The market for Government Cloud is forecast to reach $42.3 billion by 2025, growing at a CAGR of 13.9% from 2020 to 2025. Factors such as growth of digital services across government agencies, easier access from remote endpoints, and the need for regulatory enforcement drive Government Cloud Market growth across the globe. In the form of user logs, public policy, and systems, central and state governments have vast volumes of data. Therefore, it becomes critically necessary for the government to have a strong and reliable storage option to provide all on demand services, hence driving the market growth during the forecast period 2020 – 2025.
Type - Segment Analysis
The Government Cloud Market is segmented into solutions and services by type. By Type, the services segment is expected to grow at the highest rate of around 17.4% during the forecast period. The main driving forces are reducing costs, business efficiency, and business sustainability through a policy-driven and software-defined environment, which causes government service organizations to shift into a cloud world. These services help in educating government employees about the strategic transformation, business assessment, solution assessment, ROI among others. The benefits offered by education services are rapid adoption of updated technologies, improved individual and team productivity, and increased returns on software investments.
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Model - Segment Analysis
The Government's cloud sector is segmented into SaaS, PaaS, and IaaS based on business models. These service models are used over the internet to deploy applications, platform, and infrastructure. By model, the IaaS service model held the largest market share of around 47% in 2019 as it provides the capability to transfer work to the cloud at the time of peak demand for on-premises systems. This helps users save their capital resource which may get used for other purposes. IaaS enables and helps government agencies understand their cost savings and efficiencies, while modernizing and improving their IT infrastructure with minimal capital resources.
Geography - Segment Analysis
Global Government Cloud Market is dominated by APAC with a share of 38% in 2019. Asia-Pacific is in the middle of a transformation powered by cloud technologies. The increasing proliferation of smartphones and tablets is forcing major corporations to set up their Asia-Pacific cloud data centre. The governments in Australia and Singapore see cloud services as an opportunity to improve government service delivery outcomes by eliminating redundancy, increasing agility, and providing information and communication technology (ICT) services at a cheaper cost. Moreover, the Government of India has implemented a number of ICT initiatives under the National e-Governance Plan (NeGP), including the creation of ICT infrastructure both at the center and state levels. The infrastructure, thus, created is providing the basis for the adoption of cloud computing for the government with the objective of making optimum use of existing infrastructure, re-use of applications, efficient service delivery to the citizens, and increasing the number of e-transactions in the country, as a result, helping achieve the ultimate goal of NeGP.
Drivers – Government Cloud Market
Greater storage and computing capabilities
Federal agencies and other government entities worldwide recognize the value of managing and monitoring cloud data for purposes of continuity and enforcement. The Government cloud allows these organizations to safely and efficiently handle and store their data. This results in enhanced and unified teams that can handle bigger projects at an effective cost. Cloud hosting services can be advantageous for government agencies and other small departments. These facilities can be leased as much as required for the needs of processing power and data storage. This saves the efforts for procuring one-time cost to for the servers and manage the ongoing costs to maintain the costly data centres. Furthermore, the government cloud provides greater computing capabilities when implementing disaster recovery solutions, as it enables government agencies to configure customized settings for backup, with regards to the data and application types, sequence, and backup location.
Increasing adoption of IAM (Identity & Access Management)
Managing and securing multiple accounts growing the cloud is rising with rapid industrialization. This has resulted in increased IAM solutions being implemented. Earlier, IAM was regarded by companies as a capital investment that was bought and introduced on premises. The successful implementation of IAM projects involved a large cost structure, which took months of intensive research. The pattern is now continuously evolving, however, due to the growing cloud market. Implementing and accessing cloud-based IAM software and services has become simpler because of the minimal capital needed for activation and the less time spent on implementation. With the growth of SMEs, the adoption of cloud IAM solutions across organizations has also increased.
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Challenges – Government Cloud Market
Fluctuating structure of the regulatory policies
Regulatory strategies differ across countries, and from organization to organization. There is not a consigned entity in many countries to control such policies. The policies must therefore be controlled and enforced taking into account the regional factors, such as macroeconomic risk factors, as well as the business needs. Organizations have begun introducing risk and compliance approaches along with approaches to audit management to help address this restriction. The complexity of the evolving regulatory policies and the shifting macroeconomic conditions make it difficult for vendors to meet the requirements of government agencies. Some organizations, especially in the regions where there are no proper governing and regulatory bodies, tend to implement in-house regulatory guidelines and policies.
Market Landscape
Product launches, acquisitions, and R&D activities are key strategies adopted by players in the Government Cloud Market. Government Cloud driver market is expected to be dominated by major companies such as AWS (US), Microsoft (US), IBM (US), Google (US), HPE (US), Oracle (US), Salesforce (US), Cisco Systems (US), Dell Technologies (US), VMware (US), Verizon (US), CGI Group (Canada), AT&T (US), SAP (Germany), NetApp (US), Informatica (US), Huddle (UK), Capgemini (France), CenturyLink (US), Citrix (US), Equinix (US), Fujitsu (Japan), NTT DATA (Japan), Red Hat (US), and NEC (Japan) among others.
Acquisitions/Technology Launches/Partnerships
In April 2019, U.S. government has planned to sign a $10 billion military cloud contract called JEDI (Joint Enterprise Defense Infrastructure). This contract is aimed 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.
In November 2018, Amazon Web Services has expanded its global footprint by establishing a new region of interconnected data centers specifically for the US government and its various contractors. This initiative has been taken following the launch of Amazon’s first West Coast government cloud region in 2011.
Key Takeaways
By Type, the services segment is expected to grow at the highest rate of around 17.4% during the forecast period as it facilitates reduced costs and business efficiency which causes government service organizations to shift into a cloud world.
Government Cloud Market is dominated by APAC with a share of 38% in 2019 due to ever increasing need of maintaining large volumes of government data.
The government cloud provides greater computing capabilities when implementing disaster recovery solutions, as it enables government agencies to configure customized settings for backup, with regards to the data and application types, sequence, and backup location, thereby propelling the market growth.
Varying structure of regulatory policies is affecting the implementation of government cloud in various countries hence hindering the market growth.
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