Where Are the Cloud Hot Spots?

Published: October 30, 2013


Federal agencies’ use of vendor-provided cloud services has ramped up considerably over the last few years, providing much-needed good news in federal IT. However, some agencies are ahead of the others. These are the cloud pioneers forging ahead into the technology wilderness and the trail they are blazing is opening up tremendous business opportunities for cloud vendors.

Federal agencies’ use of vendor-provided cloud services has ramped up considerably over the last few years, providing much-needed good news in federal IT.  That agencies have been turning to the cloud at a time of fiscal constraint comes as no surprise.  After all, one of cloud computing’s early value propositions was that it could save agencies money by providing scalable, rapidly provisioned IT infrastructure they could “rent” on an as needed basis.  It took a while for risk averse federal customers to come around, but come around they have.  Now even the well-funded Intelligence Community is turning to large-scale commercial infrastructure providers like Amazon Web Services.  Reducing costs truly wins out in the end.

The federal cloud market is still evolving, but if we look closely we can see parts of it taking shape.  There are, for example, emerging “Cloud Hot Spots.”  These are agencies in the late-early stage of adoption.  They have dipped their toes in the water, liked it, and have decided to forge ahead.  Many of these hot spots are places where we are likely to see faster cloud adoption in the years ahead.

So, where are the hot spots?  Table 1 below shows the top 10 agencies in terms of number of verified cloud projects.  These are our pioneers in the technology wilderness.

Table 1

There are some surprising names on this list, like the Department of Defense.  How could the DoD be considered a cloud pioneer when it has struggled to reconcile the cloud approach with data security?  The answer is that various DoD components, particularly the Defense Advanced Research Projects Agency (DARPA) and the Defense Information Systems Agency (DISA), but also the U.S. Transportation Command and Special Operations Command, have all dabbled in cloud computing in one way or another.  Common projects across the DoD have included systems engineering to enable cloud use, using cloud for testing environments, and even application hosting.

Keep in mind that Table 1 shows only the top 10 agencies by number of efforts.  The picture changes a bit when it comes to total awarded contract value (TCV).  As Table 2 shows, on a TCV basis the DoD takes a backseat to smaller agencies like Interior and its multiple award $10 billion ceiling Foundation Cloud Hosting Services contract vehicle.     

Table 2

The Department of Homeland Security remains in second place with over $6 billion in cloud contracts awarded.  Now, with its Next Generation: Enterprise Computing Services procurement coming in FY 2014, cloud use and brokering at DHS is poised to accelerate rapidly.

Looking ahead, the promise of cloud investment at just these ten departments suggests an exceptional business opportunity.  The Department of Health and Human Services intrigues me in particular.  It is such a massive, uncoordinated department that there are multiple well-springs of cloud adoption.  The National Institutes of Health (NIH) is already ahead of most of the department when it comes to cloud adoption.  The Centers for Medicare and Medicaid Services (CMS) is not far behind.  If HHS does not adopt an enterprise approach based on a single, consolidated contract vehicle like Interior’s FCHS or DHS’ pending NG: ECS program, it could be a lush, green field for cloud vendors.

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