Market Trends of Europe Cloud Computing Industry
Strong Government support for Promoting Cloud Adoption
- European governments are prioritizing digital sovereignty, aiming to keep data generated in Europe stored and processed locally. This push fosters the growth of regional cloud infrastructure and diminishes dependence on non-European providers, championing the adoption of local cloud solutions.
- Governments are increasingly turning to cloud solutions to enhance public sector services, spanning healthcare, education, and administrative functions. This shift is fueling a surge in demand for cloud services, as public institutions aim to modernize their IT frameworks.
- For instance, Eurostat, a government agency, reports that cloud computing adoption in Europe rose by approximately 4% points from 2021 to 2023. By 2023, 45% of EU enterprises embraced cloud computing, with large enterprises showcasing a notably higher adoption rate. In 2023, Finland (78%), Sweden (72%), Norway (71%), and Denmark (70%) emerged as frontrunners in cloud adoption within the EU. Conversely, Bulgaria (18%), Romania (18%), and Greece (24%) recorded the lowest adoption rates.
- Organizations are increasingly adopting cloud solutions to meet the stringent data protection and privacy standards set by frameworks like the European Union's GDPR and the Digital Markets Act (DMA). This regulatory push is driving up the demand for cloud services that emphasize robust security and compliance features.
- Flexera Software, a US-based software company, reports that in 2024, 71% of European organizations prioritize optimizing their current cloud usage for cost savings and migrating additional workloads to the cloud. In addition, 61% of respondents view automated workload migration to the cloud as a significant priority for the year.
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The UK is Expected to Hold a Major Share of the Market
- As one of the world's largest, the UK’s financial services sector has driven cloud adoption. Banks, insurance firms, and fintech companies are turning to cloud technologies, enhancing their data management, bolstering security, and elevating customer engagement, fueling the market's expansion.
- In November 2023, Aldermore Bank, a UK retail bank and lender, formed a strategic alliance with Mambu, a cloud banking platform. Aldermore Bank caters to homeowners, landlords, and business owners with financing solutions, alongside offering savings accounts and motor finance. Through this collaboration, Aldermore aims to modernize its technological approach, enhancing its clientele's unique experience. Mambu, a rapidly expanding SaaS cloud banking platform in the United Kingdom, accelerates the design and development of diverse financial offerings for a wide range of clients, including banks, lenders, fintechs, retailers, and telcos.
- In response to growing concerns, UK financial regulators are pushing for comprehensive new rules. These regulations aim to safeguard the UK's financial system from potential threats posed by cloud computing giants and other essential third parties that banks and insurers depend on. The Bank of England, highlighting the risks, seeks enhanced authority to oversee the finance industry's transition to cloud computing. Their concerns center around the industry's tendency toward secrecy and the concentration of sensitive data with major tech players, notably Amazon.com Inc. and Microsoft Corp.
- Post-Brexit, there has been an increased focus on data sovereignty and localization. This has led to a surge in demand for UK-based cloud providers that can ensure compliance with local data regulations, boosting the domestic cloud market. Post-Brexit, the United Kingdom rolled out its tailored version of GDPR, introducing notable changes that directly affected the daily operations of data centers and cloud service providers. This shift from the European norm has intensified scrutiny of consumer data management, mandating frequent audits and checks for compliance. As a result, data centers and cloud service providers have faced heightened costs to meet these compliance demands, ultimately impacting their profit margins.
- The growing developments in the country are set to bolster the market growth rate during the forecast period. In June 2024, UK Power Networks adopted cloud transformation. The London-based energy distributor and system operator is nearing the completion of a significant migration to a hybrid cloud infrastructure. This infrastructure is expected to cater to approximately one-third of all residents and businesses across the United Kingdom. UK Power Networks, primarily utilizing Microsoft Azure for its cloud requirements, will maintain on-premises systems in two data centers. These data centers are designated for storing highly sensitive data and services, ensuring protection against potential cyberattacks.
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