Europe Turns to the Cloud

by admin on July 25, 2011

BERLIN — When the founders of Shutl, a British courier service that makes deliveries in 90 minutes in busy London, decided to set up a business that ran exclusively on cloud computing, they needed to get creative.

Data privacy laws in Europe forbade the transfer of information about individuals outside the 27-country European Union. That had prevented many companies on the Continent from moving to the cloud, where data may be stored on remote servers in Asia, the United States or elsewhere at a lower cost than what a company would pay for its own servers.

Yet despite the tricky legal landscape, Shutl, now a two-year-old start-up, has become one of Europe’s most avid users of cloud technology. The company carries out more than 1,000 deliveries a day over a cloud network operated by Amazon, the U.S. Web retailer.

Amazon.com, one of the world’s largest sellers of cloud services, helped clinch deals with Shutl and other European businesses, like the French railroad company S.N.C.F. and Bankinter, a Spanish bank, by effectively moving the cloud to Europe by setting up a data center in Dublin. Tom Allason, the Shutl founder and chief executive, said that the company planned to expand from London to all of Britain and Ireland. “Cloud computing helped make Shutl possible,” he said.

While cloud computing remains the exception, not the rule, in Europe, the trend is gaining momentum. According to Gartner, the research firm, annual sales of cloud services in Europe will rise 4.3 percent, to $29.5 billion, in 2015 from $24.7 billion this year.

Sales will still be only roughly half the level of revenue in North America, where remote computing was developed and its biggest sellers — Amazon, Salesforce.com and Microsoft — are leading an industry that Gartner says will generate $60 billion in sales this year.

But in Europe, the willingness of smaller companies like Shutl, and bigger clients like the European Space Agency and the Fraunhofer Institute of Germany, both Amazon clients, to use the cloud are signs that the outsourcing trend is reaching Europe’s shores.

“This is a tectonic shift in computing that is going to take many years to unfold,” said Adam Selipsky, a vice president at Amazon Web Services, the cloud computing arm of the online retailer. “Despite the challenges, on the ground, the cloud is happening in Europe.”

Europe is embracing the cloud despite the complexities of the bloc’s data protection laws. In addition to forbidding the transfer of data on European citizens outside the Union, there are many different versions of what is considered private information and how it is supposed to be handled. That makes it a legal headache to develop standards that satisfy all member states.

For European businesses, cost savings are the cloud’s biggest attraction. Cloud data centers are typically vast collections of computer servers and supporting equipment run by businesses that specialize in wholesale data processing. The centers are designed to provide the most efficient use of all storage and computing power, avoiding costly downtime and lulls typical of smaller businesses.

Mr. Selipsky said that Amazon customers typically saved 25 percent to 30 percent of costs by using its global cloud network instead of maintaining their own computing systems. Amazon allows its clients to store their information at any of its global data centers.

Mr. Allason, the Shutl founder, said that using Amazon’s cloud services had saved him from having to spend £100,000, or $160,000, to set up an internal computing system. He said he had used the savings to build his business, which aggregates and links delivery orders from British retailers like Argos and Oasis to hundreds of local courier services.

Cloud computing could get a lift soon from Brussels, where lawmakers are reviewing the European Union’s data protection directive, which governs how personal information travels within and outside the 27-nation bloc. Viviane Reding, the European commissioner overseeing the revisions, plans to make a proposal this autumn.

Ms. Reding, in an interview, said that businesses and consumers would both benefit from revisions in her proposal, which must be approved by the European Parliament and the Council of Ministers, which is made up of officials designated by each country to represent its interests. The process is not expected to conclude until next year. The Union’s existing data protection directive was adopted in 1995. “The rules are still valid, but the application of the rules must be modified to reflect the realities of the Internet age,” Ms. Reding said.

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