U.S. Public Sector’s Cloud Push Boosts Azure’s Importance

More U.S. public-sector organizations are turning to the cloud for their core IT infrastructure, boosting demand for Microsoft Azure and related services from ecosystem partners, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens Microsoft Cloud Ecosystem report for the U.S. Public Sector finds that Azure is the de facto cloud platform for a majority of state, local and educational (SLED) entities. As these organizations strive to better serve constituents despite shrinking IT resources, Azure is becoming essential to productivity, communications, server and storage functions at many agencies.

“Effective use of Azure allows public agencies to efficiently provide services that have a positive impact,” said Nathan Frey, partner and lead, ISG Public Sector, for the U.S. “Experienced IT service providers play a key role in getting the most out of Azure’s capabilities.”

SLED organizations are migrating to the cloud for several benefits that are beyond the reach of their limited internal resources, the report says. In the cloud, they can scale computing power, networking and storage up and down as demand changes. They also gain access to enhanced security, the agility to adopt new technologies and the ability to more closely align their IT and business strategies.

Rising cloud adoption partly reflects the U.S. public sector’s growing focus on cybersecurity and compliance, ISG says. With Azure, Microsoft is responding by moving toward a zero-trust architecture, which continuously verifies access to enterprise systems, and increasing investments to ensure Azure solutions adhere to a growing array of data privacy and security regulations.

Many state and local governments are also under pressure to increase engagement with the public by offering constituents better ways to communicate and access information, the report says. Azure provides AI-powered chatbots, virtual assistants and sentiment analysis tools to support these initiatives. Governments are also using analytics and ML tools in Azure to identify issues, predict demand and allocate resources.

SLED organizations also are migrating their SAP environments to the cloud at an accelerating pace for better scalability and security, lower costs and simplified maintenance, ISG says. This has increased demand for SAP on Azure services from a large ecosystem of providers. Agencies are also embracing Microsoft Power Platform services, which enable more employees to quickly create new applications through low-code/no-code methods.