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You Want to Be Sustainable: Cloud Computing May Still Be Right

Small and medium-sized enterprises (SMEs) play a role in the development of new products and trends, and are major employers globally when it comes to private-sector jobs. At the same time, they face more challenges than large corporations to develop their workforce, manage resources, and even gain access to markets. Cloud computing, and the growing availability of cloud platforms in particular, are strong drivers of change for SMEs. Providing a competitive advantage against corporations, sustainable cloud computing solutions have been named the ultimate equalizer for small and mid-sized companies and a decisive step toward digital maturity. 

Ambivalence towards the cloud persists

We are still operating in a climate of the ongoing global recession. For many companies, this means social obstacles such as staff resistance to change and fear of technology. SMEs have been increasingly turning to cloud computing for economic sustainability and cost-effective support in their efforts to remain competitive.

In the race against a growing number of multinational players equipped with more resources, training opportunities, and funding to innovate, cloud computing enables SMEs to leverage strategic levels of skills and know-how without substantial in-house investment. Here the cloud model has acted as a major facilitator of innovation. It has provided basic infrastructure for SMEs and, in doing so, has contributed to competitiveness and social sustainability. 

Strategic advantages of cloud computing include the ability to move data from any location worldwide at any time, scalability, relatively low costs, and all-round agility. It has already become a platitude to reiterate the various competitive assets of the cloud. SMEs save on hardware and software, profit from the cloud storage capacity, and can enter the market with more ease thanks to cost-effective integrated cloud computing services. Also, you save on a skilled workforce to manage your IT assets. Anyone using the cloud can now run a large compute cluster or a database with just a few clicks. Setting that up on your own hardware, on the other hand, is a complex and expensive task. 

Green cloud computing

At the same time, companies are growing increasingly aware of the sustainability aspect of cloud computing, the role of the data center in global emissions and the carbon footprint associated with running intelligence in the cloud. To this end, many are proactively seeking affiliation with a cloud data center that runs on renewable energy, uses alternative energy sources, or makes use of innovative energy consumption concepts. This way, SMEs can still benefit from the pace of innovation, yet the green cloud will allow them to alleviate the environmental impact of the public cloud.

The green data center and cloud solutions that use renewable energy sources mean that companies can still achieve high levels of efficiency while meeting their sustainability goals. This path is clear and it is called green cloud computing. This means a commitment to energy efficiency concepts together with an increased awareness towards the carbon emission landscape.

Sentiments towards cloud computing

And yet, market research indicates that European SMEs are not making the best out of the cost-effective solutions that cloud computing offers. Back in 2014, the sentiment surrounding cloud computing was still that of resistance. Even though the phenomenon has come a long way, the status quo as of 2019 is that many SMEs have not become more open to the cloud model. According to recent data, 73% of senior SME decision-makers in the UK did not understand the cloud

And this is only the surface. Once we look deeper into the ongoing processes and structural setbacks in small and mid-sized companies, we observe only modest levels of future-fitness. Problems include lack of ongoing professionalization, sluggish to non-existent know-how transfer, and workforce unwilling to engage with new technologies. 

Obstacles to cloud computing adoption in SMEs

According to a recent study, the majority of SMEs in Germany named “own staff” the largest obstacle in the transition toward future-ready agile solutions such as cloud computing and IoT. Among the reasons for this is the lack of resistance management offerings and insufficient education initiatives on the issue. Read more in our related article “Challenges to Implementing IoT in Your Company: Resistance Management as Part of Change Management”

At the same time, studies show that SMEs are in need of support. This support may come in the form of cooperation with research and education institutions to safeguard lasting development.

Investment in SME education and growth is a Europe-wide task

Educating senior management about the assets of cloud computing has become a Europe-wide initiative. According to a recent publication by the Organisation for Economic Co-operation and Development (OECD), a fundamental rethinking of SME and entrepreneurship policies is needed to improve business conditions and access to resources. The OECD SME and Entrepreneurship Outlook 2019 clearly shows that “the digital transformation provides scope for productivity growth but large adoption gaps exist compared to larger firms”. 

The European Commission has been launching initiatives to support investment in Information and Communication Technologies (ICT) for over a decade. As early as in 2012, EC adopted Communication COM(2012) 529 for Unleashing the potential of cloud computing in Europe. The communication aimed to increase the use of cloud computing within all parts of the European Union’s economy. The initial strategy involved the adoption of three key actions. These included the creation of a European Cloud Partnership. The latter aims to work towards strategies to turn cloud computing into green computing, that is, a proven driver of sustainable growth and innovation.

As part of the measure Digitising European Industry, the European Cloud Initiative – Building a competitive data and knowledge economy in Europe aims to secure Europe’s role in data-driven innovation and leadership. Along these lines, EC’s Digital Single Market strategy continues to be a top priority. In 2019, the EC announced its own new cloud strategy promoting a “cloud-first with a secure hybrid multi-cloud service offering”. 

Cloud computing in SMEs

Cloud computing is an on-demand self-service offering that allows for broad network access, resource pooling, and high scalability. The cloud offerings come with four types of access: public, private, hybrid, and community.  Also, there are four basic service models:

  • Software as a Service (SaaS). In this case, we have Cloud Service Providers (CSP) applications running on a cloud infrastructure. It is accessible from user devices through a web browser.
  • Platform as a Service (PaaS). Here users develop on the cloud infrastructure or gets applications created with programming languages and tools supported by the provider.
  • Infrastructure as a Service (IaaS). The CSPs provide users with storage, networks, and essential computing resources. The user can deploy and run software, including operating systems and applications.
  • Everything as a Service (XaaS). This model covers the vast variety of services and applications for user access on-demand over the internet.

Complex attitudes towards the cloud

Cloud services come with low-cost software solutions, unlimited data storage, and portability. Data can be accessed from any location worldwide at any time. The cloud also means high-level security protocol, ease of data management, and streamlined business performance. The main pain points for SMEs involve reservations regarding the security of the data and the reliability of the service, especially with regard to the claim to unlimited accessibility. Also, the cloud is known for its troubled relationship with matters of sustainability and climate change.

Some companies are also concerned with the lack of control over their Information and Communications Technology (ICT) systems. Such issues cause many SMEs to postpone their migration to the cloud until their questions are answered in full. Apart from these infrastructural concerns, we have limited in-house ability to assess the infrastructure, cost, and fit to the specific situations of specific companies. Added to this is the insufficient ICT skill level of users, managers, and decision-makers, as well as the initial investment in time and training that may appear hard to justify. 

So the cloud might be easier to handle than the current on-premise systems in SMEs. But, due to lack of vendor-neutral educational resources, it is still too complex for decision-makers in SMEs to assess. Managing cloud resources is less demanding than managing on-premises systems. However, the skills required for the cloud may not be in the comfort zone of IT staff in SMEs.

Concluding remarks

As uncertainty persists, SMEs are in need of external support. This may come in the form of public initiatives or education campaigns to make full use of cloud technologies. Adopting a cloud-first policy does not take place in a vacuum. Local public institutions, intra-governmental organizations and transgovernmental networks are already involved in the promotion of cloud literacy. These are looking into ways to address major pain points including data security in the cloud and regulatory compliance. 

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About Record Evolution

We are a data science and IoT team based in Frankfurt, Germany, that helps companies of all sizes innovate at scale. That’s why we’ve developed an easy-to-use industrial IoT platform that enables fast development cycles and allows everyone to benefit from the possibilities of IoT and AI.