The Department of the Navy’s chief information officer said Navy and Marine Corps IT managers should expect to see “ruthless” internal cost cutting this year in preparation for significant budget cuts.
“We don’t know how much that is yet, but it’s going to be a big number,” Terry Halvorsen said at the DON CIO’s May 12 conference in Virginia Beach, Va. “There’s no way it can’t be a big number.”
Halvorsen’s office posted an audio recording of the session on its website this week.
To achieve the cost reductions, he said, he’s gotten the word from as high as the Secretary of the Navy that if the department is going to take risks with its IT systems, they shouldn’t be the ones that directly provide warfighting capability. Instead, he said, the Navy and Marine Corps need to accept risk in their business systems as they look for ways to do things better and cheaper.
“And I fully understand sometimes it’s difficult to separate business IT from the rest of IT and from warfighting IT,” he said. “But I think we’re going to have to make some attempts to do that. We’re going to take risk. The one thing I don’t want to do is to take risk when we don’t have to in any area that affects, call it the tip of the spear, the edge of the battle, the thing that we are in business to do. It is to kill the enemies of the country. That is the business of this corporation if you wanted to put it in business terms.”
He said the DON will take a ruthless approach to finding savings in the short term rather than relying on promises of future cost reductions.
“We spend X amount of dollars today. We are going to spend X minus amount of dollars next year,” Halvorsen said. “Savings are what we take away. Does that mean we won’t look at cost avoidance plans? No, we’ll certainly do that. But when we do that, DON’s going to be very ruthless in saying, ‘OK, we gave you two dollars. You said if we gave you two dollars, in the next year, you would save us four. Not cost avoid, not maybe. You said you’d save us four. We’re taking the four.’ We are going to be ruthless, because if we don’t do it, I guarantee it’s going to be done for us.”
The first job is getting a handle on how much the Navy and Marines actually spend on IT, something he said his office has been working closely on with the department’s financial managers. But Halvorsen’s office has identified cost centers that are prime candidates for efficiency gains. They are the usual suspects in government IT: underutilized data centers, expensive, customized software, exploding bandwidth demands, inefficient software licensing practices and huge numbers of duplicative applications on the department’s networks.
“We run at least seven—and maybe nine depending how you define them—records management and tasking systems,” Halvorsen said. “We are going to one. It makes no sense. I get that they may be meeting somebody’s requirement. The question is, is the requirement for maybe a small number of people worth the additional money that we’re paying across the board? Not just in the cost of buying that new system, but the cost of sustaining it, operating it and securing it. I’m going to tell you the answer on that one is no. Records management is important, but if I miss something on records management, do you think anything happens to a Marine in the field? I don’t either.”
Halvorsen said the Navy and Marine Corps will set specific targets for removing applications from their inventory. As of now, they estimate there are close to 2,000 on the department’s three main networks.
“We are going to not just put some controls on applications,” he said. “We are going to put a money target that says X percent or X dollars worth of applications come of the system in fiscal year 2012. We’re going to call it application rationalization, and it will be maybe one of the more unpopular things that’s going to happen, but it’s going to happen.”
The prime targets will be applications or systems that overlap with one another.
“We run multiple systems that basically do the same thing because someone said they can’t change their process,” he said. “Well, we’re going to do the math. And if the math says this 100,000 people are costing us an additional 25 percent against the 1.2 million people we serve, that system is gone. It’s a math drill, and we take the money. You are going to see a lot of that this year.”
The department already has started to tackle its software licensing costs through an enterprise software licensing program run by the Marine Corps. They’ve already set up a contract vehicle for Microsoft products, and others are coming soon. Halvorsen said those vehicles will be the only authorized method to buy a given license.
“There will be no waivers to that,” he said. “One of the things we’re going to have to do as part of our efficiencies is enforce that, and not allow the waivers we’ve allowed in the past. People with good intentions have gone around that in the past, but we end up, when you pull the string, paying more than we should have.”
The department began heading in the direction of data center consolidation early this year when it imposed a moratorium on the construction of any new data centers. DON currently has between 140 and 170, depending on what counts as a data center. The department has closed five this year, and plans to have fewer than 100 by 2013.
Janice Haith, who serves as the CIO for the Navy portion of the DON, said for now, the consolidation effort only includes centers in two environments: the Navy Marine Corps Intranet (NMCI), and the Space and Naval Warfare Systems Command (SPAWAR).
“That is purposeful,” she said. “We have excess capacity and we need to use it. We’re going to continue to go down the path of consolidation, and the savings are not just people. There’s an energy savings we’re trying to calculate, because that’s another of the areas that the secretary is concerned about.”
Through all the cost saving efforts though, Halvorsen said the bottom line is that the DON needs to save money now, not just in the future. He said that’s something he wants members of industry to keep in mind when they approach the department with ideas that could lead to efficiencies.
“When you say you’re going to save us money, understand what you saying,” he said. “You said I’m going to spend less money today. If you say ‘you could spend less money if you give me more money,’ OK, we’ll listen to that, but let me be very clear. The people who will get more response are the people who say, ‘hey, I have a way today that you could spend less money and still retain your service.’ This is about spending less money.”
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