SOFIA (Bulgaria), October 1 (SeeNews) – Critical momentum is currently building up behind the adoption of cloud computing across Southeast Europe (SEE) as both the public and private sector seem to be overcoming any lingering security and old-school IT management concerns and embracing its simplicity of use, scalability and cost efficiency, industry experts said.
While the experts acknowledge the region is still lagging slightly behind the cloud trends in Western Europe and overseas, they also note a sharp pick-up in demand over the past 12 months or so - especially in the financial services and utilities sector and among small and medium-sized enterprises (SMEs), with regional telcos fairly well-positioned to offer the necessary infrastructure and customized solutions.
“Cloud is the fast growing segment in our industry and IBM is seeing clients across the SEE region are taking advantage of the trend being driven by a number of factors like the proliferation of Big Data, social media and mobile," David Holliday, IBM cloud sales leader Central and Eastern Europe, said.
Haris Pinjo, head of Cisco data center solution sales South East Europe, notes that it has taken a while to change the mindset about cloud services.
“There were two main reasons for that: security was one with the majority of companies believing that it is more secure if the equipment sits on their premises. The second reason is that IT departments are keen to keep their jobs, and there were concerns about what happens if the services or infrastructure are provided from the cloud – even though we see that such concerns were unfounded.”
Holliday agrees that there are still clients in the region that would like to own the asset but that this attitude is shifting as they realize the cloud would free them from legacy investments and skills.
FINANCIAL SECTOR, UTILITIES, TELCOS BRING SEE SHIFT TO CLOUD TO PIVOTAL POINT
“We have previously seen a relatively slow pace of adoption of cloud services in the SEE region in comparison to Western Europe but in the last six to twelve months we have experienced greater demand with more telcos delivering and offering these types of services,” Paul Inman, sales and marketing director at Neostratus, a Hungarian-based cloud enabler and IBM partner, said.
“We are reaching a pivotal point with momentum building and in the next 12-24 months we anticipate a surge in adoption.”
Holliday believes that if you look at the combination of what is going on in the market and combine that with the impact of the financial crisis what you have is an environment where cloud is becoming a very attractive option. And the best way to approach this transition is to start small.
“Pick a workload with a good business case for cloud. Build momentum and go from there. So whether that is trial of a public cloud service or entry-level private cloud offering, the trick is to get started, experiment and go from there.”
One way to ensure potential for the strong uptake of this new type of service, Pinjo said, is for the governments in the region to articulate a clear vision for the importance of IT and then promote it, for example, by creating cloud-based services for the general public.
Other drivers of the adoption of cloud in the region are its strong broadband penetration and the uptake of 4G services. Large regional and multinational service providers can definitely speed up this process by replicating business models that they have used in Western countries, Pinjo added.
The experts concur that the financial services sector, utilities and telecoms companies are the frontrunners when it comes to the early adoption of cloud services in the region and are driving the momentum behind this technological shift.
Inman points out that cloud is an excellent fit for businesses like insurance companies - because they have a significant fringe workforce that can become very cost-effective and easily manageable with cloud services, but also for any operation where you have very diverse supply and distribution chains such as retail, the construction industry and in large holding companies.
ACROSS-THE-BOARD DEMAND IN TURKEY
IBM is seeing demand in Turkey from all flavors, Holliday said, noting that another key driver are Turkish telcos which are also making a move into cloud.
“What is attractive about Turkey in the cloud space is that there you have a large number of conglomerates and family firms and that makes it very interesting to provide a set of standardized cloud services to the group.”
Inman also notes that in Turkey there is a very strong burgeoning micro-business with 10 employees or less. “These companies are now seeing demand for hosted email, ERP and similar services because the size of the business does not justify buying the equipment and creating in-house IT departments.”
BULGARIAN CLOUD MARKET UNDERSERVED, HELD BACK BY OLD MINDSETS
A wider adoption of cloud services in Bulgaria can only happen if local businesses let go of their outdated and investment-intensive IT management concepts and embrace the shift from a CAPEX to an OPEX model while allowing outside experts to guide them along this path, Angel Denchev, technical resource manager at Sofia-based software engineering services company Musala Soft, said.
He is adamant that the penetration of cloud services in the country is supply-driven and the process could be sped up by placing more capacity on the market.
Another key factor, in his view, is the expansion of the reach of e-government which could have a strong habit-forming effect among both the general public and private businesses.
Denchev sees overregulation of construction, fiber-optic deployments and fire safety as some of the factors deterring investment in data centers in Bulgaria alongside the overstretched capacity of the power distribution grid in the bigger cities.
“The launch several years ago of projects like the Sofia-based Telepoint and 3DC attracted the major customers looking for high-specs data centers. The market in Sofia is currently well-supplied along the entire range of data center specifications from the high- down to the low-end.”
However, away from the capital city, supply of carrier-neutral data center services is very scarce or virtually non-existent. “Many companies are in need of redundant capacity in remote locations but there is no supply. Filling up this supply gap could shake up the local market for co-location services.”
ECONOMIES OF SCALE TOUGH CHALLENGE FOR CLOUD PROVIDERS IN CROATIA
One of the problems facing cloud services providers on a small-sized market like Croatia is achieving economies of scale that would allow them to come up with competitively-priced offerings, Goran Car, director of professional services and cloud division at Zagreb-based IT company Combis, said.
“Other than getting the pricing model right, educating the market stakeholders on the benefits of the cloud and also getting the government administration on board are also important factors for the future development of this segment,” he added.
Goran Djoreski, CEO of Zagreb-based cloud computing and data center services provider Altus IT, notes that, in most cases demand for cloud services comes from local SMEs and that the bigger corporations in the financial services, pharmaceuticals and other sectors still predominantly opt to own their data centers and only go as far as investing in software-as-a-service.
In his view, the data center market in the country suffers from undercapacity but that is linked to low demand as the shift in mentality that would lead to the embracing of the infrastructure-as-a-service model has been very slow.
"I firmly believe that cloud technologies have the potential to help small and medium companies in Croatia and in the region to leapfrog technology to become more competitive," Djoreski added.