recommended reading

IaaS Growth Drives Federal Cloud Market


Infrastructure-as-a-service offerings dominate the federal cloud computing market, according to a new report.

The federal government spent $3.3 billion on cloud computing in fiscal 2015, up almost 25 percent from a sequestration-driven 5-year low of $2.6 billion in fiscal 2012, according to analysis from big data and analytics firm Govini released this week.

IaaS providers benefitted the most from federal agencies beginning to modernize IT infrastructures. Agencies increased IaaS spending by 53 percent to $897 million in fiscal 2015 from $585 million in fiscal 2012.

From an industry perspective, the biggest beneficiaries were IBM – the market leader in IaaS offerings, with $1.1 billion in cloud revenue since fiscal 2011 – and cloud resellers DLT Solutions and InfoReliance.

» Get the best federal technology news and ideas delivered right to your inbox. Sign up here.

The need for agencies to modernize IT infrastructures and manage the internet of things – the proliferation of networked devices and sensors – are driving cloud spending, said Matt Hummer, director of analytics and professional services for Govini.

“Agencies have an infrastructure modernization gap between the standards for what they need to be doing for things like the internet of things and where they are right now,” Hummer said. “The mission of agencies and their data and mobility are really driving cloud.”

New guidance on IT modernization from the  General Services Administration, the Office of Management and Budget, as well as legislation before Congress is likely to push cloud spending higher, he said. A key factor is that the Obama administration guidance is predicated on agencies having the dollars to actually modernize – such as the $3.1 billion IT Modernization Fund promoted by U.S. Chief Information Officer Tony Scott. As it stands, the administration’s fiscal 2017 budget sets aside $7.3 billion for provisioned services like cloud computing.

“A big challenge a lot of agencies are having is they are ad hoc buying cloud wherever they can where the dollars allow them to do that,” Hummer said.

While IaaS might be the biggest cloud market in federal government so far, software-as-a-service or platform-as-a-service offerings also show growth. Govini’s analysis indicates federal SaaS spending “surged in fiscal 2015,” jumping to $574 million from $342 million in fiscal 2014. With SaaS becoming the dominant software delivery model in part because of features like automatic patch management, Govini expects increases in coming years in SaaS spending. 

Govini calls PaaS “optimal for IoT development” because of its flexible architecture – among other features – and the numbers indicate increased growth in that market across government as well. Driven heavily by the Defense Department, which accounts for almost half the government’s PaaS spending, the federal PaaS market jumped 39 percent from fiscal 2011’s spend to $551 million.

Threatwatch Alert

Thousands of cyber attacks occur each day

See the latest threats


Close [ x ] More from Nextgov

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • It’s Time for the Federal Government to Embrace Wireless and Mobility

    The United States has turned a corner on the adoption of mobile phones, tablets and other smart devices, outpacing traditional desktop and laptop sales by a wide margin. This issue brief discusses the state of wireless and mobility in federal government and outlines why now is the time to embrace these technologies in government.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • A New Security Architecture for Federal Networks

    Federal government networks are under constant attack, and the number of those attacks is increasing. This issue brief discusses today's threats and a new model for the future.

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Software-Defined Networking

    So many demands are being placed on federal information technology networks, which must handle vast amounts of data, accommodate voice and video, and cope with a multitude of highly connected devices while keeping government information secure from cyber threats. This issue brief discusses the state of SDN in the federal government and the path forward.

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.


When you download a report, your information may be shared with the underwriters of that document.