MA

Cloud in OMB’s Evolving IT Budget Capital Planning Guidance

Published: July 10, 2019

Federal Market AnalysisBudgetCloud ComputingForecasts and SpendingInformation TechnologyOMB

Cost Pools, IT Towers … what does it all mean?

Back at the end of June, the Office of Management and Budget (OMB) published updated guidance for agency IT budget planning. The new document, called FY 2021 IT Budget – Capital Planning Guidance, offers technical details and requirements outlined in OMB’s Circular A-11, Section 55 that the agency has been rolling-out incrementally over the last few years.

This year’s guidance continues to align agency IT capital planning with the Technology Business Management (TBM) Framework employed as a best practice across the private sector. Adopting the TBM is heralded as a big deal for the federal government because it institutes a series of metrics that align business operations with IT investments, providing transparency into costs and performance. It is through TBM adoption that agencies are supposed to get a better handle on how they spend the IT dollars appropriated to them.

This year’s guidance pertaining to cloud computing includes the following items:

IT Cost Towers: For FY 2020, OMB required that agencies combine their reporting on data center and cloud investments as part of the IT Cost Pool approach in the TBM. This practice will continue in FY 2021 with OMB recommending that agencies “report Data Center and Cloud Standard Investments at the most granular level available, such as by data center or cloud procurement. If this level of granularity is not available, agencies should report at the bureau or agency level and include all relevant data centers and/or cloud procurements at this level of management.”

Mapping: Cloud investments may be listed under any of three TBM IT Towers – Data Center, Compute, and Storage. In order to separate cloud spending in these towers, OMB advises “disaggregating” it to define non-cloud vs. cloud costs under each area. What OMB considers cloud spending includes, but is not limited to: virtual servers running a version of Microsoft's Windows Server or the Linux operating system; hardware, software, labor, and support services and central storage such as SAN, NAS, and similar technologies for distributed compute infrastructure; equipment, software, and labor to run and operate; mainframe online storage (i.e., attached storage arrays and the associated equipment, software, and labor) to run and operate.

Off- vs. On-Premise Cloud: OMB does not use these terms, but they apply to the guidance. OMB directs agencies to report “private-sector cloud” or public cloud” expenditures as part of what it calls a “Cloud Data Center.” This differs from on-premise (i.e., govt.-run) data centers linked with cloud capabilities, the reporting of which falls under various classifications of tiered data centers.

With luck, future reporting of cloud expenditures will help industry understand where cloud dollars are going. Still, expectations must be tempered because OMB does not publicly release information on “Cloud Data Centers.” It’s definition of “cloud costs” also remains extremely loose, which muddies the water. All of this means that for the foreseeable future industry will continue to receive incomplete data sets that provide only a partial view of the market.