Government-Focused Cloud Industry Predicted To Reach $18.48B By 2018

The government cloud market is predicted to soar to $18.48 billion in revenue in 2018 from $2.87 billion last year, according to a just-released MarketsandMarkets research report.

According to Dallas-based MarketsandMarkets, the rise in cloud adoption in the government sector is primarily due to a colossal disruption in the traditional technology ecosystem, said Priyam Agarwal, research associate at MarketsandMarkets.

"This disruption will result in increasing opportunities for many key players in the market, including Web and cloud masters like Amazon and Google, along with a large number of telecom operators and other services providers," said Agarwal. "In order to protect their security interests, government agencies at federal, state and local levels require a secure and a quick method to synchronize and transfer their confidential information across agencies.”

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The ability for government agencies to pay as they go as well as increased storage and computing capabilities have helped boost cloud adoption in the space, said Agarwal.

"Today, there are online marketplaces for information and communication services specifically for the government agencies, [including] IaaS, PaaS, SaaS and various other consulting services. Government departments can easily purchase cloud services on a pay-as you-go model or on yearly contracts," said Agarwal. "Government cloud helps the entities to securely and efficiently manage and store their data. This results in enhanced and unified teams, handling much bigger projects at an effective cost.”

IT standardization is yet another factor driving cloud adoption in government agencies, said Agarwal.

"Currently, the cloud adoption is purely driven by IT," said Agarwal. "But, going forward, it will be driven by the respective government [agency's] mission. The government agencies are modifying their IT portfolios to take advantage of cloud computing and to maximize the capacity utilization, to improve IT flexibility and responsiveness, and to minimize operating costs."

For Network Solutions Provider, the government sector's march to the cloud is a sure thing, said Phillip Walker, CEO of the El Segundo, Calif.-based company.

"I think that cloud is inevitable," said Walker. "Government agencies are seeing where they need to update. It's a better use of funds, gives them more flexibility and it's a great step to convergence in connecting email and phone systems, and in connecting the government faster." 


Security, not cost savings, is the primary driver of whether or not a government agency will adopt a cloud model, said Walker.

"Security is the biggest threat and push in terms of picking a model, in what is the safest way to do this," said Walker. " [Agencies are asking,] 'How can I slowly get into this so I am comfortable?' Cost, on the other, hand is not going to be an issue."

Network Solutions Provider aims to boost its role as a trusted adviser in implementing the cloud in federal agencies, said Walker.

"This is an opportunity to show our expertise since we were born as a cloud company -- we're not shifting models; we're enhancing our current model," said Walker.

N2Grate Tech Solutions, meanwhile, works with the Federal Aviation Administration, Social Security and the Department of Labor to build out a variety of cloud solutions, said Steve Halligan, president and COO of Washington, D.C-based N2Grate. Community clouds from public cloud providers and hybrid cloud models are on the rise, he said.

"Special compartmentalized community clouds serve a distinct population by having these firewalled cloud services," said Halligan. "Hybrid has probably the broadest set of applicability to federal agencies, whether it's existing infrastructure assets that they currently own or contracts that are currently in execution phase for a variety of security-related reasons.

"My company's role is to facilitate, consult, guide and understand all the aspects in the marketplace to help agencies in that [cloud] transition, and that's really our goal," said Halligan. "Each year, we are doubling down on this market's continued growth. ... We anticipate these cloud migrations to be a major part of our focus for many years to come."

PUBLISHED JAN. 9, 2013