Legacy Systems Account For 70% Of Federal IT Spend, Cloud Platforms Could Offer A Way Out


New research from MeriTalk on federal IT spend could also offer some insights for state and local government IT shops. The data show that while federal IT spending priorities are “fundamentally broken,” cloud platforms are emerging as a way out. The report looks at these Platform as a Service (PaaS) models and what they can do to improve efficiency and cut costs.

According to the General Accountability Office (GAO), 70% of federal IT spend, some $56 billion is going into servicing legacy systems. This trend is also true at the state and local level. According to data in the report, half of federal IT shops feel locked into technology contracts that are keeping them on out-of-date software and hardware systems. Cloud PaaS offerings could be a means of letting these and other public sector IT shops move off legacy systems and develop new applications quickly.

40% of respondents in the study said they expect to see much of their IT work done on a cloud PaaS model within the next three years. However, just 12% of feds are using PaaS today. The divergence between those figures suggests that not only will IT spend have to shift, but new procurement avenues will also need to be created in short order. CivSource has previously reported on some of the procurement challenges that still plague Software as a Service (SaaS) providers when it comes to working with all levels of government, and SaaS offerings have been on the market for decades. The rapid deployment, and cost efficiency of cloud services may just be enough to turn slow to react procurement departments on their heads.

The federal cloud first strategy, coupled with data center consolidation at all levels of government and the ability of agencies to jump from hardware to cloud are all adding momentum to PaaS that SaaS never really had. 77% of respondents in the study say that new application development is mission critical, but few organizations want to be locked into a single provider. The state of Texas recently launched a cloud brokerage platform that allows the state to be provider agnostic and ensure they’re getting the best performance at current prices. This model in of itself is something new for public sector organizations which have been previously defined by multi-year purchasing cycles, which only ensured that they got a price, not the best price, along with a service, and not always the best service – especially if it wasn’t fully deployed until years after.

According to the report, the average software development cycle takes 3.5 years, at roughly $100 an hour. Cycles and spend like this in the face of continued budget cuts and still recovering tax bases are bringing this situation to a head. One in three respondents admitted to using tools for work that haven’t been approved, simply because they need to get the job done. This situation adds to security vulnerabilities on public sector networks that are driven not by maliciousness, but by a desire to be productive.

MeriTalk puts the savings from a move to PaaS at approximately $20.5 billion per year before factoring in time saved by workers themselves, who can now actually complete tasks assigned to them. Still, resistance at the top could have a chilling effect on tradition. 41% said they don’t have buy-in from leadership on this issue. CivSource looked at similar data at the state level, showing that often different offices in an organization have conflicting ideas about what cloud services can do, suggesting significant socialization is still needed throughout offices and agencies on this issue. Clock’s ticking.