Cloud Computing as an Important Aspect of the Digital Transformation of Companies

A study by the Internet Economy Foundation examines the question of how the digital transformation in small and medium-sized enterprises (SMEs) can be accelerated through the increased use of cloud computing services. To this end, it analyses the current use of cloud products in German SMEs and the obstacles they face, and develops recommendations for policy makers.

Obtaining cloud computing services enables companies to access highly developed digital infrastructure and applications efficiently, scalably and cost-effectively. For SMEs in particular, the migration of data and processes to the cloud is therefore a key aspect of their digital transformation. However, the status of cloud computing in German companies varies greatly. Around 55% of large companies with more than 250 employees use sophisticated cloud services, such as cloud-based databases. However, only 31% of SMEs do so.

The reasons for this reluctance to use cloud computing in SMEs are, in particular, concerns about unauthorised access to sensitive company data and a lack of legal certainty with regard to data protection. In recent surveys by Flexera and Bitkom, 85% and 75% of companies respectively stated that they had security concerns in connection with the use of cloud computing. The potential loss of data is also a challenge for 60% of the companies surveyed. 60% of companies that do not yet use public cloud services cite the unclear legal situation as an obstacle to their introduction. According to the GDPR, providers of cloud services must be able to guarantee compliance with European data protection standards. In practice, this is often only possible if the data is stored in a data centre within the EU. However, this is offset by the market dominance of US cloud providers. European providers of cloud services had a market share of just 16% in 2021, which is also spread across a large number of smaller providers, none of which have the necessary critical mass to seriously compete with US providers.

The European Gaia-X project aims to counteract this problem with a Europe-wide platform for various cloud providers based on uniform EU standards for data protection and interoperability. In combination with funding offers for digitalisation, the conditions for the cost-effective, legally compliant and European security standard-compliant use of cloud computing can also be created in SMEs.

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