Federal agencies spent $3.3B on cloud in FY 2015 — report

IBM dominates the federal infrastructure-as-a-service market, accounting for $1.1 billion in revenue between fiscal years 2011 and 2015, the Govini report found.

Federal spending on cloud computing has rapidly increased in the past several years — in spite of a lack of a comprehensive set of policies to help the government update its systems, a new analysis found.

In the last fiscal year, the federal government spent $3.3 billion on cloud, up from the $2.6 billion it spent in fiscal year 2012, according to a report out this week from big data and analytics firm Govini.

Infrastructure as a service, where the vendor offers virtual computing capabilities over the internet, accounted for the largest proportion of the cloud spending. Between fiscal 2011 and 2015, federal agencies spent a total of $3.6 billion on IaaS (out of a total $14.4 billion cloud spend). During that span, IBM was the leader in the field, accounting for $1.1 billion in revenue.

Matt Hummer, Govini’s director of analytics and author of the report, told FedScoop that IBM is in a unique position to “disrupt themselves” because they made or service many of the federal government’s current legacy systems.


“Because the transition to the cloud is so complex, it’s likely that IBM is really going to maintain its dominance in the IT hardware networking world — just because it does already has a strong legacy footprint, and it also has some very compelling options for transitioning to the cloud,” he said.

However, the report notes companies like Google and Amazon Web Services are “gaining share in the federal market by pushing their solutions through value-added resellers.” For example, DLT Solutions, which sold more than $655 million in IaaS between fiscal 2011 and 2015, sells Google and AWS products.

Meanwhile, spending on software-as-a-service offerings grew at the fastest rate, increasing by more than 67 percent (to $573 million) in 2015 over the previous fiscal year, the report found. Hummer said the ease of “updating security” is what’s largely driving that trend.

“SaaS platforms, they’re cloud based, so essentially you can update code, you can update administrative rights,” he said. “Both those components can be updated automatically and deployed instantaneously.”

For the report, Govini gathered unclassified contract documents from 16 defense and civilian agencies for the last several fiscal years into a database. Then, the company developed a kind of code to look for key words and ran it over the document database to glean information.


This year, the administration pitched Congress a plan to establish a $3.1 billion IT modernization fund, but the report notes that even if the idea doesn’t clear the legislature, agencies will continue to work to update their systems.

“Regardless of whether the funds are appropriated, agencies will continue to plan for modernization under OMB’s guidance and spend whatever development, modernization and enhancement (DME) funds they have mostly on IaaS and PaaS,” the report says.

Correction: Due to an error in the Govini report, an earlier version of this story incorrectly reported that DLT Solutions sold Microsoft IaaS products. 

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