acquisition strategies to promote the Cloud First policy and strategic sourcing goals. Agencies with near-term modernization needs are advised to plan for adopting a shared services approach. In the coming months, OMB will issue new guidance on technology and business requirements for financial systems.
This mandate from OMB comes on the heels of the Government Accountability Office removing management of interagency contracts from its 2013 High Risk List. This list calls attention to agencies and program areas that are particularly vulnerable to fraud, waste, abuse and mismanagement. GAO removed the high risk designation for interagency contract due to improvements in several areas including: progress addressing identified deficiencies, adding management controls, creating a policy framework for new contracts, and taking steps to provide better data.
Shared services: A compelling model for government business
Deltek is pleased to present a guest blog on cloud computing from Microsoft. Over the next year, the General Government Services team will be looking to partner with leading vendors in the fields of cloud computing, enterprise resource planning software, student and teacher information systems, statewide longitudinal educational data systems and other core technologies tracked in the GovWin IQ Opportunities Database. Special thanks to Joel Cherkis and Michele Bedford Thistle for contributing their valuable insight and opinions regarding cloud computing.
If you are interested in guest blogging for Deltek in the topics mentioned above, reach out to DerekJohnson@deltek.com for more information! Meanwhile, be sure to follow us on LinkedIn!
By Joel Cherkis, Government General Manager, Microsoft
As public sector organizations around the world seek to cut costs in response to economic and budget pressures, many are looking for new strategies to deliver on their missions. Adding to this challenge is that amid shrinking budgets and resources, more than ever, citizens are demanding services from government that rival the best and most innovative in the consumer world.
In this era of doing more with less, shared services – a new computing model made possible by the cloud – is rapidly gaining popularity in government. It refers to taking a service, application, or infrastructure owned by one organization and sharing it via the cloud with multiple parties, either within the same organization or adjacent ones. Analyst firm IDC Government Insights predicts that in 2013, shared services will account for 18 percent of the government cloud market and will offer new ways of procuring and provisioning technology.
The benefits of this model are clear. By combining the IT resources of departments, agencies, and even various levels of government, public sector organizations collectively stand to realize enormous cost savings by eliminating the need to independently own and manage their own IT resources. There are also important opportunities to boost efficiency by consolidating IT resources and maximizing the use of underutilized applications and services by opening them to a broader set of stakeholders. With this new model also comes greater access to innovation, particularly for local government leaders who, despite limited budgets, can now access the latest technologies by collectively sharing the cost.
A great example of an organization that’s taken advantage of shared services in the cloud is Staffordshire County Council in the U.K., which created the Staffordshire Public Sector Network (PSN) to enable public sector organizations in the area to securely share services over a common network. As a result, the council is now able to deliver a pricing model based on usage of cloud services, maximize its current IT investments, and better predict future IT needs because of its new approach.
Shared services offers an exciting new model for government, and stands to change the way that public sector organizations use and procure technology. By fully leveraging economies of scale, shared services can help governments maximize their investments in technology, improve utilization of existing resources, and expand access to innovation by sharing the cost of adopting the latest technologies. As organizations continue facing challenging budget environments, I believe this will drive even more governments to adopt a shared services approach. If you’d like to learn more, I encourage you to check out our Microsoft On Government blog, which frequently covers this topic.
To learn more about cloud computing procurement in the state and local marketplace, be sure to check out Deltek’s 2012 report, “Creating the Hybrid Cloud,” by research analyst Derek Johnson (subscription required).
NASCIO divulges state CIO priorities in annual survey top tens
The National Association of State Chief Information Officers (NASCIO) recently published its 2013 State CIO priorities and priority technologies, based on its annual state CIO survey. The survey is a valued peak into the minds and wish lists of state IT executives, and when compared against past priorities, we can see that consolidating existing IT infrastructure and optimizing it for the future (particularly for the cloud) will be among the highest priorities for CIOs this year.
In this year’s top three, we see a fairly consistent pattern among the states of shifting away from the budget cutting, cost-saving measures of the post-recession years, toward much-needed reinvestment in long-term IT infrastructure. Among last year’s top three, consolidation/optimization remains number one, but budget and cost control falls to number five, and governance drops off the list completely. The second spot this year goes to cloud services, which didn’t even make the list until 2011. Security makes a triumphant return to the top three after being a middle-of-the-pack priority since 2009. In my opinion, these three priorities are all connected and track fairly well with what Deltek has seen in the market over the past few years.
Initiatives to consolidate or upgrade existing data centers have been, or are taking place in Oklahoma, Texas, Florida, New York, Pennsylvania and North Carolina. Among these states, New York, Pennsylvania, North Carolina and Texas require significant cloud capabilities for their new consolidated data centers. In many cases, states are looking to the private sector to implement these initiatives and guide them on the right path. Of course, as the importance of cloud-based IT services rise, so do concerns about secure technologies. While security is no longer the barrier to cloud entry that it has been in the past, it is and will remain one of the top concerns for CIOs as they continue integrating the cloud into their existing IT infrastructure.
2013 CIO Technology Priorities
NASCIO also queries its members about their top 10 priority technologies. While the shakeup from last year’s top three is less pronounced, we continue to see a distinct pattern emerging in the minds of state CIOs. It is clear that many envision a future government workforce that is mobile, virtual and able to access workplace resources from anywhere on the planet. While this likely falls short of representing a harbinger of doom for the face-to-face, brick-and-mortar way of doing state business, the investment in these top three technologies may very well be laying the groundwork for such a future.
Not surprisingly, the new top technology pursued this year is cloud-based services. This comes as no surprise to Deltek, which has seen an explosion of cloud-related procurement in the last three years, as well as procurements for other technologies with specific cloud-integration components built into solicitations. We are quickly approaching the point (if we have not reached it already) where cloud integration requirements for state technology RFPs are the norm, not the exception.
Also notable is the journey of mobile workforce technologies, which hung around as a low-level CIO priority from 2007-2009, dropped out of the top 10 entirely in 2010-2011, and returned this year with a vengeance as the number two priority technology. As cloud computing continues to make it easier for government employees to virtually access their workplace from remote environments, governments are planning to put some serious dollars into making sure their workforce has the mobile computing tools necessary to take advantage of this new environment.
For the full version of this AP with a complete breakdown of policy and technology priorities, click here (subscription required)
Future of Federal IT Environment Requires Fundamental Changes of Hardware Vendors
In our newly published Federal Information Technology Hardware Market report, we forecast that demand for vendor-furnished IT hardware by the U.S. government will decrease from $28.7 billion in 2012 down to $20.2 billion in 2017, a compound annual growth rate (CAGR) of almost -7%. Our team started by envisioning what the federal IT environment will look like in 2017 and the game-changing trends that will shape that future.
In preparation for writing the report, entitled Federal Information Technology Hardware Market, 2012-2017, we looked at many trends to envision the year 2017 and the most impactful trend, by far, is the fiscal state of the federal government. Risks from China's and Japan's flagging economies (undermining their ability to continue financing our government's out of control spending), the Eurozone crisis, and continued federal revenue shortfalls indicate a tougher time annually financing federal government spending. Those threats and the ballooning national debt and interest payments on it mean that annual pressure to cut agency budgets will only intensify.
In 2014 alone, the administration is asking agencies to cut their IT budgets 10% and make suggestions of how to reinvest that money to save even more (though no sure promises to allow agencies to re-invest have been forthcoming). However, the continued agency approach of cutting spending while making only incremental changes in what they fundamentally do and how they do it, won’t meet the challenges that lie ahead. Moreover, no matter who is elected president, the administration through OMB will continue to challenge agencies to ‘Do More With Less.’
However, changing technology approaches, such as cloud computing, and eventually some degree of wholesale ‘IT-as-a-Service,’ can enable agencies to keep doing more with less. Amidst consolidation initiatives to increase efficiencies and reduce spending, agencies have been experimenting, with some degree of hard-won success, with the technology capabilities offered by innovative vendors and utilized more broadly in the commercial market. In the future, agencies will continue to quickly evolve their technology strategies and approaches and shift how they invest. With greater budget pressure, agencies will become less and less risk adverse, especially as a generation of federal IT professionals retires, and the next generation of young innovative IT professionals take charge.
Game-Changing Trends
In the report, our team highlights five game-changing trends that portend to disrupt and reshape the federal IT environment and market over the next five years. These trends spell the final death-knell business-as-usual, as well as strategies to morph over time for federal contractors as a whole, and hardware vendors in particular:
· Managing Data Not Infrastructure – Agencies will realigning their IT investments to focus on managing and securing data instead of managing infrastructure. The data-centric approach is anticipated to increase the agility of agency IT environments, reduce costs, and enable agencies to adopt emerging technologies more easily. Cloud computing and hardware agnostic mobility are driving this change. SOA, data center consolidation, and data management are enablers.
· Increasing Efficiency – Agencies are seeking ways to improve operational efficiency and increase employee productivity while at the same time reducing costs. Mobility and Big Data are two factors forcing this change.
· Enterprise Services – Agencies are moving from IT environments characterized by system-specific siloes to environments based on services oriented architectures that emphasize system interoperability and the ubiquitous availability of data. This transition toward enterprise services is not only breaking system specific siloes, it is also changing the way agencies invest in and utilize technology solutions. Shared services, cloud computing, and network computing are examples.
· Accelerating Innovation – Agencies are introducing standards-based common operating environments (COE), adopting data-centric policies, and turning toward services oriented open architectures to increase the agility of their IT environments. This enables them to leverage innovative new technologies, such as cloud computing, mobility, and Big Data more rapidly.
· Consolidating Acquisition Avenues – Agencies are being pushed by OMB to drive down the cost of buying commodity IT products. Agency CIOs are establishing strategic sourcing contracts or turning to GSA vehicles to consolidate commodity IT acquisitions. Agencies with long standing sourcing programs already in place are relying more heavily on these contracts, while agencies without established programs are taking steps to introduce them within the next one to two years.
Conclusion
To the degree and speed that these game-changing trends fundamental change the federal IT landscape, they could cause a shake-up in the federal IT competitive environment which will hit unprepared hardware vendors especially hard. If the trends bring about fundamental change in the federal landscape too slowly and the fiscal pressures continue unabated, the future scenario will be even more dire and disruptive.
Hardware vendors selling in the federal market need to adjust what they offer and how they sell to federal customers. Cloud computing, thin-client adoption, mobile computing, and enterprise services will transform the hardware market and present both challenges and opportunities for hardware vendors. Hardware vendors need to be determining and implementing go-forward strategies now that will keep them viable in the federal market into the future.
About the Report
Our Federal Information Technology Hardware Market, 2012-2017 report provides companies with a detailed view of the future federal IT hardware market and a market forecast for the next five years. It includes forecasts for the federal hardware market overall and the following technology segments:
· End-User Devices
· Storage and Peripherals
· Infrastructure (Servers and Mainframes)
· Communications and Network Equipment
It also includes hardware profiles for the top ten agencies with agency drivers in each of those technology segments. The report is designed to enhance a vendor’s federal planning process with relevant strategic analysis and provides recommendations that guide hardware vendors to maximize their market positioning to best take advantage of the changing federal IT environment.
Federal Software Market Forecast Indicates a Contraction is Ahead
Last week, we released a new report, Federal Software Products Market, 2012-2017, where we delve into the driving trends and challenges that will shape the size and direction of the federal software marketplace for the next few years and beyond. What strikes us about this particular segment is the combination of market forces at play that are transforming the landscape and strongly impacting what, how much and how federal agencies will purchase and manage their software portfolios now and in the future.
In the report, we discuss several near-term trends that we see in the federal technology market coalesce around several key areas:
- Agencies are looking for was to shift to managing data versus infrastructure.
- Drive to maximize efficiency is accelerating the move toward automation and analytics.
- Increase of mobile computing progresses in tandem with 24/7 demand for information access.
- Operational models are shifting towards services, placing greater emphasis on acquiring and expanding capabilities through managed services (SaaS, communications, security).
- Push to accelerate innovation and technology adoption, like automation and analytics.
- Agency strategies of moving towards common operating environment and standard enterprise architecture will leverage economy of scale, and require consolidation of acquisition avenues (contract vehicles/BPA).
Given these and other trends, there are several positive market drivers helping to sustain the federal software segment and numerous negative inhibitors that will suppress federal spending, and therefore growth. Here are just a few we recognize.
Market Drivers
- Pockets of sustained spending on custom software developments, particularly in the sciences and high performance computing.
- Business system modernization and standardization will insulate certain software investments.
- Software is at the core of priority systems for defense spending. Similarly, VA and HHS are driven by iEHR and other major systems heavily reliant on software
- Continued demand for software will be augmented by a push for COTS and standardized/enterprise solutions.
- Cyber security is expected to be a growing mission area for agencies. Security software spending and automation will enable personnel to focus on complex security issues.
Market Inhibitors
- Integration and consolidation efforts will be ongoing in the near term, maintaining software funding. Then (after FY14) savings start to be realized, lower spending levels.
- Push for standardization is expected to increase implementation of COTS and enterprise solutions, lowering long term costs.
- Rationalization of Defense applications will contribute downward pressure in Defense software spending.
- Strategic sourcing initiatives are enabling agencies to leverage cost saving through negotiated prices and economy of scale.
Deltek’s Federal Software Forecast
As a result of these trends, drivers and inhibiters, Deltek forecasts demand for vendor-furnished software products by the U.S. Government will decline slightly from $13.5 billion in 2012 down to $13.3 billion in 2017 at a compound annual growth rate (CAGR) of -0.2%. (See chart below.)
Implications
- Agencies will be pressured to make “controlled cuts” to “near-sequestration” levels regardless of whether or not sequestration actually occurs.
- Agencies are moving toward cloud computing and mobile computing in a drive to maximize efficiency and adopt innovative technologies while also reducing costs.
- Enterprise licensing and strategic sourcing will reset software expenditure levels to new baselines as agencies fully implement new policies and rationalize their software portfolios.
- Standardization and modernization of both infrastructure and enterprise software will consolidate acquisitions, but drive growth in key areas such as mobility and cybersecurity.
Check out the report: Federal Software Products Market, 2012-2017
Digital Government Strategy Designed to Catch Up to Our Mobile World
Wednesday, August 8th, at the Federal Mobile Computing Summit in Washington, DC, Dave McClure, Associate Administrator of GSA’s Office of Citizen Services and Innovative Technologies, talked about the future of the federal Digital Government Strategy and encouraged agencies to think boldly and be innovative as they devise mobile means for delivery of information and citizen services through thier digital strategies. The stage is being set for the next wave of the Information Revolution, which portends to be much more transformative to peoples’ lives than the Internet wave of the last 10 years.
He emphasized that under the Digital Government Strategy, they are devising a twelve month roadmap with frequent milestones (30 days, 60 days, 3 month, 6 and 9 month). Those milestones will pave the way for one quarter to one third of agencies’ websites will be in mobile-friendly formats. And that will just be the beginning of moving website as well as a wealth of other agency data-holdings to mobile environments in a world where information will really become a critical asset. Over the next 5 to 10 years, the focus will be on data, which will be the “core ore” that can be turned into actionable knowledge that can be used to change lives.
The aggressive strategy is driven by anticipated “citizens’ demand for high-quality communications, services, and transactions delivery on their terms anytime, anywhere, and on any device,” McClure said.
However, there are many issues and challenges that must be addressed and overcome relating to both procurement of mobile devices and services and management of mobile devices and, especially, data on those devices.
To address those commonalities, GSA has stood up the Digital Innovation Center as a lightweight, slim staff, highly collaborative center where subject matter experts can be pulled in as needed to address policies, issues, and challenges. The focus of the center is on “build-once and use many times” in government-wide or multi-agency setting. And that mantra goes for all aspects of enabling mobility, including:
BYOD policies and common device management policies;
· A mobile and wireless security reference architecture;
· Building shared development platforms for mobile apps; and
· Creating contract vehicles that can be used government-wide.
They are focused, also, on early performance analytics and tools to be used to determine:
· How citizens interact with government and how to enable access to valuable in-demand services and data designed to enable a high-quality user experience
· Common open source content management systems for uniformity of experience on all government websites, and
· Creation of web APIs to open data up to be shared and used by many inside and outside of government
The center is emphasizing rapid productivity and has set up five innovation teams which are required to devise innovative solutions in 6 months for delivery of citizen services and transactions. Vendors should track what these teams are doing carefully as they are setting the stage for the next wave of the Information Revolution, which portends to be much more transformative to peoples’ lives than the Internet wave of the last 10 years….and, like most things these days, this one is accelerating and coming at us faster than ever.
NACo app store pilot aims at collaboration
The National Association of Counties (NACo) Annual Conference and its kick-off technology summit were held in Pittsburgh, Penn., last week. A highlight of the conference was the announcement and discussion of a new online resource that will assist governments in sharing knowledge and information solutions. The NACo App Store is a pilot project produced through a partnership between NACo and Oakland County, Mich.
Phil Bertolini, deputy county executive/CIO of Oakland County, Mich. Bertolini is heavily involved in Oakland County's pioneering efforts around cloud models, shared services and crowd sourcing. He led a session at the technology summit on the NACo App Store, which is a cloud-based application library that allows NACo members (government) to share government-solutions knowledge across traditional organizational borders. In his presentation, Bertolini explained that Oakland County has seen a 35 percent decrease in tax revenues over the last several years, and therefore has no choice but to share. I had the opportunity to speak one-on-one with Bertolini and posed the following question:
Q: What do you see as the primary hurdles to governments sharing tools/technology?
Bertolini: There are a number of hurdles to governments sharing technology that, in my opinion, can be overcome. First, many governments have been working within their own world for many years. The downward economy we lived through for the past four years has forced governments to do business differently. Shared services lower the cost of doing business and are now attractive targets for governments at all levels.
Second, many governments have a limited understanding of how to collaborate with each other. Governments have a limited understanding of what their peers have to offer, making it almost impossible to get the conversation started. The NACo Application Store will provide the necessary collaborative environment where governments can share data and begin the necessary conversations.
Third, in many cases, governments struggle to secure the necessary support for collaboration from elected officials or main stakeholders. Educating all of the parties involved is paramount to success. This education can be aided by our technology peers across the country, and every effort to secure support must be made.
Conclusion
Many of the sessions and discussions at the NACo technology summit revolved around sharing. Geographic and communication barriers that once distanced the more than 3,000 U.S. counties no longer apply. Due to unprecedented fiscal challenges, and facilitated by tools like the NACo App Store, counties have no choice but to abandon their silos and perceived uniqueness, and band together to lift their shared challenges and collectively benefit from their peers’ successes.
Find a NACo Tech Summit conference recap and additional information on Oakland County and the NACo App Store in this Analyst Perspective.
Cook County/Chicago Collaboration Saves Over $33 Million With Efficiency Measures
Cook County President Toni Preckwinkle and Chicago Mayor Rahm Emanuel recently announced that they saved over $33 million in the first year of a City-County partnership exploring collaboration opportunities to reduce costs and improve services, with over 85% of those savings to recur on an annual basis.
The $33 million in identified savings and new revenue puts the collaboration effort at the halfway mark to achieving the initial goal of saving at least $66 million by the end of 2014, according to a statement from Preckwinkle.
“We are energized by the numbers we’ve achieved. Today’s results show that the collaboration is on target to reach, and likely surpass, our initial goals,” President Preckwinkle said. “We’ve said from the start that this is just the beginning for the city-county collaboration, and working together as partners has allowed us to save taxpayers money, increase efficiency and promote quality of life in ways that hadn’t been considered before.”
In March 2011, Preckwinkle and Emanuel asked a committee of civic leaders to explore collaboration opportunities for Cook County and the City of Chicago. The committee was tasked with identifying ways the city and county could reduce costs, streamline services, and improve resident interactions.
In June 2011, the Joint Committee on City-County Collaboration issued a 100-page report outlining 19 areas where the two jurisdictions should work together. The report projected that potential savings of $66 million to $140 million could be achieved by 2014.
With their initial success in cutting costs, the City-County partnership will continue to seek savings and ways to improve government services. As part of this, the partnership is currently looking to expand collaborations in the areas of anti-violence, animal care & control, broadband, and human resources, all areas where collaboration efforts weren’t initially envisioned. Overall, 23 different initiatives have been part of the City-County collaboration efforts thus far.
As noted above, the original collaboration initiatives were expected to save $66 million to $140 million by combining purchases, melding services and making public-employee unions compete against private businesses. Previous cost savings identified by the collaboration committee included:
· Streamlining custodial services: $11 to $23 million
· Centralizing energy management: $9 to $23 million
· Expanding joint purchasing: $12 to $24 million
Thus far, Cook County and the City of Chicago have already achieved over half of the lower end of their savings estimates. Among the savings the city and county say they already have counted are $5.9 million from joint purchasing, and $4.1 million by uniting efforts to collect unpaid taxes.
Our Take:
Overall, we support the collaboration efforts between Cook County and the City of Chicago to reduce costs and improve services and efficiency, and would like to see more City-County partnerships being formed elsewhere in the future. With the partnership already having such success, perhaps this partnership could serve as a blueprint for other City-County collaborations in the future.
In the initial report, the Committee on City-County Collaboration was able to outline several areas where collaboration efforts would work, and those initiatives should continue to produce nice cost savings for the city and county over the next few years. The initial report mentioned several areas where information technology-related spending could arise as a result of these collaborative efforts, including IT support services, homeland security, public safety data sharing, and 311, GIS and open data services.
Ohio Governor Calls For Local Governments and Schools to Share Services
Ohio Governor John Kasich's office recently released a report which provides leaders a roadmap for a more cost-effective, collaborative way of doing business, including strategies that reduce costs, improve efficiency and deliver improved government and educational services.
In the report, titled “Beyond Boundaries,” Kasich calls on Ohio local governments and schools to share services in a regionalism approach to reduce municipal costs and increase efficiency.
The report, which came out last week, includes a comprehensive study of public policy recommendations, potential collaborations and needed changes to address the overall way of doing business in Ohio’s public sector. The plan is based on a statewide shared services survey, which collected baseline data on existing shared services arrangements and identified future opportunities for local entities to share staffing, equipment and facilities across jurisdictions.
Overall, the report details various statistics on shared services, and makes 10 recommendations for areas in which governments and schools can share services and save money going forward. Here is a list of the proposed recommendations made in the report:
1. Local government and education leaders need to enter into simple agreements with one another to simplify the process of creating shared services opportunities.
2. Remove identified barriers to shared services and collaboration, including legislative approval when necessary.
3. The State should review Ohio’s existing network of educational service, information technology and education technology centers and provide recommendations on the necessary structure and governance that will provide an integrated system of regional shared service centers using various implementation strategies.
4. Apply additional market forces to encourage the use of shared services and ensure the quality of services.
5. Continue developing tools to assist local governments and schools in implementing collaboration and shared services, including supporting information portals related to shared services.
6. The Local Government Innovation Council should create and award bonus points to applicants for submitting projects that are consistent with recommendations or promising practices identified in this Shared Services Plan.
7. Develop various benchmarks and access to information that aids local government and school officials in determining when savings opportunities may exist through shared services.
8. Create “triggers” for districts and/or local governments in fiscal distress, or those with substantial recommendations coming out of performance audits.
9. State associations that have participated in developing this Shared Services Plan should take a leadership role in developing draft agreements; educating their members; facilitating the relationships regionally; training their members in using the tools available to them and communicating about shared services consistently over the next few years.
10. The Shared Services Model should be used by state and local leaders to determine opportunities for shared services and the optimum manner for individual entities to join together for the provision of a specific shared service.
While there aren’t really any incentives or directives forcing local governments and schools to act on these recommendations, the Kasich Administration is trying to make sure that statutory and policy changes are being made to expedite the use of shared services, and that information and tools are widely-available for local leaders to realize the shared services opportunities which are available across the state. The report also provides several examples of shared services working among various jurisdictions, and suggests that local governments and schools are already saving about $1 billion annually through collaborative projects.
The report specifically notes that ten of the top 30 shared services opportunities being pursued are in the area of information technology. It also highlights that “standardization of technology platforms and equipment and the consolidation of datacenters will accelerate opportunities for cloud computing technologies and facilitate shared services opportunities in administration, human resources, purchasing, facilities, fleet maintenance, staffing and capital spending.”
Our Take:
Overall, we support the actions taken by Governor Kasich to use shared services as a platform for local governments and schools to reduce costs and improve efficiencies. The Governor seems to understand the need to reduce costs in the wake of fiscal pressures, and has made some solid recommendations to address various shared service options for local governments and schools, while attempting to reduce the state’s spending footprint moving forward. Overall, Deltek expects opportunities in the areas of IT refresh, systems integration, portal development, and IT services to arise as a result of these shared services efforts.
If you would like to learn more, our S&L research partner PTI also has a great book on the topic. http://www.pti.org/index.php/ptiee1/more/711/
Federal Data Center Consolidation Progress
Last week, Zach Baldwin, GSA Cloud Computing PMO and lead for the Federal Data Center Consolidation Initiative, spoke at Deltek’s Marketview Conference regarding the status of data center consolidation. In May, agencies posted new data center closure targets for 2013 on Data.gov.
Baldwin stated that agencies have identified 1000 data centers to close by the end of 2014. The new goal, set by Federal CIO Steve VanRoekel in January, is 1200. Baldwin believes that more closures will continue to be identified to meet the higher closure target.
Last month, agencies updated their planned data center closures through 2013 on Data.gov. According to the website, agencies plan to have closed 627 data centers by the end of 2013, putting them just over the halfway mark for their goal of 1200 closures by 2015. The chart below shows planned closures by agency.
According to Baldwin, “GSA and Navy are leading the way.” Agencies will publish updated consolidation plans in September. Baldwin also stated that “agencies don’t like to forecast savings and can’t aggregate savings numbers well, right now.”
When asked about initiative momentum after the low hanging fruit is addressed, Baldwin said that there will be a “harder pathway for agencies when the heavy lifting comes. But it forces agencies to have more customer relationships with bureaus so they can drive change enterprise-wide.” Agencies that are more federated will have the hardest time. In those agencies, budget control is distributed and major cultural issues exist. Agencies will need industry’s help when they get to the Tier 1 centers and start to address major application migration. Also, budget pressures will force agencies to be more creative.
Baldwin stated that he believes that data center consolidation, along with FedRAMP, will help drive cloud adoption, however, it is just one option for consolidation. Baldwin also sees a convergence of data center and cloud where agencies leverage IaaS providers to support data centers. FedRAMP will help facilitate cloud contracting and we will see an increase in dollars going through the GSA cloud BPAs.
Baldwin believes that agencies will begin to share their excess capacity, and the data center marketplace, which is required by the 25 Point Plan, is open. But while agencies have the capacity, they don’t necessarily have the administrative systems, such as billing, metering, and SLA management, set up to provide services to outside organizations.
When asked about application rationalization, Baldwin said that most of the focus to date has been on facilities, but more focus will shift to IT and apps over time. The shift will facilitate shared services, which is much easier to do with today’s technology such as cloud. According to Baldwin, the federal IT environment will be more efficient in five years. “Data center consolidation is not all about closing centers, it’s focused on utilization.” The cultural change starts in procurement, with management and hosting of applications. As time goes on, we will see more focus on applications, and we will continue to see pockets of innovation.