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Julia Neuschmid, Senior Research Analyst, IDC Austria
Cloud computing is becoming mainstream in Central and Eastern Europe (CEE) and Sub-Saharan Africa (SSA) — two rapidly developing regions in which digital transformation is serving as a major economic driver. According to IDC's recently conducted research study (sponsored by Oracle) that provides insights into the current state of digital transformation, based on interviews with over 250 IT and business decision makers, one-third of the companies are already in cloud, while another 39% are currently planning and evaluating cloud strategies. "We need to optimize our infrastructure and operations to improve agility and cost effectiveness," was mentioned by one of the participants in the research (the head of finance of an organization in Ghana’s public sector) in characterizing what drives cloud adoption in the SSA region.
1/3 of the companies are already in cloud, while another 39% are currently planning and evaluating cloud strategies.
Organizations adopt cloud because it is easy, flexible, and scalable. Users can access data from any place, at any time, using any device; they only need to pay for the services they consume, and they do not need to concern themselves with maintenance or upgrades. Companies that have not yet moved toward cloud adoption are held back mainly by concerns related to security and loss of control, even though cloud providers have solid arguments in favor of cloud as a highly secure solution.
Organizations adopt cloud because it is easy, flexible, and scalable.
Who Are the Leading Cloud Adopters?
Cloud has been an IT enabler especially for small and medium-sized businesses (SMBs), as it provides a high level of security at a low cost compared with in-house solutions, and it enables SMBs to focus more on their core business activities. The current adoption among CEE and SSA companies with 250 to 1,000 employees is 40%. Interest in cloud is now increasing in larger organizations, as indicated by IDC’s research. Almost every second company with more than 2,500 employees is planning or evaluating cloud strategies, and 41% of the companies with between 1,000 and 2,500 employees have said yes to cloud planning and evaluation. One interesting fact is that not only lines of business (LoBs) as well as IT respondents currently planning and evaluating cloud, LoBs even have a slightly higher rate of involvement (40%) than IT (38%). This shows a shift in decision-making and financial power from IT to LoBs within enterprises.
Cloud has been an IT enabler especially for small and medium-sized businesses (SMBs), as it provides a high level of security at a low cost compared with in-house solutions, and it enables SMBs to focus more on their core business activities.
Individual industries adopt cloud at different speeds. The utilities vertical has by far the biggest demand for cloud, and is heavily involved in planning or evaluating cloud adoption (59%). Utilities, finance (47%), and the public sector (42%), including education and healthcare, comprise the top three potential cloud adopters. Retail follows with 40%, and telecommunications with 34%. Other vertical markets (e.g., manufacturing, transportation, and professional services) have significantly lower adoption rates.
According to IDC's research, the preferred cloud solution in both regions is software as a service (SaaS), with customer relationship management (CRM) and enterprise resource planning (ERP) expected to be the most popular cloud applications in the next 12 months. CRM is becoming a necessity for companies operating in the digital marketplace. Often, on-demand CRM solutions provide better functionality for companies undergoing digital transformation than on-premises solutions, because SaaS CRM solutions natively support 3rd Platform functionalities (e.g., mobility and social media). Also, interest is high in infrastructure as a service (IaaS), providing virtualized computing resources over the internet, and databases that run on cloud computing platforms. Platform as a service (PaaS) remains the smallest segment of the public cloud market, mostly because it is used typically by a small segment of companies with product or service offerings directly based on IT.
Interest is high in infrastructure as a service (IaaS), providing virtualized computing resources over the internet, and databases that run on cloud computing platforms.
In Western Europe (WE) in particular, we see an increasing number of organizations with cloud-first policies, mainly SMBs and startups, that prefer to purchase cloud services rather than conventional IT wherever possible. Cloud computing has become accepted as the future of IT infrastructure. In WE, the decision is shifting from whether or not to adopt cloud, to questions about the type of adoption (e.g., what type of cloud, when is the right time to move, how does the organization derive business value from cloud, and which are the right partners to take the organization to cloud).
The majority of organizations in CEE and SSA evaluate cloud services alongside conventional IT when looking to fulfill an IT requirement. However, interest in migrating to cloud (as one of the 3rd Platform technologies) has been high in recent years, and will continue to be so in the future. We are at a point where the pillars of the 3rd Platform enable business transformation and can be used for optimizing as well as expanding business models and processes.
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.