Cloudy Outlook

The impact of Obama IT initiatives like a shift to Web-based services is as yet unknown.

The buzzword in federal information technology spending this year is "cloud computing"-the outsourcing of IT services to software and hardware providers.

But that migration will have to wait for future budget cycles. The fiscal 2009 budget was conceived in the final year of the Bush administration before President Obama formulated the idea to experiment with Web-based services.

Obama, heralded as the "technology president," is learning that innovative applications take time to make their way through regulatory and budget cycles and into practice. Any cost savings or efficiencies from cloud computing might not be evident until 2012, because it takes a long time to deploy a new platform at even one agency, says Ray Bjorklund, senior vice president at FedSources, a market research firm.

The president's fiscal 2010 budget proposal to shift to Web-based services seems to recognize the slow pace of IT program overhauls. "Of the investments that will involve upfront costs to be recouped in out-year savings, cloud computing is a prime case in point," the budget states. "Initial pilots conducted in collaboration with federal agencies will serve as test beds to demonstrate capabilities, including appropriate security and privacy protection. . . . Expected savings in the out years, as more agencies reduce their costs of hosting systems in their own data centers, should be many times the original investment in this area."

Aside from a slight bump in spending due to stimulus funding, fiscal 2009 will look a lot like 2008 in terms of IT programs. The government's 2009 IT budget is $70.7 billion, up from $66.4 billion in fiscal 2008, according to the Office of Management and Budget. Most of the 7 percent increase represents the same natural growth seen between 2007 and 2008 as a result of expanded programs, additional reporting requirements and cost overruns.

The Obama administration, for now, is executing a holdover IT initiative from the Bush administration, known as lines of business. The approach aims to save money by consolidating systems for routine operations such as financial management and human resources. Mark Forman, former administrator of e-government and IT at OMB, introduced the initiative about midway through the Bush administration, "and it took a little while to get some ground speed," Bjorklund says.

First quarter 2009 spending on IT services was about the same as in the first quarter of 2008, says Stan Soloway, president and chief executive officer of the Professional Services Council, a contractor trade group. "IT spending has been strong and almost by definition must continue to be strong based on the policies Obama has put forth," including governmentwide cybersecurity initiatives, new energy infrastructures and nationwide implementation of health information technology, he says.

As for Obama's plan for Web-based services, it could take IT managers time to wrap their heads around the concept of government as a platform-the term federal Chief Information Officer Vivek Kundra uses to describe cloud computing. "If you were to ask most of the people who are in federal IT, they would say, 'Yeah, it sure is cloudy out,' " jokes Larry Allen, president of the Coalition for Government Procurement, an industry group, referring to the tendency of government to be one of the last adopters of breakthrough technologies.

Even if agencies do move to cloud computing in the near future, it might not result in less spending. "That might mean less need for servers-but it doesn't speak to all the other aspects of IT and network support," Soloway says.

Click here for the top 50 technology contractors.
Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care


When you download a report, your information may be shared with the underwriters of that document.