U.S. Public Sector Embracing Hybrid Cloud Solutions for IT Modernization

The US public sector is embracing hybrid cloud solutions to modernize outdated IT infrastructures, with 90% of state, local, and educational agencies predicted to adopt hybrid cloud models. Managed service providers play a key role in facilitating digital transformation, offering expertise in IT infrastructure upgrades, cybersecurity, and automation. The transition is driven by budgetary constraints and the need for skilled workforce, and is expected to enhance performance, security, and compliance.

The U.S. public sector is increasingly turning to hybrid cloud solutions to modernize outdated IT infrastructures, according to a recent report by Information Services Group (ISG). The report, titled "2025 ISG Provider Lens® Private/Hybrid Cloud — Data Center Services," highlights that 90% of state, local, and educational (SLED) agencies are expected to adopt hybrid cloud models [1].

The shift is driven by budgetary constraints and the need for a skilled workforce. Many agencies are looking for IT modernization projects with measurable outcomes, provided through AI tools and automation. They rely on managed service providers (MSPs) to administer their IT assets and supply the necessary skills for digital transformation [1].

Legacy systems in the public sector, some of which are decades old, burden agencies with high costs and inefficiencies while failing to meet constituents' evolving service expectations. Managed service providers facilitate infrastructure upgrades for better IT performance, security, and compliance, along with specialized knowledge to ensure applications gain the benefits of hybrid cloud environments [1].

As they transition to complex, modern IT architectures, public agencies are also embracing automation and AI for IT operations (AIOps). These capabilities can identify potential issues early, preventing major failures, and automate repetitive tasks. AIOps also helps organizations sift through the large volumes of data the public sector generates to glean actionable insights and make useful predictions [1].

Data management is becoming critical for SLED agencies as they seek to deliver better services and make more informed policy decisions. Comprehensive solutions from managed services providers, encompassing data storage, enhanced security, and advanced analytics, allow organizations to organize and protect sensitive data [1].

To remain financially sustainable while advancing their IT capabilities, public-sector agencies are implementing FinOps tools from service providers to control cloud costs. Many are also taking advantage of pay-as-you-go service contracts that let them align their IT expenditures directly with usage. Emerging automation capabilities are also reducing operating costs by streamlining processes [1].

The report also explores other private and hybrid cloud trends in the U.S. public sector, including the impact of complex, evolving IT regulatory requirements and a growing urgency to eliminate data silos for better data sharing among agencies [1].

Managed cloud services are becoming increasingly popular, with 60% of organizations opting to outsource public cloud management to an MSP [2]. These services allow businesses to offload day-to-day cloud operations to a managed services provider, enabling them to focus on strategic IT initiatives while the MSP handles routine tasks like infrastructure monitoring, security patching, and cost optimization [2].

The adoption of hybrid cloud models and managed services is expected to enhance performance, security, and compliance for U.S. public-sector agencies, making government processes quicker and more intuitive for users and fostering greater engagement with citizens [1].

References:
[1] https://www.businesswire.com/news/home/20250716516208/en/Hybrid-Clouds-Aid-U.S.-Public-Sectors-IT-Transformation
[2] https://www.tailwindvoiceanddata.com/blog/what-are-managed-cloud-services-pros-cons?hsLang=en