Federal IT budget: Look for security, cloud spending in 2018

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Spending patterns

Will FY 2017 spending patterns point the way toward what’s to come in the next federal IT budget? IDC’s analysis highlights several areas of spending in the soon- to-conclude fiscal year. McCarthy said the larger-than-originally planned portion of the FY 2017 budget was spent, in part, on “security improvements, Defense Department (DoD) programs, cloud migration, system upgrades and grants to help states improve their Medicare and Medicaid Management Systems,” McCarthy said.

In an interview with SearchITChannel, McCarthy cited IDC estimates identifying DoD as the department that will spend the most on IT in FY 2017, some $30 billion. The U.S. Department of Health and Human Services is in second place at $12 billion and the Department of Homeland Security (DHS) is third, spending approximately $6.5 billion.

He added 60% of IT spending goes toward IT services such as hosting and managing data, upgrading software and hardware, business process support, performing business analytics and hiring programmers to customize technology solutions. The remaining 40% goes toward various types of software to support infrastructure management, hardware and other machines such as mobile devices that attach to the network.

McCarthy identified another growth area that he said will impact federal government IT spending next year: cloud providers that have ecosystems of software developers creating innovative software offerings on cloud platforms.

“These application developers will build solutions that meet the needs of whatever federal agencies want,” McCarthy said. “They’ve become savvy and they are able to offer solutions that meet federal requirements such as the Federal Information Processing Standards and the Federal Information Security Management Act,” he added.

McCarthy said his recent research on spending also indicates activity around the federal government’s Data Center Optimization Initiative (DCOI), which requires agencies to report on their data center strategies and transition to more efficient infrastructure such as cloud computing services. Since the start date for meeting DCOI requirements begins this fall, IT solutions providers can expect agency IT directors to be busy on several fronts during FY 2018. Federal data centers “will find themselves being evaluated on key metrics, including power usage effectiveness, effectiveness of their energy metering, level of virtualization, server utilization, facility utilization and more,” McCarthy said in a statement.  

He added: “Instead of managing devices, IT directors will move toward managing pools of resources and looking for ever-greater efficiencies. Essentially, DCOI requires a change in core skill sets, and it applies measurement and goals in a way that, frankly, can’t always be met by older legacy systems.”