25 Point IT Reform Plan

I've been thinking about the 25 point plan put out by the OMB CIO late last year. It is broad and sets some very specific and practical targets. I think that is what I like best about this plan, it doesn't get mired down in policy issues and is very action-oriented. Over the next few weeks I'm going to try to walk through a few points on the plan.

The Federal Data Center Consolidation Initiative is one that everybody ought to agree with. It is based on sound economic principles. A data center requires specialization. The bigger the scale of the operation translates into driving the unit costs down. However there is friction in the time in which you are ramping up to try to achieve that greater cost efficiency. Those first movers in this space, Amazon and Google are way ahead, and have already achieved a level of efficiency and capability that is hard to match. In order for another organization to try to achieve that same level of efficiency and cost savings, they need their customers to bite the bullet in terms of higher costs in the near term. That is really hard to do, especially when people are so nervous about the budget. Agencies may feel like they don't have the time to allow the new data center to mature and drive those unit costs down, and may instead want to jump to something like EC2. Every time that happens it affects the opportunity for the Agency to achieve that greater efficiency.

Thus the nervousness that I have about the FDCCI project is whether the government is inclined to limit competition to achieve a level of consolidation in the near term to achieve the efficiency that will allow them to compete with the first movers. The next point on the plan, a Marketplace for Data Center Availability may address this point. The question here is whether this marketplace will be limited to just federally owned and operated data centers or whether the commercial sector will be allowed to compete. My opinion is that if the companies are allowed to compete then they will win. They have a competitive advantage by being the first movers into this space. Their offerings are more mature and stable and they have achieved a price point that cannot be matched by the government.