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December 7, 2010

Cloud will make UK £35bn richer a year, claims group

Europe's five biggest economies could potentially be 'richer' to the tune of E177.3bn - or £150bn - a year annually by 2015 via wholesale adoption of the cloud, according to a think tank whose analysis has been sponsored by storage giant EMC

By Cbr Rolling Blog

The source of the strong claims is a somewhat obscure (to us at least) outfit, the Centre for Economics and Business Research, which says it has performed an in-depth analysis of the potential impact at the macro-economic level of a move to cloud on Europe’s five largest economies – specifically, France, Germany, Italy, Spain and the UK.

How did the firm arrive at the E177.3bn figure? Its methodology, we are told, was to identify both capital and operating expense "savings" made by "companies adopting cloud computing services" then measure them against "macro and business variables" such as business development opportunities; business creation; indirect gross value added (GVA); tax contributions and "expenditure on cloud services". (Said methodology, by the way, takes up 27 pages of the final report, so we have to give it some credit.)

On that basis, the UK could, like its Western European peers, via things like using more private and hybrid clouds and so forth, be ‘better off’ to the value of E30bn (£25bn).

How? "Cloud computing is a new approach to IT," the report informs us, making "technology available to businesses in a scalable manner and as a service, when they need it," thus speeding up time-to-market, removing traditional barriers to entry and allowing companies to exploit new market opportunities. "This ‘business creation’, as a direct result of cloud, will have a profound effect on the market structure of many sectors as competition increases and, thus, on global macro-economic performance".

To take just one stat offered, "By 2015 Cebr predicts that the total economic benefit of the private cloud alone will be over E60bn and that indirect and induced employment generated between 2010 and 2015 could be as high as 2,396,000".

"Our study shows that, not only is cloud computing an issue from the micro perspective of boosting the efficiency of an individual company’s IT investment and, hence, of its corporate productivity, it is also likely to be a critical macro-economic factor that will be crucial for boosting Europe’s economic growth," adds the group’s managing economist, Oliver Hogan.

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Well, this is all quite strong stuff and patently there are things one could – and should – take issue with. Personally, I am always uneasy about macro growth charts that always go pleasingly up in a north-north-east direction; such graphics never seem to be that much use when we encounter road bumps like the Credit Crunch and I am sure I have some stat lying around that told me house prices were set to grow all century.

But this is serious analysis and deserves your scrutiny and respect, if not total belief. Frankly, if cloud can make my country richer by £2.5bn, let alone £25bn, count me in – we could do with it.

Still, if you are interested in this data, go here for a fuller version of the report.

You may also be interested to hear all this is planned as a two-part analysis, with a second report, due in February, which, we are told, will look at the economic benefit and impact of cloud on specific industries across France, Germany, Italy, Spain and the UK.

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