Guest Blog with IBM
Author: Simon Porter
Cloud computing is the most touted technology in the global business landscape today. Europe is no exception.
There are two main ways we’re seeing businesses take advantage of the cloud in Europe. First, there are the smaller, innovative, and born-on-the-cloud startup companies that use it to help them disrupt existing industries by getting to market faster and with less upfront capital investment.
The second area where we’re seeing European companies take advantage of cloud is at more established enterprises looking to enter new, international markets. As companies here seek to become more global, they’re looking toward non-European markets—whether by selling into those markets or tapping into suppliers. In these cases, cloud empowers them to enter these new markets by providing the flexibility, speed and scalability needed to be a global player.
Cloud also enables businesses to market and sell to customers in new and more efficient ways. With the proliferation of smartphones and social media, business success relies on turning this technology into new sales channels. This is often referred to as systems of engagement, and with unpredictable volumes, it’s ideally suited to cloud.
The economic climate in Europe is improving, but it remains very competitive. It is critical for businesses to optimize their supply chains and lower their sales and support costs. Applying sophisticated analytics is one effective way of doing this. In the past, this was prohibitively expensive. But cloud enables analytics-as-a-service, removing the need and cost for a large up-front investment in an IT system that may be used only a few hours per month.
Challenges in cloud adoption persist
According to a Eurostat study released this past year, only 19 percent of European businesses used cloud computing services in 2014. Compare that to a recent RightScale study that reports 82 percent of U.S. enterprises as having a hybrid cloud strategy (up from 74 percent in 2014), and it would appear that Europe is lagging. However, that’s only part of the story.
You can expect the European cloud adoption numbers to rise sharply this year and even more in years to come. But as with any emerging technology, there remains barriers to adoption.
Chief among those barriers is security.
According to a recent Cloud Industry Forum poll, 70 percent of U.K. executives cited data security among their biggest concerns in moving to cloud. That marks an 11 percent year-over-year increase.
What IT departments in Europe are seeing is something quite different than what the rest of the world is experiencing, and that stems from data location and security. A lot of the questions around security and data location are driven by perceptions in the market that aren’t always true. Security in a cloud-based solution will often be much stronger than that of an on-premises, in-house IT solution.
To remain competitive, European businesses must work through security challenges—and I fully believe that they will. It’s ultimately not a matter of technical or legal challenges preventing cloud adoption in Europe—it’s about business leaders understanding the transformational benefits cloud can bring to their business, and then typically for midsize businesses taking advantage of this by using a local trusted Cloud Service Provider.
The good news is that IBM is continuing to open data centers in Europe. We now have centers in the U.K., Netherlands, Germany, France, and most recently announced, Italy. But even with this span of locations, customers want to keep their data in country.
European SMBs typically lack resources and the IT skills to take advantage of this new kind of capability. They need to turn to a local service provider that can essentially be their IT department. At IBM, we’re continuing to expand our partnerships with local cloud service providers as a means of enabling local data and secure environments with IBM’s Managed Service Providers.
A move to hybrid
In the business world, we recognize clients have already made investments in core IT systems. We find that European customers want to protect and enhance them with new, innovative capabilities that enable them to make better business decisions faster with advanced analytics. Companies are also able to reach new customers and markets with multi-channel marketing and sales capabilities, both largely based on cloud-enabled digital and social technologies.
For example, a client may have an existing enterprise resource planning (ERP) system that they have invested a lot of time and money in over the years. They still need to see a return on that investment. It is impractical to completely replace it with a new solution, but perhaps enhancing it with social analytics or social engagement could help them in their customer service and marketing.
Combining mission-critical, on-premises systems with new cloud-based systems of engagement is an example of a common hybrid cloud solution. This is how many businesses in Europe protect their existing investments in IT while taking advantage of new delivery models.
An eye toward the future
The world is only getting flatter. There are multiple new entrants in many industries, and existing businesses will have to differentiate their own offerings to remain competitive. Who would have thought the taxi industry could be disrupted in the way that Uber has done? Cloud can be the key enabler for businesses to innovate around new products and channels faster and in a lower risk manner.
IBM will be at the Cloud World Forum on Stand D150, taking place on the 24th – 25th June 2015.
Tony Morgan, Client Chief Innovation Officer GTS Europe at IBM will be speaking on Day 1 at 11:05am in Theatre C: DevOps & Containerisation on ‘Speaker out of the Shadows: Managing Innovation with Cloud.’