Data Center Consolidation: Reporting Can Be Improved to Reflect Substantial Planned Savings

GAO-14-713 Published: Sep 25, 2014. Publicly Released: Sep 25, 2014.

Highlights

What GAO Found

Of the 24 agencies participating in the Federal Data Center Consolidation Initiative, 19 agencies collectively reported achieving an estimated $1.1 billion in cost savings and avoidances between fiscal years 2011 and 2013. Notably, the Departments of Defense, Homeland Security, and Treasury accounted for approximately $850 million (or 74 percent) of the total. In addition, 21 agencies collectively reported planning an additional $2.1 billion in cost savings and avoidances by the end of fiscal year 2015, for a total of approximately $3.3 billion—an amount that is about $300 million higher than the Office of Management and Budget's (OMB) original $3 billion goal. Between fiscal years 2011 and 2017, agencies reported planning a total of about $5.3 billion in cost savings and avoidances.

Agencies' Data Center Consolidation Cost Savings and Avoidances (Dollars in Millions)

	Estimated and actual			Planned
Fiscal year	2011	2012	2013	2014	2015	2016	2017	Total
Total savings and avoidances	$192	$268	$683	$895	$1,250	$917	$1,144	$5,350
	$1,143 total			$4,206 total

Source: GAO analysis of agency data. | GAO-14-713 Note: Totals may not add due to rounding.

However, planned savings may be higher because six agencies that reported having closed as many as 67 data centers reported limited or no savings, in part because they encountered difficulties, such as calculating baseline data center costs. In addition, 11 of the 21 agencies with planned cost savings are underreporting their fiscal years 2012 through 2015 figures to OMB by approximately $2.2 billion. While several agencies noted communication issues as the reason for this, others did not provide a reason. Until OMB assists agencies in reporting savings and agencies fully report their savings, the $5.3 billion in total savings will be understated.

Most agencies reported successes in achieving cost savings—notably, the benefits of key technologies, reduced power consumption and facility costs, and improvements in asset inventories. However, agencies also reported challenges, many of which were the same as GAO found in 2012. One of the most-reported challenges was related to obtaining power usage information as a means to determine cost savings. In light of how closely these successes and challenges relate to achieving cost savings, it is important for OMB to continue to provide leadership and guidance, including—as GAO previously recommended—using the Data Center Consolidation Task Force to monitor agencies' efforts.

Pursuant to OMB guidance, in May 2014 the Data Center Consolidation Task Force completed a set of 11 metrics to measure agency progress toward optimizing their data centers, such as power usage and facility utilization. In addition, related targets to be achieved by fiscal year 2015 have been developed for nearly all the metrics. However, the metrics do not address server utilization, even though OMB reported this to be as low as 5 percent in 2009, which is significantly below OMB's target of 60 to 70 percent. Without such a metric, OMB may not be getting important insight into agencies' progress on a key issue that was a driving factor in launching the consolidation initiative.

Why GAO Did This Study

In 2010, as focal point for information technology management across the government, OMB's Federal Chief Information Officer launched the Federal Data Center Consolidation Initiative to consolidate the growing number of centers. As of May 2014, agencies reported a total of 9,658 data centers—approximately 6,500 more than reported by OMB in 2011.

GAO was asked to review federal agencies' continuing efforts to consolidate their data centers and achieve cost savings. The objectives were to (1) evaluate the extent to which agencies have achieved cost savings to date and identified future savings through their consolidation efforts, (2) identify agencies' notable consolidation successes and challenges in achieving cost savings, and (3) evaluate the extent to which data center optimization metrics have been established. GAO assessed agency-reported cost savings and avoidance documentation, interviewed agency officials, and assessed data center optimization metrics against prior OMB requirements and goals.

Recommendations

GAO is recommending that OMB assist agencies in reporting cost savings and develop a metric for server utilization as part of any reevaluation of the metrics. GAO is also recommending, among other things, that agencies fully report their consolidation cost savings. OMB and 12 agencies agreed, 1 did not state whether it agreed or disagreed, 1 had no comments, and 1 partially agreed noting challenges. GAO continues to believe the recommendation remains valid as discussed in the report.

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Office of Management and Budget	To better ensure that FDCCI improves governmental efficiency and achieves cost savings, the Director of OMB should direct the Federal CIO to, as part of any future evaluation of the data center optimization metrics, develop and implement a metric for server utilization.	Closed – Implemented The Office of Management and Budget (OMB) agreed with, and has taken steps to implement, our recommendation. Specifically, in August 2016, OMB issued a memorandum that established a metric for server utilization. Specifically, OMB's server utilization metric measures the percent of time an agency's servers are busy, as well as the percent of physical servers fully equipped with automated monitoring software needed to measure server utilization. OMB also established a target value for its server utilization metric of greater than or equal to 65 percent, which agencies are expected to achieve by fiscal year 2018. By establishing this metric, OMB is better positioned to measure agencies'... View More
Department of Health and Human Services	The Secretaries of HHS, the Interior, Justice, and Labor, and the Administrators of GSA and NASA should complete action plans for addressing their challenges in reporting cost savings, as discussed in this report.	Closed – Implemented The Department of Health and Human Services agreed with, and has taken initial steps to implement, our recommendation. In June 2015, the department reported that it had begun an effort to calculate the tangible cost savings and avoidances derived from closing over 50 data centers as part of its data center consolidation efforts. As of March 2018, the department reported that it had closed a total of 101 data centers and had identified $182.16 million in cost savings and avoidances for fiscal years 2012 to 2018, which is approximately $156.74 million more than GAO reported in September 2014 that the department had achieved. By reporting all data center consolidation cost savings, OMB and... View More
Department of the Interior	The Secretaries of HHS, the Interior, Justice, and Labor, and the Administrators of GSA and NASA should complete action plans for addressing their challenges in reporting cost savings, as discussed in this report.	Closed – Implemented * The Department of the Interior agreed with, and has taken initial steps to implement, our recommendation. Specifically, in December 2014, the Interior's Deputy Assistant Secretary for Policy, Management and Budget planned a series of steps toward addressing our recommendation. The steps included, for example, consolidating and streamlining data center consolidation reporting processes, developing a template that all department bureaus and offices are required to use, and issuing a directive requiring consistent reporting for all data center cost savings and avoidances. Subsequently, the department developed a Data Center Optimization Initiative (DCOI) strategic plan and submitted it to... View More
Department of Justice	The Secretaries of HHS, the Interior, Justice, and Labor, and the Administrators of GSA and NASA should complete action plans for addressing their challenges in reporting cost savings, as discussed in this report.	Closed – Implemented The Department of Justice agreed with, and has taken steps to implement our recommendation. Specifically, in November 2014, Justice's Chief Information Officer initiated a series of steps intended to address the recommendation. These steps include developing guidance for applying standard definitions and reporting on data center costs and savings, incorporating the revised guidance and instructions into the department's tools and processes, and implementing and beginning to collect data using the enhanced guidance, tools, and processes. In addition, the department submitted its Data Center Optimization Initiative (DCOI) strategic plan to OMB in September 2016, which described plans to... View More
Department of Labor	The Secretaries of HHS, the Interior, Justice, and Labor, and the Administrators of GSA and NASA should complete action plans for addressing their challenges in reporting cost savings, as discussed in this report.	Closed – Implemented The Department of Labor agreed with, and has taken initial steps to implement, our recommendation. In September 2015, the department stated that its Office of the Chief Information Officer was working to develop an enterprise data center inventory as part of the department-wide Data Center Consolidation Initiative Working Group. In March 2017, the department had not yet reported any resulting cost savings or avoidances in its quarterly report to OMB. Additionally, as of March 2018, the department reported that it had closed 32 data centers through fiscal year 2017 and indicated that it had identified approximately $16.95 million in cost savings and avoidances for fiscal years 2012 to... View More
General Services Administration	The Secretaries of HHS, the Interior, Justice, and Labor, and the Administrators of GSA and NASA should complete action plans for addressing their challenges in reporting cost savings, as discussed in this report.	Closed – Implemented The General Services Administration (GSA) agreed with, and has taken steps to implement, our recommendation. Specifically, in October 2014, the Administrator of GSA established a series of steps toward addressing the agency's challenges related to reporting data center consolidation cost savings. The steps included, for example, working to baseline existing costs, reporting on any subsequent data center closings, and tracking actual savings and avoidances. In addition, the Administrator stated that the agency would introduce additional tools and processes as necessary to measure the benefits and outcomes of the data center consolidation initiative. In executing these plans, in November... View More
National Aeronautics and Space Administration	The Secretaries of HHS, the Interior, Justice, and Labor, and the Administrators of GSA and NASA should complete action plans for addressing their challenges in reporting cost savings, as discussed in this report.	Closed – Implemented The National Aeronautics and Space Administration (NASA) has taken steps to implement our recommendation. Specifically, in January 2015, NASA's Chief Information Officer issued an action plan to address challenges in reporting costs saving. The action plan includes, for example, conducting comprehensive data center power assessments, establishing cost and energy usage baselines, and implementing a total cost of ownership modeling tool to reveal cost savings and avoidance. Concurrent with the issuance of the action plan, NASA's Chief Information Officer also issued a directive to NASA's Centers intended to improve the reporting of data center consolidation cost savings. Among other... View More
Department of Agriculture	The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Department of Agriculture (USDA) agreed with, and has taken steps to implement, our recommendation. In September 2014, we found that the department reported fiscal year 2012 through 2015 cost savings and avoidances of $244.17 million to GAO, but had only reported $71.20 million to the Office of Management and Budget (OMB)-a difference of approximately $172.97 million. As of September 2018, the department has reported that it closed 2253 data centers resulting in a total of approximately $51.8 million in cost savings and avoidances for fiscal years 2012 to 2018. In September 2018, USDA officials, including the lead for data center operations, stated that the 2014 estimate of savings... View More
Department of Commerce	The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Department of Commerce has taken steps to implement our recommendation. In September 2014, we found that the department reported fiscal year 2012 through 2015 cost savings and avoidances of $76.96 million to GAO, but had only reported $71.59 million to the Office of Management and Budget (OMB)--a difference of approximately $5.37 million. In particular, the agency had not reported $8.09 million in fiscal year 2015 data center consolidation savings and avoidances to OMB, as it had reported to GAO. In May 2015, the department was reporting fiscal year 2015 data center consolidation savings of $110.98 million to OMB. Because Commerce has improved the reporting of its data center... View More
Department of Defense	Priority Rec. The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Department of Defense (DOD) concurred with, and has taken initial steps to implement, our priority recommendation. In March 2016, we determined that the department had identified a total of about $1.07 billion in data center consolidation cost savings from fiscal year 2012 through 2016. As of May 2018, the department had reported $497.83 million in its quarterly integrated data collection submission to the Office of Management and Budget (OMB) - an amount that is $572.17 million less than the $1.07 billion that was previously reported to us in March 2016. However, in July 2018, the DOD official with responsibility for overseeing DOD's data center consolidation and optimization... View More
Department of Energy	The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Department of Energy agreed with, and has taken steps to implement, our recommendation. In September 2014, we found that the department reported fiscal year 2012 through 2015 cost savings and avoidances of $2.52 million to GAO, but had only reported $1.19 million to the Office of Management and Budget (OMB)--a difference of approximately $1.33 million. In May 2015, the department was reporting total data center consolidation savings of $5.41 million to OMB. Because Energy has improved the reporting of its data center consolidation savings and avoidances, OMB and Congress will have improved insight into the department's progress against key data center consolidation initiative goals.
Department of the Interior	The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Department of the Interior agreed with, and has taken steps to implement, our recommendation. In September 2014, we found that the department had reported fiscal year 2012 to 2015 cost savings and avoidances of $84.42 million to GAO, but had only reported $13.59 million to the Office of Management and Budget (OMB)-a difference of approximately $70.83 million. Subsequently, in September 2018, the department reported that it had closed 190 data centers through fiscal year 2018 and indicated that it had reported approximately $19.38 million in cost savings and avoidances for fiscal years 2012 to 2018. In September 2018, Interior provided written correspondence that stated that the 2014... View More
Department of Transportation	The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Department of Transportation agreed with, and has taken steps to implement, our recommendation. In September 2014, we found that the department had reported fiscal year 2012 to 2015 cost savings and avoidances of $140.18 million to GAO, but had only reported $7.36 million to the Office of Management and Budget (OMB)-a difference of approximately $132.82 million. As of September 2018, the department had reported that it closed 174 data centers resulting in a total of approximately $53.74 million in cost savings and avoidances for fiscal years 2012 to 2018. In September 2018, the Transportation officials with responsibility for overseeing the department's data center consolidation and... View More
Department of the Treasury	Priority Rec. The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented Treasury has taken steps to address this recommendation. Specifically, a Treasury information technology specialist reported in October 2017 that the department was working with the Office of Management and Budget (OMB) to clarify how Treasury should report specific initiatives to ensure cost savings was being accurately reflected in its quarterly reporting. Subsequently, in November 2017, Treasury reported about $1.15 billion in data center consolidation-related cost avoidances in its quarterly report to OMB, in contrast to the $12 million in savings it reported to OMB in 2014 and the $577.7 million it reported to GAO in the same time period. Treasury's November 2017 reporting also... View More
Department of Veterans Affairs	The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Department of Veterans Affairs agreed with, and has taken initial steps to implement, our recommendation. In September 2014, we found that the department had reported fiscal year 2012 to 2015 cost savings and avoidances of $24.28 million to GAO, but had not reported any of its savings and avoidances to OMB as required. As of March 2017, the department reported a total of $23.61 million in data center consolidation savings and avoidances to OMB--less than 3 percent different from what was previously reported to GAO. By reporting all data center consolidation cost savings, OMB and Congress gain important insight into the department's progress against key data center consolidation... initiative goals. View More
Environmental Protection Agency	The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Environmental Protection Agency agreed with, and has taken steps to implement, our recommendation. In September 2014, we found that the agency had not fully reported its data center consolidation cost savings and avoidances to OMB, as required. Specifically, the agency had not reported its planned fiscal year 2015 savings and avoidances of $.65 million. In May 2015, the Environmental Protection Agency reported $4.07 million in fiscal year 2015 data center consolidation cost savings and avoidances to OMB--an amount that is $3.42 million higher than previously planned. As a result, stakeholders in the federal consolidation effort will be better positioned to oversee agencies' progress... against key initiative goals. View More
National Aeronautics and Space Administration	Priority Rec. The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The National Aeronautics and Space Administration (NASA) agreed with, and has taken steps to implement, our recommendation. Specifically, in January 2015, NASA's Chief Information Officer issued a directive to NASA's Centers intended to improve the reporting of data center consolidation cost savings. Among other things, the directive noted the importance of estimating savings and avoidances from the consolidation and optimization of NASA's information technology resources and reporting progress to the Office of Management and Budget (OMB). To this end, the directive described several approaches the agency could use to achieve cost savings and avoidances, such as consolidating servers and... View More
Office of Personnel Management	The Secretaries of Agriculture, Commerce, Defense, Energy, the Interior, Transportation, the Treasury, and Department of Veterans Affairs; the Administrators of the Environmental Protection Agency and NASA; and the Director of the Office of Personnel Management should direct responsible officials to report all data center consolidation cost savings and avoidances to OMB in accordance with established guidance.	Closed – Implemented The Office of Personnel Management (OPM) agreed with our recommendation, but has not yet taken steps to implement it. In September 2014, we found that the agency had reported fiscal year 2012 to 2015 cost savings and avoidances of $3.40 million to GAO, but had not reported any of its savings and avoidances to the Office of Management and Budget (OMB) as required. Subsequently, OPM developed a data center optimization initiative (DCOI) strategic plan that identified the agency's intent to close 5 data centers by the end of fiscal year 2018. As of March 2018, the agency had reported that it had closed 4 data centers in fiscal year 2017. As a result, OPM reported $4.65 million in data... View More
Office of Management and Budget	To better ensure that the Federal Data Center Consolidation Initiative (FDCCI) improves governmental efficiency and achieves cost savings, the Director of OMB should direct the Federal chief information officer (CIO) to utilize the existing PortfolioStat review sessions to assist the Department of Health and Human Services (HHS), Interior, Justice, Labor, the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) in identifying data center consolidation cost savings opportunities.	Closed – Implemented The Office of Management and Budget (OMB) agreed with, and has taken steps to implement, our recommendation. Specifically, in June 2015, OMB issued a memorandum that discussed the fiscal year 2015 PortfolioStat requirements, including that agencies should hold PortfolioStat sessions on a quarterly basis (versus annually, as done previously) with OMB, the agency chief information officer, and other attendees. The memorandum also stated that, during these sessions, agencies are expected to discuss a strategy to reduce duplication and waste within the IT portfolio of the agency, identify projected cost savings resulting from such strategy, and identify ways to increase the efficiency and... View More

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