Here’s a quick lesson on how to track government technology spending.
1) Follow the money.
2) Understand the official definition of what is being purchased.
3) Note the location of where the money has been spent. (Assuming that it's accurate. More on that below.).
These three steps are more challenging than you’d think, but they remain key for understanding how and where the U.S. federal government is directing its money. The problem is, for federal cloud computing solutions, these details have become a bit hazy. Cloud categories that were once clear have been changed. It’s a troubling trend because spending on cloud computing is growing. For fiscal Year 2016 it will top $6.7 billion. That’s roughly a 70% increase of FY 2015 cloud spending.
The full cloud spending forecast, including agency details, can be found in the following IDC document IDC.com starting tomorrow.: Perspective: Federal Cloud Growth Is Substantial Through 2019, but Provider Landscape Is in Flux. The document should be available on
The Problem with OMB’s Current Cloud Definitions
For over 10 years the Office of Management and Budget (OMB) has made decent efforts to report on how federal agencies spend their IT dollars, including how those budgets are targeted at various technologies and how the money is allotted to various sub-agency and program level solutions. For nearly five years this data has included basic details on cloud budgets, and until fiscal year 2016, cloud expenditures seemed fairly straightforward because they followed industry standard taxonomies.
Here’s how the details were segmented before this year:
By implementation type
- Private cloud
- Community cloud
- Public cloud
- Hybrid cloud
By deployment type
- Software as a Service
- Platform as a Service
- Infrastructure as a Service
- Other cloud
This formerly was a fine model because that’s the way most industries categorize cloud spending. It’s also how IDC tracks cloud spending. But now OMB has added an “Other” category to both of these lists. Not only that, these new categories have become the largest buckets of measured cloud spending. It nearly equals the total increase on cloud spending this year.
The figure below shows the issue. The same $6.7 billion federal cloud budget is shown segmented in two ways, by Deployment Type and then by Implementation Type. It shows how the other category has crept up to consume a majority of cloud spending.
This way of tracking cloud spending is extremely vague and it deviates from a standard used by much of the IT industry. This it makes it harder to follow the money when looking at a federal agency cloud budget. We contacted OMB via email last week to ask for details on what this other category includes, but there was no reply.
The real issue is that it’s important for both vendors and citizens to understand what the government needs for its cloud services. Government cloud requirements are stringent. Things like the Federal Information Security Management (or Modernization) Act set very specific performance and security requirements, and vendors have to customize, test and certify their offerings. Thus they need to know how large a gov market is before making decisions on how they might enhance and sell their products. When the government calls more than two thirds of its offerings “other,” it blurs the lines and confuses providers.
Part of a Larger Issue?
Meanwhile, a January, 2016, report from the Government Accountability Office (GAO) highlighted the fact that OMB does not always follow standard definitions for other some types of spending that it tracks.
An executive summary of the report stated that GAO admittedly found “most definitions adhered to leading practices derived from international standards for formulating data definitions,” they still found nearly 30% of the agency procurement details the reviewed were missing required elements or did not follow standard definitions for describing information. The report focused heavily on issues related to “place of performance” definitions for all types of contracts.