Technology Convergence: Cloud-Based Big Data Solutions, FY 2020-2022

One trend we’ve been seeing for at least the last decade here at Federal Market Analysis is the growing convergence of formerly discreet types of technology. This trend has increasingly manifested itself in the form hardware, software, and services bundled together into a single solution. If you think of your company’s own offerings how many of them are now pure hardware or software plays? I’m guessing it is very few, if any at all. This has placed pressure on sales personnel to understand and be able to explain the interplay between what were once separate types of solutions.

Growth in the federal government’s adoption of cloud computing has further muddied the waters. For example, cybersecurity capabilities once sold as on-premise, standalone features deployed in a government data center are now often delivered as-a-Service via a commodity cloud provider. This trend is more visible in the commercial sector, which has the budgetary flexibility to pay for cloud services as you go, but it is increasingly in evidence across federal agencies, too.

Big data technology provided as-a-Service is another of these areas. Commercial computing power is now available at such magnitudes that it makes more sense for agencies seeking to leverage advanced analytics to use commercial cloud providers than it does for them to use their own data centers. In an effort to document this trend, today’s post takes a look at federal spending on big data solutions provided as-a-Service.

Total Market

The data shown below comes from GovWin’s Federal Cloud Computing Database, a repository of identified cloud contracts that is updated frequently and is available to FMA subscribers.

As we can see, spending on cloud-based big data technology has been a bit of a roller-coaster for the last three fiscal years. This is, however, not the case across all of the government as the dip in FY 2021 is attributable only to a slow down in spending at the Department of Defense. The dip then reversed in FY 2022, eventually attaining a level close to that seen two years earlier.

Spending in the civilian sector, meanwhile, remained steady in FY 2021 before experiencing a burst upward in FY 2022 to the tune of an additional $116M.

The civilian agencies that notched the biggest gains were the Department of Energy ($68.5M in FY 2022 vs. $405K in FY 2021) and the Department of State ($12M in FY 2022 vs. $698K in FY 2021).

Spending by Solution Type

When it comes to the types of big data solutions being purchased advanced analytics leads the pack.

This comes as no surprise as analytics are among the easiest capabilities to deliver as-a-Service. Storage is included because of the amounts of data agencies are using cloud-based solutions to handle. HPC, or High-Performance Computing, is an interesting one because of the bandwidth required to transport the vast volumes of data related to it. Not surprisingly, the National Oceanic and Atmospheric Administration spent the most of all agencies. They use HPC to model complex and dynamic atmospheric patterns.

Summing up, if the trend shown for FY 2022 holds, it suggests that spending on cloud-based big data technology will continue rising in FY 2023. Presumably, that means it will continue for the years to come. This is likely to be the case as quantum computing gets closer to reality. Once a workable quantum computer is developed, agency data centers will instantly become obsolete, requiring federal customers to turn to cloud-based computing with even more vigor than they are now. I don’t have a crystal ball, but based on what we’re seeing in the commercial technology market this eventuality is probably 5 or so years in the future.