Cloud computing headed for $20B market
Administration strategy calls for data center reduction to pay for plan
- By Kathleen Hickey
- Feb 18, 2011
The market for cloud services is about to explode in the government space if Federal CIO Vivek Kundra has his way. HIs recenlty released Federal Cloud Computing Strategy calls for about a quarter of federal IT spending, or $20 billion, to be committed to cloud systems.
Additionally, under the Cloud First program, agencies will be required to move three services to the cloud within 18 months, adopt a cloud model wherever feasible and evaluate cloud options before making investments.
An estimated $20 billion of the federal government’s $80 billion in IT spending could be used for cloud computing, Kundra said in the report. The agencies expected to spend the most on cloud technology are the Homeland Security and Treasury departments, at approximately $2.4 billion apiece, followed by the Defense, Veterans Affairs and Transportation departments. The top contractors at those agencies include companies such as Hewlett-Packard, Computer Sciences Corp., IBM, and Lockheed Martin.
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Funding for the move will be created through data center consolidation. Kundra anticipates a 30 percent reduction in data center infrastructure costs by moving to cloud solutions, with similar efficiencies in software applications and end-user support.
“Cloud computing can allow IT organizations to simplify, as they no longer have to maintain complex, heterogeneous technology environments. Focus will shift from the technology itself to the core competencies and mission of the agency,” he wrote.
Currently, federal agency servers operate at a capacity much lower than private industry worldwide, with 27 percent manufacturing capacity utilization, compared to a 79 percent average across the European Union, France, Germany, the United States, Brazil and Canada, Kundra said in his presentation on the report.
He said the federal government’s IT environment “is characterized by low asset utilization, a fragmented demand for resources, duplicative systems, environments which are difficult to manage, and long procurement lead times. The cloud computing model can significantly help agencies grappling with the need to provide highly reliable, innovative services quickly despite resource constraints.”
The report is an expansion of the administration’s cloud policy in its "25-Point Implementation Plan to Reform Federal IT Management," released in December. In it, Kundra defines cloud computing, outlines a migration framework and strategies, and cites examples and resources.