Gartner: We're Still At The 'Very Beginning' Of Government Cloud Spending


After a couple of tough, lean years of reduced IT spending, the U.S. federal government will start to increase its technology budget once again in 2016, according to research firm Gartner.

Rishi Sood, vice president of government at Gartner, told attendees at UBM Channel's XChange Public Sector 2013 event in Washington, D.C., that the next two years will see a continued decrease of federal IT spending from $74.4 billion this year to $70 billion and $68.2 billion in 2014 and 2015, respectively.

But the good news is, Sood said Gartner predicts IT spending will begin rebound in 2016 with $69.9 billion and then reach $73.4 billion in 2017.

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"We see this as a short-term decline, not a secular decline in IT spending," Sood said. "If we can weather the downturn of this short-term storm, then there's plenty of money and opportunity [in the future]."

While government cutbacks and sequestration have put a pinch on IT budgets in the short term, Sood said there are still tremendous opportunities for government solution providers as more agencies and departments look to cut costs through cloud computing, cybersecurity and IT outsourcing.

Specifically, Sood identified federal health-care and intelligence agencies as the biggest spenders in the government right now. But he stressed that solution providers must identify the specific needs and preferences of each agency. For example, he said, the Environmental Protection Agency probably doesn't have a need for big data solutions, while the intelligence community isn't looking to outsource network operations following the recent NSA data leak.

Overall, Sood believes cloud computing will drive much of the IT spending for the federal government. Sood said the federal government is currently in what Gartner refers to as the "third wave" of cloud deployment with Infrastructure-as-a-Service adoption becoming more widespread. "You can't buy storage today without there being some kind of cloud component," he said.

For cloud spending, Sood said Gartner sees civilian-facing government agencies such as the Department of Interior, which recently announced a massive $10 billion cloud migration, and the Department of Agriculture leading the way. Ultimately, he said, cloud adoption for these agencies will be about more than just cost-cutting and will fundamentally change the way the government uses IT and interacts with its constituents.

"Cloud is becoming more central to the IT operation," he said. "We're still at the very beginning of cloud spending for the federal government."

PUBLISHED AUG. 22, 2013