Deltek Sees Continued Growth in Federal Cloud and Big Data Spending

Published: November 02, 2016

Big DataCloud ComputingForecasts and SpendingInformation Technology

Fiscal, policy, and technology pressures converge to push the adoption of cloud computing and big data solutions by federal agencies.

Federal agency spending on cloud computing and big data solutions continues to rise, but growth is not at the same pace across the defense and civilian sectors of the market. 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. Deltek anticipates, therefore, that the market will see considerable growth in agency cloud investment over the next several years.

Agency spending on big data solutions is also gathering speed after having been slowed by budget cuts related to sequestration. Deltek believes that improving administrative oversight, maturing digital strategies, modernization pressure, demands for better cybersecurity, and slowly growing experience with big data solutions will translate into accelerated spending through the end of this decade.

In Deltek’s new Federal Priorities: Cloud, Big Data, Mobility, and Data Centers, 2016-2021 report, the Federal Market Analysis team identified the following trends shaping agency investment in cloud and big data technology:

  • Modernization Initiatives – From policy developments like the Office of Management and Budget’s revised Circular A-130 guidance to pending legislation like the Modernizing Government Technology (MGT) Act of 2016, agencies are under growing administrative pressure to adopt cloud computing as a way of increasing their technological agility, closing data centers, and reducing costs.
  • FedRAMP 2.0 Speeds Solution Approvals – Once considered a chokepoint in the agency adoption of cloud, the new FedRAMP 2.0 program has reduced the time it takes to receive certification from months to weeks. The speedier program promises to accelerate agency use of cloud as a secure, reliable industry-provided solution.
  • Cloud Improves Cybersecurity Posture – Ironically, given commonly-voiced concerns about the security of the cloud, agency spending and contract awards on cloud-based cybersecurity solutions rose each year from fiscal 2013 to 2015.
  • Chief Data Officers/Digital Strategy – Fourteen major federal departments and agencies now have chief data officers, a development that is slowly enabling them to organize the use and management of data to their advantage. Evolving digital strategies are also putting agency data on a standardized machine-readable footing, which is laying the foundation for the enterprise use of big data tools and approaches.
  • Research and Development – Agency spending on R&D related to big data and/or high performance computing continues to command billions of dollars in annual funding. This trend is particularly pronounced at agencies with a scientific mission and at the Department of Defense.

Given these drivers, Deltek forecasts federal demand for vendor-furnished cloud computing services will grow from $3.1B in FY 2016 to $6.35B in FY 2021 at a Compound Annual Growth Rate (CAGR) of 15%. 

Deltek forecasts federal demand for vendor-provided core big data solutions will increase from $1.95B in FY 2016 to $3.55B in FY 2021 at a Compound Annual Growth Rate (CAGR) of 13%.

Key Findings

Deltek developed several key insights when analyzing agency trends in cloud and big data investment:

  • Cloud spending rose from FY 2014 to 2015, but slowed compared to the previous year. Civilian agencies continued to outspend the Department of Defense.
  • Although both civilian agencies and the DoD still favor private cloud deployments over all others, spending on community cloud solutions saw solid growth.
  • Contract awards for cloud-based cyber solutions continues to rise, suggesting agencies view cloud-based solutions as viable alternatives for enhancing their cyber security posture.
  • Cloud engineering services remained in high demand across the entire market, with DoD and civilian agency spending totals being roughly equal from FY 2013 to FY 2015.
  • Spending on big data-related services continues to make up the highest percentage of agency spending overall.
  • Agency spending on high performance computing rose considerably, reflecting a focus driven in part by the White House’s National Strategic Computing Initiative.

For much more of our perspective on the federal cloud and big data markets, as well as on trends in mobility and data center investment, see Deltek’s new report Federal Priorities: Cloud, Big Data, Mobility, and Data Centers, 2016-2021.