IBM Seals Biggest Federal Cloud Computing Deal Ever

IBM’s deal with the US Department of Interior (DOI) is the most recent piece of evidence that cloud computing has become serious business. The deal with the DOI is worth a staggering $1 billion and will have IBM installed as the primary provider of cloud services to the department over a period of ten years. The services provided by IBM will include data storage, secure file transfer, web and domain hosting, application hosting, and virtual machines, amongst other related services.

The deal is the largest federal cloud contract inked so far, and represents a major coup for IBM and a welcome boost, considering that the firm lost a bid to Amazon Web Services for a $600 million contract with the Central Intelligence Agency (CIA). The fallout even sparked a court dispute, with IBM placing doubts on the supplier evaluation process.

IBM is clearly thrilled with the contract, with general manager of US federal and government industries Anne Altman calling the contract indicative of the company’s capability “to help governments transform with new technologies.” Combined with IBM’s recent $123 million deal signed with the Department of Veterans Affairs to upgrade its human resources system, the DOI deal reflects the company’s commitment to providing high-end solutions for government bodies.

The Interior Department acts as steward to 20% of United States land. The 500 million acres include 21 national conservation areas, 556 national wildlife refuges, 397 units of the national park system, and 16 national monuments. It also manages 476 dams and 348 reservoirs in the country, and maintains relations with 566 Native American tribes.

Through this cloud computing project, the DOI aims to address a major challenge: renovating the way its IT infrastructure operates from top to bottom. The Department believes that moving its data and applications to a cloud web host model will help consolidate its bulging data centers and server rooms, currently standing at around 400. IBM’s Smart Cloud for Government, AIX Cloud, and SmartCloud Enterprise will all play a big part in the transformation, its robust services being tapped into by the entire organization.

Considering the enormity of the project, the agency’s plan is to roll out the transformation project gradually over a ten-year period with a variety of suppliers in addition to IBM. Other big names involved in the project include Global Technology Resources, Smartronix, Unisys, Verizon Communications, and AT&T. The organization’s plan is to save up to $100 million per year starting in 2016, and it hopes to use the savings to fund investments and applications in the future.

The Department of Interior’s decision to move to cloud services is not entirely surprising, considering the results of the 2013 Federal Cloud Computing Survey run by InformationWeek. The survey revealed that over 50% of agencies see strong advantages in cloud computing. It also showed an increased usage of commercial cloud services in federal government, with 18% of survey respondents assessing if not using them. Unsurprisingly, the most cited reason for a move to cloud computing is cost, with 54% reporting this as the most important reason.


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