To help agencies achieve these  benefits, OMB required agencies to immediately shift to a “Cloud First”  policy and increase their use of available cloud-based and shared  services whenever a secure, reliable, and cost-effective cloud service  exists. Specifically, the seven agencies had implemented 21 cloud computing  services and spent a total of $307 million for cloud computing in fiscal  year 2012, about 1 percent of their total IT budgets. Agencies Have Made Progress in Implementing Cloud Computing Services, but Progress Is Uneven

OMB’s Cloud First policy requires federal agencies to implement cloud  computing services whenever a secure, reliable, and cost-effective cloud  option exists. Since then, the agencies have added more cloud computing services. Table 1 lists the number of  cloud computing services implemented by each agency in 2012 and  2014. These agencies also increased the amount they budgeted and reported  spending on cloud computing services. Specifically, the seven agencies,  collectively, reported their spending increased by $222 million, from $307  million to $529 million. Officials from OMB and the agencies attributed the agencies’ varying  degrees of progress in part, to the following: in implementing its Cloud  First policy, OMB has granted the agencies discretion in determining  whether and which services are to be migrated. In addition, the agencies’ relatively low percentage of budget allocated to  cloud spending is due in large part to the fact that the agencies have not  assessed a majority of their investments, although OMB’s guidance calls  for agencies to assess all their IT services for migration to the cloud  irrespective of where each investment is in its life cycle. Specifically, as  shown in table 4, the agencies collectively had not assessed about 67  percent of their 2000 investments. A key reason cited by the agency officials for why most of their  investments had not been evaluated for cloud services was that they  were largely legacy investments in operations and maintenance; the  agencies had only planned to consider cloud options when the  investments were to be modernized or replaced at the end of their life  cycle. Until the agencies assess their IT investments that have yet to be  evaluated for suitability for migration to the cloud, they will not know which  services are likely candidates for migration to cloud computing services,  and therefore will not gain the operational efficiencies and cost savings  associated with using such services. Agencies Reported Cost Savings from Implementation of Cloud Computing Services

Agencies reported that they had cost savings from implementing 22 out  of 101 cloud computing services through fiscal year 2013. Specifically,  they collectively saved about $96 million by implementing these 22  services. These savings included both one-time savings and life-cycle savings. For  example, GSA had a one-time cost savings of $2.6 million by migrating to  a cloud customer service solution, which was a less expensive alternative  than upgrading its existing system. First, a motivation for  changing to some of the cloud-based services was not to reduce  spending, but to improve service. Second, in selected cases, the cloud  computing service opened up a new service or provided a higher quality  of service; while this provided useful benefits to the agency, the  associated costs negated any savings. Recommendation for Executive Action

To help ensure continued progress in the implementation of cloud  computing services, we recommend that the Secretaries of Agriculture,  Health and Human Services, Homeland Security, State, and the  Treasury; and the Administrators of the General Services Administration  and Small Business Administration direct their respective Chief  Information Officers to take the following actions:
Ensure that all IT investments are assessed for suitability for migration  to a cloud computing service. It also is to provide increased  availability and other performance  benefits as well as a scalable on-demand  network.
Why GAO Did This Study

Cloud computing is a relatively new process for acquiring and delivering computing services via information technology (IT) networks. Specifically, it is a means for enabling on-demand access to shared and scalable pools of computing resources with the goal of minimizing management effort and service provider interaction. To encourage federal agencies to pursue the potential efficiencies associated with cloud computing, the Office of Management and Budget (OMB) issued a “Cloud First” policy in 2011 that required agency Chief Information Officers to implement a cloud-based service whenever there was a secure, reliable, and cost-effective option.
GAO was asked to assess agencies' progress in implementing cloud services. GAO's objectives included assessing selected agencies' progress in using such services and determining the extent to which the agencies have experienced cost savings. GAO selected for review the seven agencies that it reported on in 2012 in order to compare their progress since then in implementing cloud services; the agencies were selected using the size of their IT budgets and experience in using cloud services. GAO also analyzed agency cost savings and related documentation and interviewed agency and OMB officials.

What GAO Found

Each of the seven agencies reviewed implemented additional cloud computing services since GAO last reported on their progress in 2012. For example, since then, the total number of cloud computing services implemented by the agencies increased by 80 services, from 21 to 101. The agencies also added to the amount they reported spending on cloud services by $222 million, from $307 million to $529 million. Further, the agencies increased the percentage of their information technology (IT) budgets allocated to cloud services; however, as shown in the table, the overall increase was just 1 percent.
The agencies' relatively small increase in cloud spending as a percent of their overall IT budgets, is attributed in part, to the fact that these agencies collectively had not considered cloud computing services for about 67 percent of their investments. With regard to why these investments had not been assessed, the agencies said it was in large part due to these being legacy investments in operations and maintenance; the agencies had only planned to consider cloud options for these investments when they were to be modernized or replaced. This is inconsistent with Office of Management and Budget policy that calls for cloud solutions to be considered first whenever a secure, reliable, and cost-effective option exists regardless of where the investment is in its life cycle. Until the agencies fully assess all their IT investments, they will not be able to achieve the resulting benefits of operational efficiencies and cost savings.
The agencies collectively reported cost savings of about $96 million from the implementation of 22 of the 101 cloud services. These savings included both one-time and multiyear savings. For example, the General Services Administration saved $2.6 million by migrating to a cloud customer service solution, and Homeland Security saved $1.2 million from fiscal years 2011 through 2013 by implementing a cloud-based collaboration service. Agency officials cited two major reasons for why the other services they had implemented did not save money. First, a motivation for changing to some of the cloud-based services was not to reduce spending, but to improve service. Second, in selected cases, the cloud computing service opened up a new service or provided a higher quality of service; while this provided useful benefits to the agency, the associated costs negated any savings.

What GAO Recommends

GAO is recommending, among other things, that the seven agencies assess the IT investments identified in this report that have yet to be evaluated for suitability for cloud computing services. Of the seven agencies, six agreed with GAO's recommendations, and one had no comments.