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2/4/2011
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Tech CEOs Pitch Savings Plan In Washington

The CEOs of Dell and IBM go to Washington to share their ideas on how the federal government can save $1 trillion over 10 years through more effective use of IT.

Technology CEOs met with President Obama this week to share their views on U.S. policy in the areas of technology innovation, education, and competitiveness. While in Washington, they reiterated their case that the federal government stands to save $1 trillion over 10 years through smarter, more effective use of IT.

On Tuesday, Obama met with the Technology CEO Council, including the CEOs of Applied Materials, Dell, EMC, IBM, Micron Technology, and Xerox. The discussion delved into education, jobs, and U.S. competitiveness, issues that Obama raised in his Jan. 25 State of the Union speech.

“He told us in the cabinet meeting that morning that he instructed the cabinet to go work on these elements to drive smarter government,” IBM CEO Sam Palmisano said on Wednesday during a presentation at the Center for Strategic and International Studies in Washington. Michael Dell, the CEO of Dell, also participated in that discussion.

In October, the CEO Technology Council published a position paper that laid out a strategy for saving the federal government $1 trillion over the next 10 years. The tech CEOs argue that the federal government's IT infrastructure is too scattered and diverse, and not as efficient as it could be.

They’re largely preaching to the converted. Obama called for better IT execution shortly after taking office, and federal CIO Vivek Kundra and chief performance officer Jeffrey Zients have been leaning on agency CIOs for across-the-board improvements in technology implementation and performance. In December, Kundra introduced a 25-point plan to reform federal IT management through initiatives such as data center consolidation, cloud computing, and IT program management.

In its white paper, the Technology CEO Council lays out seven areas where it argues the government stands to save hundreds of billions of dollars. They include infrastructure consolidation, improved supply chain execution, reduced energy consumption, and shared services. Not surprisingly, much of that advice hinges on technology products and services sold by their companies.

In February 2010, the Office of Management and Budget launched the Federal Data Center Consolidation Initiative with a goal of eliminating 800 federal data centers, a 40% reduction, by 2015. MeriTalk estimates the government stands to save $14.6 billion over five years through that initiative.

Palmisano argues the feds should have a more aggressive target, even suggesting that the number of federal data centers -- now in excess of 2,000 -- could be brought down to two for every state, or only 100. “A lot of times people think these are very complicated projects," he said. "All we’re talking about is putting things together and sharing the resources."

The government’s supply chains are also inefficient and ripe for change, the CEOs said. “Do you really need hundreds of thousands of supply chains?” asked Dell. He argued that number can be “streamlined tremendously” by “collapsing and consolidating” them to achieve huge savings. The Technology CEO Council posits that the government could save $500 billion though supply chain optimization.

Palmisano acknowledged that embarking on new IT projects in federal government isn’t always as straightforward as it tends to be within a business. “It’s hard for us as business people to understand what’s necessary politically to get things done,” he said. “We can only help people with the analysis and the facts and the case.”

The CEOs also promoted private clouds as a way for government agencies to enjoy the benefits of cloud computing without the risks of commercial cloud services. Palmisano pointed to IBM’s own use of a private cloud for software development and testing, at 50% savings compared to dedicated systems. “There’s no security risk; it’s behind the firewall,” he said.

In December, federal CIO Kundra introduced a “cloud-first” policy that requires agencies to consider a cloud option for new IT requirements. The departments of Defense and Energy and NASA are among the government’s early adopters of the cloud model.

At the same time, agencies stand to realize savings by upgrading their computing and virtualization infrastructures, Dell said. “Holding on to the stuff that’s four, five, six years old is actually incredibly expensive,” he said. “Not to mention enormous power savings -- when you are using power-efficient technologies, you reduce power consumption by 95 percent.”

Federal agencies must eliminate 800 data centers over the next five years. Find how they plan to do it in the new all-digital issue of InformationWeek Government. Download it now (registration required).

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