Bursting the Bubble

Why do SMEs Hesitate to Step on the Cloud?

17 May 2013 | by

The Cloud is everywhere.

You can always access the Cloud, wherever you are.

We should move all our data on the Cloud!

At present, cloud computing may sound like something from Inception. But it looks like it is going to be the future for computer systems. For those who are not familiar with it, simply put, it is the online storage of data. You have probably already accessed the cloud by using Dropbox, Google Documents and Gmail. So, consumers like you and me normally use it for email, file storage, payment services and music and video streaming. Businesses use it mainly for basic office tools, collaboration, project management, and the design of custom applications. Cloud computing can be an efficient and effective way for businesses to manage their data and, in the future, companies will be as dependent on centralised computing (i.e. cloud computing) as they are on centralised electric production. However, many organisations – especially SMEs – do not yet see  the advantages cloud computing offers. How come?

First of all, let me share the story of Edison (mentioned during a breakfast meeting organised by BUSINESSEUROPE and the European Parliament a few weeks ago); namely, there is an analogy here between cloud computing and electricity. Thomas Edison is known for innovating electric light, but the electricity generator was  equally as important an innovation. Companies used to bring their own electricity generator to power their factory or home. At the end of 1800s companies stopped buying their own generators and started to plug into the centralised electricity production, which is how electricity is produced today. For computing, we used to buy a PC and buy software to install on the PC and companies often bought and operated their own servers. Now, with cloud computing, we only need an internet connection and access to our data via a PC, mobile phone etc.

In September 2012, the European Commission adopted a strategy for ”Unleashing the Potential of Cloud Computing in Europe”. The strategy is designed to speed up and increase the use of cloud computing across the economy. Despite the benefits of the cloud, businesses aren’t taking full advantage of its capabilities as they have yet to overcome the trust factor. They look at the cloud as a technology that is out there, but nobody is really sure how to deal with it. In particular, cloud computing is still a minority pursuit among European SMEs. One of the reasons why consumers and SMEs don’t use or understand cloud computing is related to contracts between cloud providers’ (the service provider that offers customers storage or software services) and the cloud users (the company). The Commission needs to define models of contract which can be fair. Cloud providers’ contracts often disclaim liability, contain inappropriate clauses and lack standards on data control and security. In particular, service contracts offered to SMEs are inflexible and offer little room for negotiation. Companies worry: will my data be protected? Which providers can I trust? Can I switch providers easily? Therefore, standardised contracts are needed, with detailed requirements concerning safety, security and reliability. Another important point is that fast Internet connections are needed for cloud computing. The roll out of high speed broadband across the EU is necessary to allow cloud computing to unleash its full potential. Cloud needs a well-functioning, developed and secure network, which offers high-speed internet connectivity, as underlined in the Digital agenda.

I’m sure that in the beginning of centralised electricity production, organisations worried about the development of it, like they do today with cloud computing. What was true in 1800s, with centralised electricity just developing, is true for cloud computing today. In the future our society will depend on the cloud like we depend on electricity. Therefore it must be kept in mind that cloud is not only important for the ICT sector, but for also for “traditional” enterprises. The problem for SMEs is that they do not have the expertise and knowledge to deal with cloud computing. Big companies have ICT managers to deal with this, but SMEs have limited resources and therefore often don’t have the means to employ someone. In order to make it simple and understandable for them, SMEs need to develop their skills and knowledge. Proper basic skills are necessary to face this new environment and to take advantage of new technology and ICT. Otherwise it can be a bottleneck to develop the digital world that we live in today.

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