Information Technology Reform: Progress Made but Future Cloud Computing Efforts Should be Better Planned
Published: 2012-07-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As part of a comprehensive effort to increase the operational efficiency of federal technology assets, federal agencies are shifting how they deploy IT services. OMB issued a Cloud First policy in December 2010 that requires federal agencies to implement cloud-based solutions whenever a secure, reliable, and cost-effective cloud option exists; and to migrate three technology services to a cloud solution by June 2012. Cloud computing provides on-demand access to a shared pool of computing resources; can be provisioned on a scalable basis; and reportedly has the potential to deliver services faster, more efficiently, and at a lower cost than custom-developed systems.
GAO was asked to (1) assess the progress selected agencies have made in implementing this policy and (2) identify challenges they are facing in implementing the policy. To do so, GAO (1) selected seven agencies, analyzed agency documentation, and interviewed agency and OMB officials; and (2) identified, assessed, and categorized common challenges.
section_title: What GAO Found
paragraphs: The selected federal agencies have made progress implementing the Office of Management and Budgets (OMB) Cloud First policy. Consistent with this policy, each of the seven agencies incorporated cloud computing requirements into their policies and processes. For example, one agency had incorporated a review of its information technology (IT) investment portfolio to identify candidates for a cloud solution into its IT plan. Further, each of the seven agencies met the OMB deadlines to identify three cloud implementations by February 2011 and to implement at least one service by December 2011. However, two agencies do not plan to meet OMBs deadline to implement three services by June 2012, but plan to do so by calendar year end, ranging from August to December. Each of the seven agencies has also identified opportunities for future cloud implementations, such as moving storage and help desk services to a cloud environment. While each of the seven agencies submitted plans to OMB for implementing the cloud solutions, all but one plan were missing key required elements. For example, 7 of the 20 plans did not include estimated costs and none of the plans for services that were to migrate existing functionality to a cloud-based service included plans for retiring or repurposing the associated legacy systems. According to agency officials, this was largely because the information was not available at the time the plans were developed. Until agencies cloud implementations are sufficiently planned and relevant systems are retired, the benefits of federal efforts to implement cloud solutionsimproved operational efficiencies and reduced costsmay be delayed or not fully realized.
GAO identified seven common challenges associated with the implementation of OMBs Cloud First policy.
Common Challenges to Cloud Computing
1. Meeting Federal Security Requirements
2. Obtaining guidance
3. Acquiring knowledge and expertise
4. Certifying and accrediting vendors
5. Ensuring data portability and interoperability
6. Overcoming cultural barriers
7. Procuring services on a consumption (on-demand) basis
Recently issued federal guidance and initiatives recognize many of these challenges, such as the National Institute of Standards and Technology standards and guidance, and the General Services Administrations program to assist federal agencies certify and accredit potential cloud service providers.
section_title: What GAO Recommends
paragraphs: GAO is making recommendations to seven agencies to develop key planning information, such as estimated costs and legacy IT systems retirement plans for existing and planned services. The agencies generally agreed with GAOs recommendations. State disagreed with one recommendation, noting that legacy retirement plans were not applicable to its existing cloud services. GAO maintains that the recommendation is applicable for reasons discussed in this report.

section_title: Letter
paragraphs: Cloud computing is an emerging form of delivering computing services via  networks with the potential to provide information technology (IT) services  more quickly and at a lower cost. Cloud computing provides users with  on-demand access to a shared and scalable pool of computing resources  with minimal management effort or service provider interaction. It  reportedly has several potential benefits, including faster deployment of  computing resources, a decreased need to buy hardware or to build data  centers, and more robust collaboration capabilities.
In December 2010, the Office of Management and Budget (OMB), in its  25 Point IT Reform Plan, identified cloud computing as having the  potential to play a major part in achieving operational efficiencies in the  federal government’s IT environment, such as improving asset utilization   To help achieve these efficiencies,  and reducing duplicative systems.OMB developed a “Cloud First” policy that requires each agency chief  information officer (CIO) to fully migrate three services to a cloud solution  by June 2012, and implement cloud-based solutions whenever a secure,  reliable, and cost-effective cloud option exists.
In light of the “Cloud First” implementation requirements, you asked us to  (1) assess the progress selected agencies have made in implementing  the federal “Cloud First” policy and (2) identify challenges selected  agencies are facing as they implement the policy.
To address our first objective, we selected seven agencies using a  combination of the size of the agencies’ IT budgets and their prior  experience in using cloud services. We analyzed documentation from  the selected agencies, including plans and progress reports submitted to  OMB, which described the actions agencies have taken to migrate  selected services to a cloud solution. In addition, we interviewed officials  responsible for implementing the cloud solutions to determine how the  services were selected and migrated. We also interviewed officials from  the National Institute of Standards and Technology (NIST) and OMB to  understand cloud computing standards, requirements, and guidance for  federal agencies.
To address our second objective, we interviewed officials from each of  the selected agencies and asked them to describe challenges associated  with their implementation of cloud solutions. We then assessed and  categorized the challenges and totaled the number of times each  challenge was cited by agency officials. In order to identify the common  challenges, we generalized challenges that were mentioned by two or  more agencies. We also compared the challenges to federal guidance determine the extent to which the guidance addresses agency  challenges.
We conducted this performance audit from October 2011 through July  2012 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objective. Further details of our  objectives, scope, and methodology are in appendix I.
OMB, Federal Cloud Computing Strategy (Washington, D.C.: Feb. 8, 2011) and CIO  Council and Chief Acquisition Officers Council, Creating Effective Cloud Computing  Contracts for the Federal Government, Best Practices for Acquiring IT as a Service (Feb  24, 2012).
subsections: section_title: Background
paragraphs: IT can enrich people’s lives and improve organizational performance. For  example, during the last two decades, the Internet has matured from  being a means for academics and scientists to communicate with each  other to being a national resource where citizens can interact with their  government in many ways, including receiving services and supplying  and obtaining information.
While investments in IT have the potential to improve lives and  organizations, some federally funded IT projects can—and have— become risky, costly, unproductive mistakes. As part of a comprehensive  effort to increase the operational efficiency of federal technology assets  and deliver greater value to the American taxpayer, federal agencies are  shifting to the deployment of cloud services.
subsections: section_title: Overview of Cloud Computing
paragraphs: Cloud computing takes advantage of several broad evolutionary trends in  IT, including the use of virtualization. According to NIST, cloud  computing is a means “for enabling convenient, on-demand network  access to a shared pool of configurable computing resources that can be  rapidly provisioned and released with minimal management effort or  service provider interaction.” NIST also states that an application should  possess five essential characteristics to be considered cloud computing:  on-demand self service, broad network access, resource pooling, rapid  elasticity, and measured service.applications are network-based and scalable on demand.
Essentially, cloud computing  According to OMB, cloud computing brings a wide range of benefits:
Economical: cloud computing is a pay-as-you-go approach to IT, in  which a low initial investment is required to begin, and additional  investment is needed only as system use increases.
Flexible: IT departments that anticipate fluctuations in user demand  no longer need to scramble for additional hardware and software.  With cloud computing, they can add or subtract capacity quickly and  easily.
Fast: cloud computing eliminates long procurement and certification  processes, while providing a near-limitless selection of services.
According to NIST, cloud computing offers three service models:  Infrastructure as a service—the service provider delivers and  manages the basic computing infrastructure of servers, software,  storage, and network equipment upon which a platform (i.e., operating  system and programming tools and services) to develop and execute  applications can be developed by the consumer.
Platform as a service—the service provider delivers and manages the  underlying infrastructure (i.e., servers, software, storage, and network  equipment), as well as the platform (i.e., operating system, and  programming tools and services) upon which the consumer can  create applications using programming tools supported by the service  provider or other sources.
Software as a service—the service provider delivers one or more  applications and the computational resources and underlying  infrastructure to run them for use on demand as a turnkey service.
As can be seen in figure 1 below, each service model offers unique  functionality, with consumer control of the environment decreasing from  infrastructure to platform to software.
NIST has also defined four deployment models for providing cloud  services: private, community, public, and hybrid.
In a private cloud, the service is set up specifically for one  organization, although there may be multiple customers within that  organization and the cloud may exist on or off the customer’s  premises.  In a community cloud, the service is set up for organizations with  similar requirements. The cloud may be managed by the  organizations or a third party and may exist on or off the  organization’s premises.
A public cloud is available to the general public and is owned and  operated by the service provider.
A hybrid cloud is a composite of two or more of the above deployment  models (private, community, or public) that are bound together by  standardized or proprietary technology that enables data and  application portability.
According to federal guidance, these deployment models determine the  number of consumers (tenancy), and the nature of other consumers’ data  that may be present in a cloud environment. A public cloud should not  allow a consumer to know or control other consumers of a cloud service  provider’s environment. However, a private cloud can allow for ultimate  control in selecting who has access to a cloud environment. Community  clouds and hybrid clouds allow for a mixed degree of control and  knowledge of other consumers. Additionally, the cost for cloud services  typically increases as control over other consumers and knowledge of  these consumers increase.
section_title: Federal Guidance for Cloud Computing
paragraphs: According to OMB, the federal government needs to shift from building  custom systems to adopting cloud technologies and shared solutions,  which will improve the government’s operational efficiencies and result in  substantial cost savings. To achieve these benefits, OMB required  agencies to immediately shift to a “Cloud First” policy and increase their  use of available cloud and shared services whenever a secure, reliable,  and cost-effective cloud solution exists.
In order to accelerate the adoption of cloud computing solutions across  the government, OMB made cloud computing an integral part of its 25  Point Implementation Plan to Reform Federal Information Technology  Management. The plan specified six major goals: align the acquisition process with the technology cycle, align the budget process with the technology cycle, and apply “light technology” and shared solutions.strengthen program management,  streamline governance and improve accountability,  increase engagement with industry,  To achieve these goals, the plan outlines 25 action items, such as  completing plans to consolidate 800 data centers by 2015 and  developing a governmentwide strategy to hasten the adoption of cloud  computing. To accelerate the shift to cloud computing, OMB required  agencies to identify, plan, and fully migrate three services to a cloud  solution by June 2012.
In February 2011, OMB issued the Federal Cloud Computing Strategy, as  called for in its 25-Point Plan. The strategy provides definitions of cloud  computing; benefits of cloud computing, such as accelerating data center  consolidations; a decision framework for migrating services to a cloud  environment; case studies to support agencies’ migration to cloud  computing; and roles and responsibilities for federal agencies. For  example, the strategy states that NIST’s role is to lead and collaborate  with federal, state, and local government agency CIOs, private sector  experts, and international bodies to identify and prioritize cloud computing  standards and guidance. Further, the strategy notes that an estimated  $20 billion of the federal government’s $80 billion in annual IT spending is  a potential target for migration to cloud computing solutions.
In a December 2011 memo, OMB established the Federal Risk and  Authorization Management Program (FedRAMP), a governmentwide  program to provide joint authorizations and continuous security  monitoring services for all federal agencies. Among other things, the  memo required the General Services Administration’s (GSA) FedRAMP  program management office to publish a concept of operations, which  was completed in February 2012. The concept of operations states that  FedRAMP is to: ensure that cloud-based services have adequate information security; eliminate the duplication of effort and reduce risk management costs; enable rapid and cost-effective procurement of information  systems/service for federal agencies.
Further, the FedRAMP program is to assess and grant cloud service  providers provisional authorization to provide cloud services  governmentwide. Agencies can leverage the provisional authorization to  minimize certification and accreditation processes. FedRAMP reached  initial operational capabilities in June 2012 and is to be fully operational in  fiscal year 2014.
Consistent with OMB’s Cloud Computing Strategy, NIST has issued  several key publications related to standards and security. For example:
NIST Special Publication (SP) 500-291, NIST Cloud Computing  Standards Roadmap identifies current standards, standards gaps, and  standardization priorities. For example, it describes the status of  cloud computing standards for interoperability, portability, and  security.
NIST SP 500-292, NIST Cloud Computing Reference Architecture  presents the NIST Cloud Computing Reference Architecture and  Taxonomy to communicate the components and offerings of cloud  computing. The architecture is presented in two parts: (1) a  complete overview of roles; and (2) the necessary components for  managing and providing cloud services, such as service deployment,  service orchestration, cloud service management, security and  privacy.
NIST SP 800-144, Guidelines on Security and Privacy in Public Cloud  Computing provides an overview of public cloud computing and the  security and privacy considerations involved. Specifically, the document describes the threats, technology risks, and safeguards  surrounding public cloud environments, and their treatment.
NIST SP 800-145, The NIST Definition of Cloud Computing defines  cloud computing in terms of essential characteristics, service models,  and deployment models.
NIST is also working on the Cloud Computing Technology Roadmap (SP  500-293), which is to describe cloud computing security challenges and  high-priority gaps for which new or revised standards, guidance, and  technology need to be developed.plans to publish the roadmap by the end of 2012.
According to NIST officials, NIST  In February 2012, the CIO Council and the Chief Acquisition Officers  Council issued guidance for acquiring IT in a cloud environment. The guidance identifies 10 key areas unique to federal agencies’ procurement  of cloud services that require improved collaboration and alignment  during the contracting process. The 10 areas are:
Selecting a cloud service—choosing the appropriate cloud service  and deployment model.
Cloud service provider and end-user agreements—terms of service,  and service provider and end-user agreements need to be fully  integrated into cloud contacts.
Service-level agreements—agreements need to define performance  with clear terms and definitions, demonstrate how performance is  being measured, and identify what enforcement mechanisms are in  place to ensure the conditions are met.
Roles and responsibilities—cloud service provider, agency, and  integrator roles and responsibilities should be clearly defined.
Standards—NIST’s cloud reference architecture should be used for  cloud procurements.
Security—requirements for the service provider to maintain the  security and integrity of the agency data must be clearly defined.
Privacy—privacy risks and responsibilities need to be addressed in  the contract between federal agencies and service providers.
E-discovery—service providers need to be aware of the need to  locate, preserve, collect, process, review, and produce electronically  stored information in the event of civil litigation or investigation.
Freedom of Information Act (FOIA)—all relevant data must be  available for appropriate handling under the act.
E-records—agencies need to ensure that service providers  understand the federal agencies obligations under the Federal  Records Act.
More recently in May 2012, OMB issued its shared services strategy, as   According to OMB, this strategy is to help  called for in its 25-Point Plan.federal agencies (1) improve return on investment across the agency’s IT  portfolio, (2) close productivity gaps by implementing integrated  governance processes and innovative IT service solutions, and (3)  increase communications with stakeholders to ensure transparency,  accountability, and collaboration in the full life cycle of IT shared services.  To facilitate these improvements, the strategy provides definitions,  concepts, and critical success factors to be considered when  implementing IT shared services; an implementation strategy; and a  federal governance structure to support federal agencies’ shared services  development and implementation efforts.
section_title: Prior GAO Work Has Identified Improvements Needed in Federal Cloud Computing Efforts
paragraphs: In May 2010, we reported on the efforts of multiple agencies to ensure the   We noted that while OMB,  security of governmentwide cloud computing.GSA, and NIST had initiated efforts to ensure secure cloud computing,  significant work remained to be completed. For example, OMB had not  yet finished a cloud computing strategy; GSA had begun a procurement  for expanding cloud computing services, but had not yet developed  specific plans for establishing a shared information security assessment  and authorization process; and NIST had not yet issued cloud-specific  security guidance. We made several recommendations to address these  issues. Specifically, we recommended that OMB establish milestones to  complete a strategy for federal cloud computing and ensure it addressed  information security challenges. These include having a process to  assess vendor compliance with government information security  requirements and the division of information security responsibilities  between the customer and vendor. OMB subsequently published a  strategy in February 2011 that addressed the importance of information  security when using cloud computing, but did not fully address several  key challenges confronting agencies, such as the appropriate use of  attestation standards for control assessments of cloud computing service  providers, and the division of information security-related responsibilities  between customer and provider. We also recommended that GSA  consider security in its procurement for cloud services, including  consideration of a shared assessment and authorization process. GSA  has since developed its FedRAMP program, an assessment and  authorization process for systems shared among federal agencies.  Finally, we recommended that NIST issue guidance specific to cloud  computing security. As noted previously, NIST has since issued multiple  publications that address such guidance.
More recently, in October 2011, we testified that 22 of 24 major federal  agencies reported that they were either concerned or very concerned  about the potential information security risks associated with cloud  computing. These risks include being dependent on the security  practices and assurances of vendors and the sharing of computing  resources. We stated that these risks may vary based on the cloud  deployment model. Private clouds, whereby the service is set up  specifically for one organization, may have a lower threat exposure than  public clouds, whereby the service is available to any paying customer.  Evaluating this risk requires an examination of the specific security  controls in place for the cloud’s implementation.
We also reported that the Federal CIO Council had established a cloud  computing Executive Steering Committee to promote the use of cloud  computing in the federal government, with technical and administrative  support provided by GSA’s cloud computing program management office,  but had not finalized key processes or guidance. The subgroup had  worked with its members to define interagency security requirements for  cloud systems and services and related information security controls.
Additionally, in April 2012, we reported that more needed to be done to  implement OMB’s 25-Point Plan and measure its results. Among other  things, we reported that of the 10 key action items that we reviewed, 3  had been completed and 7 had been partially completed by December  2011. In particular, OMB and agencies’ cloud-related efforts only partially  addressed requirements. Specifically, agencies’ plans were missing key  elements, such as a discussion of needed resources, migration  schedules, or plans for retiring legacy systems. As a result, we  recommended, among other things, that the Secretaries of Homeland  Security, Veterans Affairs, and the Attorney General direct their  respective CIOs to complete elements missing from the agencies’ plans  for migrating services to a cloud computing environment. In comments on  a draft of this report, each of the agencies generally agreed with our  recommendations.
section_title: Agencies Have Made Progress Implementing OMB’s Cloud First Policy, but Better Planning Is Needed for Future Efforts
paragraphs: OMB requires federal agencies to immediately shift to a “Cloud First”  policy by implementing cloud-based solutions whenever a secure,  reliable, and cost-effective cloud option exists. To accelerate the shift,  OMB required agencies, by February 2011, to identify three IT services to  be migrated to a cloud solution and develop a plan for each of the three  services, migrate one of the services to a cloud-based solution by  December 2011, and migrate the remaining services by June 2012.  According to OMB’s 25-Point Plan, migrating these services was intended  to build capabilities and momentum in the federal agencies, and to act as  a catalyst for agencies to migrate additional services to cloud-based  solutions in order to improve the government’s operational efficiency and  to reduce operating costs.
Each of the seven agencies we reviewed has made progress  implementing OMB’s “Cloud First” policy.
Each agency has incorporated cloud computing requirements into its  policies and processes. For example, the Department of State (State)  incorporated into its plan a review of its IT investment portfolio to  identify candidates for cloud solutions. Similarly, the Department of  Agriculture (USDA) identified cloud computing as a high-priority  initiative and adopted the “Cloud First” policy of migrating existing, or  offering new, IT services to a cloud-based environment. The agency is  also developing and deploying an infrastructure to offer cloud-based  services to other government departments and agencies.
Each agency identified at least three services by February 2011 to  implement in a cloud environment and reported that the agency had  implemented at least one cloud service by December 2011.  Agencies selected the services based on a mix of criteria, including  (1) services that had already been implemented in a cloud  environment or were in the process, (2) risk to mission functionality,  and (3) maturity of the cloud solutions. In selecting the services, most  agencies chose existing services, while others developed and  implemented new services. Specifically, of the 21 services selected,  13 were migrations of existing functionality and 8 were new  services. The most commonly identified services were e-mail,  website hosting, and collaboration services.
Further, five agencies reported implementing more than one cloud  service by December 2011, with four agencies reporting to have  implemented cloud-based services prior to December 2010, which  was when OMB issued its 25-Point Plan. In addition, two of the seven  agencies do not plan to meet OMB’s deadline to implement three  cloud solutions by June 2012. Specifically, USDA plans to complete  its Document Management and Correspondence Tracking system in  September 2012 and the Small Business Administration (SBA) plans  to complete one of its services in August 2012 and another in  December 2012. While DHS does not plan to implement four of its  services until after June 2012, officials reported that it implemented  four services by December 2011 and two services by June 2012. See  figure 2 for the cloud-based services by agency and service type; and  reported planned and implementation dates.
While each agency submitted plans to OMB for its selected services, all  but 1 of the 20 plans submitted to OMB were missing one or more key  required elements. In its 25-Point Plan, OMB required agencies to  prepare a plan for implementing each cloud-based service and retiring the  associated legacy system. According to OMB, each plan is to contain,  among other things, estimated costs of the service, major milestones, and  performance goals. However, only 1 plan fully met the key elements as  required. For example, of the 20 plans, 7 did not include estimated costs,  5 did not include major milestones, and 11 did not include performance  goals. Further, none of the 14 projects migrating existing services  included plans to retire the associated legacy systems. See table 1 for our  assessment of key elements of the agencies’ plans.
While agencies did not include all of these elements in the plans provided  to OMB, three agencies later reported that they had estimated costs for  five of the seven services. According to agency officials, information was  missing because it was not available at the time the plans were submitted  to OMB or it was deemed not to be relevant.
While developing milestones for services already implemented would  appear to add little value, it remains important that agencies develop cost  estimates, performance goals, and plans to retire associated legacy  systems. Doing so would enable agencies to measure performance and  determine whether the cloud-based solution is cost effective, and ensure  that savings generated from retiring systems are realized.
Additionally, each of the agencies identified opportunities for future cloud  implementations. For example, GSA officials stated that GSA is  considering migrating its storage and help desk services to the cloud,  while State officials stated that the agency is considering moving its  development environment to a cloud solution. Further, USDA is currently  offering a portfolio of cloud services to other agencies through its National  Information Technology Center, which, according to USDA officials, is  working to provide competitive and scalable services to federal agencies.
As agencies implement these and other cloud-based solutions, identifying  key information—cost estimates, milestones, performance goals, and  legacy system retirement plans—will also be essential in determining  whether their activities constitute a positive return on investment, and  therefore, whether the benefits of their activities will be fully realized.
section_title: Several Challenges Affected Agencies’ Implementation of the Cloud First Policy
paragraphs: In transitioning to cloud-based solutions, officials in the agencies we  reviewed stated that they encountered challenges that may impede their  ability to realize the full benefits of cloud-based solutions:
Meeting federal security requirements: Cloud vendors may not be  familiar with security requirements that are unique to government  agencies, such as continuous monitoring and maintaining an  inventory of systems. For example, State officials described their  ability to monitor their systems in real time, which they said cloud  service providers were unable to match. Treasury officials also  explained that the Federal Information Security Management Act’s  requirement of maintaining a physical inventory is challenging in a  cloud environment because the agency does not have insight into the  provider’s infrastructure and assets.
Obtaining guidance: Existing federal guidance for using cloud services  may be insufficient or incomplete. Agencies cited a number of areas  where additional guidance is needed such as purchasing commodity  IT and assessing Federal Information Security Management Act  security levels.Plan required agencies to move to cloud-based solutions before  guidance on how to implement it was available. As a result, some  HHS operating divisions were reluctant to move to a cloud  environment. In addition, Treasury officials noted confusion over NIST  definitions of the cloud deployment models, but noted that recent  NIST guidance has been more stable.
For example, an HHS official noted that the 25-Point
Acquiring knowledge and expertise: Agencies may not have the  necessary tools or resources, such as expertise among staff, to  implement cloud solutions. DHS officials explained that delivering  cloud services without direct knowledge of the technologies has been  difficult. Similarly, an HHS official stated that teaching their staff an  entirely new set of processes and tools—such as monitoring  performance in a cloud environment—has been a challenge.
Certifying and accrediting vendors: Agencies may not have a  mechanism for certifying that vendors meet standards for security, in  part because the Federal Risk and Authorization Management  Program (FedRAMP) had not yet reached initial operational  capabilities. For example, GSA officials stated that the process to  certify Google to meet government standards for their migration to  cloud-based e-mail was a challenge. They explained that, contrary to  traditional computing solutions, agencies must certify an entire cloud  vendor’s infrastructure. In Google’s case, it took GSA more than a  year to certify more than 200 Google employees and the entire  organization’s infrastructure (including hundreds of thousands of  servers) before GSA could use Google’s service.
Ensuring data portability and interoperability: To preserve their ability  to change vendors in the future, agencies may attempt to avoid  platforms or technologies that “lock” customers into a particular  product. For example, a Treasury official explained that it is  challenging to separate from a vendor, in part due to a lack of visibility  into the vendor’s infrastructure and data.
Overcoming cultural barriers: Agency culture may act as an obstacle  to implementing cloud solutions. For example, a State official  explained that public leaks of sensitive information have put the  agency on a more risk-averse footing, which makes it more reluctant  to migrate to a cloud solution.
Procuring services on a consumption (on-demand) basis: Because of  the on-demand, scalable nature of cloud services, it can be difficult to  define specific quantities and costs. These uncertainties make  contracting and budgeting difficult due to the fluctuating costs  associated with scalable and incremental cloud service procurements.  For example, HHS officials explained that it is difficult to budget for a  service that could consume several months of budget in a few days of  heavy use.
Recently issued federal guidance and initiatives recognize many of these  challenges. For example, OMB’s Federal Cloud Computing Strategy  recognizes the challenge of data portability and interoperability and notes  that agencies should consider the availability of technical standards for  cloud interfaces that reduce the risk of vendor lock-in. Similarly, several  NIST publications—such as their Guidelines on Security and Privacy in  Public Cloud Computing and Cloud Computing Reference Architecture—  address portability, interoperability, and security standards, and NIST  plans to issue additional guidance on cloud computing security, among  other things. In addition, the FedRAMP program is to create processes  for security authorizations and allow agencies to leverage security  authorizations on a governmentwide basis in an effort to streamline the  certification and accreditation processes.
section_title: Conclusions
paragraphs: Selected agencies have made progress implementing OMB’s “Cloud  First” policy. In particular, agencies have incorporated cloud solutions into  their IT and investment management policies and processes, and  implemented one or more services in a cloud environment by December  2011. Two agencies do not plan to meet OMB’s requirement to fully  implement three services to a cloud environment by June 2012, but plan  to do so by year end.
Further, agencies’ plans for implementing these services were often  missing key information, such as performance goals or legacy system  retirement plans. Without complete information, agencies are not in a  position to know whether the implementation of the selected services was  cost-effective and whether the cost savings generated from retiring legacy  systems were realized. Going forward, as agencies implement additional  cloud-based solutions, it is important that, at a minimum, they develop  estimated costs, milestones, performance goals, and plans for retiring  relevant legacy systems. Until agencies’ cloud implementations are  sufficiently planned and relevant systems are retired, the benefits of  federal efforts to implement cloud solutions—improved operational  efficiencies and reduced costs associated with retiring legacy systems— may be delayed or not fully realized.
Additionally, agencies are facing a series of challenges as they implement  cloud solutions. Recent guidance and initiatives may help to mitigate the  impact of these challenges. Further, these initiatives may help agencies  assess their readiness to implement cloud-based solutions and guide  their implementation.
section_title: Recommendations for Executive Action
paragraphs: To help ensure the success of agencies’ implementation of cloud-based  solutions, we are recommending 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 CIOs to take the  following two actions: establish estimated costs, performance goals, and plans to retire  associated legacy systems for each cloud-based service discussed in  this report, as applicable; and develop, at a minimum, estimated costs, milestones, performance  goals, and plans for retiring legacy systems, as applicable, for  planned additional cloud-based services.
section_title: Agency Comments and Our Evaluation
paragraphs: We received comments on a draft of this report from all seven  departments and agencies in our review, as well as from OMB and NIST.  The Departments of Agriculture, Homeland Security, and Treasury, and  the GSA agreed with our recommendations; the Department of State  agreed with our second recommendation and disagreed with our first  recommendation; and HHS and SBA did not agree or disagree with our  recommendations. Each agency’s comments are discussed in more detail  below.
In written comments, USDA’s Acting CIO stated that the department  concurred with the content of the report and had no comments.  USDA’s written comments are provided in appendix III.
In written comments, the Director of DHS’s GAO-OIG Liaison Office  concurred with our recommendations and described ongoing and  planned actions to address them. DHS’s written comments are  provided in appendix IV. The department also provided technical  comments, which we have incorporated in the report as appropriate.
In comments provided via e-mail, Treasury’s Deputy Assistant  Secretary for Information Systems stated that the department agreed  with the report and had no comments.
In written comments, GSA’s Acting Administrator agreed with our  findings and recommendations, and stated that GSA will take action  as appropriate. GSA’s written comments are provided in appendix V.
In written comments, State’s Chief Financial Officer concurred with  our recommendation to develop cost estimates, milestones,  performance goals, and plans for retiring legacy systems for its  planned cloud-based services. The department stated that it has  established an annual requirement for all programs and initiatives to  conduct an alternative analysis for retiring legacy systems and using  cloud-based services, if feasible. The analysis includes the  development of estimated costs, milestones, performance goals, and  legacy system retirement plans. The department disagreed with our  recommendation to establish cost estimates, performance goals, and  plans to retire associated legacy systems for each of the department’s  cloud-based services discussed in this report, noting that these  services did not have associated legacy systems to be retired. In a  clarifying conversation, the Division Chief, Bureau of Information  Resource Management, explained that one of the two migrated  services ran on a virtual machine that hosts many other programs,  and the other service transitioned from internally-managed software to  a cloud-based service, neither of which required the retirement of an  existing system. We acknowledge that a retirement plan may not be  applicable for these two services; however, our recommendation is  not focused solely on the need for legacy retirement plans, but also  identifies the need to establish cost estimates and performance goals  for each cloud-based service discussed in this report. As stated in this  report, State did not establish performance goals for its electronic  library service. Performance goals help to set priorities and drive  progress toward key outcomes, thus enabling agencies to measure  performance and determine whether the acquired cloud-based service  is performing as intended and achieving the desired outcome.  Therefore, we believe that the recommendation is applicable and  relevant to the department. State’s written comments are provided in  appendix VI.
In comments provided via e-mail, HHS’s Office of the Assistant  Secretary for Legislation stated that the department did not have any  general or technical comments on the report.
In comments provided via e-mail, SBA’s Office of Congressional and  Legislative Affairs stated that the agency had no comments on the  draft report and that SBA would work to implement the  recommendations.
OMB and NIST provided technical comments, which we have  incorporated as appropriate.
We are sending copies of this report to interested congressional  committees; the Secretaries of Agriculture, Commerce, Health and  Human Services, Homeland Security, State, and the Treasury; the  Administrators of the General Services Administration and Small  Business Administration; the Director of the Office of Management and  Budget; and other interested parties. In addition, the report will be  available at no charge on GAO’s website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-9286 or pownerd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix VII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) assess the progress selected agencies have  made in implementing the federal “Cloud First” policy and (2) identify  challenges selected agencies are facing as they implement the policy.
To address our first objective, we first categorized agencies by the size of  their information technology (IT) budget: large (more than $3 billion),  medium ($1-3 billion), and small (less than $1 billion), as reported in the  Office of Management and Budget’s (OMB) fiscal year 2011 Exhibit 53.  We then selected agencies from each budget category to include (1) a  mix of services (e.g., e-mail, collaboration, and website hosting) that  agencies had proposed moving to the cloud and (2) agencies that were  cited by OMB as having successfully implemented a cloud solution.  Seven agencies were selected: the Departments of Agriculture (USDA),  Health and Human Services (HHS), Homeland Security (DHS), State, and  the Treasury; and the General Services Administration (GSA) and the  Small Business Administration (SBA). We analyzed documentation from  the selected agencies, including project plans and progress reports,  which described the actions agencies have taken to migrate services to a  cloud solution. We also compared agencies’ migration plans to OMB’s  associated guidance to determine any variances. We interviewed officials  responsible for implementing the cloud solutions to determine how the  services were selected and migrated. Finally, we interviewed officials  from the National Institute of Standards and Technology (NIST) and OMB  to understand cloud computing standards, requirements, and guidance  for federal agencies.
To address our second objective, we interviewed officials from each of  the selected agencies and asked them to describe challenges associated  with their implementation of cloud solutions. Because of the open-ended  nature of our discussions with agency officials, we conducted a content  analysis of the information we received in order to identify and categorize  common challenges. To do so, two team analysts independently reviewed  and drafted a series of challenge statements based upon each agency’s  records. They then worked together to resolve any discrepancies,  choosing to report on challenges that were identified by two or more  agencies. These common challenges were presented in the report.  Finally, we compared the challenges to OMB’s Federal Cloud Computing  Strategy and the Chief Information Officers Council’s and Chief  Acquisition Officers Council’s cloud computing guidance to determine the  extent to which they were addressed.
We conducted this performance audit from October 2011 through July  2012 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Descriptions of Selected Services
paragraphs: This appendix provides information on the services the selected federal  agencies chose to migrate to cloud solutions. Specifically, this appendix  includes a brief description of the three cloud services, as well as the  service model, deployment model, and Federal Information Security  Management Act of 2002 (FISMA) security level.
Data Center Services: DHS is implementing a private cloud within two of  its data centers to enhance sharing sensitive information across the  department. The private cloud encompasses multiple services (DHS  committed to OMB to move eight data center services to a cloud  environment) to improve collaboration and information sharing within the  department.
Employment Verification: This is a free service that workers can use to  confirm employment eligibility in the United States. This service is to  provide a mechanism by which DHS can validate identity, and control  secure access to employment information.
Website Hosting: This service is intended to host DHS public-facing  websites and offer an enterprise content delivery capability with 100  percent availability and provide a web content management capability to  manage the content across all of the public-facing websites that reside  within the public cloud offering.
Correspondence Tracking: This service is to allow the Federal  Acquisition Service to track communication with Congress from when  correspondence is received to the final processing of a response.
GSA’s E-mail and Collaboration Solution: This cloud solution is to  replace GSA’s legacy e-mail system, and is to provide faster upgrades  and improved customer service to approximately 17,000 users. In  addition, this service is a critical component of GSA’s mobile technology  strategy.
IT Power Management Services: This new functionality manages the  power settings for more than 17,000 GSA workstations and the Office of  the Chief Information Officer’s infrastructure servers. GSA estimates that  it will reduce the carbon footprint by over 4.8 million carbon pounds a year  by turning off computers every evening.
Medwatch+: This service is to provide a web portal for reporting public  safety information, as well as information by drug and biological product.  This effort is comprised of three private cloud services: Safety Reporting,  Device Adverse Reporting, and Drugs and Biologics Adverse Reporting.  The first two services are already in cloud environments and the third is  being migrated.
Grants Solutions: This suite of services is available to federal agencies  and grantee/applicant organizations. These services cover 14 grant  award processes for federal agencies and grantee/applicant  organizations through GrantSolutions.gov.
Audit Resolution Tracking Management System: This “proof-of- concept” was designed to replace the Administration for Children and  Families’ legacy Audit Resolution system. This service linked audit  reports with the appropriate grantees and was expected to reduce hosting  costs.
Collaboration Services (Management and Technical Assistance Line  of Business): This service is intended to encourage small business  owners and small business lenders to take advantage of SBA programs,  services, and loan options.
Human Resources (Performance Management): This new service is to  provide tools for training and performance management while reducing  annual infrastructure costs.
LAN/WAN, Offsite Vaulting: This is to provide online backup and  recovery capabilities; and electronic vaulting for records retention.
Electronic Library: This is to provide domestic and overseas agency  staff with direct access to information in over 50 databases. The cloud  solution is to add additional functionality including online, self-service  resource check-in, check-out, and other library requests; regionalized and  issue-driven electronic information portals; and an integrated electronic  catalog with other online libraries.
Program Management: This service is to provide program managers of  the Nonproliferation and Disarmament Fund access to agency data from  any location.
Website Hosting: This is to provide access to keyword-searchable and  downloadable government documents, unclassified publications, and  databases regarding the history of State, diplomacy, and foreign relations.
Business Process Management: This is to automate the Bureau of  Engraving and Printing’s processes for manufacturing, financial  management, acquisition, and supply chains.
Document Management and Freedom of Information Act Case  Management: This service is to provide the agency capabilities such as  electronic capture, store, search/analyze, share, and document  management.
Website Hosting: This service is to provide a flexible, scalable  architecture for the department’s main website and four additional  websites.
Collaboration Services (USDA Connect): This service is to increase  interagency interaction, productivity, and efficiency by providing tools  such as Profiles, Wikis, Blogs, Communities, Activities, Files, and  Bookmarks for over 107,000 USDA users.
Document Management and Correspondence Tracking: This is to  eliminate redundancy and increased efficiency by consolidating over 20  systems to a single cloud-based customer relationship management  environment to organize customer information and track correspondence  throughout the agency.
E-mail: This is to provide e-mail service for over 120,000 inboxes and  enhanced agencywide collaboration through e-mail, instant messaging,  web conferencing, and a global address list.
section_title: Appendix III: Comments from the Department of Agriculture
section_title: Appendix IV: Comments from the Department of Homeland Security
section_title: Appendix V: Comments from the General Services Administration
section_title: Appendix VI: Comments from the Department of State
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, the following staff also made  key contributions to the report: Deborah Davis (assistant director),  Shannin O’Neill (assistant director), Nancy Glover, Sandra Kerr, Emily  Longcore, Andrew Stavisky, and Kevin Walsh.