FRAMINGHAM, Mass.--(BUSINESS WIRE)--IDC Government Insights today announced the availability of a new report, Perspective: Looking Up – U.S. Federal Cloud Forecast Shows Sustain Growth Through 2018 (Doc #GI250735). The detailed report, a follow-up to IDC Government Insights' inaugural cloud spending forecast in July 2013, evaluates how the U.S. Federal Government is spending part of its IT budget on cloud-based solutions. According to the new forecast, cloud spending now represents about 5% of all IT spending by the federal government. IDC Government Insights expects that the growth will continue into FY2015.
- ClicktoTweet: IDC U.S. Federal Cloud Forecast Shows Sustained Growth Through 2018, According to IDC Government Insights
For five years, both the U.S. Federal CIO Council and the Office of Management and Budget (OMB) have been pushing government agencies to move some types of IT systems to the cloud, particularly new systems, stored data, and mobile solutions. The ongoing level of spending on cloud solutions indicates that this effort is finally having a significant long-term effect. Total cloud spending is going up and the nature of cloud spending itself is changing.
Key highlights from the forecast include:
- Federal cloud spending for FY2014 will come in higher that originally predicted. A year ago, OMB stated that agencies are slated to spend a little over $2.2 billion on cloud solutions for 2014. By the end of this fiscal year, that number will grow to more than $3.0 billion.
- As in the previous two years, OMB has predicted a slight pull-back on cloud spending for upcoming FY2015. The current estimate is just under $2.9 billion for next year, however, IDC Government Insights believes that cloud spending will actually increase, not decrease, for FY2015, rising to perhaps to as much as $3.4 billion.
- Software as a Service (SaaS) is passing Infrastructure as a Service (IaaS) as the largest type of cloud spending. Last year, OMB estimated that agencies would spend $1.2 billion on IaaS and $724 million on SaaS for FY 2014. This meant that government was different than other industries, since most spend more of their cloud dollars on SaaS. But by the time FY2014 ends on September 30th, the federal government will have spent just $986 million on IaaS, and over $1.3 billion on SaaS.
Spending Snapshot by Cloud Type
Private Cloud
Federal private cloud services spending will reach $2.3 billion in FY2014. IDC Government Insights expects to see this market reach $5.9 billion by FY2018. Growth here is largely driven by the government's need to procure solutions that meet specific IT security standards. The Social Security Administration is the leading agency for private cloud.
Public Cloud
Government spending on public IT cloud services will reach $173.3 million in FY2014. IDC Government Insights expects to see this market reach over $3 billion by FY2017. Growth is driven by increased levels of trust for some types of public cloud, and by low-risk types of solutions, such as hosted Web sites and storage of that content which is considered public information. The Defense Department is the leading consumer of public cloud.
Community Cloud
Community IT cloud services spending will reach $406.9 million in FY2014. IDC Government Insights expects to see this market reach $868.9 million by FY2018. Much of this growth comes from traditional shared services solutions, focused around specific Federal Enterprise Architecture (FEA) Business Reference Models – pieces that are known as "Primary Service Areas." The Justice Department is the leader for community cloud.
Hybrid Cloud
Hybrid IT cloud services spending will reach $135.1 million in FY2014. IDC Government Insights expects to see this market decline to $118.8 million by FY2018. Hybrid is created when some clients use a variety of cloud solutions to "roll their own," creating mash-up style applications. While IDC Government Insights believes that hybrid cloud is the wave of the future, it's not necessarily a discreet spending category. The only agency expected to have a significant jump for hybrid cloud spending is the Treasury Department.
Future Outlook
While the immediate bright spot for the federal government is software as a service, longer term, IaaS will continue to shine. Meanwhile, federal private cloud spending currently exceeds public cloud spending by a wide margin given governments' unique security needs, such as FIPS compliance for civilian agencies and risk management rules for Defense organizations. In addition, as government also needs to work with trusted partners in a highly controlled environment, private cloud solutions will be the clear preference for the next several years.
According to Shawn McCarthy, Research Director, IDC Government Insights, "Clearly cloud growth is ramping up in the U.S. Federal Government. Spending went higher than originally predicted this fiscal year and we expect that the growth will continue into FY2015, even though the Office of Budget Management has indicated that it will cut back slightly on cloud spending. 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. For that reason alone, some will make the switch, although that kind of commitment should not be made without a detailed return on investment (ROI) analysis."
For additional information about this report or to arrange a one-on-one briefing with Shawn McCarthy, please contact Sarah Murray at 781-378-2674 or sarah@attunecommunications.com. Reports are available to qualified members of the media. For information on purchasing reports, contact insights@idc.com; reporters should email sarah@attunecommunications.com.
About IDC Government Insights
IDC Government Insights assists government policy, program, and IT leaders, as well as the suppliers who serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of government and IT industry experience, our global research analyzes and advises on business and technology issues facing the Federal/Central and local/provincial Governments. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of IDG, the world's leading technology, media, research, and events company. For more information, please visit www.idc-gi.com, email info@idc-gi.com, or call 703-485-8300. Visit the IDC Government Insights Community at http://idc-community.com/government.
