Deltek Predicts Operational Agility and Cost Efficiencies Will Fuel $3.2B in Federal Cloud Computing Services Spending by 2017

Agencies are treading carefully until security, budget, acquisition and infrastructure issues are resolved.

HERNDON, Va. — (BUSINESS WIRE) — May 3, 2012Deltek, Inc. (Nasdaq: PROJ), the leading global provider of enterprise software and information solutions for professional services firms and government contractors, has released a new GovWin IQ research report; Federal Cloud Computing Services Market, 2012-2017.

While IT spending by federal agencies is experiencing the same budget pressures as other segments of federal spending, the cost savings associated with cloud computing are serving as an enabler of its adoption inside many agencies. Further, agencies recognize that streamlining their IT environments and sunsetting their legacy systems reduce costs and improve performance. According to Deltek’s new report Federal Cloud Computing Services Market, 2012-2017, federal spending on vendor-furnished cloud computing services by the U.S. government will increase from $734 million in 2012 to $3.2 billion in 2017 at a compound annual growth rate (CAGR) of 34%.

The adoption of cloud computing by federal agencies will be largely influenced by their levels of “cloud readiness.” Agencies’ progress in data center consolidation and infrastructure modernization sets the stage for cloud computing decisions, as agencies determine whether their internal resources are prepared to handle cloud computing, or if they must leverage cloud offerings from commercial or other government providers. To provide a practical view of implementation trends across the federal market, Deltek analyzed the current state of infrastructure consolidation, planned cloud initiatives, and the most used contract vehicles that could be used to procure cloud services to estimate the “Cloud Readiness Levels” for the top 12 departments. The report shows that agency preparedness varies, even as policies and mandates push for broader near-term cloud adoption.

“Some departments like Health and Human Services and Transportation are well prepared for cloud due to significant progress in data center and infrastructure consolidation and well-developed cloud computing strategies,” explains Deltek Principal Research Analyst Alex Rossino. “Homeland Security has pursued several cloud implementations but, like Navy and many other departments, it still has much work ahead to integrate its legacy IT infrastructure.”

Government policies, such as the federal information technology reform outlined by the Office of Management and Budget's 25 point implementation plan, are pushing agencies to identify and adopt cloud computing solutions. However, the directives to implement and manage cloud services are outpacing the strategy and migration plans needed to minimize risk.

“While the ‘Cloud First’ policy encourages agencies to transition services to the cloud, ambitious timelines and policy pressure may not give adequate time for agencies to develop solid, long-term strategic plans,” notes Deniece Peterson, Senior Manager with Deltek. “As a result, private cloud deployments, which allow agencies to maintain control over the risk that lack of adequate planning may create, will continue to dominate the market in the near-term.”

There are major roadblocks that can slow the momentum of the cloud services market, such as standards, budgeting and acquisitions, and security requirements. The Federal Risk and Authorization Management Program (FedRAMP) will set a security baseline for cloud services, but agencies will need to define any additional requirements they have above FedRAMP. The “certify once, use many times” process established in FedRAMP is expected to accelerate the rate of cloud adoption.

“Addressing the security issue with FedRAMP will definitely open the door for cloud adoption,” observes Deltek Senior Research Analyst Kyra Kozemchak. “However, the potential timeline from FedRAMP application to assessment to actual contracts means that most cloud providers must be committed for the long-term in order to see significant business benefits.”

A free summary of the report is available from Deltek’s GovWin IQ at; Federal Cloud Computing Services Outlook, 2012-2017. The report includes a forecast of federal Cloud Computing Services contracted spending and the current contract landscape at the top twelve federal departments and agencies. Press interviews can also be arranged through Email Contact.

About Deltek

Deltek (Nasdaq: PROJ) is the leading global provider of enterprise software and information solutions for professional services firms and government contractors. For decades, we have delivered actionable insight that empowers our customers to unlock their business potential. 15,000 organizations and 2 million users in over 80 countries around the world rely on Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and deliver more profitable projects. Deltek – Know more.

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