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Telefónica Viewpoint on Cloud Computing

Submitted by on 09 Mar 2012 – 15:49

Telefonica Viewpoint on Cloud ComputingBy Tomás Calvo Gómez, Head of Cloud Advisory TeamGlobal Cloud Services & Strategy, Telefónica Digital

“If SMEs could access computing power over the web, they would no longer need to buy and maintain technologies or IT applications and services. Such web based services, called ‘Cloud Computing’, are the medicine needed for our credit squeezed economy” Viviane Reding [1]

Being one of the hottest topics in ICT, there are thousands of analyst reports, books and brochures written about Cloud Computing and its benefits. It could be tempting to regard it as just a new cool technology hyped by the specialized media. But behind all that buzz there is a huge potential for change for the whole society. Cloud Computing could be a real engine of growth for Europe. It is estimated that more than 300,000 new SMEs[2] and up to 2.4 millions of new jobs[3] could be created thanks to productivity improvements and new business opportunities.

First of all, Cloud Computing is about consuming applications, computing and storage resources through the network on an on-demand basis. Service providers build and maintain all the necessary infrastructure. Consumers – typically enterprises – are thus freed from the burden of the basic design and care of complex computer systems, concentrating only in the execution of their own business. Since they are paying only for the computing power they need, they are more flexible and efficient. This can be considered as a tipping point in the evolution of IT outsourcing, powered by three key forces: new technologies that allow “virtual” computers to run on any provider’s equipment, an almost universal network to move around these “virtual” computers, and new pay-per-use business models. It is a very similar revolution to the standardization of electric generation and distribution, when factories stopped building their own power plants.

For established corporations, with their own datacenters, Cloud Computing is a useful complement for growth and evolution. But for new enterprises, the crucial upfront investment in technology to support their operations is removed. Starting from scratch, they can grow from nil to millions of customers in a very short span of time thanks to the scalability – in price and performance – offered by Cloud Computing. Effectively, barriers of entry for virtually every type of business are lowered, as long as it is connected to the Internet.

Leveraging on Cloud Computing hundreds of new startup companies are being created with the goal to change the way people communicate and share information. This is especially visible in North America, where more than half of the global Cloud market is consumed[4], but in Europe new exciting ways to take advantage of this technology are also found. Just as an example, Cloud Computing is a natural fit for the implementation of the Open Data policy encouraged by the European Commission. With no investment in advance, attractive pricing and unlimited capacity, it is a natural choice for Public Administrations to store and publish all their internal data for reuse, making it possible to reach the full benefits of this initiative that could be valued up to 180 billions of euros[5].

But technology alone is not a magic silver bullet. With Cloud Computing, data and applications are delocalized on the internet, with the ability to move transparently from one place to another and accessed from anywhere. This is effectively a digital borderless world where, in many cases, it is difficult to assess even which is the applicable law. A clear, practical and forward looking legal framework is needed for protecting users’ rights and business interests. The European Commission has already taken many steps in this direction and is currently tackling important reforms on the digital single market and the data protection legal framework. Our experience as a telecommunications service provider has shown that engaging user privacy in a transparent and fair way can only be beneficial as it generates trust. But it is also very important that the right balance between individual privacy and business friendly rules is achieved, so that many of the Cloud Computing benefits are not kept away from European citizens and companies, especially SMEs. Service providers need a true level playing field and a homogeneous framework across the Europe Union to operate with economies of scale enough to foster innovation and promote massive adoption.

Society is getting more and better connected thanks to Cloud Computing, the general availability of fixed and mobile broadband, and the wide adoption of new personal computing devices, such as smartphones and tablets. Leveraging on the intersection of all these trends and our experience, Telefónica is actively bringing these technologies to the market through Telefónica Digital, the global business division for Cloud Computing and other new digital services. We are firmly committed to work with European institutions as the common goal of making Europe cloud-active, for growth and innovation, goes hand in hand with a cloud-friendly regulatory environment.


[1] “Europe’s Fast Track to Economic Recovery” The Ludwig Erhard Lecture. Lisbon Council, Brussels, 9 July 2009

[2] “The Economic Consequences of the Diffusion of Cloud Computing”. Etro, Federico. The Global Information Technology Report 2009-2010, World Economic Forum, 2010

[3] “The Cloud Dividend”. Centre for Economics and Business Research. Dec 2010.

[4] “Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015”. Gartner Group, 2011 Update

[5] “Review of Recent Studies on PSI Re-use and Related Market Developments”. Graham Vickery. Information Economics. Paris. 2011