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US Government IaaS Spending to Reach $5.4 Billion by 2017: IDC Report

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Though cloud spending has been low across US federal agencies for the past two years, a new report by IDC Government Insights expects to see a rise in spending after fiscal year 2014.

The report, “Perspective: Growth and Slight Contraction – Government Cloud Spending by US Federal Agency,” says that the boost in spending is helped by enterprise architecture standards, which helps to create a commodity approach to cloud solutions.

For the past several years, the US government has promoted a “cloud-first” approach for agencies to move away from legacy IT systems to cloud services.

Infrastructure as a service, and private cloud in particular, lead government cloud investment. IaaS will grow to $5.4 billion by 2017, according to the report, while federal private cloud services spending will reach $1.7 billion in fiscal year 2014, reaching $7.7 billion by 2017.

“There are clear indications that fiscal year 2014 will continue to be a flat year for cloud computing investments,” Shawn McCarthy, research director at IDC Government Insights said in a statement. “Yet beyond that, growth potential looks bright. Investments should reach a critical mass around 2015 and beyond. A new emphasis on cloud solutions is expected to return within the next 18 months, and private cloud investments should approach $7.7 billion by FY2017.”

Spending on public cloud is currently only about 10 percent of that for private cloud solutions, the report says. Security is still an issue in terms of public cloud adoption, though many agencies are making investments in IaaS.

In terms of which departments are leading in adoption of different models of cloud deployment, the Treasury Department is the leading consumer of public cloud, the Social Security Administration is the leader for private cloud, and the Justice Department is the leader in community cloud.

On Tuesday, the City of San Jose announced an agreement with Microsoft Office 365 to move email systems to the cloud. Earlier this year, the City of Chicago migrated to Office 365.

One of the more surprising findings in the survey is that hybrid cloud spending is expected to be flat across the federal government, with spending of $77.4 million in FY2012 moving downward to $77.3 million in FY2014. The Treasury Department and NASA are leaders in hybrid cloud.

Recently, the Defense Information Systems Agency announced that it is undergoing a recruitment process to award a five-year $450 million contract to build a cloud for the US Defense Department.

On Tuesday, principal cybersecurity advisor for the UK’s G-Cloud program said that only 16 percent of government spending is with small and medium-sized businesses, but that its program should help SMEs win government cloud business.

What do you think of the outlook of federal cloud spending? Do you target government agencies with your cloud services? Let us know in a comment.

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