To update a bit of conventional wisdom that's held true for as long as governments have been awarding contracts: “A few hundred million here and a few hundred million there and pretty soon you're talking about some real money.” So it is with the U.S. intelligence community and its recent decision to include Microsoft as a bidder for contracts that are worth at minimum hundreds of millions of dollars and eventually will total in the billions.
The decision, which covers 17 separate intelligence agencies, is interesting on any number of levels. For one, it means that Amazon Web Services, long considered the front-runner for the award, now is facing incredibly formidable competition. The decision also points to Azure now being a stronger-than-anticipated competitor for separate Department of Defense awards that also are expected to be valued in the billions.
Perhaps most interestingly, the news is more evidence that the cloud marketplace remains incredibly fluid. Public cloud or private cloud, public sector or private sector, homegrown or hybrid or homogenous, the game is changing daily and for that reason, incumbency – real or perceived – has never been as fragile and fleeting an asset as it is today.
Tellingly, the market-redefining decision by the intelligence agencies came about as a result of a routine technology provisioning review, the sort of thing that goes on regularly in enterprises and institutions great and small.
In this case, it was part of a standard contract renewal between the Office of the Director of National Intelligence and Dell, which subcontracts its government work to Microsoft. For years, Microsoft provided basic applications to the intelligence community as part of the Dell agreement, but as a result of that pro forma review, the intelligence community now has access to the entire Microsoft Azure Government suite of applications and services. Suddenly, Office 365 and other cloud-based applications are available to a vast and vastly important new set of audiences.
Caught in the flux is Amazon Web services, which was the defacto incumbent as a result of its $600 million contract with the Central Intelligence Agency, the bellwether for intelligence community technology policies and provisioning.
Moreover, the agreement strengthens the prospects for Azure finding its way into other government agencies, most notably the Pentagon, which will be awarding a cloud contract that will surely total in the billions.
Why all the bother with these machinations and their otherworldly values? They're worth noting, I believe, because they provide object lessons from some unlikely sources for both vendors and customers. Notably, the principal lesson is the same for both providers and clients: Take NOTHING for granted.
Simply because a set of technologies and the techniques for deploying those technologies was a bad fit six weeks ago or six months ago doesn't mean it will be a bad fit 6 weeks from now or 6 months from now.
In a market as vibrant and as volatile as the cloud, lessons are continually being learned and in many cases that means unlearning what we had long accepted. That's not an easy or comforting prospect for those entrusted with business decision making, but embracing the constancy of change (not to mention the incredible potential for improving organizational efficiency and competitive strength) was, is and will remain the hallmark of those who are plying their trade at the highest levels, regardless of the size and scope of the enterprises they serve.
It's no small set of challenges we face, but we're never alone in taking them on. At Tier1, we're here to help you keep pace with change, stay sharp in your analysis of what's working well (and not so well) for you and your organization and, most importantly, bring practical perspective at a time when hope, hype, and hypotheses are sometimes substituting for real-world insight.
We're all in this together.