Cloud Solutions Grab Big Slice of Government IT Budgets: IDC

The leading category of government cloud service is private, with private cloud spending projected to reach $1.7 billion next year.

While spending increases for cloud technology have been scarce across federal agencies for two years, IT research firm IDC’s Government Insights division said it expects to see an acceleration after fiscal year (FY) 2014, a boost helped along by enterprise architecture standards and rules, which in turn helps to create a commodity approach to cloud solutions.

The report also noted cloud investments have been stalled in 2013 and 2014 by sequestration, by a slowdown in system consolidation efforts, and by other governmentwide issues, such as the complexity of establishing enterprise architecture standards.

The leading category of government cloud service is private, with private cloud spending projected to reach $1.7 billion next year and is expected to reach nearly $8 billion by 2017. Across other industries, Software as a Service (SaaS) is the leading type of cloud. But in government, it's Infrastructure as a Service (IaaS). Between now and 2017, IaaS will grow to $5.4 billion, SaaS will grow to $2.4 and Platform as a Service (PaaS) will grow to $1.1 billion, the report predicted.

Spending on public cloud is currently only about 10 percent of that for private cloud solutions. The Treasury Department is the leading consumer of public cloud, while the Social Security Administration (SSA) is the leader for private cloud, and the Justice Department is the leader for community cloud.

While public cloud spending is not the big winner when it comes to federal cloud planning, the report indicated that federal public cloud spending is still projected to rise from $110.4 million in FY2012 to over $118.3 million in FY2014, as many agencies still are making investments in public cloud for things ranging from development platforms to Website or email hosting, or even low-risk, long-term data storage.

"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."

Hybrid cloud spending is expected to be flat across the federal government, with spending of $77.4 million in FY2012, nudged just slightly downward to $77.3 million in FY2014. Treasury is the leader here too, with the hybrid systems created as the department works to tie some of its older mainframes into new cloud-based solutions.

"Private cloud clearly is the top choice when it comes to federal cloud solutions. Promises of greater security, control and privacy seem to hold the key to what federal agencies seek," the report noted. "In some cases we have seen new applications developed on a public cloud, which are later moved to a private dedicated cloud for their runtime environment."