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May 7, 2012
TIGTA - 2012-16
David Barnes
David.barnes@tigta.treas.gov
TIGTACommunications@tigta.treas.gov
(202) 622-3062

The IRS Has Improved Its Virtual Server Technology, But Further Actions Are Necessary to Reduce the Number of Servers and Increase Cost Savings to Taxpayers

WASHINGTON - The Internal Revenue Service (IRS) could save at least $7.73 million over the next five years by taking further action to virtualize all of its servers.

This is the finding of a recent audit report issued by the Treasury Inspector General for Tax Administration (TIGTA). TIGTA conducted an audit to evaluate the effectiveness and efficiency of the IRS's efforts to consolidate and virtualize its physical servers. Server virtualization is a technology that allows a number of virtual servers - which are not physical machines - to run on one physical host. This type of technology enables improved hardware utilization, savings on electricity, and reduced server replacement costs.

TIGTA determined that the IRS successfully implemented server virtualization technology to improve server efficiency and realize cost savings to taxpayers. The IRS's Server Consolidation and Virtualization Project focused on establishing a virtual server infrastructure and moving approximately 2,500 physical servers at 13 data center locations to the virtual environment. As of the end of Fiscal Year 2011, the IRS had approximately 1,800 virtual servers operating on 234 physical host servers in the virtual environment, resulting in a decrease in equipment and electrical costs.

However, the IRS does not have a plan for virtualizing its remaining servers at field offices outside of the 13 data center locations. The IRS estimates that there are approximately 650 servers in its field locations that can be decommissioned and added to the virtual server environment.

"By virtualizing these remaining servers, the IRS could realize additional savings of approximately $7.73 million," said J. Russell George, Treasury Inspector General for Tax administration. "Aside from the cost savings to taxpayers, these actions could help the IRS meet Federal Data Center Consolidation Initiative goals," he added.

TIGTA recommended that the Chief Technology Officer (1) develop and implement a process to identify servers currently located in field offices that could be virtualized, and (2) create and implement a plan to virtualize those servers. IRS management agreed with both recommendations and plans to take corrective actions.