Ten years ago, moving to the cloud was about storage and networks. Since then, there has been an explosion in cloud-based innovation, but many European companies still equate cloud simply with extra bandwidth and cost savings.
Then came 2020 and the pandemic. COVID-19 disrupted everything—from what we buy to how we work. As companies turned to remote operations and rapidly changing business models, the last remaining holdouts recognized that a migration to the cloud became an imperative.
Now, Europe is at an inflection point. The cloud offers so much more today, and there’s a growing gap between companies that approach the cloud with a decade-old view and others that grasp its full value. The latter are a subset of companies in Europe (one in 10) that approach cloud as a continuum of capabilities and opportunities that can make them both globally competitive and locally responsible. These European “Continuum Competitors” see the cloud as a critical enabler of advanced digital capabilities to achieve business goals while meeting or exceeding Europe’s climate-neutral targets.
We call them Continuum Competitors because they view the cloud not just as a single, static destination, but as an operating model, in contrast to companies that focus on simple migration.
They reimagine the role of data and compute – leveraging the cloud to transform how they interact with customers, partners and employees, make and market their products and services, and build and operate their IT systems. And they outpace their peers on many fronts.
The global race to invest better and achieve bigger with cloud
In early 2020, European companies moved four out of 10 workloads to the cloud this past year compared to three out of 10 for their North American counterparts, our research of 4,000 global executives found.
workloads moved to the cloud in early 2020 by European companies.
workloads moved to the cloud in early 2020 by North American companies.
But despite this early lead, many European companies risk falling behind when it comes to gaining the cloud’s full value. That is, a vast majority of these companies view cloud merely as shared, public data centers that can reduce costs. According to our analysis, Europe is the only region where lowering operating costs came out as the top priority for business leaders during the pandemic. In contrast, leaders in North America prioritized increasing customer value, and those in China focused on faster time to market.
While 100% European companies at a minimum adopted “basic” cloud, or software-as-a-service (SaaS), a vast majority of other indicators show European companies lag their global peers in cloud advancement. The indicators include adoption of sophisticated cloud models like platform-as-a-service (PaaS) and technologies like AI, wherein North America leads with 65% and 45% respectively.
As a result, European companies aren’t investing appropriately in cloud to achieve a wider range of business goals. In North America and China, companies expect to more than double their rate of investment in cloud between 2020 and 2024. In Europe, on the other hand, business leaders say they will spend 25% less than they did during the previous four years. This limited view of cloud may be holding back the very investment that’s needed to advance their journey.
At the current pace of investment, it would take European companies three years on average to catch up with their peers in the US when it comes to using cloud for business growth. That includes everything from leveraging cloud for sustainability goals to improving customer experience. If European companies fall back to pre-pandemic investment levels or less, it will further widen the gap with more than four years to catch up.
What’s holding back Europe’s cloud advancement?
Today’s global marketplace—with interconnected supply chains and an increasingly mobile workforce—can’t shroud the complicated challenges that keep European companies from embracing cloud in more significant ways.
The biggest pain point for this lag, according to European respondents, is complexity of business and operational change (46%). First, there’s the fragmentation and data sovereignty that are unique to the region. The European Union has 27 countries and 24 languages, many with their own local jurisdictions and regulations over how companies should collect, store and process data.
Second, there’s data trust. A lack of trust in data collection is a concern for consumers around the globe, according to our survey of 25,000 consumers. But historically, public sensitivity over privacy has been a key force driving change in European business environments, leading to the creation of world-leading data standards such as GDPR. Given that major data and cloud providers are global, there is an increasing interest among European governments to ensure global cloud providers are protecting personal data.
To comply with data sovereignty and instill trust among stakeholders, European companies opt too frequently for data silos, affecting their interoperability and impeding growth. In fact, nine out of 10 resort to creating data silos for sensitive data. These silos can impede the development of robust data supply chains necessary to fuel innovation and achieve growth. It’s clear that European companies need a new way to unlock competitiveness.
European companies resort to creating data silos for sensitive data.
Continuum competitors show the way forward
When the only constant thing in business is change, European companies can realize more value from cloud by using it as a continuum of seamless—not siloed—capabilities.
Historically, cloud meant public cloud and shared data centers. Today, most organizations deploy some mix of public, private and edge clouds based on their needs–with very little integration among them. As a result, innovation, data and best practices realized in one part of the organization don’t benefit others, impeding value.
On the other hand, the Cloud Continuum includes a spectrum of capabilities and services from public through edge and everything in between, seamlessly connected by cloud-first networks, and supported by advanced organizational practices. The array of technologies that makes up the Cloud Continuum varies by ownership and location, from close to the enterprise to completely off-premise. Cloud-first 5G and software-defined networks unify the Continuum, allowing access to the cloud from virtually anywhere without creating silos among private, public, hybrid, edge or multi-clouds.
Continuum Competitors make choices from across the cloud continuum to create a seamless technology and capability foundation that best serves their business needs—now and into the future.
Take IKEA, the furniture retail giant. IKEA started laying the groundwork for a digital transformation several years ago, with the help of the Google Cloud team. Then it came face-to-face with the frenzy of pandemic-fueled online shopping. As a Continuum Competitor ready to leverage cloud, IKEA instantly transformed its technology infrastructure, converted closed stores into fulfilment centers and enabled contactless “Click & Collect” services while increasing the capacity to manage large web traffic volumes and online orders. By using Google Cloud, among other key serverless technologies, it accomplished in weeks and days what would normally take years or months. Going forward, the company has a permanent commitment to reinvention using the cloud.
"Thanks to cloud, and only because of cloud, we’re able to have a real data analytics and AI revolution. That has been a very important evolution into starting to embed algorithms across everything we do."
— BARBARA MARTIN COPPOLA, Chief Digital Officer, Ikea Retail
Continuum Competitors quickly adapt to changes by capturing feedback on products and services on an on-going basis. In fact, 81% of Continuum Competitors believe they are well prepared even for future tighter regulations around data residency and sovereignty requirements and will be compliant very quickly, compared to 42% of their migration-only counterparts.
And Continuum Competitors distinguish themselves from their peers by getting two things right. First, they choose the right type of cloud and cloud-based services. Second, they implement advanced practices to leverage those technologies.
Four keys to Europe’s cloud success
So, what will propel European companies to advance beyond mere migration? The first step is to understand the nature of the cloud continuum: Speed and change are its fundamental facets. Agile practices that can harness the continual improvements and expansion of cloud capabilities are crucial.
1. Build a business case that engages leaders and accelerates cloud investment to achieve bigger goals.
2. Architect for unique preferences with balance, control and trust.
3. Don’t let technology languish. Augment it with human potential.
4. Accelerate innovation to deliver exceptional experiences.
Our research found that Continuum Competitors use a combination of human-centered design and cloud-based technologies to rethink experience throughout the organization, including their products and services, employee experience and delivery models. Experience-obsessed reimagination of their business is just one of their competitive differentiators enabled only by advancing on the cloud continuum.
Continuum Competitors are building smart factories, efficient and resilient supply chains, sustainable products and thriving organizations using cloud-based technologies such as AI/ML, private cloud, edge, 5G and PaaS, among others. And they find new ways to shape the transformation of their industries by leveraging cloud-based solutions to solve industry-specific problems.
Europe’s advancement depends on leaders who experience the cloud’s full opportunities. Becoming a Continuum Competitor means being ever-ready for every opportunity.