Surveys and reports from recent years show that most industries have embraced the hybrid cloud or hybrid multicloud IT model, but data protection and other regulatory factors can make it challenging for government agencies to quickly embrace these new technologies. While the public sector will maintain on-premises IT operations, the 2024 Enterprise Cloud Index (ECI) reveals a keen interest in using a variety of IT environments to support a growing number of applications and more data needed to deliver public services.

In a recent report by The Stack, The U.S. Internal Revenue Service, which collected nearly $4.7 trillion in taxes, processed 271.5 million tax returns and handled 880.9 million visits to its website, risks “disruption of critical operations” due to its legacy IT systems. 

“The IRS uses more than 600 applications, many of them more than 20 years old, custom-built and loosely integrated,” wrote The Stack. Concerns around security and IT system failures have mounted over the years, but after the 2022 Inflation Reduction Act provided $80 billion in additional funding to the IRS, a portion of which IRS CIO Rajiv Uppal will likely use to transform IT operations.

The IRS is not alone. Many public sector agencies are going through digital transformation. The 2024 ECI by Nutanix shows federal, state, and local agencies are poised to sharply increase adoption of hybrid multicloud IT operations over the next three years.

The ECI states that today only 8% of government agencies have deployed hybrid multicloud, which is defined as private, on-premises IT infrastructure combined with at least two public cloud platforms. That percentage trails the global response pool of 12% by a third. But the future looks bright: That 8% currently deploying hybrid multicloud is expected to increase to 33% within one to three years, which depicts a five-fold increase in adoption.

Economics Play a Big Role in Agencies’ Infrastructure Choices

One of the key obstacles to embracing new technologies and capabilities is funding, spanning technology hardware and software acquisitions and salaries for needed IT talent with modern skills. The economic backdrop of federal, state and local government agencies drives a lot of IT decisions, said Tom Bisbee, Systems Engineering Manager for Nutanix state and local government customers. 

“There’s a huge wage gap between the public sector and private sector,” Bisbee said. 

That means government agencies have difficulty attracting IT people with top-level skills.

“They’re increasingly looking to have people deliver solutions that are easier to manage and more accessible to staff,” Bisbee said

Without the ability to pay commercial wages, governments also have a hard time migrating legacy applications to the cloud. 

“There are a lot of legacy applications that are just not cloud ready,” said Greg LaPace, Systems Architect for Nutanix federal government customers. “And agencies don’t have the staff that can actually move applications to the cloud. So they say, ‘We’ve been told to do it, we want to do it, but we’re just going to have to refresh for the next two years and extend the timeline to do that.’”

Both large and small agencies are increasingly drawn to managed solutions so they don’t have to hire new staff or gain new skill sets. Bisbee calls it the “great SaaS-ification.” 

Using SaaS solutions allows agencies to do more with fewer employees and eases the application management burden. It also enables agencies to operate within the cloud without having to employ staff who specialize in cloud services.

Attempts to Simplify Can Increase Complexity

Government agencies that use a wide variety of SaaS solutions can unwittingly find themselves in a form of hybrid cloud or hybrid multicloud because different vendors prefer running their solutions on different clouds. An agency could end up with many managed applications spread across multiple clouds. 

Bisbee said the problem with this scenario is that the applications are still oftentimes siloed and can actually create more complexity than they alleviate.

“[These agencies] don't have a concise infrastructure footprint that they can effectively manage themselves,” he said. “They just have a bunch of vendors deploying applications in different ecosystems.” 

A vendor might not be around through the entire lifecycle of an application and the agency could be forced to in-source management of an application they don’t know how to manage. These and other challenges are significant factors in why government agencies have traditionally been slow to fully embrace hybrid cloud and hybrid multicloud IT models.

On-Prem Will Always Have a Place in Agency Infrastructure

Federal, state and local agencies are subject to a growing number of industry mandates about providing cloud-based services and capabilities to the public. But they also must comply with evolving guidelines and regulations around data privacy and how and where confidential data is used, stored, accessed and shared. Staying fully compliant with all regulations can be tricky for agencies.

LaPace said it’s important to understand the benefits of using a hybrid IT ecosystem. He said cloud-only or cloud-first strategies might not be right for many organizations because of cost inefficiencies, the need for data regulation compliance and other reasons. 

“Certain workloads are just better run on-premises,” LaPace said.

Many government agencies deal with highly sensitive information and systems that monitor and control public infrastructure such as the power grid, water filtration, satellites, traffic systems and more. They have information pertaining to national security and military plans. Some of this data will never be able to reside on a public cloud.

According to Bisbee, an agency’s IT infrastructure should allow intelligent placement of apps by considering why they’re placing an application in the cloud or keeping it on-premises, and knowing why it’s better there than anywhere else.

On-premises data centers will continue to be critical components of agency infrastructure. This is part of the reason the hybrid multicloud model is so pervasively preferred. It provides a range of environments agencies can use to put their applications and data to best use.   

New Tools Aid Agencies in Move to Cloud

The ECI survey found that 39% of public sector respondents considered siloed IT operations management a significant challenge. 

It also noted that solutions such as containers and cloud-agnostic tools were helping agencies achieve the operational consistency that cloud-smart IT requires. 

LaPace said he sees a lot more discussion of those tools among his federal government customers. 

Platform for Management Across IT Environments

Simply using diverse cloud solutions isn’t the answer, according to Bisbee. Instead, it’s important to have a single platform that lets agencies manage and control apps and data across clouds and on-prem data centers in a unified management and control plane.

“If [agencies] can’t find a simple platform to unify on, then they’re always going to struggle with services, even without a skills gap,” said Bisbee. 

“It’s always going to be complicated to secure and manage an ecosystem that crosses different platform boundaries, so a single platform where they can manage apps and data pretty much anywhere is always going to be better for them in the long run.”

Bisbee said the industry seems to recognize that a single, unified management platform is a good thing. This enables the organization to take advantage of AI-driven automation to reduce the tedious tasks in IT, freeing them up for more strategic tasks. Cloud hyperscalers are trying to unify cloud and on-prem environments. Traditional on-prem solution vendors are trying to bridge the gap to the cloud as well.

A single platform would aid agencies in their increasing cost-consciousness, too. 

“The cloud has opened their mind to the idea of production or consumption of services,” Bisbee said. 

Agencies now often want to know how much it will cost to run a service on-prem versus in the cloud, for instance.

“That’s a really hard thing to figure out if you don’t have a unified platform because it’s comparing apples to oranges sometimes,” he said

It all comes back to intelligent placement.

“You can’t make choices about intelligent placement if you don’t have any data about what it costs to run where or what it means to run the app there for the users or for the business.”

As Government Sector IT Evolves, Hybrid Multicloud Adoption Will Increase

The accelerating journey of government agencies to a hybrid multicloud IT model will represent a profound shift the way this vital industry uses technology, Bisbee said. As agencies work to modernize IT to improve the service they provide while protecting confidential and proprietary data. Evolving into a hybrid multicloud IT environment could bring agencies more flexibility, agility and choice to prevent vendor lock-in.

Erin Poulson is a contributing writer who specializes in IT and business topics.

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