IBM and Amazon are battling for an 'explosive' fed cloud market

The fight between IBM and Amazon Web Services (AWS) over a CIA cloud computing contract is just a preview of what's ahead. Federal investment in cloud computing is showing remarkable growth.

AWS and IBM, as well as many others in the cloud space, are fighting for mindshare among federal IT managers, who now ordering cloud services by the truckload.

Market research firm Deltek said federal cloud computing growth has become "explosive" in just a few years.

In 2009, the total value of awarded contracts (TCV) for cloud services was just $27 million. In the 2013 fiscal year, which ended Sept. 30, the total value of cloud contracts had risen to $17 billion -- up sharply from $4 billion in 2012. The TCV is the total value of the contract over its term, otherwise known as the contract's ceiling value, whether it's, for instance, a three-year, five-year or longer pact, according to Deltek.

The TCV is just one measure of cloud services spending. Another is overall addressable spending. That is the spending during a fiscal year available for which contractors can compete. Overall addressable cloud computing spending by federal agencies will grow from $2.3 billion in 2013 to $6.1 billion in 2018, representing an 18% compound annual growth rate, said Deltek.

"Agencies are moving much more aggressively to the cloud," said Alex Rossino, principal research analyst at Deltek, who called 2013 "the tipping point." He expects many agencies to use cloud-based infrastructure services, in particular.

Rossino said there will be some slowdown in cloud spending over the next two years because of sequestration, with the current fiscal year as the budget trough. But spending will accelerate quickly after that, he said.

IBM this week said it had received a federal key security certification for its cloud offerings, the Federal Risk and Authorization Management Program, better known as FedRAMP. Amazon has also achieved that designation.

Andrew Maner, the IBM U.S. federal leader in its Global Business Services, said the FedRAMP certification is the "recognized government standard for the government approach to cloud computing."

In competing for cloud business, IBM and other enterprise firms, are facing relatively new arrivals. IBM has launched an advertising campaign that takes aim at Amazon. But it may also be trying to reinforce the idea that it can provide a full range of enterprise services, not just cloud services.

"Simply moving workloads from one to another in the infrastructure is not going to be enough," said Maner.

Amazon declined to comment on IBM's advertising efforts.

Copyright © 2013 IDG Communications, Inc.

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