U.S. federal government spending on cloud computing jumped 25% in the past three years, driven by infrastructure-as-a-service (IaaS) investment.

An article by Nextgov discusses the finding of a recent report by big data analysis firm Govini that shows strong cloud spending. This follows an earlier report that government spending on the Internet of Things (IoT) has risen 20%.

In its analysis, Govini found that in 2015 the federal government spent $3.3 billion on cloud computing, representing a rise of 25% from $2.6 billion in 2012. That year was a particularly weak year for cloud computing investment by the government, as sequestration had driven spending down to a 5-year low in 2012.

IaaS was the key driver of the increased cloud spending, as more federal agencies undertook programs to modernize their IT infrastructure. These agencies accelerated IaaS spending by 53% in the past three years, rising from $585 million in 2012 to $897 million in 2015.

This push for modernization comes as federal agencies attempt to cope with the onslaught of the IoT technology, which involves the mass proliferation of connected equipment.

“Agencies have an infrastructure modernization gap between the standards for what they need to be doing for things like the internet of things and where they are right now,” said Govini’s Matt Hummer. “The mission of agencies and their data and mobility are really driving cloud.”

The companies which benefited most from the higher government spending were IBM and cloud resellers InfoReliance and DLT Solutions. IBM generated $1.1 billion in cloud revenue since 2011, giving it the market leading position in IaaS offerings.

IaaS hampered by lack of budget

Govini found that cloud computing investment was hampered by erratic or insufficient budgeting for modernization.

“A big challenge a lot of agencies are having is they are ad hoc buying cloud wherever they can where the dollars allow them to do that,” said Hummer.

However, new resources are on the horizon that should allow increased flows of funding for cloud investment. For example the $3.1 billion IT Modernization Fund is allowing agencies more funding on cloud, and the 2017 budget includes $7.3 billion for provisioned services such as cloud computing.