Cloud vendors are quick to tout the benefits offered by on demand IT compared to traditional on premise IT service models. Their marketing materials offer many examples of the benefits realized from moving to the cloud for increased service agility, efficiency, and cost savings. The lure of cost savings generated by moving from a capital expenditure to operating expense based, on-demand service is often cited by IT leaders as a key factor in their decision to move to cloud service support.

Indeed many federal agencies have committed significant dollars to the promise of cloud efficiencies and IT cost savings. As of 2014, it is estimated that cloud investments represent 5% of total IT spending, the equivalent of approximately $3B annually (IDC Press Release from 9/16/14).

In the rush to gain on demand IT efficiencies and savings and meet federal mandates such as the Cloud First Initiative, many have forgone careful planning to ensure their goals are met and promises from cloud vendors are delivered. Unfortunately, failure of cloud projects is not uncommon and often federal timelines for realizing benefits from cloud services are overly optimistic. To date, OMB auditors have issued over 747 recommendations as of January 2015 to address the trend of failing IT acquisitions. OMB has confirmed only ~23% have been fully addressed to date (Next Gov, 2/11/15).

In addition to addressing audit recommendations, agencies also need objective insight to better evaluate proposals and contract terms from cloud vendors. Without independent outside analysis, it is unlikely agencies will be able to establish a criteria for identification of best value or effective control and oversight mechanisms. The future of cloud acquisition will remain bleak unless organizations begin to address the root issues of evaluating cloud services and match rigorous independent analytical review with cloud acquisition planning practices.

The heart of the issue lies in the source of most cloud savings and benefit data: the cloud service provider (CSP). Since cloud services are still relatively new to the federal government, there are few independent benchmarks to establish how quickly or effectively cloud services benefits should be realized in a mission environment. As a result, agencies are dependent on cost and performance projections from competing CSPs to set targets for their service performance. This dependency gives the advantage to the CSP in evaluation of proposals and negotiation of cloud contract terms and conditions. Further, it incentivizes CSPs to bundle their prices in such a way that make it difficult for the government to compare costs or determine relative value of CSP proposals. The inevitable outcome of this dependency is that government leadership is at a disadvantage in evaluating the performance of cloud services in their mission environment.