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Europe’s future growth is in the cloud
By: Mark Lange, Director EU Institutional Relations
27 September 2012

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The European Central Bank’s proposal to buy unlimited amounts of crisis-hit government bonds has provided a glimmer of light through the shadows of the financial downturn. In the long term however, it’s clear that Europe must re-engineer its economy to achieve sustainable economic growth and abate record-high unemployment levels, especially among young people.

That’s why the European Commission, the executive arm of the European Union, is prioritising “the cloud” to put Europe’s economy back on track by unveiling a cloud computing strategy today Commisioner for the Digital Agenda, Neelie Kroes has argued that a coherent cloud strategy is needed to ensure that the cloud “happens not to Europe, but with Europe”. And rightly so.   The new, forward-looking “pro-cloud” strategy is called “Unleashing the Potential of Cloud Computing in Europe."Cloud computing provides individuals and organisations with unlimited computing power and resources – at a fraction of the cost, and is considered by many to be of similar significance to the European economy as the introduction of the internet.

Take for example the City of Madrid that helped the city stay green thanks to a cloud solution. Essentially you only pay for what you use, allowing small companies to scale their consumption to their own needs. It also avoids up-front capital investments, significantly reducing the constraints on market entry and promoting business creation. Large organisations on the other hand can share hardware such as data centres- reducing overheads, maintenance costs and even carbon emissions. Much has been made of the difference between the economies of the north and south of Europe- cloud computing has the potential to revolutionize both, and is estimated to add €177 billion and nearly 450,000 new jobs by 2015.

The Cloud Computing Strategy complements existing Digital Agenda policies, which relate to all information technology issues, and addresses specific areas that are causing some hesitation and slow adoption of cloud computing.  The Strategy urges action in some areas where the market stakeholders must act to reassure users and deliver standards and comprehensible contracts.  In areas where government stakeholders must act, the Strategy urges action in two ways.  Firstly, it addresses the need for a legal framework that will provide more clarity for the market, calling for more consistent rules not only within the EU but also with other international trading partners.

Recognising the global nature of the cloud, the Strategy urges international dialogue to resolve issues that slow or prevent cross-border data flows.  Secondly, the Strategy calls for public sector leadership in cloud adoption, creating a “European Cloud Partnership”, for public sector bodies to define consistent requirements and take advantage of economies of scale. 

Indeed, the public sector must lead by example. Early cloud adoption is vital to increase awareness of the efficiencies provided by the cloud, and simplify cloud procurement defining requirements more clearly and through policies that are objective, merit-based, transparent and technology neutral. An analysis by Copenhagen Economics published last month indicated that ten European countries bringing their public administration, health care and education systems into the cloud would collectively save more than €6 billion per year. I’m particularly impressed by Europe’s cloud-active approach. The European public sector initiatives have demonstrated that where the public sector will lead, the private sector can follow.

Right now in Europe however, cloud adoption rates lag behind the U.S. by two years, according to research firm Gartner. This is partly due to the region’s differing privacy laws. In fact, 72% of Europeans reported feeling worried that they are already giving away too much personal data when using the internet.

To build “digital confidence”, the Strategy places particular emphasis on the proposed Data Protection Regulation, which was introduced at the beginning of 2012 to update Europe’s data laws for the 21st century.   The Strategy aims to remove burdensome administrative requirements for European companies, and help boost trade across our borders. It will also give European companies the opportunity to enhance security and privacy mechanisms and better cope with compliance challenges- especially helpful for those in highly regulated industry sectors.

We at Microsoft welcome these steps to strengthen data protection in the cloud. International data transfers are the lifeblood of our knowledge economy and adequate safeguards for protecting personal data worldwide are the building blocks for reaping the benefit of cloud technology. This is why we have long been committed to offering leading privacy and security standards to our customers.

European Small and Medium Sized Enterprises (SMEs) in particular have shown a clear appetite for embracing cloud computing. Recent research by IDC reveals that 64% of SMEs are already using at least one cloud-based service and on average are lowering their expenses between 10% and 20%. This is due to the much smaller costs of using scalable cloud technology, instead of purchasing, installing and upgrading traditional computing hardware. Moreover, SMEs benefit from the cloud “levelling effect”, where they can gain a competitive advantage by having access to software and services previously only available to large organisations.

Overall, the Cloud Computing Strategy is a positive step towards building confidence and removing barriers to cloud adoption and use in Europe, addressing uncertainties that have caused real hesitation in the market despite the compelling economics of cloud computing.   I believe the cloud has the potential to change the way the EU National economies operates and spark a wave of innovation and opportunities that will guide Europe through the financial downturn.

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