Government spends more than it plans on cloud IT — report

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Government agencies spent more on cloud services than they budgeted for in the past four years, and they look set to do the same in the future, according to a new report released Wednesday.

The report from IDC Government Insights details how the Office of Management and Budget’s prediction of about $3 billion cloud spending for fiscal year 2014 turned out to be less than half of the actual spend — a pattern repeated before and since.

“Basically, every year since 2012, government agencies have spent more on cloud each year then they predicted they would,” states the report, titled “Federal Cloud Growth is Substantial Through 2019, But Provider Landscape is in Flux.”

“This has happened, even as [the] overall federal IT budget has decreased slightly.”

In the current fiscal year, 8.5 percent of all IT funds are budgeted to be spent on cloud systems and services — a whopping $6.7 billion. By fiscal 2019, the report says, that is expected to climb to $11.5 billion, rising by about $2 billion per year.

The report calculates that 50 percent or more of federal IT services will use the cloud by 2028 due to the steady funding and high demand for cloud-based storage, but the picture is uncertain because of changing and unclear definitions.

[Read more: 4 ways to encourage cloud adoption]

This year, for the first time, OMB added an “other” category to track cloud spending, in addition to the ways it previously broke down cloud costs by implementation and deployment type, report author Shawn McCarthy wrote in a blog post.  

This “other” category took up more than two-thirds of spending.

“This way of tracking cloud spending is extremely vague and it deviates from a standard used by much of the IT industry,” McCarthy wrote in his blog post. “When the government calls more than two thirds of its offerings ‘other,’ it blurs the lines and confuses providers.”

Agencies also move headstrong into the cloud once they begin to see the return on investment it can offer, McCarthy said. 

“I believe agencies have underestimated [ in their budgeting] what they will spend on cloud for the past few years, because once they start, they find that it is cost effective, and then they move into it more aggressively,” he said.

[Read more: Coming soon: A bigger, faster FedRAMP]

Among all agencies, the Department of Defense spent the most on cloud, followed by the departments of Homeland Security and the Treasury.

Cloud services have been a large focus of the government since the beginning of the federal cloud-first policy in 2011, which encourages the government to accelerate the speed by which it improves services. Since then, funding has increased annually and new programs have been added, like the governmentwide FedRAMP, which standardizes and provides continuous monitoring for cloud products.

Contact the reporter on this story via email: Jeremy.Snow@FedScoop.com. Follow him on Twitter @JeremyM_Snow. Sign up for the Daily Scoop — all the federal IT news you need in your inbox every morning — here: fdscp.com/sign-me-on. 

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budget, data analytics, IDC Government Insights, Tech
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