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Public sector IT and private sector IT can be very different animals, but a looming decision by the Department of Defense has the potential to send shock waves through both sides of the IT world. The Department of Defense is preparing to accept bids for a potential 10-year, $10 billion Joint Enterprise Defense Infrastructure (JEDI)...

The post JEDI cloud contract looms large for customers, providers appeared first on The Troposphere.


Public sector IT and private sector IT can be very different animals, but a looming decision by the Department of Defense has the potential to send shock waves through both sides of the IT world.

The Department of Defense is preparing to accept bids for a potential 10-year, $10 billion Joint Enterprise Defense Infrastructure (JEDI) contract for cloud services as it modernizes and unifies its IT infrastructure. The JEDI cloud deal’s winner-take-all parameters could result in one of the largest windfalls in the history of the market, but also reinforce perceptions in the private sector — that AWS’ decade-plus stronghold on the market is even more dominant, or that a challenger will assert itself as a viable alternative.

It wouldn’t be the first time a federal cloud contract moved the needle in the private sector. Perceptions about the security of cloud infrastructure changed several years ago as big banks and well-known corporations gave their stamp of approval, but a public sector deal in 2013 stood out with many customers, when AWS won a $600 million contract to build a private cloud for the CIA. As will be the case with the JEDI contract, there were technical differences between the infrastructure the spy agency could access compared to the rest of the AWS customer base, but many corporate decision-makers have argued that if AWS security is good enough for the CIA, it’s certainly good enough for them. At the very least it provided an extra layer of comfort for the choices they made.

The JEDI cloud deal would have less impact on AWS today, as the company brought in more than $5 billion in revenues in its latest quarter alone. Still, the $10 billion contract would dwarf the 2013 CIA deal, and similarly echo across the entire cloud market. Cloud computing is a very capital-intensive, potentially very profitable business — a decade-long cash infusion on that scale would nicely buffer against the torrid growth required for a provider to compete in the hyperscale market.

But AWS isn’t the only cloud vendor making inroads with the federal government. Microsoft signed a deal in May, reportedly worth hundreds of millions of dollars, to provide cloud-based services to the U.S. Intelligence Community. The JEDI cloud contract would be an even bigger feather in Microsoft’s cap as it tries to lure companies to its Azure public cloud.

“If the award goes to Amazon it would tend to expand its lead in the market,” said Andrew Bartles, a Forrester Research analyst. “If it goes to Microsoft it would boost Microsoft Azure, not into the lead, but it would make it more of a two-horse competition.”

The JEDI contract would be an even bigger boon to IBM or Oracle, which have histories with the public sector but struggle to keep pace in the public cloud market. IBM has publicly tossed its hat into the RFP ring for this contact, and much of the public attention on this deal sprang from a private dinner between President Donald Trump and Oracle CEO Safra Katz in which she reportedly told the president the contract heavily favored AWS

And what about Google Cloud Platform? It’s often lumped in with AWS and Azure for its technical prowess but it hasn’t resonated as much with the enterprise market, and a deal of this size would turn heads. But Google recently pulled out of another Defense contract amid employee concerns about the use of its AI capabilities, and it hasn’t said publicly whether it will seek this JEDI cloud contract

The government believes the contract is so critical to its defense mission that it must align with a single partner for the next ten years. The counter argument is that cloud technology, capabilities and vendors change so rapidly that such a lengthy contract would lock in and limit the government’s options, said Jason Parry, vice president of client solutions at Force 3, an IT provider that contracts with the federal government.

An updated solicitation for input from the Defense Department was supposed to be published by the end of May. The delay is likely due to the volume of responses the government received, Perry added. The DoD has since declined to give a timeline on when the latest request would become available.

“It will be very interesting to see if they take the input provided and release something that people feel is more aligned with where the industry is headed, or if they stick with a single award,” he said.

Forrester’s Bartles recommends that the government split the JEDI cloud contract among multiple vendors to preserve flexibility and keep providers on their toes. But regardless of who wins, the deal will inevitably serve as another marker in the growth of this market.

“It validates adoption of cloud more broadly,” he said. “In a sense it reinforces the notion that your company can trust the security of cloud platform services.”

The post JEDI cloud contract looms large for customers, providers appeared first on The Troposphere.


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