Specific, government-wide projected cost savings for 2026 are difficult to quantify precisely, as official reporting focuses on individual agency targets and progress. However, government data center optimization initiatives aim to yield substantial savings through reduced operational costs, energy efficiency, and minimized real estate footprint.
Past efforts under the Federal Information Technology Acquisition Reform Act (FITARA) and the Data Center Optimization Initiative (DCOI) have already generated significant cumulative savings:
Agency-specific results: As of August 2023, the Department of Health and Human Services (HHS) alone had achieved over $340 million in cost savings and avoidance since the DCOI's inception.
General benefits: Consolidating IT systems can lead to over $100 million in cost savings for individual agencies. The savings stem from avoiding large capital outlays (CapEx), reducing power consumption, and lowering maintenance costs for unused physical infrastructure.
While many agencies have met their initial targets, some reports indicate that achieving significant further large-scale closures and associated savings from existing optimization efforts might be challenging, with a current focus on continuous improvement rather than massive one-off savings. Ongoing savings in 2026 will likely come from sustained operational efficiency and strategic migration to cloud-based services as per the "Cloud Smart" strategy.
In essence, expected cost savings in 2026 are not tied to a singular completion date but are an ongoing benefit of the federal government's continuous effort to modernize and optimize its IT infrastructure, with an emphasis on energy efficiency and smart technology adoption to manage the rising demand for compute power.
There are no specific figures for the cost savings expected from global government data center completions in 2026. However, past and ongoing consolidation initiatives, such as the US Data Center Optimization Initiative (DCOI), have demonstrated that savings can be achieved through a variety of measures, including:
Reducing
the number of physical data centers.
Optimizing
energy efficiency.
Increasing
use of technologies like virtualization and cloud services.
Cost savings from government data center initiatives
While no universal figures for 2026 are available, insights from different countries show how government agencies aim to achieve cost savings:
United
States: From 2020 through September 2022, 24 US federal agencies closed 96 data
centers, saving approximately $875.10 million.
Reports also indicate that consolidating IT systems can lead to over $100 million in cost savings.
Australia: The Australian government's 2030 Data and Digital Government Strategy focuses on digital transformation and improved service delivery, which includes data center improvements. While specific cost savings for 2026 are not detailed, Australian IT spending on data center systems is projected to increase to AUD $10.1 billion by 2026, driven by growth in artificial intelligence (AI) infrastructure.
United Kingdom: The UK government's AI action plan, launched in January 2025, has triggered significant private investment in data centers. These initiatives aim to position the UK as an AI leader and support infrastructure growth, with market data showing annual data center spending reaching £10 billion a year by late 2025.
Key strategies for achieving savings
Governments leverage several strategies to realize cost benefits from data center modernization and consolidation:
Virtualization and Cloud: Agencies like the US Department of Health and Human Services (HHS) are using cloud-based technologies to modernize data centers and close legacy facilities.
Efficiency: Measures like Data Center Infrastructure Management (DCIM) tools and better operational practices can monitor and reduce power usage, increasing energy and power efficiency.
Reduced Overlap: By consolidating many smaller facilities into fewer, larger ones, agencies can reduce redundancy in hardware, software, and operational expenses, including cooling and real estate.
Modernization: Upgrading to modern data center architectures can lower long-term operational expenses by reducing maintenance costs and improving resource utilization.
Automation: Automating tasks can boost operational efficiency and free up IT staff for more strategic projects.
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