Federal Procurement of and Spending on Cloud-Based Analytics

Published: October 09, 2019

Information Technology

Agencies spent more and awarded more contracts for cloud-based analytics in FY 2018.

Technology convergence has been accelerating in recent years as commercial providers develop new capabilities delivered to customers via cloud platforms and infrastructures. The consumption of commercial technology by U.S. federal agencies tends to lag behind the open market, but even so the convergence trend is operative there as well. One of the areas where it is most pronounced is in the federal procurement of and spending on cloud-based analytics solutions. As the chart below illustrates, both spending and the value of awarded contracts both saw an upswing in fiscal 2018, the last full year for which Deltek has complete spending data.

Admittedly, the numbers here are tiny compared to other parts of the federal technology market. They nevertheless show that federal agencies are increasing their use of cloud-based solutions to get analytics capabilities they want. The jump in FY 2018 also tracks well with overall growth in the federal cloud market that Deltek highlights in its latest Federal Priorities Spotlight: Cloud Computing, 2019-2024 report. Deltek highlights that identifiable federal spending on cloud rose to a new high of $3.7B in FY 2018 so something clearly changed in the federal cloud computing market that fiscal year. Agencies began spending more and awarding more contracts for cloud services than ever before. The procurement of and spending on analytics also benefitted from the U.S. federal government’s burgeoning interest in cloud computing, signaling a trend that Deltek expects will continue.

As for the cloud-based analytics portion of the market specifically, here are a few additional insights to be gleaned from the data.

  1. The adoption of cloud-based analytics is accelerating. Spending rose 150% from FY 2016 to FY 2018, while the total value of awarded contracts for cloud-based analytics capabilities rose 120% over the same period.
  2. Business intelligence solutions dominate spending, with $13M obligated in FY 2016 and $21M in FY 2018.
  3. Spending on cyber security analytics is rising fastest among all analytics types, from $665K in FY 2016 to $12M in FY 2018.
  4. Interest in cloud-based artificial intelligence is stirring. Air Force spent $190K in FY 2018 on a AI Cloud Hosting Service Pack.
  5. The top 3 procured analytics solutions by awarded contract value from FY 2016-2018 were Cloudera ($34M), UFED Cloud Analyzer ($23M) and Palantir ($13M).
  6. The top 5 leading agencies contracting for cloud analytics in FY 2016-2018 (by awarded contract value) were: Justice ($16M), Air Force ($14M), U.S. Special Operations Command ($13M), Veterans Affairs ($8M) and Treasury ($8M).

Agency interest in analytics delivered via the cloud is clearly rising, but the figures provided here probably only scratch the surface given the amount of cloud-relevant spending that passes through contracts which are not cloud-specific in nature. Industry partners are also undoubtedly offering analytics solutions via the cloud that it is difficult for market analysts to identify. Whatever the actual numbers might be the trend in federal cloud-based analytics consumption is positive for industry partners.