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Is Your CSP Capitalizing on the Rise in Federal Cloud Spending?

Is Your CSP Capitalizing on the Rise in Federal Cloud Spending?

Blog Article Published: 07/12/2022

This blog was originally published by A-LIGN here.

Written by Tony Bai, Federal Practice Lead, A-LIGN.

With federal cloud spending at an all-time high, the government sector has become a lucrative market for technology companies. Analysis from Deltek indicates that federal agencies spent nearly $11 billion on the cloud in FY 2021, up more than 40% from the $7.6 billion spent in 2019.

Cloud service providers (CSPs), in particular, have a significant opportunity to capitalize on this meteoric rise in federal cloud adoption. However, in order to do business with the U.S. government, such companies must achieve Authorization to Operate (ATO) status under the Federal Risk and Authorization Management Program, also known as FedRAMP.

In the article below, you will learn:

  • Why the U.S. government is prioritizing cloud technologies
  • The current trajectory of federal cloud spending
  • How your business can use FedRAMP to capitalize on this trend

The Cloud Smart Strategy (Formerly Cloud First Strategy)

A 2017 Executive Order (EO), Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure, was a major catalyst in accelerating the federal agency adoption of cloud-based solutions. It declared that agencies must “show preference in their procurement for shared IT services, to the extent permitted by law, including email, cloud, and cybersecurity services.”

As a result, the U.S. government officially updated its Federal Cloud Computing Strategy from “Cloud First” to “Cloud Smart” in June 2019. The Cloud First strategy was more conceptual in nature and left many implementation questions unanswered. Cloud Smart, on the other hand, was designed to provide practical guidance to help agencies enhance the speed, security, and cost savings of their IT programs. A significant amount of this guidance focuses on brokering business relationships with CSPs based on the value their cloud technology provides.

More recently, the 2021 Executive Order on Improving the Nation’s Cybersecurity mandated that the head of each government agency “update existing agency plans to prioritize resources for the adoption and use of cloud technology.” This demonstrated that the U.S. Government remains dedicated to realizing the long-term mission of Cloud Smart.

Record-high Spending Across the Federal Cloud Market

Government agencies are currently experiencing broader, more intense pressure to adopt cloud-based solutions than ever before. But are they acting accordingly to fulfill the promise of Cloud Smart?

If you look at federal cloud spending data from the past few years, the answer is a resounding “yes.” As mentioned above, agencies spent an impressive $11 billion in FY 2021, outpacing several different projections from mid-2021 by an order of magnitude and suggesting that the market is growing even faster than many anticipated.

What’s more, the total value of cloud contracts awarded by federal agencies in FY 2021 was a staggering $23.3 billion, indicating that the government is committing to long-term relationships with CSPs, offering high-value solutions for their IT needs.

Even in the face of a looming recession, federal spending on technology has remained steady, and cloud remains a top priority that is firmly locked in the upper percentile of all federal contract spending.

Using FedRAMP to Capitalize on the Federal Cloud Boom

It has become abundantly clear agencies are steering their considerable purchasing power toward the adoption of cloud technologies. To streamline and standardize the security and procurement elements of the Cloud Smart strategy, the government is using FedRAMP.

In order to do business with government agencies, CSPs must demonstrate their ability to meet federal security requirements through FedRAMP assessment, authorization, and continuous monitoring. The program resulted in a robust marketplace of vetted CSPs for agencies to choose from when evaluating their technology needs and advancing their cloud maturity.

It’s also worth noting that the FedRAMP program continues to put a great deal of effort into making the authorization process more accessible to CSPs of all shapes and sizes. In 2018, six years into the program, there were 100 authorized products. In just a few years, that number has more than doubled to 260+ authorized products and counting.

Best of all, agencies have a great deal of trust in the security of FedRAMP-authorized cloud solutions and are leaning heavily on vendors from the FedRAMP marketplace. According to FedScoop’s recent Federal Perceptions of Cloud Security report, federal IT leaders believe FedRAMP is the number one way to maintain security control over their agency’s strategic data, above on-prem data centers and hybrid/commercial cloud environments.

Three Reasons CSPs Should Invest in FedRAMP Now

Are you a CSP considering doing business with the government? Here are four reasons you should get started on FedRAMP compliance ASAP.

The Ability to Sell to the Federal Government

FedRAMP is mandatory for all cloud services used by government agencies. Achieving authorization will allow you to tap into the booming federal cloud market.

Meet Multiple Government Agencies Requirements

A FedRAMP security authorization can be reused across multiple agencies: FY 2021 saw a 45% increase in the amount of FedRAMP-authorized security packages reused by agencies, indicating that the “certify once, use many” vision of the program has become a reality.

Differentiate with a Valuable Marketing and Sales Tool

FedRAMP is recognized as the pinnacle of cloud security certifications, which means it can be a valuable cybersecurity proof point when you are selling to the private sector, too. A news search of “FedRAMP authorization” yields countless press releases illustrating the pride CSPs take in this compliance achievement.


About the Author

Mr. Bai is a cybersecurity professional with a range of certifications. As the Federal Practice Lead at A-LIGN, Mr. Bai supports all FedRAMP, FISMA, NIST 800-171 and other NIST-based projects. He is responsible for overseeing all NIST-based engagements and providing security controls advisory and guidance to our clients. Mr. Bai has hands-on experience leading all stages of system security, including requirements definition, auditing, scanning, and mitigation. With over 27 years of information systems experience to include 10 years specializing in cybersecurity. His extensive background includes providing risk assessments of information systems for government agencies and commercial clients. Mr. Bai brings an impressive blend of knowledge of security controls and technical aspects of cybersecurity and IT operations.

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