The U.S. Federal Government’s Great Migration to a Diverse Hybrid Multicloud IT Landscape

The U.S. federal government is undergoing a significant shift in its IT infrastructure strategy, according to the 2024 Enterprise Cloud Index report commissioned by Nutanix.

Federal agencies are adopting a diverse hybrid multicloud strategy. This trend is evident in the report, which shows that exclusive use of on-premises data center/private cloud is expected to decline from 27% today to just 5% within the next 1-3 years.

In addition, reliance on a hybrid cloud IT operating model – defined as private infrastructure combined with a single cloud – is forecast to decline from 60% today to 35% in 1-3 years.

This migration isn’t a wholesale abandonment of on-prem, but a calculated expansion into the public cloud. Federal IT leaders are adding a diverse array of public cloud providers to their technology arsenals, creating a heterogeneous hybrid multicloud environment.

Contributing factors include federal IT leaders' need for choice and flexibility to support cloud-smart initiatives as well as technologies such as GenAI and other high-performance, data-intensive workloads. An IDC* survey found that 85% of organizations are actively evaluating and approximately one-third are beginning to budget for GenAI-enabling infrastructure technologies. 

Federal agencies are supporting the intelligent edge, where datacenter capabilities are required to process and analyze data for remote sites, as well as use cases such as decision-support and video surveillance. Disaster recovery remains a priority use case given on-going ransomware and malware threats. The number of “dark sites” is increasing, with federal agencies establishing security perimeters by running isolated "dark sites" alongside connected networks, separated by a DMZ with targeted security tools.   

Another factor includes the explosion of application development within business units that are using newer methodologies, such as SecDevOps. Moor Insights and Strategy** reports that while some applications drive the business longer term, others are created and deployed with a fixed duration and limited scope to support campaigns and other short-term initiatives.

What will this new IT landscape look like? 

The research indicates that IT operating models include a six-fold increase in hybrid multicloud – private infrastructure with two or more public clouds – and an over three-fold increase in adoption of multiple public clouds. 

As these diverse IT models proliferate, operational silos in this new IT landscape will continue to create application and data management challenges. These respective silos require specialized skill sets, toolsets and constructs that generally do not interact with each other. This interoperability gap and complexity can lead to data access issues, increased security vulnerabilities and policy inconsistencies across environments that ultimately hinder modernization initiatives like AI adoption.

Why are federal IT leaders planning to embrace more complexity with a more diverse cloud operating model? The Nutanix report found that the primary drivers of infrastructure choice include ransomware and malware protection, flexibility to run across clouds and on-premises, and data services like snapshots, replication, data recovery, and back-up.

An IDC* report noted that the most successful enterprises will need to become adept at creating, maintaining, and continually refreshing complex, interoperable environments that rely on heterogeneous mixes of traditional systems, modern dedicated cloud-native platforms, distributed workloads and systems, and a myriad of public cloud options. The ability to seamlessly connect between multiple clouds enables federal IT leaders to use optimized resources to ensure performance, efficiency, sustainability, cost, innovation, resiliency and sovereignty. 

In working with U.S. federal customers, Nutanix found that avoiding vendor lock-in while ensuring freedom of  choice and  flexibility are top IT priorities, especially given the concerns about risk prompted by recent industry acquisitions and subsequent portfolio and business model changes.

The Nutanix ECI report reflects these priorities and shows that IT leaders are making IT deployment model changes to unlock new levels of efficiency, security and innovation. This is driven by the desire to improve operations, deliver better services and outcomes, and enhance the experience of constituents.

Over 80% of survey respondents stated their organization would benefit most from a hybrid environment that encompasses public and private clouds. This cloud-smart approach enables IT leaders to choose the best IT environment for each application, data set and workload to meet objectives such as reducing costs, improving the security posture, meeting compliance and regulatory mandates like data sovereignty and improving performance.

This shift isn't unique to the federal government. Most industries foresee a declining reliance on only on-premises or hosted datacenter models in favor of diverse hybrid multicloud operating models over the next 1-3 years.

The Nutanix report on the federal government found several concerns with adopting a more diverse IT operating model, including whether the strategy would support AI initiatives, sustainability goals, interoperability, security, and address application and data management challenges.

Ransomware in particular stands out as a major concern. A staggering 50% of federal respondents ranked ransomware and malware protection as their primary driver for infrastructure decisions. This urgency is understandable given the alarming fact that more than 90% of federal agencies experienced a ransomware attack in the past three years.

Furthermore, 71% of federal organizations reported taking weeks or longer to fully recover from such attacks – a stark contrast to the 58% of global public sector entities that recovered within hours or days.

The ongoing ransomware threat, coupled with data security and compliance challenges, has kept cybersecurity as the top C-level priority for 2024, superseding even AI implementation.

Application migration is another hurdle, with 83% of respondents citing it as a moderate to significant challenge. Nonetheless, over 70% of federal agencies moved at least one application to a different IT environment in the past year, primarily to improve security posture, meet regulatory requirements or outsource IT management.

Containerization, a key enabler of cloud portability, has seen some traction, with 84% of federal organizations having containerized at least some applications. However, 16% have yet to adopt containers, which is significantly higher than the 5% global public sector average.

Sustainability is an area where the federal government lags behind global public sector averages. While over 90% of federal respondents pursued sustainability initiatives in 2023, only 72% agreed that sustainability is a priority for their organization, 15 percentage points below the global public sector.

The top sustainability initiatives of the past year included improving compliance with environmental regulations, improving the ability to identify areas for reducing waste products, and modernizing the IT infrastructure to reduce space, power and cooling costs. 

The Nutanix report reveals a disconnect between the federal government and global trends regarding remote work as a sustainability initiative. Only 19% of federal respondents cited remote work technologies as reducing pollution from employee commuting, in stark contrast to the 50% global average. This disconnect likely stems from unique operational and security requirements of federal agencies.

AI emerged as an intriguing paradox in the Nutanix report. Identified as one of the top five areas for increased investment, implementing AI ranked surprisingly low as a C-level priority for 2024, with only 27% of federal respondents listing it as such. This is a stark contrast to 37% for the global public sector and 45% for all global industries.

Federal IT leaders also ranked running AI applications as one of their top five challenges. Moreover, 99% of federal respondents agreed that data privacy is a concern due to AI. Federal respondents spoke of issues that include federal oversight, AI training for employees, accountability, and disclosure of use.

Conclusion

The federal government's IT infrastructure transformation is an ambitious and complex undertaking. It promises significant rewards in terms of agility, security and modernization to accelerate mission success, increase efficiency for benefit and service delivery and improve the constituent experience. As agencies navigate this hybrid multicloud journey, they must address interoperability gaps, application migration challenges, and the ever-present threat of ransomware and data breaches.

The 2024 Enterprise Cloud Index report from Nutanix shows how federal government's cloud-smart strategy is creating a seismic shift in how IT infrastructure is perceived and utilized – not as a monolithic, one-size-fits-all solution but as a highly diverse ecosystem tailored to the unique needs of each application, data set and workload.

Get all the details by downloading the 2024 Enterprise Cloud Index report on the US federal government.