New Report: Deltek’s Federal Cloud Market Forecast from Fiscal 2022 to Fiscal 2024

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 $14.5B in FY 2022 to $18.6B in FY 2024 for a three-year percentage growth rate of 28.0%

Key Research 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.

Deltek's Federal Cloud Computing Market, 2022-2024 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.