Navy CIO Plans 25% Cut In IT Spending

Navy CIO Terry Halvorsen plans to trim IT budgets via cloud computing, data center and app consolidation, thin clients, enterprise licensing, and rigorous spending controls.
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The Department of the Navy, on a mission to cut 25% from its business IT budget over the next five years, is implementing strict IT spending oversight rules, investing in thin clients, pushing hard on data center and app consolidation, and working on department-wide enterprise technology licenses, Navy CIO Terry Halvorsen said Tuesday in an hour-long interview with journalists.

Halvorsen, in one of his first meetings with reporters since being named CIO in November 2010, laid out some details of an ambitious plan to cut major dollars from the Navy's business IT budget while keeping the operational, war-fighting IT budget largely intact. "We're going to be aggressive in meeting the savings number," Halvorsen said. "It's not a secret that we're in a tough business environment. If we don't take it out of business IT, the money will come out of somewhere else, and I will probably like that other place less."

Despite the cuts, Halvorsen says he doesn't think the Navy and Marine Corps, both of which sit within the Department of the Navy's purview, will have to sacrifice any IT functionality. "We believe that where industry is, there are efficiencies to be had and better ways we can execute," he said.

Enterprise licensing is one place where Halvorsen believes there are significant savings to be had. "Buying in bulk will save us quite a bit of money," he said. "We are such a high volume buy that enterprise licenses will drive our price down. When you can tell a company that you're more than a single percentage point of their revenues, let's just say you can get some interesting price points."

The Marine Corps is currently working on behalf of the entire Department of the Navy on a Microsoft enterprise licensing agreement, and Halvorsen said that other enterprise buys should be expected. Next up could be Oracle, where the Navy spends significant sums of money. In the future, Halvorsen foresees the possibility of single licenses across the entire Department of Defense.

Newly mandated investment review procedures also should help rein in the spending, as Halvorsen has mandated both the Navy and Marine Corps appoint an authority to approve all IT purchases more than $1 million. The services have taken that one step further, with deputy Navy CIO Vice Adm. Kendall Card now approving anything costing more than $250,000 and Marine Corps CIO Brig. Gen. Kevin McNally setting a $150,000 threshold (even lower in some circumstances).

While Halvorsen acknowledged a risk that such thresholds for IT spending approval could slow acquisition, he said that the gain "far outweighs" the risk. "It's about saying, 'Do we really need something new to meet the requirement, or could we use something existing,'" he said, adding that the new approval process also a way to better prioritize spending.

Another way to cut spending will be to buy "smarter," Halvorsen said. For example, the Navy is analyzing whether there might be a more efficient way to buy mobile service plans, and Halvorsen says that processes, rather than technology, may need to be changed if an off-the-shelf system can meet almost all of the Navy's requirements, rather than customizing the technology to meet the last few requirements.

In terms of actual technology moves, the Navy will focus on data center consolidation, application consolidation, a thin client strategy, and cloud computing. In terms of data centers, the Navy is cutting a number of them, and several months ago put in place a data storage moratorium that requires waivers for any storage or server buy. In terms of applications, Halvorsen's office is looking to eliminate duplicate apps, take variations out of apps by doing things like moving to one standard version, and working on a list of legacy systems that don't meet the Navy's open architecture requirements and thus will eventually need to go away.

Thin clients have a strong future at the Navy, according to Halvorsen. "We find some of our users spend 90% of their time on Office-type software," he said. "Does that make sense to host that in a server-based environment rather than loading an instance on somebody's desktop or laptop? We're doing that analysis now, and we see places that we believe will make more sense to go to wider use of thin- and zero-clients than we have today."

Halvorsen also sees savings in cloud computing, possibly even commercial clouds for the least sensitive type of work, such as the Navy's recruiting Website. "We want to use whoever can provide us with our level of operational needs at the best price," he said. The cloud could also help with savings through pay-per-use licensing, he added.

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