For the fourth straight year, federal IT spending was about even with the prior year’s budget – and it seems very clear that trend will come to an abrupt halt in 2013. The Professional Services Council (PSC) stated the “Addressable IT Budgets” in Fiscal Year 2012 added up to $121.7 billion – a total the Council estimates will drop to $115.5 in FY13, with budgets for IT equipment expected to drop 19% in FY13.

With the so-called “fiscal cliff” looming, the new year began promptly with a deal that largely addressed the tax portion of the so-called “fiscal cliff” equation, but delayed measures addressing the spending portion of the “cliff” that include raising the debt ceiling and sequestration spending cuts.

As most in government know by now, these sequestration cuts call for mandatory, across the board cuts to the tune of $1.2 trillion over eight years, with federal IT budgets facing a cut of around 5% just in the next year, according to PSC.

Though these cuts would have a significant effect on IT budgets, federal IT workers will largely still be expected to carry their original plans centered on a four-pronged strategy: maximizing ROI of federal IT; closing a productivity gap and overhauling government into the 21st century; interaction and national priorities; and cybersecurity.

In spite of the looming budget uncertainty, 2013 will be a year where the drivers are the Digital Government Strategy and cloud computing. The Digital Government Strategy is designed to have agencies focus on being more information-centric and less document-centric in managing their data and content. The White House Chief Information Officer (CIO), Steven VanRoekel, has charged this strategy with enabling the American people to access high-quality digital government information and services anywhere, anytime, on any device.

The White House CIO’s office wants to achieve this by using common digital delivery platforms across agencies to reduce costs, streamline development, standardize practices, and ensure consistency. These measures will allow for a more customer-centric environment where end-users can shape and consume information they need.

Maximizing ROI is actually the easiest part. The government is doing what many private sector firms have done, and that is consolidate systems and centers. When it came to data center inefficiency, to this point, the federal government was excelling at it.

The number of federal data centers grew from 432 in 1998 to more than 1,100 in 2009 (and more as it later turned out), and power consumption in 2006 was 6 billion kWh of electricity. In 2010, the government concluded that without a major shift, that power bill would exceed 12 billion kWh by 2011.

The Federal Data Center Consolidation Initiative memorandum of 2011 set a schedule to help meet a goal of consolidating at least 800 data centers by 2015, although a target number for how many data centers there should be in the end has not been set.

The savings, though, are staggering on paper. The Department of Treasury plans to have 50% of its servers virtualized by 2015.The DOD will save up to $300 million in FY 2013 from the closure of 100 data centers while the EPA has saved $10 million since FY 2011 by consolidating IT procurements and standardizing help desks.

By embracing more powerful and flexible IT environments and platforms, federal IT professionals are, in essence, beginning to press the proverbial “reset button” on their IT environments and infrastructures.

In the past, federal IT professionals have been forced to build on top of their existing environments which often stunted the effectiveness and efficiency of any technology upgrades. That no longer has to be the case, as more modern IT environments can enable agencies to bypass the current roadblocks they have in their infrastructure and unlock the potential of their IT.

A method of hitting the “reset button” has quickly gained momentum in the federal space — specifically cloud computing. Agencies are working to implement policies and contracting procedures to enhance its ability to move services such as email, data storage, and customer analytics to the cloud. The Office of Management and Budget (OMB) is requiring agencies to itemize their cloud computing initiatives in fiscal 2014 budget plans.

In December 2010, the OMB identified cloud computing as having the potential to play a major part in achieving operational efficiencies in the federal government’s IT environment. It recommended the “Cloud First” project, in which each department was asked to assess its progress and challenges in implementing the “Cloud First” policy.

The OMB made cloud computing an integral part of its “25 Point Implementation Plan to Reform Federal Information Technology Management.” The plan outlines 25 action items, including plans to consolidate 800 data centers by 2015. The OMB required agencies to identify, plan, and fully migrate their services to a cloud solution by June 2012.

The OMB’s guidelines included 10 key areas of focus for cloud service procurement. These included choosing the appropriate cloud service and deployment model, the terms of service and quality of service level agreements from the providers, roles and responsibilities as defined between the government and provider, standards, privacy, e-discovery and e-records and Freedom of Information Act compliance.

Thus far, some agencies have gotten off to quick starts. Moving to cloud-based email is the first step many agencies are taking. The Agriculture Department and General Services Administration both have moved to cloud email systems and expect to save $27 million and $15 million, respectively, during the next five years.

Meanwhile, the Department of Veterans Affairs announced in November that it will move all of its 600,000 employees to a cloud-based email, messaging and calendar system during the next five years. The EPA will move about 25,000 employees to a cloud-based email service by early 2013.

All methods of saving money, however, are not created equal. Through the Low Price Technically Acceptable procurement acquisition protocol, the vast majority of bidders pass the “technically acceptable” criteria, leaving agencies the ability to judge bids only by the top-line price. Though the sticker price may be lower, it stunts the ability of agencies to seek the best and most long-term cost effective options, taking innovative and cutting -edge solutions off the table in some cases – especially when they are seeking to implement IT solutions new to many agencies like cloud.

The federal IT budget calls for a continuation of moving from legacy systems to the cloud, but many government IT professionals aren’t turning the lights out on their old systems just yet.

Thus far, government officials have moved 120 services to the cloud and have retired 50 legacy systems, but strangely, the Government Accountability Office says no plans to retire old systems have been discussed. The GAO also noted that many agencies’ plans for implementing these services were often missing key information, such as performance goals or legacy system retirement plans.

“Without complete information, agencies are not in a position to know whether the implementation of the selected services was cost-effective and whether the cost savings generated from retiring legacy systems were realized,” the GAO said.

It could be the government is keeping these old systems in standby mode, in case there is a failure, problem with migration or incompatibility somewhere along the line. Cloud computing itself is still in something of a state of evolution, and government data is done on enormous scale so the migration will likely continue to be a deliberate process.

However, as more agencies discover the potential of these new platforms to improve current operations and bypass weighed-down legacy infrastructure, the pace may very well increase – and there are few times that force organizations to make re-think how they do business more than when they are being asked to do more with less.

Kevin Jones is vice president of Dell Services.