Government Cloud Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Government Cloud Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Government Cloud Market was valued at USD 22.86 billion in 2020 and expected to reach USD 59.74 billion by 2026 and grow at a CAGR of 17.4% over the forecast period (2021 - 2026). Government cloud refers to cloud computing and virtualization solutions that are developed, especially for government organizations. It is a global initiative to address and design cloud solutions that meet the needs of IT, strategic, financial, and operational objectives of federal governments across the world.

Key Highlights

• Government data generation is on the rise due to growing census data (ever-increasing population), new policies/initiatives introduction, partnerships with other regions, and GDP increase due to new enterprises mushrooming. Legacy systems consisting of physical hardware are not efficient and might run out of space. Hence, government cloud is mandatory.
• In 2009, the United States launched the data.gov portal. Since then, there has been a rapid increase in the systematic opening of government data around the world. Cloud is responsible for the transparency of government data, which promotes the government's accountability and reduces corruption. It also helps in empowering citizens and helps to solve complex public problems bringing a wider range of expertise and knowledge to bear on public problems.
• The skills gap is one of major challenge faced by cloud computing companies. As per IBM, shortage of skills in cloud technologies is one of their topmost prediction in 2018. OpRamp's Cloud Skills Survey also says that most of the enterprises are planning to go for a hybrid model where they will shift certain specialized workload to managed service providers and also the re-skill internal team.
• Another challenge that cloud computing companies face is that of security. According to IBM survey data and case study analysis, primary security oversight issues, including governance, vulnerabilities, and misconfigurations, remain top risk factors for cloud computing companies. One of the surveys top findings suggests that 66% of the respondents rely on cloud providers for base line security, and with the growing cyber crimes it makes the cloud security imperative for use in government and private organizations.
• Covid-19 has positively impacted the cloud market as factors like remote work and digitalization encourage the use of cloud-based solutions. According to a survey by MariaDB, 40% of the respondents are accelerating their move to the cloud, and around 51% planning to move applications to cloud to prepare for the second wave of Covid-19. About 39% expect to be 100% in the cloud. On the flip side, 24% of respondents are slowing down their move to the cloud because of security, price, and compatibility issues.

Key Market TrendsSoftware-as-a-Service to Occupy Maximum Share

• One area of cloud technology that is boosting significant growth is SaaS. SaaS-based applications and services are often used as integrating with cloud and on-premises models in hybrid environments. Organizations often need their SaaS applications to couple with many other existing applications and platforms in their data centers, as well as other cloud platforms. ​
• Government agency no longer has to create its own solutions when viable solutions are already on the cloud. The use of SaaS applications, where cognitive technologies are built into the software, has the potential to increase the uptake of AI and other emerging technologies in government.​
• For instance, the US Department of Health and Human Services uses a cloud-based, AI-powered SaaS tool to help analyze grant applications. This tool can analyze data to identify patterns that can help predict the likely outcome of a grant, e.g., identifying applications with a high probability of a negative financial audit finding. This tool can also summarize hundreds of pages of information into a paragraph that agency analysts can quickly review and then decide whether or not to award a grant.​
• Indian Government agencies are in numerous developmental stages and are always on the lookout for new ways to enhance their service provisioning while also reducing their costs so that they do not exceed their allocated budget. ​
• There is a demanding need for restructuring within the public sector in terms of processes in order to improve efficiency and efficacy. One of the best ways of restructuring the IT function within the public structure is by adopting software delivery models like Software as a Service.

Asia-Pacific to Witness the Highest Growth

• Various government initiatives have helped the region adopt cloud services, thus accelerating digital transformation and transforming into a full-fledged cloud computing hub. During recent years, countries in the ASEAN bloc have been working on the expansion of universal broadband infrastructure, building a stronger ICT industry, promoting a widespread use of ICT in all sectors, and creating a solid legal infrastructure suitable for the new technology development.​
• For instance, in the 2020 budget the Malaysian government announced an amount of MYR 21.6 billion into the National Fiberisation and Connectivity Plan (NFCP). The Malaysian government has set a target of achieving 50% cloud adoption by the year 2024. The focus in 2021 would be on the implementation of cloud-first strategy in the public sector.​
• A study on cloud computing in ASEAN by Thailand’s Electronic Government Agency (EGA) concludes that Indonesia is a potentially huge market for cloud computing due to a swift growth in internet users and a nascent stage of business transformation based on cloud computing.​
• In May 2020, the Cabinet of Thailand approved a USD 146.6 million state cloud and data center service to be funded over the next two years. The Government Data Center and Cloud service will be used by government agencies to ensure safe and secure use of data. With a state-run cloud service, the government expects USD 154.3 million to be saved on renting cloud services. ​
• The Japanese Government has asked Amazon Web Services to help move human resource systems and document management tools onto the cloud in a more than USD 273 million) contract through fiscal 2026. The government aims to put systems currently operated by different ministries and agencies on the cloud in four to eight years. ​

Competitive Landscape

The market for government cloud is concentrated with major giants, such as Microsoft, Oracle NEC, IBM, and Google, providing cloud solutions and services for the government. The entry barrier is high for this market since the existing vendors have a strong foothold in the market.

• June 2020: Salesforce launched cloud infrastructure, Government Cloud Plus, for U.S. government customers. The cloud solution offered by the company has achieved FedRamp provisional authority at the high-security impact level, which provides customers a secure and compliant environment to deploy CRM and other industry solutions.
• Oct 2019: Microsoft beats Amazon for a USD 10 billion military cloud contract called JEDI (Joint Enterprise Defense Infrastructure). JEDI is designed to upgrade legacy systems with newer cloud services. According to the original proposal, JEDI Cloud will provide enterprise-level, commercial IaaS and PaaS to the Department and any mission partners for all Department business and mission operations.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

IBM Corporation
Oracle Corporation
Internap Corporation
Packet Inc. (An Equinix Inc. Company)
Scaleway Inc.
Amazon Web Services Inc
Rackspace Inc.
CenturyLink, Inc.
LightEdge Solutions, Inc

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