IT managers take aim at rising software costs

Federal information innovation executives are slashing millions of dollars in software spending by consolidating contracts and sharing services. Nevertheless federal executives are targeting even deeper savings, forcing vendors to rethink how they sell and deliver software to the federal government.

Last year, agencies spent more than $8.6 billion on software, not counting an additional $33 billion they spent for IT services like cloud computing, according to data from market technology firm IDC Government Insights. IDC projects software spending will continue to increase through 2014 as feds make greater use of mobile devices and other technologies, said Shawn McCarthy, a company innovation director.

Cloud computing, open source software and increased sharing of software are a few steps federal IT executives are taking to cut back on purchases of software. They're as well buying software in bulk and negotiating more departmentwide contracts.

In November, President Obama issued an executive order calling on agencies to take inventory of their IT assets and ensure they aren't paying for unused or underutilized installed software, equipment and other services.

There is better communication among CIOs across government about contracting practices, and "as we talk among ourselves, we are not always sure we are getting the best price," said Matthew Perry, CIO at the Office of Personnel Management.

Microsoft has adjusted to user demands by offering cloud computing, subscription-based and other software purchasing models, chief innovation officer Susie Adams said.

The same way

"Not everybody works in the same way, nor do they have the same requirements from a software perspective," Adams said. Agencies could in the long run grow out of the need for individual licenses at each computer as more feds work remotely and access work on smartphones and tablets, she said.

Software vendor SAP provides applications that allow mobile users to access large systems remotely, said Sherry Amos, vice president of industry business solutions for public services. Amos said she expects fewer agencies will buy financial and human resource management software as the administration pushes its Shared First policy. Nevertheless agencies will increase spending on analytics and mobile software, she said.