SPLIT (Croatia), April 16 (SeeNews) – Small- and medium-sized enterprises (SMEs) have emerged as a key driver of demand for cloud services in the region of Southeast Europe (SEE) as they seek to absorb cutting-edge technology and get integrated into the global supply chains, Cisco’s general director for SEE said.
“Telecom service providers are realizing there is a big market in the region for selling cloud services to SMEs as the bulk of those clients mostly lack the in-house skills required to keep their business apace with the latest technological offerings in voice, video or connectivity,” Peter Hajdu told SeeNews in an exclusive interview on the sidelines of the Cisco Connect 2014 South East Europe forum held recently in Croatia’s Split.
Across the SEE region – mostly comprising export-focused economies where ties to the global supply chains are critical - the telcos are keen to engage with Cisco in developing services for the SME market which needs light-touch, scalable solutions tailored to business with 30-40 – or in some cases as few as 10-15 – employees that can often be configured and managed remotely, he added.
Hajdu said it is difficult to tell if IT spending in SEE is rising in nominal terms compared to last year because of the pricing competition among equipment vendors in the region and also due to the proliferation of cloud services where the upfront investment is not that big and is instead spread out over several years as operating expenses.
“It is more telling to look at physical demand in the region. And what is driving physical demand is that there are more companies realizing they have to have more access to technology to increase their efficiency.”
One industry in the SEE region that will definitely have to undergo a transformation to boost efficiency are public utilities which operate largely outmoded infrastructure and need to sharply boost their rate of technology absorption.
“Cisco is already having early-stage discussions with some utilities in Romania and some other SEE countries where they are trying to see what investment that would require,” Hajdu said.
EYES ON PUBLIC CLOUD
In addition to SMEs, another area where Cisco is seeing rising demand for cloud services in SEE is the public sector.
“There is serious interest across the region in private-cloud solutions for the government sector. Quite a few countries have started initial analysis how these services could be deployed properly and we are trying to engage to see where we can work with them. This process will take several years to unfold with key legislative details that still have to be sorted out like data protection and storage,” Hajdu said.
The Cisco executive is adamant that amidst the wide-spread cuts in public spending, governments must keep technological advancement among their priorities and that it is the job of the private sector to share knowledge with them on this vision.
Hajdu noted that educational levels are holding up across the SEE, despite some slippage in recent years, and that they still provide a good basis for keeping innovation alive in the region. The other side of this process is fostering venture capital and entrepreneurship.
On the venture capital side, Cisco is doing its bit through its partnership with 3TS Capital Partners, a venture fund vehicle focused on Central and Eastern Europe (CEE) that has already done multiple acquisitions and exits, including one in Bulgaria and three in Romania.
Managed by 3TS Capital Partners, 3TS TCEE Fund III - a new growth vehicle with a 103 million euro ($142 million) first closing - was announced in September. It was subscribed by Cisco, the European Bank for Reconstruction and Development, the European Investment Fund and OTP Bank, among other key institutional partners.
“The idea is to spot early-stage growth companies in this region which we believe are cutting edge in certain technologies – energy-related, internet of everything, transportation solutions, software applications, etc,” Hajdu said.
The active portfolio of 3TS currently includes 11 companies such as mobile marketing solutions provider Simartis from Romania and Solvoyo, an enterprise software business in Turkey. 3TS plans to continue investing in three to five companies per year across the whole CEE region from the Baltics to Turkey with a focus on expansion financing ranging from 2.0 million to 10 million euro per company with smaller and larger investments done in exceptional cases.
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