DOD's cloud push proves that the innovation pyramid has flipped

The Defense Department's big-ticket cloud computing acquisitions show how the innovation pyramid has flipped and how the government has to follow the commercial world to get innovation.

The Defense Department’s ongoing work toward a pair of big-ticket cloud computing acquisitions show the reversal of the U.S.’ innovation pyramid from government to the commercial sector but some of that can also be traced to policy changes.

As I wrote earlier this month, IT market analysts have called out DOD’s aggressive push to buy a commercial cloud through the much-speculated about JEDI procurement is an example of so-called “Moore’s Law economics” in action that shows the flip in that innovation pyramid.

Specifically in cloud computing, advancements are coming from the likes of Amazon Web Services, Microsoft, Google and others.

Add DOD’s $8 billion "DEOS" email and calendar service acquisition into that mix as well as an example of where commercial innovation outpaces government-backed innovation efforts. Users outside of the government arena largely default to commercial cloud options, AWS’ Global Public Sector Vice President Teresa Carlson said Wednesday at the AWS Public Sector Summit in Washington, D.C.

“If you go to Silicon Valley or startups or students at universities they don’t know any different,” Carlson said. “Researchers, students and schools doing research today have no idea what to use except tools of cloud computing.”

The CIA took its step five years ago in the award of a $600 million contract to AWS for commercial cloud services. AWS rolled out its “Secret Region” cloud in the fall to host intelligence agencies’ software and data at the “secret” level of classification.

DOD’s pair of cloud acquisitions are its attempt to move forward but also show how early the military is still in its journey, not to mention the fact they have 500 different cloud initiatives ongoing.

“You have groups like them that are so important to our national defense globally and they’re still utilizing post- World War II capabilities with that lack of a sense of urgency to move,” she said. “They’re the enterprise of all enterprises, so you have one group that’s moving fast and another one moving really slowly. It’s going to take a while for the journey.”

Now here is where the policy angle comes in. In passing the 2012 National Defense Authorization Act, Congress directed DOD to come up with a commercial cloud strategy. Fast forward to September 2017, when Deputy Defense Secretary Patrick Shanahan sent a memo to speed up cloud adoption across the department and start a steering group to drive that push.

Congress in particular “really wanted to see the department move faster in order to support the mission requirements and to keep pace with other nations,” Amazon Public Policy Director Shannon Kellogg told Washington Technology and our sister publication GCN Wednesday at the summit.

“So seeing this big policy shift really happen at that secretary and deputy secretary level with the policy memo… that was also a very important example of how there’s been this big shift in policy to go faster and to go in a bigger way to commercial cloud services,” he said.

It should be noted that market analysts and executives widely view AWS and Microsoft as the clear frontrunners to win the $10 billion JEDI contract.

Many of them see AWS as the favorite partly because of DOD’s single-award plan versus multiple-award. (But Microsoft is not far behind according to federal IT analysts at Bloomberg Intelligence)

Stripping away the widely held perceptions regarding JEDI, Kellogg’s comments on what Congress wanted are instructive because they also mirror the newfound push from the defense and intelligence communities in particular to focus on the U.S.’ technological superiority.

That catalyst to reinvest in defense technology stems from moves by U.S. adversaries like Russia and China to make those investments, particularly since the post-Cold War drawdown from the 1990s and subsequent peace dividend.

Analysts at Technology Business Research recently connected DOD’s aggressive push forward on JEDI to that catalyst of U.S. underinvestment, whereas U.S. technology advancements previously had the catalyst of the Soviet Union’s push to do the same.

When DOD sent its explanation to Congress ahead of a May 7 deadline regarding JEDI, the Pentagon called out its own fragmented cloud acquisition strategy as an impediment and highlighted the fact that it has more than 500 current initiatives across the enterprise.

That indicates “DOD already has a multi-cloud strategy and they’re embracing through their initial policy changes comments the greater adoption of commercial cloud,” Kellogg said.

Those seemingly include the massive milCloud 2.0 effort run by the Defense Information Systems Agency, which wants to help other DOD services and components sign onto this iteration by 2019.

DOD has not made a specific budget request to Congress regarding JEDI, but does peg its overall five-year spend on cloud computing at around $1.6 billion through 2023.