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Nordic countries are leading Europe in cloud service take-up, but lag behind in terms of strategic use. Only one in 10 Finnish, Norwegian and Swedish organisations can be regarded as cloud mature, according to a new study.
More than two-thirds of organisations in these countries are still at an immature (18%) or basic (51%) level in terms of cloud usage, according to the Cloud Maturity Index (CMI) study published by Finnish IT services provider Tieto and research company Radar. This means they are lacking a clear definition of and strategy for cloud services.
“The survey indicates that many organisations still use cloud services ineffectively to a large degree. Quite often, the actual use is not anchored to the joint business strategy but is rather driven by a short-term need to cut costs,” said Niraj Sood, head of business development for managed services at Tieto.
“Paradoxically, these [non-mature] organisations seem to be less successful with cutting costs than cloud-mature organisations, where focus instead lies on innovation and business development.”
According to the study, on average, mature organisations invest twice the proportion – almost 10% – of their IT budget on cloud services compared with those that are not mature. But this pays off – on average, cloud mature organisations have 34% lower IT operations costs compared with competitors and more than twice the budget for innovation.
The Nordic split
Finland leads its neighbours in operational cloud maturity with a higher proportion of cloud-based IT services than Sweden and Norway. Finnish organisations also use more types of cloud services in a greater number of sectors. But in Sweden, strategic cloud use – having an established strategy for cloud services – is slightly more mature.
“IT outsourcing has been adopted from very early on in Finland and, in general, outsourcing is more common,” Sood said. “In Sweden out-tasking and resource procurement are used more often. For example, [Swedish] banks buy lots of resources and consultancy from outside but don’t really do large scale outsourcing contracts like in Finland.”
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In addition, penetration of software as a service (SaaS) is high in both countries. Sood said that because IT outsourcing has traditionally been driven by cost efficiency, the incentives for it have been lower in Norway’s prosperous economy. According to the study, operational cloud maturity is 43% lower in Norway than Finland.
Where Norway bucks the trend is in growth speed. It had the highest growth in cloud services usage in the past year. Currently, the report states, 69% of Finnish organisations use cloud in some form compared with 60% and 46% in Sweden and Norway respectively.
Barriers are disappearing
Gartner Finland’s Leena Mäntysaari pointed out that while growth in cloud service adoption has been fast, cloud maturity is unlikely to ever reach 100%.
“When talking about maturity [of any technology] it’s good to remember only a small percentage of companies will ever reach the highest level – it’s natural,” she said.
Furthermore, barriers for cloud adoption still exist. According to Tieto’s CMI study, security and regulatory requirements were seen as the most common barriers to implementing cloud services, yet only 10% of cloud-mature organisations saw them as an issue, which implies the perceived barriers are addressable.
“Data security is a good example,” Mäntysaari said. “A few years ago it was a major worry for companies, but based on [Gartner's] studies companies have had good experiences [with cloud services] and this is reflected on how they now perceive their safety.”