A policy blueprint for the Cloud Computing market

Grazed from BusinessCloud9. Author: Thomas Boue.

Cloud Computing is the fastest-growing and most exciting major technology trend in the software and computing industries. It is also a market that holds tremendous opportunity, as Tom Loosemore, deputy director of the UK Government Digital Service, said in a speech earlier this year given at the Digital London Conference , where he heralded Cloud Computing as one of the main drivers of the UK economy over the next few years.

Indeed, by 2015, revenue from public IT Cloud services will reach nearly 55 billion euros, according to IDC . Roughly a quarter of that will likely be in Western Europe — and private Cloud solutions could add another 10 to 20 percent. Even more significant to the economy will be the knock-on benefits that come from accelerating digital commerce and making robust technology solutions available to more users with greater cost efficiencies than ever before…

However, these benefits can only be fully realised if rules and regulations are agile and open across borders. This point is illustrated within a study by the Business Software Alliance which has come to the conclusion that a global patchwork of conflicting laws and regulations threatens to prevent Cloud computing from reaching its full potential. The BSA Global Cloud Computing Scorecard finds there is a pressing need for governments to better harmonise their policies to smooth the flow of data across borders.

The Global Cloud Computing Scorecard benchmarks the Cloud readiness of 24 countries that together make up 80 percent of the global information and communications technology market. It shows which countries are best positioned to drive the Cloud computing revolution; it reveals barriers to growth; and it outlines a set of guiding principles to expand economic opportunity in the Cloud that all countries would be well advised to follow.

The UK ranks seventh out of 24 countries in the scorecard behind Japan, Australia, Germany, the United States, France and Italy. With Spain also appearing in the top 10, the strong presence of European countries at the top of the league table displays their solid legal and regulatory base to support the growth of Cloud computing. For example the UK’s recent launch of the G-Cloud, the UK government’s application cloudstore for the public sector to obtain Cloud computing services on a ‘pay as you go’ basis, has illustrated the most fully elaborated Cloud policy in Europe to date, adopting a “public Cloud first” approach for public procurement. On the other hand, and perhaps unsurprisingly, developing countries such as China, India and Brazil show the most room for improvement.

However the study has also found that a number of high-ranking countries have taken measures to wall themselves off with technology preferences and market-distorting regulations. For example, despite a set of relatively strong data protection laws and cyberlaws in place, UK businesses are required to register their data sets with the regulator, which seems an unnecessary burden on business and may act as a barrier to certain Cloud services. Similarly in Germany and France there is an increasingly prevalent view that to make data safe and secure you have to quarantine it behind national borders. That may be true for highly sensitive information, but applying the principle more broadly will limit the opportunities for Cloud computing, which is all about scale.

Cloud providers in Germany and France, in turn, have launched “made in Germany” and “made in France” programmes that institutionalise this bias against foreign competition. From a branding perspective, this is understandable. But in the Cloud market, it is also self-defeating. The biggest long-term growth opportunities for European Cloud firms will likely be outside the EU, so it is essential to promote open competition in all directions.

It is also clear that the proposed EU Data Protection Regulation presents opportunities — and potential obstacles — for the development of the cloud. On the one hand, it could improve the single market by, for example, consolidating registration requirements for data controllers. But it is also very prescriptive in mandating how companies can collect, store, and manage information. The risk is that too many compliance obligations could have a chilling effect on digital commerce and the cloud.

To have a truly global Cloud market, laws do not need to be identical in every country but they do need to be compatible. BSA offers a seven-point policy blueprint for expanding economic opportunity in the cloud:

1. Protect users’ privacy while enabling the free flow of data and commerce.
2. Promote cutting-edge cybersecurity practices that counter threats by drawing on the innovative capacity of the market.
3. Battle cybercrime with meaningful deterrence and clear causes of action against criminals.
4. Provide robust protection and vigorous enforcement against misappropriation and infringement of Cloud technologies.
5. Encourage openness and interoperability among Cloud providers and technologies.
6. Promote free trade by lowering barriers and eliminating preferences for particular products or providers.
7. Provide incentives for the private sector to invest in broadband infrastructure, and promote universal access to it among citizens.

According to a recent report released by the Boston Consulting Group, titled The $4.2 Trillion Opportunity, Cloud data storage and other internet-related spending contributed £121bn to the UK’s GDP in 2010, providing further evidence that Cloud computing is set to be a new engine of the global economy. To get there, policymakers in Europe and around the world must ensure a legal and regulatory framework that will promote innovation, provide incentives to build the infrastructure to support it, and promote confidence that using the Cloud will deliver benefits without sacrificing privacy, security, and safety.