Cloud Computing Accounts for Just 1% of HHS’ IT Budget, GAO Finds

September 26, 2014 in News

Although cloud computing could result in significant cost savings for HHS, the department has allocated just 1% of its overall budget to such services, according to a new Government Accountability Office report, Health Data Management reports.

Report Details

For the report, GAO examined the cloud computing services of seven federal agencies, including HHS. The report compared the status of such services in fiscal year 2014 budgets with its previous report in 2012, about three years after the Office of Management and Budget issued the federal Cloud First policy, which requires agencies and departments to implement cloud-based services whenever there is a cost-effective, reliable and secure opportunity to do so.

Report Findings

The GAO report found that HHS:

  • Increased its number of cloud computing services from three in July 2012 to 36 in July 2014 (Slabodkin, Health Data Management, 9/26); and
  • Increased its spending on cloud computing services from $26 million in FY 2012 to $64 million in FY 2014, which corresponded to an increase from 0% of its IT budget to 1% of its IT budget.

However, the report found that only four of HHS’ 36 current cloud computing services reduced costs, for a total savings of $1,190,000.

GAO cited two major reasons why cloud computing services did not result in savings:

  • The change to such services was intended to improve service, and not to reduce costs; and
  • In some cases, such services created an additional service or improved quality of service, which created added costs that offset any savings.

In the latest report, GAO found that departments and agencies cited several challenges to implementing cloud computing services, including:

  • Funding for implementation;
  • Having appropriate expertise for acquisition processes;
  • Meeting new network infrastructure requirements;
  • Meeting federal security requirements; and
  • Overcoming cultural barriers.

Recommendations for HHS

GAO recommended that HHS:

  • Assess all IT investments for potentially migrating to a cloud computing services; and
  • Establish timelines for IT investments that have not been evaluated for migration to cloud computing services.

HHS said it agreed with the recommendations (GAO report, September 2014).

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