We’ve been talking about the cloud for years now, and providers have done plenty to hype it too. But most customers have been very wary about it, especially in Europe.

Cloud Concerns

There are many reasons for that, from fear of job losses to information security. People in many IT departments are far from thrilled about the cloud, of course -- they are afraid it might make them obsolete. And their concerns are understandable, especially when you think of the outsourced projects of the past few years that moved more than a couple of IT departments (or parts of them) to external service providers.

Cost cutting was the most common rationale. But did this always result in improved quality, better service levels, greater flexibility and faster response times to user requests? That’s a very controversial question.

The cloud also raises information security concerns. “Where exactly is my data being stored?” is one of them. The Patriot Act has created additional uncertainty and concern, as it allows authorities in the U.S. to access the cloud data of German businesses.

This worry is usually paired with the demand that cloud providers store their cloud data in Europe, out of the reach of the U.S. government. All global cloud providers have to deal with this issue, and they are all familiar with the demands for a European data center and a guarantee that data will only be processed in Europe.

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User companies gradually seem to be changing their views on the cloud. Experton Group says that cloud computing has long been a fact of life, and it sees social collaboration as the critical driver of cloud growth. It forecasts that cloud spending will increase from €313.5 million to over €2.2 billion in 2017. One of the reasons for this, says Dr. Carlo Velten, a senior advisor at Experton Group, is that providers are pushing social business and collaboration so much. It’s interesting to note that Experton Group predicts spending on ERP in the cloud will fall slightly. Does this mean that German companies think ERP is too sensitive for the cloud?

Public Cloud, Private Cloud, Hybrid Cloud - Some Definitions

A public cloud is where the provider makes resources available to the public over the Internet. Personal webmail services are a common example. Private cloud services, on the other hand, are usually run by companies for their own employees only. A private cloud offers users within the company the added-value features of the cloud, such as scalable IT infrastructure or installation-free and maintenance-free IT applications, which are run over a Web browser.

A hybrid cloud is a mix of these two cloud types. It runs some services through public providers on the Internet, but other applications and data -- usually confidential material -- are processed within the company. (This information is based on definitions by Fraunhofer).

Changing Attitudes

The Cloud Monitor 2013 published by German industry association BITKOM, KPMG and PAC is also predicting strong cloud growth. In addition, the study sheds light on the mixed feelings and polarized attitudes that companies have about the cloud.

Private clouds still enjoy greater acceptance than public clouds, but now more companies endorse public clouds and are willing to use them. The study also identifies collaboration (and customer relationship management, or CRM) as key drivers for public clouds. The advantages offered by public cloud solutions are particularly suited to these tasks, it says.

All these studies suggest that the cloud will more rapidly gain a stronger foothold in the market as time goes on. In my opinion, the first services to move to the cloud will be those where cost savings and greater efficiency make the case. E-mail is one example, and collaboration is another. The solutions will be highly standardized and will have very clearly defined functions.

However, customized solutions are hard to run in a public cloud. These will continue to run inside companies or in a private cloud where it is easier to make adjustments. There is no reason not to use a cloud for e-mail components and calendars. Custom-developed solutions, on the other hand, are better off running in the company data center, in a private cloud, where they are easier to modify and maintain. The result is a hybrid structure, with one part of the IT running in a public cloud and another part running in an organization’s own infrastructure or in a private cloud. This hybrid model is probably what many companies will end up choosing.

It also looks very likely that more and more services, especially those involving social collaboration, will move to the public cloud. This will give small and medium-sized companies the chance to use advanced social software without having to run these solutions themselves.

Image courtesy of Genova (Shutterstock) 

Editor's Note: To read more by Stefan see his Progress Through Technology: Why Germany Needs to Become a Social Business