Kevin Shaker

Is State about to become the next big cloud service provider?

It seems that the goal for some government agencies is to not only be a consumer of IT solutions but also provide those technologies to others as well. That’s certainly true of the State Department, which has made clear its objective to become a larger cloud services provider via its Foreign Affairs Network or FAN. State plans to increase its services through the FAN network by 15 percent by the end of fiscal 2018.

Developed by the department's Bureau of Information Resource Management, FAN is a portfolio of secure, cloud-based services that enable a more mobile, productive and collaborative workforce. According to State, FAN allows the foreign affairs community to have access to modern cloud services that have standardized security and management frameworks and streamlined procurement options.

But State is not the only agency with the goal of increasing its presence as a service provider. The Agriculture Department is planning to offer services across all federal agencies – whether as a platform-as-a-service provider or as a financial services and systems provider. USDA asked for $3 billion for IT in fiscal 2018, out of an overall discretionary budget of $18 billion.

Money for new State projects

By comparison to USDA, the State IT budget has remained mostly the same over the past three years, with slight reductions from year to year, generally in the neighborhood of $50 million. The fiscal 2018 request is roughly the same level as the fiscal 2017 enacted level. The development modernization and enhancement (DME) budget is actually about $13 million less than fiscal 2016.

DME is “new IT money,” or funding to be used to buy new products, develop new applications and implement new capabilities. Despite this reduction, State still requested a total of $366 million for DME funding –around 20 percent of its total IT budget, which is actually above the civilian average of 10 percent to15 percent. State designates a large 57 percent of its IT spend as infrastructure, primarily for back-end technologies needed for enterprise IT functions such as servers and network security. State needs that level of infrastructure and networking spending to support its vast IT facility holdings around the world.

That level of demand creates a constant budget pressure to reduce energy consumption – and to reduce the agency’s dependence on physical infrastructure, in favor of more cloud-based technology.

Cost savings, mobility and the FAN connection

Last June, State awarded a contract to create a platform for applications that monitor, analyze and visualize State facility sensor data, to cut down on energy use. Essentially a trial, the contract now is worth $25 million over three years, and only covers a portion of State buildings. Down the road, however, it will open up other Statae facilities to using the internet of things as a means of controlling costs.

On other cost-savings fronts, State is adhering to the government’s Data Center Optimization Initiative, with a goal to cut back on physical data centers – especially the ones in the U.S. to the main point of consolidation, the Enterprise Server Operations Center West or ESOC West data center.

The department also has the goal of increasing mobility access to its employees in two different ways.

First, it wants to increase the number of mobile devices by 30 percent so that employees can access critical apps while working in the field or at home. Second, to support this rollout, the agency will need to purchase more mobile network technologies and mobile application development tools to ensure employees have the access to the right databases and systems.

It’s through these and other efforts that State plans to use FAN to become a more prominent service provider to external customers. Ironically, FAN is already being used by organizations like the USDA (which has its own ambitions to provide more services to agencies). The USDA Foreign Agricultural Service needs global IT network connectivity and relies on FAN for that connectivity.

There’s a nice symmetry to what may be happening in IT services across the federal government. On the one hand, you have USDA building out its capabilities in analytics and financial services to meet the needs of other agencies here at home. On the other hand, you have State beefing up its networking infrastructure to improve mobility and network connectivity for agencies with needs abroad.

In each case, you have an agency playing to its strengths and betting it can turn a traditionally high-dollar part of its overall budget into services for others, rather than just an expense.

About the Author

Kevin Shaker is a market intelligence analyst with immixGroup (an Arrow company), which helps technology companies do business with the government. He can be reached at or on LinkedIn at

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