U.S. Government Cloud Spending Exceeding Forecasts
As the federal government stumbles toward cloud deployment, an industry watcher reckons that cloud computing nevertheless represents a healthy 5 percent of federal IT spending. The growth is being led by private cloud deployment.
IDC Government Insights concludes in a report released this week that federal cloud spending in fiscal 2014 will exceed earlier predictions, climbing above $3 billion. The U.S. Office of Management and Budget had allocated just over $2.2 billion for federal cloud deployment during the current fiscal year that ends Sept. 30.
Curiously, U.S. budget officials had been projecting a pause in cloud spending during fiscal 2015 even as agencies like the Defense Department move rapidly to cloud platforms despite ongoing security issues. The current federal spending estimate for next year was $2.9 billion, but IDC predicts it will actually increase to as much as $3.4 billion over the next year.
Along with the Pentagon, key agencies like the CIA and the Department of Homeland Security are either deploying private cloud infrastructure of preparing to do so. Amazon Web Services is delivering a huge cloud network for U.S. intelligence agencies and was the first cloud provider to be certified to handle sensitive DOD data.
Meanwhile, IDC estimates that Software-as-a-Service accounts for most federal cloud spending, surpassing Infrastructure-as-a-Service offerings for the first time. The market analyst calculates that federal agencies will spend $1.3 billion on SaaS during the current fiscal year and just $986 million on IaaS.
The other big winner during fiscal 2014 was private cloud services, according to IDC, which will reach $2.3 billion this year as agencies like the Social Security Administration begin deploying new IT services. "Growth here is largely driven by the government's need to procure solutions that meet specific IT security standards," the report concluded.
Federal spending on private cloud services is expected to reach $5.9 billion by fiscal 2018, IDC forecast.
It also projects federal spending on private cloud services will continue to outpace public cloud investments "by a wide margin" given the unique security requirements of federal agencies. These include compliance with Federal Information Processing Standards and Federal Information Security Management Act (FISMA) guidelines.
Compliance with FISMA has been problematic. The Healthcare.gov website operated by the Department of Health and Human Services was again hacked in July. The suspected pointed of entry for the exploit was a server used to test code that was mistakenly connected to the Internet.
Nevertheless, IDC remains bullish about federal cloud spending despite OMB plans to throttle back on cloud deployment. "The main reason we believe that growth will continue is that cloud is proving to be a cheaper solution in some cases for government agencies," Shawn McCarthy, research director for IDC Government Insights, explained in a statement releasing the federal cloud spending report. "For that reason alone, some will make the switch."
