United States government agencies will continue to invest hefty sums in cloud computing technology over the next five years. After that period, spending on cloud is likely to moderate, but the amount of investing will remain at impressive levels.
Cloud computing is far from mature within the federal government, but it has reached a point at which it is a mainstream component of government IT resources -- a development recently recognized in several forums.
"Policy imperatives from the White House, legislative pressure from Congress, and mounting needs for innovation, agility and cost reduction have motivated agencies to expand their use of cloud solutions," said Alex Rossino, senior principal analyst at Deltek, in a federal information technology update last month.
There has been significant progress in federal cloud adoption, noted immixGroup, at its Government IT Sales Summit last month.
One theme of the conference was the way cloud technology is "shaping the future of the public sector technology industry," said Chris Wiedemann, a market analyst at immixGroup.
"Although it feels like we've been talking about it for decades, the fact of the matter is that public sector cloud adoption faced numerous obstacles due to the unique constraints of the market," Wiedemann noted.
Government agencies finally have arrived at a place of "real, concrete adoption," he added.
The U.S. Department of Defense accounts for nearly half of federal spending on the cloud, and one factor spurring the department's investment was creation of the Defense Information Systems Agency's milCloud program, a centralized cloud capability offered to all defense agencies.
DISA will continue to advance cloud resources through milCloud, according to Lloyd McCoy, DoD manager for the immixGroup.
However, "defense agencies are not limited just to milCloud. They are venturing into the commercial market for cloud resources, and that is opening up opportunities," he told the E-Commerce Times.
"Across the federal space, use of the cloud has become increasingly more widespread," said Cameron Chehreh, chief technology officer at Dell EMC Federal.
Although there is still cloud adoption progress to be made, federal IT managers largely recognize the value of the technology and are seeking opportunities to implement cloud and improve efficiency at their agencies," he told the E-Commerce Times.
There is wide interest in cloud computing among federal agencies, based on the results of a survey of 100 federal IT managers, which Dell EMC Federal released last month. Given a list of eight possible priorities for future spending, 68 percent of survey respondents chose cloud services, 64 percent chose data storage, and 50 percent selected virtualization.
Regarding the importance of future technology trends, 91 percent selected cloud computing, while 90 percent chose mobility, and 87 percent chose virtualization.
For vendors of comprehensive cloud services, as well as for providers of the hardware and software building blocks agencies may use to configure their own cloud platforms, the future of the federal market seems bright. Vendors no longer have to convince government buyers of the value of the technology, and instead can focus on more productive and conventional marketing strategies addressing specific capabilities, cost advantages, and customer relationships.
The survey findings are underscored by actual and projected spending on cloud technology. Federal cloud investments reached US$3.10 billion in fiscal 2016, with spending in 2017 set at $3.85 billion, Deltek reported last month. In the near term, spending will jump by $1 billion in 2018 to $4.80 billion. That will be followed by another big jump, to $5.80 billion in 2019. The pace will moderate, with spending reaching $6.20 billion in 2020 and $6.35 billion in 2021.
"Our forecast is based on the expectation that cloud spending will pick up speed through 2020 and then level off," Deltek's Rossino told the E-Commerce Times.
"Growth in what will by then be a mature market will assume a much slower compound annual growth rate after 2020. We doubt we'll see a rapid march upward after 2020 similar to what we'll see in the years immediately to come," he said.
Other important factors related to federal cloud investments are illuminated in the Dell survey, which was conducted by PSB. For example, 52 percent of respondents acknowledged they had not yet invested in cloud but intended to make their initial cloud commitment over the next year. Thus, vendors still have a lot of opportunity at the federal level.
The specific type of cloud configuration is almost as important to federal buyers as embracing the technology in a general way, both the Dell EMC and Deltek research suggests, as there is no one-size-fits-all platform when it comes to cloud investments.
Federal investing in public cloud technology was the leading platform for fiscal years 2015, 2016 and 2017, with a cumulative expenditure of $3.21 billion including actual, projected and requested spending, according to the Deltek report, released this fall.
On that basis, private cloud investing by federal agencies amounted to $3.14 billion, while community cloud spending came to $651 million, and hybrid platforms amounted to $305 million over the three-year period.
The selection of the type of cloud will be important in future acquisitions.
"The kind of cloud deployment an agency chooses will matter to different members of the vendor community in different ways," said Deltek's Rossino.
"For example, if an agency chooses a private cloud deployment, it could mean that they are building their own private cloud, and not that they are intending to use the services of a vendor's private cloud," he said.
"In the former case, it would benefit hardware and software vendors rather than cloud service providers, because the agency would be buying the assets it needs to stand up the private cloud on its own premises," Rossino explained.
"Another example when it matters is public cloud," he continued. "Say an agency desires only to use a public cloud solution. This would mean that only vendors who have a public cloud offering or who offer public cloud services through a partner could compete. If a vendor had neither type of offering, then they would be unable to participate in the contract competition," he said.
Hybrid platforms may be preferable to other options, Dell's Chehreh noted, even though investments to date have been far less for hybrid technology, based on the Deltek analysis.
"Any move to the cloud will require a mindset shift in thinking that will ultimately create a more future-ready mindset for agencies across the board," said Chehreh.
"However, what's important in choosing a public, hybrid or private cloud model is that federal agencies select the right cloud environment for their mission and security needs," he noted.
"In general, federal agencies will find the most benefit in selecting a hybrid cloud environment that allows them the flexibility and control necessary to eliminate risk," Chehreh suggested. "For organizations that deal primarily with highly sensitive information, a private cloud environment may be the best option. All clouds can create value, but the hybrid models provide the opportunity to tailor the delivery to meet unique mission and security requirements."