Federal Cloud Computing Spending Outpacing Overall IT Growth by Factor of 20, According to Deltek Report
New Deltek GovWin IQ report shows $6.2 billion in contractor-addressable cloud computing spend by fiscal year 2020
HERNDON, Va. – December 17, 2015 – According to Deltek’s new GovWin IQ report Federal Priorities: Cloud, Big Data, Mobility, and Data Centers, 2015-2020, federal agencies are expanding investments in cloud computing at a rate that is over 20 times faster than overall federal information technology (IT) spending. Deltek forecasts spending on cloud computing services to increase from $2.4 billion in FY 2015 to $6.2 billion in FY 2020 at a Compound Annual Growth Rate (CAGR) of 21.4%. Comparatively, Deltek forecasted CAGR for total federal IT spending is -0.7% over the next five years, representing a small decline from $97.7 billion in FY 2015 to $94.4 billion in FY 2020.
Progress in cloud strategy development and Federal Risk and Authorization Management Program (FedRAMP)- certifications will continue to provide the groundwork for agencies to migrate from outdated, legacy systems to cloud-based solutions. The number of FedRAMP approved solutions is growing, but so is the number of non-compliant cloud solutions, suggesting that agencies are not waiting for FedRAMP Authority to Operate (ATO) certifications to procure cloud solutions. As a result, agencies’ cloud evolution will continue to come under scrutiny of not only the Office of Management and Budget (OMB), but also agencies’ Inspectors General (IGs), many of which have raised concerns about FedRAMP compliance, inconsistencies in ROI metrics and cloud management practices.
As the pressure for enterprise-wide standardization and operational efficiency increases, agencies continue to chip away at redundant and unnecessary spending to free up funding to devote to priorities such as cloud computing. The budget relief introduced by the recently passed Bipartisan Budget Act of 2015, which adds $25 billion in additional funding for FY 2016 and FY 2017 respectively, will allow agencies to invest in cloud solutions that may have otherwise been shelved under sequestration.
Deltek’s new cloud computing spending report outlines management and spending trends in federal cloud computing, big data, mobility, and data center solutions, and profiles buying behavior for the Department of Defense as well as for the top 10 civilian agencies.
Key report findings:
- The number of FedRAMP-certified cloud vendors has grown, but a slower-than-anticipated pace is hampering cloud adoption.
- Hybrid cloud is growing in attractiveness as agencies expand beyond the exclusive use of private virtualized infrastructure to using a combination of commercial and internal solutions.
- As agencies look to the cloud for infrastructure modernization, they are increasingly turning to contractors for consulting expertise, as well as cloud engineering and migration support.
Contract awards for cloud-based cyber solutions continue to rise, suggesting agencies view cloud-based solutions as viable alternatives for enhancing their cyber security posture.“Strong investment in cloud computing is reassuring within a flat IT budget environment,” said Deniece Peterson, Director of Deltek’s Federal Industry Analysis program. “Although budgetary pressures are easing for the next two fiscal years, agency leadership is still focused on cloud computing, which can drive long-term savings that can be redirected to mission-critical needs.”
For more information on GovWin IQ and this report, visit the “Federal Priorities: Cloud, Big Data, Mobility, and Data Centers, 2015-2020” page on Deltek.com or get the free summary here. The report is free to subscribers of GovWin’s Federal Industry Analysis program. Press interviews can be arranged by contacting Lauran Cacciatori.
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About GovWin IQ
Deltek’s GovWin IQ provides the market intelligence tools and analysis government contractors need to gain a competitive advantage and be a formidable player in the federal market. Backed by a team of government research and analysis experts, GovWin IQ provides the most powerful, comprehensive, and timely lead generation and business intelligence solutions available. More than $2.1 trillion in opportunities are tracked every year – a number no other competitor can match. www.deltek.com/govwin
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