Three Federal Departments with Growing Cloud Spending

Federal agencies have been adopting cloud computing services for more than a decade, but it is only in recent years that spending on those services began to ramp up to levels market watchers expected to see a long time ago. Civilian sector agencies such as Veterans Affairs, Health and Human Services, and Homeland Security have long been at the forefront of cloud investment. Now, however, we’re beginning to see rising spending on cloud services at additional civilian agencies. These include the National Aeronautics and Space Administration (NASA), Social Security Administration (SSA), and Department of the Treasury, all of which reported sizeable increases in Fiscal Year 2022.

The chart below shows the extent of this growth at these three agencies. Please keep in mind that this is only the spending I’ve been able to identify. There are doubtless millions of other dollars going to cloud services that are not labeled as such.

Total Cloud Spending, FY 2020-2022

NASA

• FY 2020 - $161M
• FY 2021 - $130M
• FY 2022 - $257M

SSA

• FY 2020 - $112M
• FY 2021 - $134M
• FY2022 - $191M

Treasury

• FY 2020 - $136M
• FY 2021 - $331M
• FY 2022 - $398M

What’s fascinating about these numbers for the Treasury in particular is that the department has been competing an enterprise-wide cloud contract called the Treasury Cloud for more than a year. In other words, the use of cloud services has been accelerating despite the fact that an enterprise vehicle isn’t yet in place. With the award of the TCloud contract just this week industry can probably expect the Treasury’s cloud spending to gather even more steam.

Spending by Service Delivery

Diving deeper into the numbers for service delivery shows that NASA has seen recent increases in spending on Infrastructure (IaaS) and Software-as-a-Service. Spending on Platform-as-a-Service (PaaS) remains weak.

IaaS

• FY 2020 - $12M
• FY 2021 - $17M
• FY 2022 - $20M

PaaS

• FY 2020 - $5.0M
• FY 2021 - $0.0M
• FY 2022 - $5.0M

SaaS

• FY 2020 - $13M
• FY 2021 - $14M
• FY 2022 - $30M

The picture at the SSA looks a little different.

IaaS

• FY 2020 - $6.0M
• FY 2021 - $71M
• FY 2022 - $45M

PaaS

• FY 2020 - $0.0M
• FY 2021 - $0.0M
• FY 2022 - $9.0M

SaaS

• FY 2020 - $55M
• FY 2021 - $29M
• FY 2022 - $95M

As at NASA, identifiable PaaS spending remains practically non-existent at the SSA. Also different from NASA is SSA’s IaaS spending, which fluctuates year-over-year. The SSA invested a lot in IaaS several years ago to provide cloud services via its new enterprise data center. It is SaaS Spending where the SSA has seen its biggest growth. This comes as no surprise as most agencies began in the last couple of years to consume more SaaS capabilities.

At the Treasury, meanwhile, spending has increased on all three types of cloud service delivery. Spending on IaaS showed the clearest gain, but SaaS continues to be the most used type of cloud service at the department.

IaaS

• FY 2020 - $25M
• FY 2021 - $53M
• FY 2022 - $83M

PaaS

• FY 2020 - $3.0M
• FY 2021 - $3.0M
• FY 2022 - $16M

SaaS

• FY 2020 - $63M
• FY 2021 - $196M
• FY 2022 - $202M

Takeaways

What should we make of this data? In the first place, it confirms that SaaS is the leading type of service delivery being used across the civilian sector. Vendors offering SaaS-based capabilities are therefore in a good spot. Just make sure your solutions are FedRAMP-approved to be competitive.

Second, the data confirms that the use of PaaS has a long way to go at some civilian agencies. This is not a surprise either as agencies struggle to get a handle on the costs associated with software development.

Lastly, IaaS spending is rising, but it still has a way to go. This analyst suspects that spending on IaaS is higher than is being shown in the data, but identifying that spending remains problematic.