Operational Funds Could Play Bigger Role in Network Modernization

By Valerie Insinna

The Defense Department is making progress in modernizing its network infrastructure, but most information technology funding still goes toward maintaining current systems.

One reason may be that IT managers are unaware of when they can use operating funding to acquire new technologies, said Anthony Robbins, vice president of federal business at Brocade, which sells networking hardware and software. Operating expenses fund goods or services that are completely consumed within a year, an example of which could be a yearlong software subscription. 

“The acquisition models are changing as it relates to IT, and that includes the network, the data center, hardware, software and the like,” he said. “The government has in its capability a way to use discretionary or operating expense funds differently than they have in the past, instead of just relying on capital expense funds.”

Brocade conducted a survey of 204 government employees in the areas of IT and finance. It asked personnel such as financial managers, specialists and analysts how IT workers could spend operating funds. IT managers were then asked similar questions.

The company found that there was a knowledge gap between the two communities. IT managers sometimes falsely believed that they could not spend operating funds on modernization, even though financial personnel affirmed such expenditures would be allowed, he said. 

“It’s almost as if there were these stovepipes in the financial part … and the technical piece of building systems,” Robbins said.

When asked whether they considered acquiring technologies with operating funds instead of capital funds, 21 percent of IT managers did not know the option was possible, the survey said. Meanwhile, 70 percent of financial professionals said that using operating funding for IT would benefit government agencies.

Financial professionals recommended that IT managers spend operating funds on modernizing network and data center infrastructure, the survey said.

Operating funding could support Defense Department plans to consolidate its data centers from about 1,500 to 250 in the next eight years. The government has far more data centers than it needs, Robbins said. “We’re still not closing data centers across the federal government, including the Department of Defense, as fast as we could or should.”

Commercial entities are already using operating expense funds to finance new computing and network technologies because such money is more flexible, he said. These funds are “more readily available, they can surge, they can pull back.”

Topics: Business Trends, Defense Department, DOD Budget, DOD Policy, Infotech, Procurement, Science and Engineering Technology

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