Europe to reap €177.3bn dividend from cloud computing

7 Dec 2010

As many as 2.4 million new jobs and revenues of €177.3bn per year could be added across Europe’s top 5 economies as a result of the uptake of cloud computing, EMC-commissioned research claims.

In what is the first macro-economic research of its kind to calculate the value of cloud adoption, the Cebr report calculates that €177.3 billion per year will be generated by 2015 if companies in France, Germany, Italy, Spain and the UK adopt the technology as expected.

A recent report on cloud computing adoption in the Irish market by IDC expects a 40pc year-on-year growth in cloud computing.

The Cebr found that the annual economic benefit of cloud computing for each country by 2015 will be:

  • France – €37.4bn
  • Germany – €49.6bn
  • Italy – €35.1bn
  • Spain – €25.2bn
  • UK – €30.0bn

Some €177.3bn could cover the loans already made to some of the indebted countries in the region, such as Ireland (€85bn) and Greece (€110bn), and would comfortably pay for the four-year €95.7bn cuts to public expenditure recently announced by the UK government.

Cloud computing is a new approach to IT, in which technology is made available to businesses in a scalable manner and as a service, when they need it. This speeds up time to market, removes traditional barriers to entry and allows companies to exploit new market opportunities. This “business creation”, as a direct result of cloud computing, will have a profound effect on the market structure of many sectors as competition increases and, thus, on global macro-economic performance, according to the Cebr.

The Cebr believes cloud computing will be a significant driver of economic growth, competitiveness and business creation across the Eurozone. It highlights the important role that this technology will have in the economic recovery of the territory, particularly in facing the increasing threat posed by emerging economies that traditionally benefit from higher levels of competitiveness.

The study focused on the three most common cloud computing models today: public cloud, which is controlled by a cloud provider; private cloud, which is controlled internally by an organisation’s own IT team; and hybrid cloud, a combination of the two.

By 2015, Cebr predicts that €133bn – or 75pc of the total economic benefit of €177.3bn that year – will be accounted for by the non-public cloud models. The private cloud model offers the best of both worlds: organisations get the dynamic, on-demand, self-service and scalable benefits of the cloud, but control remains with the IT department so security and governance is not compromised.

Growing the cloud in Ireland

EMC, a major player in the cloud infrastructure market, employs 1,600 people in Ireland and recently invested €20m in a local R&D centre. EMC Ireland country manager Jason Ward told Siliconrepublic that cloud computing already represents 30pc of the company’s global revenues.

Ward said that there’s a lot of work to be done in Ireland to convey to businesses the advantages of cloud computing. “I think Ireland in most respects tends to be a laggard when it comes to technology adoption. There’s a lack of clarity, in particular, around private versus public cloud.

“Businesses need to see cloud computing as an approach to IT that reduces complexity. It creates an on-demand self-managed IT infrastructure.

“The crucial difference between public and private cloud is that businesses can retain ownership of the private cloud and this assures them that the enterprise private cloud is trusted, reliable and secure.”

Ward explained that EMC has an alliance in place with VMware and Cisco to deploy a secure private cloud in a box solution.

“This reduces a lot of the associated cost and therefore businesses can reduce capital expenditure and operational expenditure, improve profitability and in turn grow their workforce, creating jobs and growing capability,” Ward said.

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John Kennedy is a journalist who served as editor of Silicon Republic for 17 years