Donald Fleming understands data center consolidation. When he was corporate director for information systems and services at AlliedSignal, a $13 billion New Jersey-based conglomerate, he directed a major consolidation project that reduced the company's 10 data centers to one. Now he's been asked to use his skills again.

In July 2003, he was appointed CIO of Oregon by Gov. Ted Kulongoski, and was promptly told to get cracking on shrinking the number of state data centers -- and to do it fast. The governor, facing taxpayer revolt, has had to cut, squeeze and thin the state's budget, and high on the list of possible cost savings are the state's 32 data centers. If the state can reduce the number down to a manageable two, according to the governor, it could save between $20 million and $40 million every two years.

If accomplished, the cost reduction will go a long way toward restoring faith in the state government's ability to reduce spending, according to The Oregonian, the state's largest daily newspaper. But cost savings are just part of the story. Data center consolidation can also add value when done properly. It could spur standardization, deliver services more consistently, open access to technology, improve personnel management and leverage technology investments, according to New York state's Office for Technology.

But there are a number of hurdles -- any one of which could derail the best-laid plans -- ranging from lack of funding, to ineffective governance structures and concerned unions. The key to success, experts say, can be found only at the top. "CIO leadership is crucial," said Rick Webb, national director of Accenture's CIO Agenda and former North Carolina CIO. "He or she must bring executive and legislative leadership together along with the agency stakeholders."


Rebuilding the Data Center
Leadership is important for a number of reasons, according to Webb. CIOs must decide what to consolidate, how to consolidate and then must successfully manage the people and processes involved with the consolidation. "CIOs need special communications skills to do that," Webb explained. "Remember, edicts don't always work. It's more important that CIOs use a collaborative approach."

While consolidation can be programmatic or service-oriented -- involving financial systems or e-government, for example -- many CIOs are focusing on data centers and the vast proliferation of servers that has spread in the public sector over the last decade.

"Historically new applications have been the key to the growth in the hardware environment within government," said Craig Harper, vice president of federal operations at BMC Software. "There's a lot of hardware that's been installed to run the many applications that have grown up in government, and much of it is underutilized and expensive to maintain." BMC produces software tools that allow CIOs to model their enterprise and optimize their methodologies for using server farms and data centers. The goal is to maximize performance and help consolidate where it makes sense.

Deciding what to consolidate is a matter of alignment, according to California CIO J. Clark Kelso. "We're simply trying to do a better job of aligning our IT infrastructure so we can manage it more effectively." That means making the centers more customer-oriented in terms of serving the state's departments and agencies.

Though it sounds simple, it is a tough task faced by many CIOs. California is looking at consolidating its two largest data centers, which could save the state $4 million to $6 million annually, according to the state Legislative Analyst's Office.

Webb advocates taking incremental steps, with quick victories in mind, to persuade skeptics that consolidation will work. "The big bang approach to consolidation doesn't always work," he said. "You need both a sprint and a journey to make it happen."

With only two data centers under consideration, California doesn't have much of a choice in