Federal Data Center Spending Climbing Despite Reduction Efforts


IDC predicts slow growth over the next few years.

Federal agencies governmentwide are working to streamline their data center spending, per a 2016 White House directive—but it’ll take at least two years to see an actual reduction in spending, a report suggests.

Market research firm IDC concludes federal data center spending will top $5.8 billion in the 2020 fiscal year, up slightly from the $5.5 billion recorded in fiscal 2015.

“Even though the total number of government data centers will go down, the size of the remaining facilities will increase,” the report said. Spending in data center “facilities management” could see the greatest uptick—about 2.8 percent compound annual growth—to accommodate “changes that are needed to buildings as some data centers are eliminated and others expand.”

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Software spending could see a 2.2 percent growth and hardware 1.3 percent. Electricity spending is expected to grow just about 1 percent.

Labor costs would see the least amount of growth: just 0.6 percent compound annual growth rate over the next five years. Labor constitutes the greatest segment of data center spending, but it’s also “the place where agencies will be looking to trim headcount as they meet consolidation goals,” IDC wrote. This includes government employees and contractors.

Federal agencies will also likely “pressure software providers to consolidate software license structures” to cut down any spending on unused licenses, IDC concluded.

The Data Center Optimization Initiative directs agencies to track how much they spend on data centers and to revise their data storage strategies to be more financially and energy efficient, but since it “can cost money to migrate current solutions to new platforms, and it's not always easy to simply turn out the lights in a data center, even if it is slated for closure,” vendors can expect some data centers to stick around.

Despite slow progress, lawmakers are moving to ensure that agencies are still regularly reassessing their data center strategies.

Earlier this month, the House passed legislation that would extend provisions in the Federal Information Technology Acquisition and Reform Act to 2020—they were set to expire in 2018—including requirements for data center consolidation.

“As these modernization efforts continue being implemented, we can’t miss out on potential taxpayer savings by simply allowing agencies to run out the clock until the requirements expire the end of next year,” FITARA co-sponsor Rep. Darrell Issa, R-Calif., said in a statement.