Pressure to modernize the federal government’s IT infrastructure is rising, and cloud computing features prominently in the IT management agenda of the new administration. The need to improve agency cybersecurity postures, achieve mission efficiency, enhance operational effectiveness, lower costs, and improve citizen services will continue fueling investment in cloud computing despite the budgetary situation. Fiscal necessity supports near-term investment in cloud computing as agencies find themselves increasingly unable to balance expensive legacy infrastructure with the need to innovate to meet growing mission demands. Policy, a growing awareness of cyber vulnerabilities, and the desire to leverage modern, cloud-based commercial capabilities continues to prompt agencies to reexamine their cloud strategies, providing potential contract opportunities over the long-term.
Deltek forecasts federal demand for vendor-furnished cloud computing services will grow from $3.7 billion in FY 2017 to $6.6 billion in FY 2022 at a Compound Annual Growth Rate (CAGR) of 12%.
Key Findings
Much of agencies’ cloud spending is embedded within larger infrastructure modernization projects. Identifiable cloud obligations were $1.7B on cloud in FY 2016, a drop from $2.6B reported in FY 2015. Increased scrutiny, implementation pauses due to the administration transition, and changes in OMB reporting methods are likely contributors.
New funding mechanisms proposed in the pending Modernizing Government Technology (MGT) Act and DISA Project Accounts are expected to provide flexibility that agencies need to purchase cloud services as a utility.
GSA is playing an increasingly important role in federal cloud computing by creating a new Schedule 70 Cloud SIN, providing new contract offerings, and standing up a new Cloud Center of Excellence to develop standards.
Agencies are demanding that commercial cloud solutions be interoperable to prevent vendor lock-in and to facilitate easy data migration. Interoperability requirements are also making their way into cloud procurements.
Changes to the FedRAMP authorization process to simplify and speed the process appear to be successful; the number of FedRAMP-compliant solutions procured surpassed non-FedRAMP solutions for the first time in FY 2016.
Agencies are implementing combined private and public/community cloud solutions, creating “Hybrid Cloud Environments.” Private clouds remain important for hosting mission critical capabilities.
Critical Insight for Vendors
Deltek’s Federal Priorities Spotlight: Cloud Computing report takes a strategic 5-year view of the market factors shaping federal procurement of commercial cloud computing services.
The report provides:
Insight into the factors, policies, and strategies shaping the cloud market.
Insight into the dynamics shaping agency spending on cloud computing.
Insight into opportunities for cloud vendor business development.
Spending profiles and forecasts for the top 15 agencies using cloud computing solutions.
Recommendations to help contractors evaluate the impact of trends on their business.
Deltek's Federal Priorities Spotlight: Cloud Computing report is delivered in PowerPoint® format, including a PowerPoint® Executive Briefing, and an Excel® data workbook.