Study: Much of cloud's savings would come from IT job losses

Much of the savings that would result from the Obama administration's cloud computing initiative comes from reductions in information technology jobs, a politically troublesome move for a federal government that has avoided public scrutiny, according to study released on Wednesday by an analyst at the Washington-based Brookings Institution.

Cost savings from cloud computing, the outsourcing of computer networks and applications to a contractor, occur when an agency can reduce the number of servers it operates and purchases and cut its IT support staff, said Darrell West, vice president and director of governance studies at Brookings and author of the study.

West did not provide a specific amount agencies could expect to save if they moved to the cloud. Rather, the savings would depend on how many jobs top agency executives would be willing to cut or transfer. The city of Los Angeles, for example, moved e-mail servers to the cloud and then eliminated nine IT positions, what West called a substantial downsizing for the city's IT department.

West said he found agencies reported a 25 percent to 50 percent savings by moving IT operations to the cloud, which would translate into billions of dollars for the federal government, depending on the scope of the transition. "Many factors go into such assessments, such as the nature of the migration, a reliance on public versus private clouds, the need for privacy and security, the number of file servers before and after migration, the extent of labor savings, and file server storage utilization rates," West wrote.

Job losses would be felt mostly in IT offices because the level of support and maintenance required to keep networks running and upgraded would drop as equipment and services were moved to a third-party provider.

West presented his findings at a forum on the economic gains of cloud computing, which Brookings hosted on Wednesday. Vivek Kundra, federal chief information officer at the Office of Management and Budget, also appeared at the event, but was not part of a panel that discussed cloud savings. OMB officials were not able to comment before this article was posted.

Reducing IT jobs in an organization has "been a big part of the conversation in the private sector when companies migrate to the cloud, but it hasn't attracted as much attention among public agencies because the subject of staff layoffs is radioactive," West explained.

The study drew sharp disagreements from former government IT officials, who said cloud's savings did not depend on job reductions. "Going after jobs first is totally misguided," said Ed Meagher, director of strategy for health affairs at the federal IT consulting firm SRA International and a former deputy chief information officer at the Interior Department. "The first savings, the real savings that must be had is in infrastructure consolidation."

Meagher called job reductions "meat-cleaver management." Only after agencies have evaluated infrastructure and business processes should they consider whether they have the "right skills with the right people in the right place," he added.

Daniel Mintz, chief operating officer at Powertek Corp. and chief information officer at the Transportation Department from 2006 to 2009, said agencies should shift any IT workers affected by cloud computing to operations that are more mission-related and strategic. "I think the issue is that government personnel who understand the mission of the department are precious people," he said. "The focus is on the wrong thing. The problem is there are these demands we're placing on the government workforce and they're so tied up on things unrelated to the mission."

The government hasn't conducted a clear accounting of individual employee responsibilities, and the greatest impact from cloud is in so-called soft savings rather than actual cost cuts because personnel reductions are difficult, Mintz added. Agencies might rearrange their contractor support staff and eliminate some positions, but workers will be able to concentrate much more on why they're there, he noted.

"In my mind, too many people regard [cloud computing] as magic, when all it really is, is economics supported by technology. The costs are still the costs at the end of the day," Mintz said.

Agencies could move employees to areas where innovation is occurring and extra staff is needed, or they could transfer them to customer support roles, Meagher said. At some point, he said, an undefined number of people would not be replaced or staff reductions could occur "if it was really obvious that there were a whole bunch of people with nothing to do."

Administration officials have said major personnel changes will involve moving workers into areas where different skill sets are required to meet an agency's primary business needs.