The data published by the Cloud Transformation Observatory confirm that the Cloud market in Italy is sufficiently mature for further progression. The study shows that this technology can play an important role in the country’s system.
This explains public investments in critical infrastructures such as the PSN that will support the digital transition within which the principle of Cloud First applies.
And also in the private sector, we are witnessing the specialization of Cloud services, which have become the standard in various business sectors. In large companies, the application park is 44% on public and private cloud and we are already looking at overtaking compared to on-premise applications.
The cloud is increasingly the norm and the value of the Italian Cloud market, equal to 3.84 billion euros in 2021 (+ 16% compared to 2020), data that leaves no room for interpretation.
>>> Read here the complete press release on the Cloud market in Italy
But what significance do these numbers have? That’s what we’re going to find out in this in-depth article.
What is meant by Cloud Computing?
Before entering into the merits of the Italian Cloud market, let’s contextualize the topic. And let’s start with some basic information, such as Cloud computing as it is.
The Cloud meaning, from a technological point of view, is provided to us by the National Institute for Standards and Technology. Here is the definition of Cloud computing (NIST):
Cloud computing is the set of ICT (Information and Communication Technologies) services accessible on-demand and autonomously via Internet technologies. These services, based on shared resources, are characterized by fast scalability and precise performance measurability.
What are the economic benefits of cloud computing models? Costs are reduced because shared resources make it possible to achieve economies of scale and enable the flexible provision of services for different demand profiles and according to the needs of the organization.
The gap between requests and consumption in the Cloud computing paradigm is zeroed, as well as the risk associated with IT projects: from a fixed capital investment we move to a variable investment model based on current operating expenses.
In summary, this is what we mean by Cloud computing: the distribution of computing services that meet the needs of innovation and offer flexible resources in economies of scale.
In the Cloud market:
- You pay for what you consume → you save on operating costs
- Agile infrastructure and flexible resources → maximize efficiency
Italian cloud market: what are the types of cloud computing?
When it comes to the Cloud market, it is important to understand that this technology differs according to both the type of distribution and the type of services.
Distribution is the Cloud computing architecture, which is the way in which cloud services are implemented. The main Cloud architectures are Public Cloud, Private Cloud, and Hybrid Cloud.
Public Cloud
In the public cloud, the ownership and management of hardware, software, and infrastructure are owned by the service provider, which provides the resources shared by multiple users over the Internet.
Business risk and running costs are entirely borne by the provider. The customer pays according to consumption, depending on the services used.
Examples of the main public cloud providers are Amazon Web Services (AWS), Google Cloud, IBM Cloud, and Microsoft Azure.
Private Cloud
The private Cloud architecture relates to resources used exclusively by a single organization or company. In this Clouding model, the server can be located in the company’s data center, or it can be allocated to third-party providers hosting private clouds.
In the first case, the management will be the responsibility of internal staff, while in the case of allocation to an external server it will be the responsibility of specialized third-party technicians (Managed Private Cloud). In any case, the physical assets remain the property of the company.
Hybrid Cloud
As the name implies, the hybrid cloud model combines the use of the public and private cloud. This technology allows data and applications to be shared between the two underlying architectures and offers the organization the highest level of flexibility, optimizing the infrastructure in terms of security.
Clouding services: SaaS, PaaS and IaaS
We have seen that technology differentiates Cloud computing architectures, distinguishing between private, public, and hybrid Clouds. There are other elements that allow us to outline the ‘cloud system’ and understand how the Italian cloud market is moving.
In particular, the types of services provided allow further classification of Cloud computing and are distinguished between SaaS, PaaS, and IaaS.
Cloud SaaS (Software as a Service)
In the SaaS model, the provider offers the user cloud-managed software. The user uses it via the Internet on-demand and usually pays a subscription commensurate with consumption (for example, number of accesses, or number of enabled users).
In the Cloud model of software as a service:
- the provider manages both the software applications and the infrastructure;
- the user uses on-demand, via an Internet connection, by paying for a subscription.
Cloud PaaS (Platform as a Service)
PaaS services are environments for developing, managing, and deploying applications used primarily by developers. In fact, this solution lightens the work and allows developers to concentrate on creating Web or mobile apps without dealing with infrastructural elements, such as databases, security systems, or application servers.
In the Cloud model of the platform as a service:
- the provider provides the user with optimized platforms that can be used for testing, development, and delivery of custom apps;
- the user only deals with some aspects of the platform, since the underlying infrastructure is managed directly by the service provider, or even by the internal ICT division.
Cloud IaaS (Infrastructure as a Service)
By adopting an IaaS solution, the user rents the IT infrastructure from a Cloud provider, i.e. networks, operating systems, storage servers, and VMs (Virtual Machines). And it pays based on actual consumption.
In the Cloud model of infrastructure as a service:
- the provider creates the computing resources, on which the user installs and manages proprietary applications;
- the user can use the resources flexibly based on real and effective needs.
What is meant by Cloud Computing? Present and future applications
Too often when we talk about Cloud Transformation in Italy we think of something far away that only concerns IT managers. Nothing more wrong. Already now and increasingly in the near future, many activities will depend on this technology.
Let’s briefly explore this aspect, starting with some practical examples of Cloud computing and then moving on to examples on a macro scale that will strategically transform the country system.
Cloud practical examples
When we use an online service to send an email, edit and share documents, or archive images, we use Cloud computing technology. Here are a couple of examples.
Archiving and backup: we can transfer files and data to an external Cloud system, accessible remotely and with any device. In doing so, we optimize costs, rationalize data storage and raise the level of security. Dropbox is the best-known and most commonly used cloud storage example.
Software on demand: we talked about it describing SaaS-type cloud services. With this technology, we are able to use software for sharing documents or for e-mail as needed. Free of charge or by subscription. Gmail and Google Drive are among the most explanatory SaaS examples.
Strategic Cloud Examples
The Italian Cloud market is strategically influenced by PNRR. The National Recovery and Resilience Plan provides for the allocation of 1 billion euros for point 1.2 of the strategy, that is “Enabling and facilitating migration to the Cloud“.
There is talk of a potential audience of about 16,600 entities divided between:
- ASL
- Hospital companies
- Cities
- Schools
The action plan acts on the public administration but will affect everyone since it affects health, education, and civic life. In particular, the Cloud PA will bring the following advantages:
- More effective delivery of services to citizens and businesses
- Process improvement in terms of quality and safety
- Cost savings and greater economic resources to invest in new developments for the PA
- Optimization of the energy efficiency of IT infrastructures and greater environmental sustainability (see decommissioning of less efficient PA data centers).
How much is the Italian Cloud market worth?
As I anticipated at the beginning of this article, the Cloud Italia market is worth 3.84 billion euros (+ 16% compared to 2020). In 2021, according to the most recent Eurostat data, our country ranked fifth in Europe for the use of the Cloud by companies (+ 1% compared to 2020).
The comparison of the growth in terms of absolute value + 16% and relative value + 1% gives us a way forward to make considerations on the prospects of Cloud computing in Italy.
Let’s start breaking down the overall data, analyzing in detail the Cloud Italy 2021 market. The photograph was taken by the Cloud Transformation Observatory, promoted by the School of Management of the Politecnico di Milano and is now in its eleventh edition.
2.39 billion euros (annual growth of + 19%) were spent on the Public and Hybrid Cloud. The interconnection between private and public Cloud services is therefore the main expense item.
Within the Public & Hybrid Cloud, PaaS services had the greatest growth + 31% (value equal to 390 million euros). IaaS services grew by + 23% (value equal to 898 million euros). SaaS services, after the boom of 2020 (linked to the pandemic emergency), settle on a dynamic of + 13% and still remain the majority component (value over 1.1 billion euros).
814 million euros (annual growth of + 11%) were spent on the Virtual and Hosted Private Cloud, that is the infrastructure services allocated to external providers.
What can be deduced from these data? That the overall expenditure for Cloud computing in Italy continues to grow and the driving force is represented by PaaS services. This type of Clouding is the most enabling one for modernization and application development, as well as for the management of information systems.
Cloud Italia market prospects
In the process of digitalization of companies and organizations, Cloud computing is confirmed as a business asset, as a tool to guarantee solidity and flexibility.
The data shows that 44% of the application park in large Italian companies is managed by heterogeneous Cloud solutions. A percentage that demonstrates how the breakeven share, compared to on-premises applications, is not far off.
Yet the Observatory also notes critical issues that may represent risks to the growth of the Italian Cloud market. Which? For example, 34% of companies do not accompany the Cloud Transformation path with adequate change management initiatives.
In other words, the technological transformation must be echoed by an organizational change that passes from:
- specialist reskilling of personnel;
- staffing with specialists in Cloud computing technology;
- review of processes from a Cloud-first perspective.
If, on the one hand, the positive numbers indicate that the path is right to achieve important strategic objectives, on the other hand, businesses and the PA are now facing a real challenge.
To implement a long-term strategy, which places the Cloud at the center of Digital Transformation, system investments can give the impetus to bridge the gap between Italy and other countries. For this reason, the funds allocated by the PNRR, as well as the launch of the Gaia-X project, become a fundamental kick for innovation.
And the innovation of information architectures and the interconnection of resources distributed in different computational environments is the tailwind that the Italian Cloud needs to overtake in respect to other technologies.
