Labor moves financial system online to tighten key operations

The Labor Department has moved its financial system to a cloud-based application, according to the project's contractor, Global Computer Enterprises.

GCE's seven-year contract with Labor, worth $50 million, ties together the department's legacy travel, grants and procurement systems, and its financial application into one Web-accessible platform. The system, however, technically does not meet the government's definition of on-demand cloud computing, observers said. Cloud computing implies flexibility and elasticity of services, which is reflected in a payment-per-use setup. Nonetheless, Labor's new framework offers other benefits, such as a fast, easy, cost-efficient and secure rollout, they added.

Officials at GCE, a small business that offers financial management services, said pay-per-use access to a financial management system would be difficult because agencies need long-term help with maintenance, security and change management.

"The underpinning of the administration's model is: 'I don't want federal agencies to be in the hosting business and the licensing business; I want them to be in the business of meeting their mission,' " GCE Chief Strategy Officer David Lucas said.

The White House has been prodding agencies to shift their in-house hardware and software to a shared, on-demand online environment, known as the cloud, to save money and increase efficiency. President Obama has acknowledged that upfront costs for moving to the cloud might be high, but the return on investment could be better by renting rather than owning the technology. Labor officials declined to compare the cost of accessing the new setup to the cost of running its old financial system. Officials also would not say whether the consolidation would affect federal jobs.

Labor's move online marks the department's first financial management overhaul in more than 20 years, according to GCE. And Labor is likely the first Cabinet-level department to launch an agencywide financial system without buying hardware or software.

The financial system, which GCE says it can configure rapidly for any agency, complies with federal information security requirements under the 2002 Federal Information Security Management Act. Andrea Di Maio, a Gartner Research vice president who focuses on e-government strategies, said FISMA compliance is typically one of the stumbling blocks that agencies encounter in migrating toward the cloud.

Lucas said the vendor deployed the application in 18 months. The pre-built system is based on Oracle Financials Release 12." When you're not starting from scratch, really the game changes for a federal agency," he added.

Linking the financial system with Labor's existing business systems "highlighted the kind of coordination between the CIO and the CFO and the procurement, the grants and the travel community, that is forward-looking," Lucas said. "Those camps don't always play nice together."

James Staten, a Forrester Research analyst, said GCE is "calling this cloud computing because it is fashionable to do so," but real cloud computing requires standard governmentwide infrastructures and operating procedures, automating as much as possible, delivering services on a pay-per-use basis and enabling customers to set up and modify their own services via a Web site.

Apps.gov, a governmentwide storefront for ordering cloud computing services, is positioned as that "self-provisioning engine" in the administration, he said. GCE is strongly considering making its financial system available at Apps.gov, Lucas said.

Every major federal department is attempting to consolidate and share data centers, as Labor is doing. That is a step forward, Staten said. "What's missing is a common strategy among them all," he added. "So until we stop hearing about these one-off announcements and start hearing about a coordinated effort, it is hard for us to believe the government will make real substantive progress [in] cloud computing."

Di Maio said, "The reality is that there is a continuum of sourcing options" for shared, Web-based services -- from in-house, customized applications to public cloud services, which third-party providers make available to the general public or a large enterprise.

"Whereas the [Office of Management and Budget] and [General Services Administration] are pushing for the end of this spectrum -- the cloud computing end -- agencies will find value in different points of that continuum," he said. "This deal is one example."