Data Center Consolidation:

Reporting Can Be Improved to Reflect Substantial Planned Savings

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

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David A. Powner
(202) 512-9286
pownerd@gao.gov

 

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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.

What GAO Recommends

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.

For more information, contact David A. Powner at (202) 512-9286 or pownerd@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: 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' progress in improving server utilization--a key issue that was a driving factor in launching the consolidation initiative.

    Recommendation: 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.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Open

    Comments: 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. In March 2016, we reported that the department had closed a total of 64 data centers and had identified $6.64 million in cost savings and avoidances through fiscal year 2015, which is approximately $2.30 million more than what we reported in September 2014. However, as of June 2016, the department stated that it was awaiting additional guidance from the Office of Management and Budget regarding the next phase of the data center optimization effort and had not yet completed efforts to address challenges in calculating cost savings and avoidances. We will continue to evaluate the department's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Department of Health and Human Services

  3. Status: Open

    Comments: 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 established a series of steps toward addressing our recommendation. The steps include, 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. As of March 2016, the department stated that it plans to complete the implementation of its action plan to address challenges, including finalizing both a data center cost savings and avoidance guidance and a data collection tool, by September 2016. We will continue to evaluate the department's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Department of the Interior

  4. Status: Open

    Comments: The Department of Justice agreed with, and has taken initial steps to implement, our recommendation. Specifically, in November 2014, the Justice's Chief Information Officer initiated a series of steps intended to address our recommendation. The steps include, for example, 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 March 2016, we reported that the department had closed a total of 67 data centers and had identified $16.37 million in cost savings and avoidances through fiscal year 2015, which is approximately $10.09 million more than GAO reported in September 2014 that the department had achieved. However, as of June 2016, the department could not confirm that it had completed the planned actions to address challenges in reported cost savings. We will continue to evaluate the department's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Department of Justice

  5. Status: Open

    Comments: 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. The department added that members of the working group would be responsible for validating current inventory information and maintaining an up-to-date inventory of equipment specification data required for energy and costs savings calculations. Finally, the department stated that it is continuing to focus on the consolidation of seven regional offices with a goal of reducing the 35 total centers to seven centers. However, as of June 2016, the department had not yet reported any resulting cost savings or avoidances. We will continue to evaluate the department's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Department of Labor

  6. Status: Closed - Implemented

    Comments: 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 2014, GSA established a baseline of data center infrastructure costs across the agency. Further, the agency tracked inventory changes, including IT server reductions, and identified the resulting cost savings and avoidances. As of November 2015, GSA reported in its data center inventory that it had closed 23 additional centers compared to the number of closures reported by the agency in May 2014. Further, the agency reported a total of $36.75 million in consolidation cost savings and avoidances--an increase of $23.90 million compared to the amount of savings and avoidances previously reported by the agency in May 2014. As a result of GSA's actions, the agency is better positioned to identify and report the full extent of savings from its consolidation effort.

    Recommendation: 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.

    Agency Affected: General Services Administration

  7. Status: Closed - Implemented

    Comments: 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 things, the directive notes 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. To this end, the directive describes several approaches the agency can use to achieve cost savings and avoidances, such as consolidating servers and storage infrastructure to NASA's core data centers, virtualizing operating systems, and migrating applications to NASA cloud environment, among other things.

    Recommendation: 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.

    Agency Affected: National Aeronautics and Space Administration

  8. Status: Open

    Comments: The Department of Agriculture agreed with, and has taken initial 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 June 2016, the department had not yet fully reported its savings to OMB, as we recommended. Specifically, the department had reported a total of about $92.9 million in cost savings and avoidances to OMB from fiscal years 2012 to 2015--an amount that is approximately $151.3 million short of the total savings and avoidances that the department had reported to GAO as of September 2014. We will continue to evaluate the department's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Department of Agriculture

  9. Status: Closed - Implemented

    Comments: 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 consolidation savings and avoidances, OMB and Congress will have improved insight into the department's progress against key data center consolidation initiative goals.

    Recommendation: 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.

    Agency Affected: Department of Commerce

  10. Status: Open

    Comments: The Department of Defense (DOD) concurred with, and has taken initial steps to implement, our recommendation. In March 2016, we determined that the department had identified a total of about $1.07 billion in cost savings from fiscal year 2012 through 2016. However, as of June 2016, the department had not yet fully reported its savings to OMB, as we recommended. Specifically, DOD reported approximately $859 million in savings to OMB--an amount that is about $211 million short of the total savings and avoidances that the department had previously reported to GAO. In light of the department's considerable planned savings, such reporting is critical toward ensuring that OMB and Congress have the ability to oversee DOD's progress against key data center consolidation initiative goals.

    Recommendation: 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.

    Agency Affected: Department of Defense

  11. Status: Closed - Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Energy

  12. Status: Open

    Comments: The Department of the Interior 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 $84.42 million to GAO, but had only reported $13.59 million to OMB--a difference of approximately $70.83 million. In February 2016, the department stated that it is continuing to address challenges in reporting cost savings and avoidances, which it plans to complete by September 2016. We will continue to evaluate the department's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Department of the Interior

  13. Status: Open

    Comments: The Department of Transportation agreed with our recommendation, but had not yet taken steps to implement it. 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 OMB--a difference of approximately $132.82 million. In June 2016, the department reported a total of $4.6 million in data center consolidation savings and avoidance to OMB. We will continue to evaluate the department's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Department of Transportation

  14. Status: Open

    Comments: Although the Department of the Treasury did not comment on our recommendation, the department has since taken initial steps to implement it. For example, as of May 2016, Treasury had reported about $410 million in data center consolidation-related cost avoidances in its quarterly report to OMB--an increase of about $398 million compared to previous reports, as found by GAO in September 2014. However, the department has not yet reported to OMB other cost avoidances totaling more than $900 million that it had previously reported to GAO. Such reporting is critical toward ensuring that OMB and Congress have the ability to oversee Treasury's progress against key data center consolidation initiative goals.

    Recommendation: 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.

    Agency Affected: Department of the Treasury

  15. Status: Open

    Comments: 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 June 2016, the department reported a total of $19.31 million in data center consolidation savings and avoidances to OMB--an amount that is about $4.97 million less than previously reported to GAO. We will continue to evaluate the department's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Department of Veterans Affairs

  16. Status: Closed - Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Environmental Protection Agency

  17. Status: Open

    Comments: The National Aeronautics and Space Administration (NASA) agreed with our recommendation and has since taken initial steps to implement it. Specifically, in response to our recommendation, 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 notes 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 describes several approaches the agency can use to achieve cost savings and avoidances, such as consolidating servers and storage infrastructure to NASA's core data centers, virtualizing operating systems, and migrating applications to NASA cloud environment, among other things. The directive also requires the implementation of a total cost of ownership modeling tool to improve NASA's reporting of cost savings and avoidances. However, in March 2016, we determined that NASA had not reported any cost savings and avoidances through fiscal year 2015 even though the agency reported closing 29 data centers. Further, we found that the agency did not have planned cost savings estimates through fiscal year 2019 even though it reported plans to close nine additional data centers. As of May 2016, NASA stated that it is in the process of implementing the cost modeling tool required by its January 2015 directive to determine historical approximations of savings through fiscal year 2015. Once completed, the agency stated that any identified savings will be reported to OMB. These efforts are expected to be completed by January 2017. Until NASA fully implements its directive and reports all of the agency's data center consolidation cost savings, OMB and Congress may lack important insight into NASA's progress against key data center consolidation initiative goals.

    Recommendation: 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.

    Agency Affected: National Aeronautics and Space Administration

  18. Status: Open

    Comments: The Office of Personnel Management 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 as required. As of June 2016, the agency had not yet reported any data center consolidation cost savings and avoidances to the Office of Management and Budget. We will continue to evaluate the agency's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Office of Personnel Management

  19. Status: Open

    Comments: The Office of Management and Budget (OMB) agreed with, and has taken initial 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 effectiveness of IT investments, among other things. However, as of March 2016, several agencies were still reporting limited savings from their consolidation efforts. For example, although the National Aeronautics and Space Administration reported closing 29 data centers through November 2015, the agency reported no resulting cost savings. As another example, the Department of Labor reported closing 20 data centers through November 2015, but reported no resulting cost savings. Until OMB assists these agencies with limited or no cost savings reported, they may not be able to identify the full extent of savings from their consolidation efforts. We will continue to evaluate OMB's progress in implementing this recommendation.

    Recommendation: 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.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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