GAO: Agencies Need to Better Track Cloud Spending and Savings

If any doubt remained that the federal government has embraced cloud services with gusto and is benefiting from the move, the Government Accountability Office has put it to rest. However, agencies need to do a better job of tracking cloud spending and savings, a new report concludes. 

In a report the GAO released last month, the government watchdog says that the 16 agencies it reviewed reported that their spending on cloud investments increased by over $1 billion between fiscal years 2015 and 2018 for investments with total lifecycle costs of $1 million or more.

That increase aligns with a report released last year by Bloomberg Government that found cloud services contract obligations were expected to increase by about 32 percent in fiscal year 2018, reaching an all-time high of $6.5 billion.

The 16 agencies reported on the federal IT Dashboard that about 3 percent of their total IT spending each fiscal year from fiscal years 2015 through 2017 was spent on cloud services. For fiscal year 2018, agency-reported cloud spending through March 2018 was at 2 percent. 

Of the 16 agencies that reported an increase in their cloud service spending since 2015, 13 of them had saved $291 million to date from these services. Officials from 15 of the 16 agencies reported that they had “identified significant benefits from acquiring cloud services, including improved customer service and the acquisition of more cost-effective options for managing IT services.” The other agency — the Department of Health and Human Services — reported that it “did not have any examples of cloud investments that had produced significant or notable benefits because it did not have any completed migration efforts.” 

Additionally, the agencies identified nine cloud investments that, among other things, “enhanced the availability of weather-related information, facilitated collaboration and information sharing among federal, state, and local agencies related to homeland security, and provided benefits information to veterans,” as examples of systems that realized these benefits. 

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Agencies Need to Overcome Hurdles to Track Cloud Spending

However, it is not all good news for agencies in the GAO report. While the report praises the agencies for creating assessment guidance, performing assessments and implementing cloud services, it notes that “the extent of their progress varied.”

The Office of Management and Budget has been requiring agencies to assess all IT investments for cloud services to encourage cloud service acquisition. However, the report found, only 10 of the 16 agencies reviewed had established assessment guidance.

Further, while the agencies assessed the majority of their planned fiscal year 2019 IT investments for cloud services, 12 agencies had not completed an assessment of 10 or more investments. 

Those agencies identified issues in tracking and reporting cloud spending and savings data, including not having consistent processes in place to do so. The agencies also noted that OMB guidance did not require them to explicitly report savings from cloud implementations and, therefore, they had to specifically collect this data to meet the GAO’s request. 

As a result of these identified issues, the report says, “it is likely that agency-reported cloud spending and savings figures were underreported.” 

The GAO report recommends that the director of the OMB “should require agencies to explicitly report, at least on a quarterly basis, the savings and cost avoidance associated with cloud computing investments.” 

The report notes that OMB capital planning guidance, issued in 2014, requires agencies to evaluate each investment, or components or systems within the investment, for cloud services, regardless of the overall lifecycle stage of the investment.

While the OMB’s guidance is “not specific on how agencies should conduct these evaluations, GAO’s Information Technology Investment Management framework notes that organizations should have documented policies and procedures for the management oversight of IT investments, including the selection of investments and the evaluation of information technologies that have the potential to improve the organization’s business.”