Hybrid Cloud Environments

Those tracking the federal cloud market in fiscal 2017 have probably noticed a big increase in the number of articles, events, and agency leader comments concerning so-called “Hybrid IT.” The term is basically an abbreviated way of saying “hybrid cloud environment,” referring to the use of virtualized on-premise agency capabilities and off-premise commercial cloud capabilities combined to create a “hybrid” environment. The evolution of hybrid cloud environments appears to be an organic one driven by the push-you/pull-me tension of “Cloud First” and data center consolidation policy pressure vs. agency risk aversion. When asking themselves which cloud services are the ones that their agency can leverage easily with the least risk, IT leaders have typically chosen relatively innocuous commercial services like email, SharePoint, and mobile device management while workloads related to mission critical capabilities remain in-house. The result is a growing number of hybrid cloud environments.

Contrary to this trend, there is some anecdotal evidence that federal customers are looking to dial back the volume of business they shift to commercial cloud providers. For example, a 2017 industry survey of 150 defense, civilian, and intelligence IT decision makers showed that a majority anticipate moving more workloads from public clouds to their private clouds in the next 2 years.

What does Deltek’s cloud data say about this trend? It shows that survey results notwithstanding, the use of public/community cloud services is growing while agency reliance on on-premise private cloud services is declining. Moreover, this trend holds true across both the Civilian and Defense market sectors.

Civilian Agencies

The chart above shows the number of verified cloud efforts that Civilian agencies contracted between fiscal year 2014 and fiscal year 2016. As we can see, the number of public/community efforts nearly tripled over three years while the number of private cloud efforts declined.

Defense Department

The data for DOD shows roughly the same trend although with significantly fewer efforts contracted.

Contractor Implications

Is a reversal of the illustrated trend in the offing? Hard to say. The data shows that agencies are moving more work toward public/community clouds. What’s more, the pressure to use commercial cloud capabilities is building. Congress wants agencies to use whatever service costs the least and they are working on passing the Modernizing Government Technology (MGT) Act, which will finally provide agencies with a flexible funding mechanism for purchasing cloud services as a utility. If MGT cannot be passed directly, it could be added as a rider to the FY 2018 National Defense Authorization Act, in which case it would likely pass with ease. Steps like these, as well as the rapid growth of FedRAMP-certified solutions, would appear to support further growth in agency use of commercial cloud services rather than a return to the early days of agencies standing up private, on-premise clouds, even though some mission-critical capabilities will always remain on-premise.