Trends in Federal Cloud Procurement – Deployment Model Use

FedScoop and IBM recently released a study of the federal cloud market that provides insight into the relationship between shifting agency IT modernization priorities and cloud adoption. Based on a survey of “169 prequalified federal government agency and IT decision makers,” the study revealed some interesting things about agency investment that align nicely with data Deltek has been collecting for its upcoming Federal Cloud Market Outlook report. This is particularly the case when it comes to cloud deployment models being used.

The FedScoop/IBM report noted that “agencies are backing away from … on-site, government-run data centers … toward a combination of exclusive, government-only community clouds, hybrid models, and commercial clouds.”

Deltek found something similar to this, although the data shows a trend far more advanced across Civilian agencies than it is at the Department of Defense. The chart below shows that from FY 2015 to FY 2017 Civilian agency investment in community/public clouds grew significantly compared to investment in private clouds. Hybrid clouds remain the least invested in, but strong contract award totals (TCV = Total Awarded Contract Value) suggest an increase in spending to come.

The trend toward community/public clouds is less pronounced at DOD. This said, for the first time in the 6 years since Deltek began collecting cloud market data, Defense spending on community/public cloud finally caught up to spending on private cloud. Deltek expects this trend to continue, with spending on private cloud eventually falling below spending on community/public cloud. Like the Civilian sector, DOD’s TCV also showed strengthening investment in hybrid cloud that should translate into rising spending down the line.

 

Unfortunately, determining the distribution of on-premise vs. off-premise cloud investment is impossible given a lack of granularity in the data. It is similarly difficult to disentangle community vs. public cloud investment which is why Deltek lumps them together. The difference is not particularly important in any case because the largest community cloud providers (AWS and Microsoft) are also two of the largest public cloud providers. The point to remember is that community/public cloud providers are generally, but not always, commercial partners. Given these trends, Deltek expects to see the transition to community/public deployment models become more sharply pronounced over the next several years. This will provide greater opportunity for contractors offering SaaS-based capabilities hosted in commodity environments, but it could also see more IaaS/PaaS dollars going to the big commodity providers than is currently the case.