Federal cloud transition will save $5 billion yearly, CIO says

Transitioning about one-fourth of the government's $80 billion information technology enterprise to the cloud will save at least $5 billion annually, federal Chief Information Officer Vivek Kundra told the Senate Homeland Security and Governmental Affairs Committee on Wednesday.

Moving government data that are currently housed in dedicated computer servers to more versatile cloud computing space is a major component of Kundra's 25-point plan to reform federal IT, published in December 2010, but he'd previously been less specific about the total projected savings.

Kundra also used the $5 billion in annual savings figure in an interview with The Wall Street Journal division All Things Digital, which also came out Wednesday.

Kundra stressed in the interview that $5 billion is the minimum in projected savings from the cloud move and said a more definitive figure would have to wait for procurements on the various transitions to be finalized.

So-called computer clouds can store large amounts of data from different customers and rapidly rearrange the data to account for surges in use by some customers and dips in usage by others. The result is that cloud customers pay only for the amount of data space they actually use each month, not for a preset amount of real estate.

"By shifting to the cloud, we're using government data much more like a utility, much more like electricity or water," Kundra told the senators. "When the [General Services Administration] and [the Agriculture Department] decided to move email to the cloud, they were able to save about $40 million . . . As you scale that to far more complicated systems like financial systems, HR systems [and] some of the other infrastructure that the government leverages, we have an opportunity to save billions upon billions across the federal government."

The 25-point plan's other signature cost saving initiative -- eliminating at least 800 of the government's roughly 2,100 data centers by 2015 -- is projected to save about $3 billion, Kundra has said.

Kundra told senators Wednesday that this project remains on track despite serious cuts to his office's e-government fund, which was partly used in support of the project.

Sen. Susan Collins of Maine, the committee's ranking Republican, had requested a Government Accountability Office report on possible data center consolidation in December 2009, several months before Kundra's consolidation plan came out.

That ongoing report has since morphed into an assessment of whether the 24 affected agencies have submitted adequate consolidation plans and the likely road bumps they'll face. It is due out in July, according to GAO.

The e-gov fund was originally set at $34 million for the 2011 fiscal year, but was slashed to $8 million in the intense wrangling that averted a government shutdown in April.

As a result of those cuts, Kundra's office will pull the plug on two government transparency projects and halt planned improvements in several others, Kundra said in a letter to Sen. Tom Carper, D-Del., chairman of the Homeland Security Subcommittee on Federal Financial Management, released Tuesday.

Kundra addressed those cuts at Wednesday's hearing, saying he is hopeful funding will be restored in the 2012 budget being debated now.

"Whether it's shining a light on $80 billion of IT investments or . . . making sure that we're getting all the subaward data in contracting or grants [on the procurement tracking website USAspending.gov]," Kundra said, "the reality is that transparency is not free. It costs money and it takes resources. So, we're doing our best with the $8 million funding that we have."