Sunday, November 13, 2011

Adjusting both Funds and Mindsets in DoD

The tight coupling that currently binds Defense Department architecture - the infrastructure, communications, databases, applications, security and desktops into more than 2,200 unique silos - must be separated. Right now, each silo is the consequence of contracts in which all software is assembled into a one-of-a-kind collection of codes. The resulting software is costly to maintain; applications are not interoperable; and lack of compatibility complicates the exchange of data.

Defense Department applications are not built to controlled standards. Most department databases are not constructed for shared data definitions, and communication interfaces do not match.

Such diversity is excessive. It imposes on every system the burden of tooling more than 75 percent of the programming code to unique requirements, which results in every system possessing its own infrastructure. If the Defense Department could operate a standard information technology infrastructure, the application developers then could concentrate on building only 25 percent of the code. Diverse systems could be built on top of only a few universal infrastructures. Individual customers would be able to modify individual applications but would not be allowed to alter the code of the infrastructure, which would be centrally managed.

Only after separating the infrastructures from the applications will it be possible for the Defense Department to organize projects to fit into an enterprise architecture that is modular, interoperable, upgradeable, secure and inexpensive. Only then will it be feasible to place application-specific programs, without huge amounts of attached infrastructure code, on top of an enterprise standard environment, defined as the Defense Department private platform-as-a-service (PaaS) clouds.

Once PaaS is accepted as the ultimate architectural objective for defense computing, attention must turn to a most difficult challenge: how to migrate from thousands of incompatible legacy systems into an environment that is far less complex. That cannot be accomplished by retrofitting legacy systems with fixes, conversion routines, software bridges, emulations and patches. An overlay cannot be placed on legacy systems to make them look as if they were interoperable PaaS clouds.

To achieve cost reductions in information technology spending, the Defense Department must concentrate on generating short-term cash savings to finance the creation of PaaS clouds. In the long run, PaaS will create the greatest opportunities for cost savings for the department.

One of the military service chief information officers announced a cut in information technology expenses by 25 percent over the next five years. Consequently little money, if any, will be available to convert to PaaS-based infrastructures. The question then is what approach can be used to slim down information technology spending in the most expeditious way so that cash becomes available to start investing in PaaS in the next five years.

The department's information technology budgets for fiscal years 2012 through 2016 somehow must be structured to produce cash savings to fund cloud adoption investments. The current lack of funds also is aggravated by rapidly rising cybersecurity costs.

The Government Accountability Office just reported that fiscal year 2012's $3.6 billion for cybersecurity is not fully funded. Expenses classified as the costs of cybersecurity now are consuming 9 percent of total information technology spending. Cybersecurity is eating up most of the money that otherwise would be available for migration to a cloud environment. Spending on security will continue to grow and will have a higher priority than spending on cloud computing, despite large cost reductions that can be realized from PaaS. With a squeeze on information technology budgets where will the new funds come from?

The Defense Department currently spends 30 percent of its $36.5 billion information technology budget on new development and on upgrading existing systems. The department spends the remaining 70 percent on operations and maintenance (O&M), although that amount is understated because it does not include military and civilian personnel payroll.

Prying short-term cash from new development and upgrading to pay for PaaS is hard to do. Projects have multiyear durations. Urgent, immediate fixes also are needed to support warfare operations; these fixes cannot be deferred. Though some money could be obtained by eliminating redundant programs, the pending information technology budget shortfalls are too large to be made up through the cannibalization of development funds.

O&M funds must be the first ones approached as the immediate cash cow to finance PaaS cloud migration. Somehow, the required cash to support cloud migration must be extracted from the $26 billion spent annually on O&M. Assuming level information technology budgets for the next five fiscal years - 2012 through 2016 - this represents an optimistic pool of $130 billion from which to squeeze at least 10 percent savings. This is the amount most likely needed to accomplish a high level of migration into the cloud-computing environment. Only after the department begins collapsing thousands of costly silos into a handful of PaaS clouds can it hope to migrate toward lower-cost operations.

PaaS clouds, when finally installed, will offer superior service levels, be more secure and operate at lower costs than the current collection of legacy systems. The issue is not what is theoretically conceivable, but how much cash will become available in the next five years from cutting back on legacy O&M operations. The question is one of timing: Is there sufficient time to make the necessary reinvestments so that the Defense Department can continue operating without increasing its information technology budget?

The first step calls for a business case for checking the financial feasibility of a PaaS. There are several total cost of ownership (TCO) models available to make such calculations. For the purposes of this article, the most mature cloud model will be used (http://roitco.vmware.com/vmw). It was derived from the Alinean Corporation, where I was a founder and member of the board of directors.

I have estimated the five-year TCO costs for the Defense Department's 4 million desktops and 200,000 servers. That TCO is about $15 billion per year, or 41 percent of total information technology spending. This estimate includes the costs of telecommunications and rising expenses for security.

The largest share of the department's annual information technology costs is the average expense for the support of desktop operations, or $9.3 billion. This includes administrative support and downtime costs.
The average cost of $5.3 billion per year for servers is less than the cost for desktops. Though the department is concentrating on server virtualization, which can bring down server costs by more than 60 percent, this requires large-scale data center consolidation for which plans do not exist yet. Meanwhile, the largest short-term dollar gains can be realized from the adoption of virtual desktops. Concentrating on desktops can yield cash savings of up to $3.2 billion per year.

Estimated cash savings are based on TCO costs. Additional cost reductions could be obtained when a smaller number of PaaS clouds would shrink the expenses for existing data centers.


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