THE IC PAYS HOW MUCH FOR IT?!
I am late with this November edition because of some ongoing changes in my professional life that are of no great importance to any of you, but could impact the Social Security Administration.
October was certainly an event-filled month starting with Italian Physicist Andrea Rossi’s claim to have achieved “cold fusion” with his energy catalyzer technology that could end reliance on fossil fuel. DIA and NRO celebrated their 50th Anniversaries. Muammar Gaddafi was captured and killed by rebels ending his 41 year episodic rule of Libya, as Europe meandered to resolve the Greek Debt Crisis that seems to be threatening to toss the global economy into recession or at least my IRA into the dumpster. There was also the report that Air Force Drones operating in Afghanistan had a ”non-menacing” virus infection with little expressed concern about how the virus was introduced and why it could not be easily removed. David Patraeus, new Director of CIA, inadvertently unleashed a debate about CIA independence when he announced Langley would begin considering military views earlier in its analytic process, but the republic seems to have weathered this controversy - - - at least for now.
The Congressional “Super Committee” ultimately acknowledged defeat on identifying $1.2 Trillion in cost reductions required to avoid automatic sequestration of funds back to FY07 spending levels that Secretary of Defense Panetta argues will dramatically lower DoD ‘s capabilities to the point of putting the nation’s security at risk. The Intelligence Community (IC) for its part completed its Office of Management and Budget (OMB) homework assignment for how the IC will make its contribution over the next five years towards reducing the deficit as Director of National Intelligence (DNI) Jim Clapper provided some budgetary straight talk in his GEOINT Keynote in San Antonio on Oct 17th (http://www.dni.gov/speeches/20111017_geoint.pdf).
There were two related budget “headlines” for me in the DNI’s GEOINT remarks, one of which I was ready for based on some buzz around the IC, but the other was a total surprise to me. The DNI reporting that the IC budget would decline in double digit percentages over the next ten years really should not have surprised any IC watcher and even the stretch goal of reducing IC Information Technology (IT) spending by 50% in five years was something I knew was in at least one agency’s “what if” calculations. What I had never heard before and was not expecting was the DNI’s assertion that the IT spending consumes 20% to 25% of the total IC budget. That means the IC is spending over $16 billion a year on IT! Even understanding that the IC is probably counting communications and networking infrastructure costs in its IT spending line that the private sector does not, when IT spending breaches 10% of a corporate budget the CIO and others will be directed to get IT costs under control quickly. Given the programmatic way the IC buys IT, I believe we all understand that it leads to buying the same capability multiple times without economy of scale pricing as well replicating IT infrastructure and personnel. This makes a 20% to 25% percent cost figure for IC IT both understandable and the natural target for saving money.
To cut IT costs by 50% in five years, the IC should be (and I believe is) looking at the following known solutions for reducing costs:
- Data Center Consolidation
- Server consolidation and virtualization
- Enterprise Software Licensing
- Deploying an IC “Apps Store”
- Turning to “engineered solutions” where hardware and software are bundled together for optimal performance, ease of use, and reduced costs
- Migration to an IC private Cloud architecture
I suspect though that more than a few of you are asking, given the history of Moore’s Law, what is so challenging about cutting IC IT expenses by 50% in five years? If the IC does nothing that should happen anyway - - - - but not if you keep doing what the IC has been doing! To get noticeable saving from IT investments the IC will have to do what the private sector has been doing for years: trade in people for technology.
This means cutting green- and blue-badged IT personnel, with the latter group falling within the DNI’s other goal to cut IC costs, but protecting people to the maximum extent possible in order to avoid the experience holes caused by the Peace Dividend cuts of the early 1990’s. An answer to this conundrum is for the IC to seriously consider outsourcing the bulk of its IT functions. As an information centric enterprise, the IC certainly needs IT, but that does not make IT either an IC mission or core competency. Starting with the U-2 in the 1960s, the IC has been outsourcing to industry the building of its most important and highly classified sensors which most see as part of the IC mission. As the information age has developed, IT has become both a commodity and a utility. That sounds a lot like telephone or electrical services to me, neither of which have ever been insourced by the IC .
However it is done, the DNI is correct that moving IT to an IC enterprise model is critical so those double digit budget cuts don’t endanger essential mission capabilities and IT is better able to insure the information sharing fundamental to IC mission success.
That’s what I think; what do you think?
View and post comments here