Thoughts on the Potential Long-Term Impact of GSA’s CoE Initiative

Reports come out almost weekly about the progress that the GSA’s Center of Excellence IT modernization teams are making at the Department of Agriculture. Just this week one report quoted USDA’s CIO, Gary Washington, who said that since the CoE teams have been operating at USDA, the department had already closed 21 of its target 39 data centers. For those keeping track, the USDA only outlined its IT modernization goals in June of this year.

June!

This means the department managed to shutter two-thirds of its data center target in just under 4 months. I’m sure preparatory work had been done already to get the ball rolling, but this kind of a closure rate is phenomenal in federal IT.

All of this got me thinking about the impact that USDA’s accomplishments could have on federal IT spending as a whole. USDA is touted as a “lighthouse” agency for government IT modernization efforts. If it continues to experience success then other agencies will be clamoring at the door to participate. Housing and Urban Development and Energy have already dipped their toes in the water and it could be a sign of things to come despite the fact that Technology Modernization Funding for FY 2019 has yet to be approved.

In Agriculture’s case it’s instructive to review some numbers. The chart below shows USDA’s requested IT budgets side by side with its estimated cloud budgets and verified cloud spending data that Deltek collects. Adopting a mixed commercial/government cloud approach is central to USDA’s modernization efforts. This is also the case at every other federal agency, both Civilian and Defense.

In the USDA’s case, their IT budget declined 3% between FY 2015 and 2017 (I use this time frame because it is the one for which I have the most complete cloud data to compare), while the agency’s estimated cloud budget rose 19%. The spending data Deltek collects shows an even steeper rise of 61%, although these numbers come from a smaller data set. For FY 2018 USDA’s budget remained flat at $2.1B. For FY 2019, however, it declined by another $100M to $2B. Part of the decline could be attributed to cuts by the Trump Administration, but what if part of it can also be chalked up to a need for fewer dollars given USDA’s pace of cloud adoption? The proof in the pudding will come in the FY 2020 budget request. If USDA’s total declines yet again there may be something to the budget-reducing impact of cloud investment.

At this point all we can say for certain is that rising cloud investment at USDA is happening at the same time as the agency’s IT budget is declining. Correlation is not causation, but it can indicate a trend in the offing. If it does suggest a trend then USDA’s IT budget should continue to decline as its cloud investment rises. Cloud in this sense is a development worth tracking because it lies at the heart of the administration’s modernization drive. If increasing adoption drives down agency IT spending – as it is intended to do – fewer industry partners will benefit.