Federal Cloud Computing Market, 2022-2024

After solid growth from FY 2019-2020, federal spending on cloud computing rose to a new high of $10.8B in FY 2021. The ongoing strength of the market illustrates the extent to which federal agencies have turned to the cloud as their preferred method of modernizing aging IT infrastructure.

Spending is, however, only one indicator of increasing cloud adoption. Agencies working with the General Services Administration also certified dozens of new vendor capabilities for the FedRAMP program and the number of contracts awarded for cloud goods and services rose as well. Several other recently identified trends also continue shaping the market, including the dominance of Software-as-a-Service (SaaS) as the leading type of service delivery and the reliance of agencies on the community cloud deployment model more than any other.

In addition, the growing acceptance of cloud-based development and security operations (DevSecOps) is evident in the market as agencies turn to the cloud to create new software capabilities. This trend is translating into accelerating spending on Platform-as-a-Service (PaaS) as software development can now be carried out more quickly and at lower expense.

Deltek forecasts that agency demand for vendor-furnished cloud computing goods and services will grow from $­­­14.5 billion in FY 2022 to $18.6 billion in FY 2024 for a three-year percentage growth rate of 28.0%.

Key Findings

• Civilian Sector Leading in Commercial Cloud. Cloud adoption trends in the civilian and defense sectors of the market are diverging, with the Department of Defense (DOD) spending more on cloud engineering services and civilian agencies investing more in commercial cloud capabilities delivered as a service.
• Defense Acceptance of Cloud is Expanding. The DOD’s use of cloud prototype contracts awarded through Other Transaction Authority (OTA) is declining, which suggests a growing acceptance and understanding of its operational value.
• Use of Best-in-Class Contract Vehicles Dominates. Agencies are using GSA-designated “Best-in-Class” (BIC) contracts, GSA Schedules and Government-Wide Acquisition Contracts (GWACs) to acquire cloud solutions more than any other procurement method.
• Cloud-Based Software Development Becomes the Norm. Agencies across the federal market are turning more to cloud-based Development, Security and Operations (DevSecOps) in an effort to build capabilities faster and at lower expense. This trend is particularly noticeable at the Department of Defense.
• Cloud Engineering Keeps Traditional Contractors Competitive. Spending on engineering mission-critical applications and systems for the cloud remains one of the strongest segments of the market, highlighting both the key role played by partners of cloud service providers and the importance of “non-aaS” work to traditional IT contractors.
• Reliance on Off-Premise Capabilities is Growing. Although agencies have established multi-cloud environments, they are spending significantly more on off-premise cloud capabilities than on on-premise solutions.

Critical Insight for Vendors

Deltek’s Federal Cloud Computing Market, 2022-2024 report provides insight into key policy, acquisition and spending trends that are shaping the federal cloud computing market.

The report provides:

• Insight into the factors, policies and strategies shaping the cloud market.
• Analysis of the dynamics shaping agency spending on cloud computing.
• Identification of opportunities for cloud business development.
• Spending profiles and forecasts for the top 18 agencies using cloud computing solutions.
• Recommendations to help contractors evaluate the impact of trends on their business.

Deltek's Federal Cloud Computing Market, 2022-2024 report is delivered in PowerPoint® format, including a PowerPoint® Executive Summary and an Excel® data workbook.