The White House is aiming to create a cloud marketplace to make it easier for technology companies like Microsoft Corp. (MSFT) Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOG), as well as others, to sell their services to government agencies.
With President Trump’s senior adviser Jared Kushner charged with moving the federal government’s systems to the cloud under the Office of American Innovation, the government is floating the idea of developing a marketplace so technology companies can sell their software-as-a-service (SaaS) products to different government agencies. The administration also wants to boost security, a key issue given all the cyberattacks surfacing across the globe.
"We want to create a cloud marketplace to make it easy to sell [SaaS] products to the government," stated a document viewed by TheStreet.com that was handed out to the CEOs who attended a technology summit earlier this week. The meeting on Monday brought together leaders from 18 of the world’s top tech corporations, including Apple Inc.’s (AAPL) Tim Cook, Microsoft’s Satya Nadella, Amazon’s Jeff Bezos, Oracle Corp.’s (ORCL) Co-CEO Safra Catz and International Business Machines Corp.’s (IBM) CEO Ginni Rometty. (See also: Apple's Tim Cook Urges Tech CEOs Not to Skip White House Summit.)
Replacing Outdated Technology
Hosting a summit to modernize the government’s technology shouldn’t be surprising given it is dealing with old equipment and a lack of tech skills among its employees. Last year the U.S. Government Accountability Office issued a report in which it estimated the government spends more than $80 billion each year on information technology. And that’s with spending on IT declining by $7.3 billion over the course of the last seven years. As of 2015, the government agency found there were 7,000 or more separate investments in IT by the federal government alone. That $80 billion doesn’t include Defense Department IT systems and 58 executive branch agencies such as the Central Intelligence Agency.
“Federal legacy IT investments are becoming increasingly obsolete: many use outdated software languages and hardware parts that are unsupported. Agencies reported using several systems that have components that are, in some cases, at least 50 years old. For example, the Department of Defense uses 8-inch floppy disks in a legacy system that coordinates the operational functions of the nation's nuclear forces,” the GAO wrote in its report. (See also: Tesla's Elon Musk Delivers Trump an Ultimatum.)
While creating a cloud marketplace could mean more business to a host of technology vendors the idea may not work well with big government agencies that require upgrades to huge infrastructure. Still the White House thinks the cloud marketplace is key to modernizing its systems and is moving ahead with its plans.