A new report on the federal cloud market expects the government to increase its expenditure on cloud computing by nearly $4 billion in the next five years.
According to Deltek’s forecast of the federal cloud market, released Aug. 30, the government will likely spend $9.1 billion in fiscal year 2024 on cloud computing, an increase form $5.3 billion in FY2019.
Deltek, a enterprise software and information solutions company, found that cloud spending in the last two years has increased dramatically among civilian agencies. The Department of Health and Human Services and the Department of Veterans Affairs have both spent over $1 billion from FY2016 to FY2018. Since FY2016, the VA’s cloud spending has increased 258 percent. The Department of Homeland Security’s cloud spending increased 359 percent, with the increase largely attributable to its immigration services — Customs and Border Protection and Citizenship and Immigration Services — which spent $102 million each on cloud.
Defense agency cloud spending increased 10 percent from FY2016-2018, totally $907 million in spending. Nearly half of that was spent by the Defense Information Systems Agency, which spent $120 million on cloud in FY2018.
Defense agencies “remain among the strongest adopters of cloud technology,” Deltek wrote. Deltek emphasized that the defense agencies have a particular need from contractors in managing their cloud infrastructure.
“The DoD as a whole ... requires assistance managing disjointed cloud implementations and aligning disparate cloud architectures,” the report said.
The DoD is also in the process of awarding its controversial JEDI cloud, which could be worth $10 billion over 10 years and will serve as the Pentagon’s general service cloud — holding up to 80 percent of department systems. The DoD awarded a 10-year, $7.5 billion office solutions cloud contract Aug. 29 to CSRA, part of General Dynamics. The DoD has laid out its plan for cloud computing in its cloud strategy, which lays out a “multicloud, multivendor” strategy, using a general-purpose cloud and a fit-for-purpose cloud.
Back on the civilian side at HHS, Deltek wrote that cloud spending is “spread unevenly," with different agencies and services throughout the department using the technology at different levels. It anticipates that HHS will spend $710 million in 2024.
“The federated nature of HHS remains a serious roadblock to the adoption of enterprise cloud capabilities,” Deltek wrote.
In FY2019, DHS spent $510 million on cloud technology. According to the report, DHS cloud requirements are “extensive" and cloud migration for some legacy systems “is also proving more tricky than expected.” DHS is expected to spend $750 million on cloud in FY2024.
By FY2024, Deltek expects the VA to spend $1.85 billion on cloud, breaking $1 billion annually in FY2021. Deltek wrote that “VA leadership decided to go all in on cloud adoption.”
Deltek also wrote that the federal cloud computing market is “competitive,” with contractors continuing to be successful in the space because of agency reliance on contractors for engineering expertise.
Cloud computing is a critical part of agency modernization. Federal agencies are under increased pressure both from the executive and legislative branch to move away from their own data centers and migrate to the cloud. Cloud computing presents agencies with cheaper and more efficient options than running their own data centers. It is also pushing agencies to adopt emerging technologies like artificial intelligence.
The report also found that agencies are requesting higher certification levels from FedRAMP, which approve cloud technology for use in the federal government, than agency tasks actually require. FedRAMP certifications take a notoriously long time to receive and are mandatory for cloud technology marketed for use in the federal government.
Agencies are also adopting multicloud environments, meaning they buy cloud computing from several different companies. According to the Deltek report, this trend will continue “for as long as agencies lack in-house expertise and automated solutions.”