Federal agencies have been diligently pursuing the use of cloud-based information technology for the past three years in compliance with a White House directive. As a result, federal spending on cloud-based technologies reached US$2.3 billion in fiscal 2013, according to a market assessment by Deltek.
That investment level could top $6 billion annually in a few years. For agencies seeking to gain from the benefits of cloud platforms, lessons learned from the past three years should stimulate broader, deeper, and faster adoption of the technology.
Vendors seeking to maximize the opportunity to provide cloud services at the federal level could find that the market potential is even greater than first estimated.
The major federal push toward cloud deployments started in February 2011 with the issuance of a White House directive known as the “Cloud First” policy. The directive, issued through the Office of Management and Budget, required agencies to give cloud technology first priority in developing IT projects.
Under the policy, agencies also were required to initiate some type of cloud activity by the end of 2012. Progress in meeting those goals has been uneven among federal agencies, but certainly an awareness of the potential for cloud has taken hold.
Several factors are now at work that will move federal cloud adoption forward, including the experience gained in the first round of cloud implementations. First, the benefits of the technology have been demonstrated by early adopters. Also, initial concerns about security should dissipate, with the full implementation of the FedRAMP cloud security program, which is designed to provide a security template that can apply across the federal government.
The program should save agencies the time, trouble and expense of developing their own security measures. In addition, tighter federal budgets will bring an even greater appreciation of the efficiencies available to agencies as they maximize cash flow savings through the pay-as-you-go element of cloud technology versus heavy upfront investments in IT systems.
Challenging but Manageable
“Cloud First will lead to cloud second. Mandated adoption removed the risk and uncertainty from the first round, and now agencies have peer experience and best practices to work from,” Steve O’Keeffe, the founder of MeriTalk, told the E-Commerce Times. MeriTalk recently reported on the challenges and benefits associated with federal cloud deployments.
The report outlined the experience of 15 federal agency managers who have implemented cloud-based technologies. The managers fully acknowledged that launching the technology involved overcoming significant impediments, especially as early adopters venturing into uncharted waters. However, those hurdles failed to deter cloud adoption.
“Taken as a whole, respondents indicated that most cloud implementations prove no more challenging than traditional IT implementations. The benefits have outweighed any frustrations, and as a result, the Cloud First agencies have cheaper, more flexible, and more resilient IT,” the report concludes.
Billed as a “consumer’s guide” to cloud adoption, the MeriTalk study provides some lessons-learned guidance that both agencies and the vendors that hope to serve them should keep in mind for future cloud projects:
- Goal Setting: Beyond compliance with OMB mandates, agencies need to specifically outline their objectives for moving to the cloud in clear, specific and measurable terms.
- Build a Case: Cloud migration projects need to make sense with concrete, definable purposes, including quality of service, mission enablement, cost savings and operational efficiency.
- Procurement: Given the technical and management challenges associated with cloud solutions, federal IT professionals need to manage the procurement process and acquisition personnel more explicitly.
The challenges federal agencies have experienced in cloud development have restrained deployments to date, but alleviating these impediments should spur adoption, according to an Accenture report released in January. In a survey of 286 federal managers embracing a wide range of functions in addition to IT, Accenture found that many agencies have yet to move a substantial portion of their services to the cloud. Just 10 percent had migrated more than half of their IT portfolio to the cloud. The report was cosponsored by the Government Business Council.
“While there are initial challenges in the adoption of cloud computing, the technology holds the potential to play a major role in increasing government efficiency and service delivery,” said Annette Rippert, managing director of Accenture Federal Services.
“When properly executed, government agencies have much to gain in transitioning to the cloud,” she said.
About a third of the respondents to the Accenture survey said that the lengthy federal procurement process was a factor that impeded more widespread cloud adoption.
Adequate staffing was another important factor, with less than a third of respondents to the Accenture survey saying their agencies had the necessary staff to fully implement cloud adoption.
In terms of the future federal market for cloud deployments, annual federal spending for cloud-related projects should remain flat at just over $2.3 billion in 2014 and 2015 and then grow to $6.1 billion by fiscal 2018, Deltek has estimated.
The total contract value for federal cloud projects amounted to about $4-billion in 2012, but jumped sharply to $17 billion in fiscal 2013, Deltek said in an analysis last fall. TCV reflects the value over the life of the contract.
The clear preference for the type of federal configuration to date has been for private cloud programs — either within the government or through a commercial arrangement, Deltek reported. Infrastructure as a Service could account for nearly 60 percent of annual federal cloud spending in 2018, followed by Software as a Service at just over 25 percent. Its assessment includes the following predictions:
- Federal agencies will continue turning to cloud providers for storage and computing infrastructure more than any other type of cloud service, and Big Data will be a major driver.
- Growing comfort with the technology will lead agencies to move more mission-critical systems to the cloud for hosting.
- Available funding for agency IT infrastructures will continue to decline, driving cloud adoption.
The range of federal cloud installations will continue to be varied.
“Some agencies are embedding cloud deployments within larger contracts for IT modernization and data center management. Others are moving forward with small, standalone pilots, while others are pushing enterprise-wide cloud engagements, such as the Interior Department and the Central Intelligence Agency,” Angie Petty, senior principal research analyst at Deltek, told the E-Commerce Times.
A Role for Various Vehicles and Brokers
The multiple approaches to cloud deployments have been matched by a similar pattern in procurement. Agencies are using a variety of contracting strategies and vehicles for investments in cloud computing, data center consolidation, Big Data and mobility.
Most agencies are turning to multiple award, indefinite delivery/indefinite quantity contract vehicles, and the standard General Services Administration schedule for IT, Deltek said. However, agencies are streamlining and consolidating IT contracts for cost-effectiveness and better management, so vendors must identify and gain access to agencies’ preferred contract vehicles.
“Agencies will continue to approach investments with caution and look for creative ways to fund and implement these programs,” Petty said. “Contractors should be prepared to offer a variety of approaches and best practices to agencies adjusting to new budget realities.”
The use of cloud brokerages could facilitate federal implementation of the technology, both Accenture and Deltek suggested.
“The role of broker services has becoming a hot topic in the federal government much as it has been in the commercial sector,” Accenture’s Rippert told the E-Commerce Times.
Eight benefits of cloud brokerage services are highlighted in the Accenture survey, including speeding up the procurement process and better managing vendors.
However, 58 percent of federal respondents to the Accenture survey were unsure of which brokerage functions would benefit their agencies. Accenture launched an enhanced version of its cloud platform service last August that includes a brokerage component.
“Evolving cloud solutions can be too complex for consumers to manage,” and “brokers play a pivotal role” in matching customers with providers and for negotiating cloud arrangements, Deltek noted in its market assessment.
“We see the role of cloud brokers becoming more essential as agencies move beyond porting easy targets to the cloud,” said Petty, “and start to evaluate the migration of complex systems or mission-critical components of their IT portfolio.”