Can Federal Agencies Save Money by Using More Vendors?

Diversifying can be a smart cost-saving strategy.

MeriTalk has released another excellent study on IT in the federal government. The network examines how agencies can best leverage technology and stay within the tight constraints of budgets while keeping projects on time. There is also an expectation of government agencies to innovate, which can be difficult when funds are scarce. The latest study, Infrastructure Independence: Set My IT Free, looks at vendor diversity as a cost-savings tool:

As Federal IT requirements tighten and its resulting costs skyrocket, agencies are struggling to pinch pennies. Caught in a bind between missions and budgets, agencies are no doubt looking to cut corners, but often overlook an opportunity right in front of them – infrastructure diversity.

Federal agencies are aware that moving to a multi-vendor infrastructure environment will reduce capital expenditures while only minimally increasing operating expenditures. Despite this knowledge, agencies continue to cling to their current manufacturers. In fact, outside of applications, agencies tend to utilize only a limited number of manufacturers in each infrastructure area.

Download the study here.

A Classic Investment Strategy: Diversify

Federal Technology Diversification

How, exactly, can agencies save money by using multiple vendors? Taking a diverse approach to vendors forces agencies to incorporate flexibility into their infrastructures. Using a single vendor for large projects locks organizations in for a longer period of time, because the cost to switch grows with each passing year. As MeriTalk says, “Declaring infrastructure independence and increasing vendor diversity significantly reduces capital expenditures while only minimally increasing operating expenditures.”

So why aren’t more agencies diversifying, especially when “respondents estimate they can save 20% of their agency’s IT budget by adding an additional manufacturer – an annual Federal savings of nearly $15.8 billion?” Most IT leaders say they use a limited number of vendors to ensure compatibility across their agencies, even though most agree that siloed infrastructures can be dangerous as technology evolves.

What are your thoughts on diversifying vendors? Let us know in the Comments section.

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Mar 11 2013