When considering Infrastructure-as-a-Service options, agencies have a choice between moving their servers into a third-party data center – a service called colocation – or just moving their data and applications, allowing the cloud provider to handle all the infrastructure needs.

"We see a lot in the area of hybrid cloud – specifically around agencies that have certain assets that they want to continue to own and manage, they just don't want to own the building that those assets live in," said Lee Tamassia, director of business development for government markets at QTS. "We certainly see demand for that."

Bonus Report: A new cloud approach

Tamassia said QTS also sees solicitations from agencies looking for wholesale cloud services, particularly with smaller or low-impact applications that can be easily migrated to a third-party infrastructure.

"It depends on how much you're consolidating," said Sue Palermo, senior vice president for emerging programs and services at CCSi. "You'd have to do an analysis to determine the best way to move that … If you're moving like-for-like, then it's probably easier to go in with all your infrastructure and write off the cost of the equipment you have."

Agencies should look at colocation or wholesale IaaS on a case-by-case basis, Matt Sexton, CCSi chief information security officer, agreed, taking into account costs, availability of the data and the speed at which it needs to be accessed.

Others see full-scale hosting as the pure form of IaaS.

"I don't think of colocation as Infrastructure-as-a-Service," said Mark Ryland, chief solutions architect for AWS Public Sector. "You might be paying some service fee to rent space to put your servers in but if you still own all the servers and you're still doing everything in a manual way, that's not Infrastructure-as-a-Service."

Ryland cited moves by the Navy and NASA to host their public websites using cloud infrastructure and an interesting case study in which the SEC found the answer to a difficult analytics problem in the cloud.

Spinning up quickly in the cloud

In 2012, when the Securities and Exchange Commission needed more computing power to run their MIDAS program – a real-time database that allows analysts to see time-stamped snapshots of market transactions – employing third-party infrastructure was a necessary component of getting it off the ground.

Combining data from markets and exchanges across the country (and the globe) created more than a terabyte of data per day, far more than could be stored and properly analyzed on SEC's existing servers at the time.

"In our response to the RFP we included two options on how this could be deployed from an IT perspective," said Mike Beller, CEO of Tradeworx, which ultimately won the contract to manage the system. "One was cloud based and the other was in the SEC's datacenter."

Tradeworx preferred the cloud option but didn't know whether the SEC was ready to house its data and analysis in a third-party environment.

"The SEC very early on in our interactions said we want to do this in the cloud," Beller said. "We were very gratified by that because we felt it was going to be the best way to go. We were just glad to see the SEC was very forward-thinking about how these problems could be solved and willing to be pioneers" in the federal sphere.

SEC got its first look at the MIDAS system four months later and it was up and running within six months.

The speed to adopt and efficacy of the final product were a direct result of SEC's strong desire to implement what was, at the time, an innovative shift in government IT.

"'Where there's a will there's a way' is a big aspect of it," Beller said, both in the implementation and moving through the federal acquisition process. "SEC was highly motivated. We put extra staff on the project to address getting things done quickly. We were able to partner effectively with Amazon Web Services, who put extra staff on getting things done quickly."

The other major factor was the ability to use existing third-party infrastructure to move quickly.

"We didn't have to buy computers, move them into datacenters, rack and stack them, bring them up, transfer data onto them," Beller explained. "We just spun resources up in the cloud, following the appropriate security procedures. But we didn't have to do physical infrastructure work at all to make this happen."

"That's a great example where the SEC didn't even ask for cloud [initially] but the solution was so compelling," Ryland said.