Public Sector Cloud Adoption Trends: Navigating the Shift to a Hybrid Multicloud Future

When it comes to technology adoption, public sector organizations have long been constrained by legacy systems, IT staff shortages, limited budgets, and complex regulatory and compliance mandates.

The 2024 Global Public Sector Enterprise Cloud Index (ECI) report commissioned by Nutanix reveals a remarkable shift underway in the use of diverse IT models to unlock new levels of efficiency, security and innovation – ultimately delivering better services and experiences for constituents.  

Public sector survey respondents today are using either a hybrid cloud (45%) operating model (e.g.  private infrastructure combined with a single public cloud), datacenter or private cloud (39%)  or hybrid multicloud (8%) (e.g.  private infrastructure, on-premises and/or hosted along with two or more public cloud platforms). 

This landscape is going to dramatically change within 1-3 years by pivoting to either hybrid multicloud (33%), multiple public clouds (31%) or hybrid cloud (23%), with only 7% planning to remain solely in a datacenter or private cloud. This change is driven by the need to modernize infrastructure to meet increasing demand for digital citizen services, improve the citizen experience, strengthen data security, and harness the power of emerging technologies. In addition, IT leaders are motivated to modernize their IT environment to prepare for future crises.

The most significant growth over the next 1-3 years is projected to be in a hybrid multicloud IT operating model, with a more than four-fold increase to 33%. Use of multiple public clouds is also expected to increase dramatically by almost eight-fold to 31% in 3 years.

The vast majority of the public sector organizations surveyed (85%) agreed that their organizations have adopted cloud-smart IT deployment strategies, driven by mandates as well as to gain flexibility to move apps, data and workloads where they best meet strategic priorities. A hybrid multicloud IT model can deliver benefits such as a variety of cost, billing and deployment options that optimize app performance, improve security posture and meet regulatory requirements, including data sovereignty.

There are stark differences in the use of various IT models across federal/central government, state and local government, public healthcare, and education (including K-12 and universities and colleges.) 

Spotlight on public sector segments

• Education institutions, including private/public education, reported the highest use of hybrid multicloud (47%) across all industries this year. The shift to remote and hybrid learning during the pandemic drove significant investments. K-12 and universities have increasingly embraced software-as-a-service (SaaS) solutions for productivity, collaboration and learning management while taking advantage of the scalability, accessibility and cost effectiveness of the public cloud model. 
• Public healthcare reported the highest use of hybrid cloud (70%), defined as using  private infrastructure combined with a single public cloud. Public healthcare organizations handle vast amounts of sensitive patient data, which is subject to strict regulatory requirements like the Health Insurance Portability and Accountability Act (HIPAA) in the United States. A hybrid cloud model allows them to store and process the most sensitive data on-premises or in a private cloud, while leveraging public cloud services for less sensitive workloads or functions like collaboration, file sharing and patient portals.
• The federal and central government sector reported the highest use of hybrid cloud (52%) followed by datacenter/private cloud (34%), multiple public clouds (6%), and hybrid multicloud (6%). Federal government agencies manage huge volumes of sensitive data that is subject to stringent security and privacy mandates. For example, federal IT systems must comply with rigorous standards like the Federal Information Security Management Act (FISMA).
  These compliance requirements make public cloud adoption a complex and cautious endeavor for federal and central government organizations. . The shared, multitenant nature of public cloud services can raise concerns about data segregation and privileged access controls. As a result, many federal agencies have gravitated towards private or hybrid cloud architectures, which offer customizable security features and direct control over infrastructure.
• State and local governments reported the highest use of data center/private cloud (50%). Many state and local government agencies have long-standing investments in legacy IT systems, apps and infrastructure. Migrating these complex and often highly customized systems to the public cloud can be technically challenging and cost-prohibitive, leading some to keep their on-premises datacenters and private clouds.
  State and local governments have a responsibility to ensure the continuity of critical services, even during natural disasters or other disruptive events. Owning and operating their own data centers and private cloud environments can provide these organizations with a greater sense of control over their disaster recovery and business continuity capabilities.

Top challenges

The road to cloud maturity is fraught with obstacles. Some 95% of public sector respondents said they experienced a ransomware attack in the past three years. Accordingly, the top-ranking infrastructure decision criteria from the survey was to improve data security and ransomware protection.

The report also cites challenges with managing multi-environment storage, operations, security, and sustainability. Complying with data storage and usage guidelines remains a primary concern as public sector organizations continue to grapple with the complex regulatory landscape surrounding customer data.

Managing multiple IT environments poses significant operational challenges, often related to interoperability and data management across infrastructures with dissimilar underlying technologies.

Siloed IT operations management teams were also considered by respondents as a significant challenge (39%). Respondents noted that the operational consistency was becoming easier with solutions such as containers and cloud agnostic management tools.

The promise of new technology to change everything

Public sector IT leaders often need to balance the need for reliable, secure and compliant systems with the desire to explore and adopt emerging technologies. A diverse IT landscape allows them to pilot new solutions, such as edge computing or AI/machine learning platforms, without disrupting core operations.

A remarkable 80% of survey respondents stated they expect to increase their investments in AI technology in the next year, with a third (32%) anticipating “significant” increases. This aligns with the broader trend of public sector organizations seeking to leverage innovative solutions to enhance service delivery and decision making.

Goals: Choice and flexibility

By having access to a diverse set of IT operating models, public sector IT leaders can easily scale resources up or down, shift workloads to the most appropriate environments to meet cost, performance and security needs, and respond quickly to new demands. Certain workloads, such as those requiring real-time processing or low latency, may perform better when hosted on-premises or at the edge, closer to end users.

The shift towards hybrid multicloud and the embrace of new technologies present opportunities and challenges for the public sector. On the one hand, the potential for increased efficiency, improved security and better citizen experiences are substantial. On the other hand, the need to navigate complex regulatory frameworks, integrate legacy systems, and ensure data privacy and compliance remains a formidable hurdle.

Conclusion

The 2024 Global Public Sector ECI report commissioned by Nutanix paints a remarkable picture of the public sector's accelerating cloud journey. The forecast of four-fold growth in hybrid multicloud usage over the next three years signals a profound shift in the technological landscape of this vital sector. 

As the public sector continues to modernize its technology infrastructure, we can expect to see these cloud adoption patterns to evolve. A one-size-fits-all approach to cloud migration simply does not apply. Each public entity must chart its own course, informed by its specific operational, financial and regulatory realities.