FRAMINGHAM 11 MARCH 2011 - The Equal Employment Opportunity Commission (EEOC) expects to save 40% over the next five years by switching its financial management application to a cloud computing vendor -- a sign of the massive savings to come from the U.S. federal government's shift to the software-as-a-service model.
The EEOC ran a competitive bid and chose Global Computer Enterprises (GCE) of Reston, Va., to provide Oracle's (ORCL) Financials Release 12 software in a cloud-based delivery model. The five-year contract has an estimated value of $10 million.
The EEOC is the second federal agency to migrate its financial management system to GCE's cloud-computing service. The Department of Labor -- and all 12 of its subagencies and offices -- made the switch to GCE last year.
"We're not ones to break new ground," says Jeff Smith, CFO of the EEOC, which enforces anti-discrimination laws in American workplaces. "It was important to us that the Department of Labor had already done this with GCE from a past-performance point of view. We had some comfort that they had done this successfully in the required time frame at Labor."
The Office of Management and Budget is pushing federal agencies to adopt cloud-computing services as a way of reducing cost and time-to-market for enterprise IT systems. In February, U.S. CIO Vivek Kundra released the federal cloud computing strategy, which advocates a cloud-first approach and estimates that the U.S. federal government could shift $20 billion of its annual $80 billion in IT expenditures to cloud computing vendors.
The EEOC deal is significant because it involves an agency choosing a cloud computing model for a mission-critical application such as financial management. Other agencies including the General Services Administration have chosen cloud-computing vendors for applications such as e-mail and Web-based collaboration.
Under the terms of the EEOC contract, GCE will provide all the necessary hardware, software and networking for hosting Oracle Financials for the EEOC. It also will provide related helpdesk, tech support, security, reporting, accounting and transaction-processing services.
Prior to awarding the contract to GCE, the EEOC since 2002 had used a government data center called the National Business Center that is run by the Department of the Interior to host its financial management systems. This arrangement was supposed to save the EEOC money, but the government data center's charges were escalating.
"We were seeing 25% increases in costs year-over-year, which was pretty much unsustainable," Smith says. He added that the EEOC's agreement with the National Business Center would expire in 2012, and "we had to do something to replace that contract."
The EEOC held a full and open competition, allowing government entities like the National Business Center to bid as well as private companies including GCE. The agency required fixed-price bids. Bidders weren't required to offer a cloud computing solution, but the EEOC found that those were the most cost-effective bids that it received.
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