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Government Cloud Market Overview
The global government cloud market was valued at $20.8 billion in 2017 and is further projected to advance at a CAGR of 15.4% during the forecast period. With the rapid development in public-sector technology solutions and advancements in various cloud computing technologies, government agencies and stakeholders are increasingly steering toward new technology integration.
Based on model, the government cloud market is categorized into software as a service (SaaS), infrastructure as a service (IaaS), and platform as a service (PaaS). The SaaS category led the market by holding a revenue share of 48.2% in 2017. This can be attributed to the huge demand for SaaS from government agencies owing to the solution’s low cost and pay-as-you-go capability. Furthermore, government organizations use the SaaS model to rent software applications from cloud service providers (CSP), who host the services remotely.
GLOBAL GOVERNMENT CLOUD PRODUCT MARKET, BY TYPE, $M (2013 - 2023)
On the basis of deployment type, the government cloud market has been classified into public, private, and hybrid. Among these, the public cloud category, which held the largest share in 2017, was, in fact, the largest market category throughout the historical period (2013–2017). Furthermore, the market for public cloud deployment in the government sector generated revenue of $7.7 billion in 2017, and is projected to surpass $17.8 billion by 2023.
Asia-Pacific (APAC) is projected to accelerate at the highest CAGR, of 17.5%, in the government cloud market during the forecast period. The significant growth is attributed to the increasing government focus on improvements in citizen services and surging investments in the information and communication technology (ICT) departments in government set-ups, along with promotional campaigns. Additionally, with the rising need to implement cloud-based security services, for efficient accessibility and decision making, the government cloud market is projected to display a high growth momentum in the coming years in the region.
Government Cloud Market Dynamics
Cloud computing is trending in the government sector with continuous innovations in the technology. E-government initiatives, notable across the globe, are further accelerating the adoption of cloud computing. This is enabling the governments to advance their business flexibility in spite of their back-end silo systems, which is why they are rapidly adopting these solutions and helping the government cloud market prosper. Departments including defense, insurance, and education have been the early adopters of cloud computing in the public sector, with others following the lead in the government cloud market.
Government agencies are increasingly adopting cloud to cut down on capital expenditure (CAPEX) without actually undercutting the important public services. The usage of cloud is enabling governments to reduce the total cost of ownership (TCO), both, directly and indirectly, which is catalyzing the growth of the government cloud market. Additionally, the need for labor optimization, measured services, facility consolidation, and asset utilization is also leading to the increasing interest of government agencies in the adoption of cloud.
The propulsion in internet of things (IoT) usage is driving the growth of cloud, thereby creating a large consumer base for government cloud market players. IoT implementation requires cloud-based technologies for connectivity between different devices, which is further provided via the public, private, or hybrid models. With notable technological transformations, investments in IoT, and thereby in cloud, would be substantial, in the coming years.
The government sector is realizing the importance of IoT for attaining in-depth analysis and deriving useful information from the same. Furthermore, the transforming technological landscape is offering a strong growth potential to new entrants and start-ups in the government cloud market.
Government Cloud Market Competitive Landscape
The government cloud market displays a moderate intensity of rivalry; with the presence of several small and large market players that offer cloud solutions for the public sector, the competitiveness in the market is gradually increasing. Furthermore, the majority of the market players primarily offer similar solutions, the base offering being the same (cloud platform), with a less scope for product differentiation. This directly impacts the intensity of rivalry, with each market player combating for gaining the competitive edge.
Some of the major players operating in the global government cloud market are Intel Corporation, International Business Machines Corporation (IBM) Corporation, Cisco Systems Inc., Salesforce.com Inc., VMware Inc., Google LLC, Hewlett Packard Enterprise, Microsoft Corporation, and Oracle Corporation.
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