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Federal Agency Predicts 40% Savings From Move to Cloud

Carolyn Duffy Marsan | March 11, 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.

"We expect to save about 40% for operations and maintenance across the life of the contract," Smith says. The software-as-a-service model "had some competitive advantages ... GCE put together a darn good bid."

Ray Bjorklund, senior vice president with market research firm FedSources Inc., says the EEOC has budgeted a decline in IT services spending that he attributes in part to anticipated savings from cloud computing. "Considering that EEOC's headcount and workload continues to increase annually, I read into this change that EEOC was throttling back its spending," Bjorklund says. "Perhaps some of that throttling could be attributed to stopping the legacy [financial management] program, regrouping, and jumping on the cloud."

The EEOC says it isn't worried about the cultural changes involved with cloud computing because it already used an outside vendor to host its financial management application.

"We had 10 years of handing off financial management to an approved shared service provider. For the most part, other than cost, we were happy with the functionality and the service level," Smith says.

The EEOC is considering moving other applications including electronic fax and Web conferencing to cloud computing, says Kimberly Hancher, CIO of the EEOC. "These are applications where we feel that more cost-effective services are easily found in the cloud," she adds.

The EEOC was able to turn around its bid for the new financial management service relatively quickly, issuing a Request for Information in January 2010 and awarding 12 months later. Smith says the EEOC would have made the award three months sooner if the OMB hadn't put a temporary hold on all financial management systems awards last summer.

The EEOC will be transitioned to the GCE platform by October, when the new federal fiscal year begins. One of the challenges for the contractor is training 100 agency users on the Oracle Financials software, as they were previously using a rival platform called Momentum. All of the agency's data needs to be migrated to the new software, too.

Smith says the cloud-computing deal will be a success if it passes muster with an outside auditor at the end of fiscal 2012. "That's the Housekeeping Seal of Approval for us," Smith says.

David Lucas, chief strategy officer for GCE, says the company's ability to quickly migrate the EEOC to its cloud-based computing platform is one reason it won the award.

"We were able to show them a plan for how quickly we can move them from one service provider to another," Lucas says. "We will have them live by Oct. 1. We can do that by having a system that's already built. Our accounting system is already constructed as software-as-a-service. That reduces the risk in moving from one provider to another, and it gives agencies a whole lot of comfort."


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