Deltek’s Federal Cloud Market Forecast from Fiscal 2020 to Fiscal 2022
Published: August 28, 2020
Deltek anticipates federal spending on cloud will grow by $1.0B from FY 2020 to FY 2022.
- Federal spending on cloud computing grew from $3.2B in FY 2017 to $6.0B in FY 2020.
- Spending on cloud had already begun accelerating before the COVID-19 crisis.
- Defense spending on cloud is rising at nearly twice the rate of spending in the civilian sector.
Faced with aging information technology infrastructure that is increasingly unsecure, and urged by Congress and the White House to control spending while leveraging emerging technologies, federal agencies are turning to commercial cloud solutions as the best method of modernizing their environments.
Federal civilian agencies have led in the use of cloud for the last decade, but defense organizations are now quickly ramping up adoption by increasing their spending on everything from cloud-based capabilities to commercial cloud infrastructure. Demands from telework forced by the COVID-19 public health crisis further accelerated adoption in FY 2020 making it an historic year in the evolution of federal cloud computing use.
Forecasting the Federal Cloud Market
Deltek anticipates that federal spending on cloud will grow strongly in the next few years as agencies modernize IT environments and become more comfortable with commercial cloud solutions.
To that end, Deltek forecasts that agency demand for vendor-furnished cloud computing goods and services will grow from $6.8 billion in FY 2020 to $7.8 billion in FY 2022 at a Compound Annual Growth Rate (CAGR) of 4.6%.
Key themes emerging from Deltek's research
Accelerating Adoption Rates. Even before the COVID-19 public health crisis federal agencies had begun to speed up the use of cloud-based capabilities, the hosting of applications with commercial partners, and the development of new capabilities in cloud environments.
Spending on SaaS and PaaS Grows, While IaaS Falls. Spending on Software-as-a-Service and Platform-as-a-Service is growing across government, but spending on Infrastructure-as-a-Service appears to be leveling off in the market-leading Civilian sector. This suggests many agencies may have already contracted sufficient commercial cloud infrastructure, but still require modernized SaaS capabilities.
Defense Commits to Commercial Cloud. After years of planning, the Department of Defense appears to be firming up its commitment to commercial cloud, estimating that $300M of its planned Fiscal Year 2021 cloud budget will be spent with commercial providers.
TIC Reform Supports Adoption. After years of complaints about antiquated Trusted Internet Connections (TIC) policy creating roadblocks to adoption, new TIC 3.0 guidance is making it easier for agencies to choose cloud connectivity solutions tailored to their needs.
Sound Data Management Makes a Difference. The growing focus on sound data management across government, including the hiring of Chief Data Officers, is prompting agencies to leverage commercial cloud services that are more secure than legacy data centers.
Deltek's Federal Cloud Computing Market, 2020-2022 report is available now. It offers a 3-year strategic view of the trends, drivers, and challenges shaping federal cloud computing adoption. The report provides insight into the policies and legislation influencing the cloud market, analyzes agency spending on cloud computing, and identifies opportunities for cloud business development. Spending profiles and forecasts for the top 18 agencies using cloud computing solutions are included, as are recommendations to help contractors evaluate the impact of market trends on their business.