Federal Cloud Computing - A Performance Impediment

When compared to the highly political and down-right unmanageable “Entitlements”, the United States Federal Government (USG) has a unique opportunity to not only cut outlays and operating costs by billions of Dollars but also to foster innovation, competitiveness and cyber-security for America by implementing the Federal “cloud computing” touted by many including the Federal CIO.

Consider the following facts: various agencies of the USG run nearly 1200 data centers operating at a mere 20-25% capacity utilization. In other words, nearly 75% of the total computing resources (facilities, cooling, power, servers, applications, security, personnel, and network connectivity) of the US Federal Government sit idle every day. And, USG data center capacity expansion continues as we speak.

Let’s consider the costs of the aforementioned idle Federal data center capacity: according to credible 3rd parties that currently deliver management, strategy and performance consulting to the US Federal government, the cost of running a Federal Data Center with 1000 servers is about $77m per year. Let's put matters in statistical perspective: 1000 servers per data center is probably the median value of servers in a Federal data center. So if we were to assume that 1000 is the average number of servers per USG data center, then the costs of running all 1200 US Federal Government Data Centers is nearly $92b per year. That is ninety two billion Dollars per years in USG IT/Data Center operating expenditures (OPEX). And with a mere annual capacity utilization of 25%, nearly $69b of that expenditure is an annual waste. That is sixty nine billion Dollars of operating waste in running IT systems and infrastructure for the Federal Government. Now, that was the Federal government’s profile of its IT OPEX annually.

Let us now examine the annual cost of running 1000 servers in a commercial cloud. With no affiliation, prior working relationship or endorsement for Amazon, I have picked their cloud computing price sheet for the Amazon Web Services (AWS) and their Enterprise Cloud Computing (EC2) as a point of reference for market-based pricing just to put matters in perspective.

Amazon’s internal market study and base-lining of American businesses’ and enterprises’ has pegged the cost of running 1000 servers on-site (on an enterprises' own data centers) at about $2.5m per year. That is two and a half million Dollars per year. For some reason, the Federal government runs its data centers at a cost multiple of nearly 31x (Thirty One Times) that of the commercial sector ($77m annually per USG Data Center / $2.5m annually per commercial enterprise data center = 31). As if that is not remarkable enough of a cost differential, consider this: Amazon can run the same 1000 servers for an annual cost of $231k (Two Hundred and Thirty One Thousand Dollars) on it EC2 cloud computing service.

So here is the prospective cost savings computation for implementing and utilizing the cloud in the US Federal government. If the Federal government were to move only ½ of its IT computing needs to the cloud (i.e. USG will own only 600 data centers and build no more of them), then at an annual cost of $2.5m per data center (the cost incurred by commercial American enterprises running their own data centers on their own sites), the USG will save nearly $45b (Forty Five billion Dollars) annually.

If we were to use the Amazon EC2 cloud hosting prices of $231k per year as a market-based pricing reference point for same amount of computing resources, then the Federal government will save nearly $47b annually. That still keeps 600 Federal data centers running at a cost $77m / year while farming out the other ½ of the Federal data centers (600ea) to a secure commercial cloud. The savings of nearly $50b per year for the Federal government is staggering and could very realistically be even more that that. Even at $50b worth of savings per year, that is an additional $500b in the coffers of the US Treasury over 10 years for other Federal programs (including the reduction of the deficits).

Those savings alone notwithstanding, consider the other remarkable consequential benefits of the USG using the cloud. When IT systems and applications are centralized and virtualized in the cloud, because of reduction in the number of servers, processors, operating systems, VPNs and network connections and a more centralized controlled of remote and mobile access to the data sources, cyber-security can be improved by an order of magnitude. This is simply because the odds are better stacked on the side of the cloud than the side of the intruders (fewer points of unauthorized hack, intrusion and failure are there to be exploited.

Although achieving this greater level of cyber fortification will require use of leading-edge cyber-security technologies, they are all readily available off-the-shelf today and just need to be woven together in an innovative fashion.

Also, by using the cloud, the amount of computing resources available at any-one-time is unlimited and can be procured on-demand (think of computing demand spikes experienced by USPS, IRS, and the VA in their seasonality of computing demand). So, in the cloud, you can consume all the IT and computing capacity that you need whenever you need it and only pay for what you use. You, therefore, have a variable cost model which lends itself to the Federal trend in achieving greater efficiency and optimization.

Furthermore, thousands of 3rd party cloud-optimized applications and services will spring up to provide enhanced business operations, process visibility and other innovative services to the internal and external stakeholders of US Federal agencies. On another critical front, the cloud also enhances the ability of the USG for ad-hoc and/or controlled information sharing, collaboration and communities of interest (COI) on local, national and global basis. Think of the advantages of that for HHS (Regional Healthcare Organizations), the Military and Special Ops (Global Network Centric Operations and Network Centric Warfare in Hot-Zones) and the DHS(aligning 22 agencies to collaborate better in protection of our national borders, cargo, ports and the homeland).

However, to get from the as-is state (1200 Federal Data Centers) to the desired state (perhaps 75% of them residing on the cloud), a prudent transition and migration path is required. The path includes thoughtfully considered issues such as managed unified network interconnection, application and data security, remote VPN and mobile access management, identity and access control, maintaining your FISMA required C&A while utilizing a hybrid model of computing (your data center plus that of the cloud), Integrated spam, email and web Security, hybrid but unified H/W and S/W CMDB for asset visibility, license management and on-demand utilization of other cloud based services.

To gain a more clear and detailed perspective on the right cloud transition, migration and adoption path for your Federal enterprise, please contact me at the address below for a complementary whitepaper delineating transition scenarios, cloud-computing adoption best practices, unified security/threat management and the nuances of cloud vendor SLA negotiations and strategies.

Let the sun shine on Federal cloud computing and the associated cost savings and operational efficiencies to be gained.

Kevin Curtis
kevinrcurtis@yahoo.com
k1c@comcast.net
571.439.6577 Mobile