Issue 3, April 2009
FOCUS GOVERNMENT
WOULD IT BE MORE INSTRUCTIVE TO LOOK AT THE AMERICAN REVOLUTION?
Barack Obama’s fi scal stimulus package has experts competing furiously to get funds for their infrastructure programmes. IDC’s Industry Insights has examined the implications of the U.S. economic stimulus plan, the American Recovery and Reinvestment Act (ARRA), and quantifi ed the technology spending that may be stimulated from initiatives to be deployed in the three vertical markets of energy, government and healthcare.
The company estimates that approximately $101.2 billion in technology spend will be generated over the next fi ve years. The estimate includes both information technology (IT) spend – traditionally the focus of IDC’s market research – as well as non-IT technology in these sectors, such as smart meters, in-home display devices, energy management systems, and renewable energy technologies surrounding wind and solar power.
“While the ARRA does not provide detailed information about the exact amount of technology spending that will be allocated, the Industry Insights companies performed an extensive review of the legislation and held discussions with industry technology buyers, to estimate the amount of technology spending that is likely to be generated.
IDC anticipates that the more than $40 billion investment the ARRA targets for the energy industry will stimulate approximately $77.6 billion in technology spending. The energy initiatives that will experience the most growth will be related to intelligent grid, renewable energy, and energy efficiency.
The healthcare industry is expected to see $21.1 billion in technology spending, with the largest portion concentrated on promoting deployment and usage of electronic medical and electronic health records, including incentive payments to physicians who implement and use these tools. Additional funds will be steered to technology solutions that measure the comparative effectiveness of programs and clinical intelligence solutions.
Within the government sector, the ARRA will provide approximately $2.5 billion in technology funding to Federal agencies for new and existing programs, including allocations for the Social Security Administration, the Department of State, and the Department of Homeland Security. Industry Insights’ research identifies 12 different government technology opportunities that are anticipated to be supported by the new legislation.
In addition to spending for improving the infrastructures necessary to support the management of the ARRA funds, the Government also plays a second role in the ARRA scenario – that of the gatekeeper of funds. Industry Insights provides guidance on how technology suppliers can best engage with the Government and plan the best business strategies to pursue new revenues from this signifi cant opportunity. One key strategy will be the ability to demonstrate results that are achieved in line with the ARRA’s promise of economic recovery.
The Information Technology and Innovation Foundation says $30bn dollars should be spent on creating a Smart Grid, which would cut emissions by 5% – the equivalent of taking 53 million cars off the road. However, IT analyst Mark Raskino, a Gartner Group research fellow, warns that no public sector data center project would get funding unless it is ‘shovel-ready’.
Not that this is an unexpected development. The Energy Independence and Security Act (EISA), signed into law in 2007 to reduce energy usage, had already obligated government agencies to seek new methods to improve energy effi ciency.
Meanwhile, federal government IT organisations are feverishly putting their consolidation schemes in place. Virtualisation technologies are gaining wider understanding among non-technical IT purchasers as the benefits of consolidation and continuity could cut costs by up to 60%. Even cloud computing is becoming less nebulous and making less sense to a wider audience.
The objectives are clear enough: less downtime, lower costs, simplifi ed processes and broadened protection. The vehicle for change – going from good old server-centric number to nebulous virtual computing – is less easy to pin down.
But progress is being made. Last October, Defense Information Systems Agency’s (DISA) Rapid Access Computing Environment (RACE) infrastructure went live. RACE is a shared services cloud that gives DISA customers on-demand, self-service access to developmental testing resources. RACE is available only within DISA, but customers still get the public cloud experience of a web portal, 24-hour-a-day availability, a service catalogue and a credit card payment option.
Most data center managers will be curious to see how they incorporate virtualisation technologies without ditching the legacy systems that are still widely used. It’s widely hoped that the spiralling cost of data center infrastructures can be slowed by using agencies for cloud computing services.
Before they can do that, federal agency IT organisations need to change the way they fi nance and manage data centers and components (servers, storage and networks). Before they tackled server sprawl at the Environmental Protection Agency (EPA), for example, the bulk of the work was reportedly the rescheduling of funds from capital expenditure to operational expenditure. Though they have slashed data center consumption, a matching decimation of the IT budget is not desirable.
Mike Murphy a partner at consultancy fi
ndadatacenter.com, said that in Washington, the fi scal stimulus package may mean a whole new level of engagement and criteria for accreditation for accessing government contracts.
“If we are looking at $70bn in broadband initiatives – and for school and other public services – where the network is will dictate where the data center is. With the amount of spending that is being contemplated now, it will be interesting to see how they manage the engagement process. It could drive a brand new market.”
www.datacenterdynamics.com
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