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Security and contract concerns delay cloud adoption by EU businesses

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Cloud computing allows businesses to store data.

Cloud computing allows businesses to store data.

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Cloud computing allows businesses to store data.

Cloud computing allows businesses to store their data and carry out data processing in remote data centres, saving on average 10-20pc over the cost of installing their own IT storage.

But many business owners have concerns about using such systems, worried about everything from security to legal implications.

A recent Eurostat survey across the 28 EU member states shows Ireland in a favourable light, coming in as the sixth highest user of cloud computing, with 28pc of all enterprises using cloud computing.

That's much higher than the average.

Eurostat said that just 19pc of all EU enterprises used cloud computing in 2014 - and most of that is just for basic functions such as email hosting and storing files.

Just under half of that 19pc used more advanced cloud-based systems, including financial and accounting software.

In 2014, almost twice as many firms used public cloud servers (12pc) as private cloud servers (7pc).

The most common uses of cloud computing services by Irish firms also include storage of files, email, hosting databases and office software.

But a lack of knowledge is the main factor preventing businesses from using the cloud , according to the survey.

For those firms not using cloud services, insufficient knowledge was stated by 42pc of all firms across the EU as the main factor in 2014 preventing them from using this service. Another 37pc cited a risk of a security breach.

These two top blocking factors can be found in all business sectors, except in the ICT sector and the medical devices sector.

For businesses in those two sectors, the risk of security breach was reported as the main blocking factor from adopting cloud services.

For existing users of cloud computing, the security issue featured again as the main factor limiting the further use of cloud computing services.

For businesses already using cloud computing services, security breach was stated by 39pc of these firms across the European Union as the main concern.

The second most common reason for shying away from the cloud was the high cost of buying the service.

Uncertainty about applicable law completed was the third main factor limiting businesses from extending their use of cloud computing services.

The European Commission has issued guidelines to help cloud users ensure essential elements are included in plain language in contracts they make with cloud providers.

This Irish government has also developed a comprehensive strategic approach to develop the sector, in recognition of Ireland's potential to become a world leader in cloud computing.

This focus has already attracted world leaders, such as EMC, Citrix and Dropbox.

The Irish Centre for Cloud Computing (IC4) is focused on developing an internationally recognised industry-led centre of excellence for infrastructure as a service , platforms as a service, and software applications as a service.

Cloud R& D centres have been developed in Ireland by Dell, HP, IBM, and EMC, with global operational centres operated by Google, Microsoft and Amazon.

The developments are mainly in the Dublin area which now has the densest cluster of data centres in Europe.

The cloud computing services market is forecast to have grown by 20pc in 2014 to a total of $174bn (€153bn) worldwide according to IHS, a US information consultancy.

Cloud advertising as a service is the largest segment of the cloud services market comprising 48pc of the market in 2012 according to research group Gartner.

The cloud business process services segment is the second-largest market segment after cloud advertising, comprising 28pc of the total market in 2012.

That was followed by cloud application services, at 14.7pc, cloud system infrastructure services at 5.5pc, cloud management and security services at 2.8pc, and cloud application infrastructure services at 1pc.

Earlier this month, the European Commission tendered for its first ever cloud services.

It sought suppliers for a two-year contract, in a deal that would cover the equivalent of about 15pc of the EC's current in-house storage. It also calls for the provision of 2,500 virtual machines.

The trend towards using the cloud is clear and businesses should consider the advantages it can bring - from productivity to cost potential cost savings.

But it's evident that a lot more needs to be done to assuage concerns that businesses have. Once that's done, the take-up may be even swifter.

John Whelan is the former chief executive of the Irish Exporters' Association and now works as an international trade consultant.

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