Federal Spending on Cloud and Big Data are on the Rise

Federal agency spending on cloud computing and big data solutions continues to grow, although not at the same pace across the defense and civilian sectors of the market. Policy imperatives from Congress and the White House, as well as the need for innovation, agility, and cutting costs, have motivated agencies to take a good, hard look at cloud solutions. And while challenges to adoption remain, Deltek's Federal Industry Analysis (FIA) group sees considerable growth in agency cloud investment over the next several years.

Similarly, agency spending on big data solutions is picking up, even though recent budget tightness has slowed the pace of acquisitions. Despite the steep learning curve associated with big data solutions, agency pilots, niche uses, and ongoing dialogue with industry is increasing awareness and understanding of big data that Deltek FIA believes will translate into accelerated spending through the end of this decade.

Deltek FIA’s new report, Federal Priorities: Cloud, Big Data, Mobility, and Data Centers, 2015-2020, takes a comprehensive look at the federal cloud and big data markets and identifies the following trends that are shaping these key areas of investment:

• Growing Risk – For the second year in a row, Inspector General audits of cloud investments and FISMA compliance show that agencies are using non-FedRAMP compliant cloud solutions.
• FedRAMP is picking up Speed (kind of) – After a slow start, the GSA’s FedRAMP Program Management Office has begun to pick up the pace of certifying vendors, but progress is still painfully slow.
• Cyber Security – Agencies are turning to cloud-based solutions, including the use of cloud-based big data analytics, to address weaknesses in their cyber security posture.
• The Growing Influence of Chief Data Officers – Faced with increasingly complex IT environments and solutions, agencies are centralizing administrative organizations to improve data management and leverage big data solutions.
• High Performance Computing becomes a Priority – The White House attempts to accelerate the use of game-changing HPC and big data technology by announcing a National Strategic Computing Initiative.

Given these drivers, Deltek FIA forecasts federal demand for vendor-furnished cloud computing services will grow from $2.4 billion in FY 2015 to $6.2 billion in FY 2020 at a Compound Annual Growth Rate (CAGR) of 21.4%. 

Deltek FIA also forecasts federal demand for vendor-provided core big data solutions will increase from $1.6 billion in FY 2015 to $3.2 billion in FY 2020 at a Compound Annual Growth Rate (CAGR) of 14.4%.

Key Findings

Deltek FIA developed several key insights when analyzing agency trends in cloud and big data investment:

• Agencies continue having difficulty understanding how to procure cloud using available acquisition methods.
• Determining the ROI of investing in cloud continues to be a major agency challenge, suggesting that vendors who provide cost-savings estimates for their solution could derive a competitive advantage.
• Contract awards for cloud-based cyber solutions continues to rise, suggesting agencies view cloud-based solutions as viable alternatives for enhancing their cyber security posture.
• Spending on engineering agency environments and applications for the cloud remains strong, suggesting that some agencies continue to hedge their bets by relying primarily on private, on-premise cloud solutions.
• Advanced analytics deployments are underway in many places, but these face challenges, the most pressing of which is the lack of enterprise big data strategies at most agencies.
• Spending on big data-related services and software has been stronger at civilian agencies than across the DoD.

For much more of FIA's perspective on the federal cloud and big data markets, as well as on trends in mobility and data center investment see our new report Federal Priorities: Cloud, Big Data, Mobility, and Data Centers, 2015-2020.