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Managed Service Provider Can Seize Opportunity in Germany’s Still Immature Cloud Computing Market

by Rene Buest  |  October 1, 2019  |  1 Comment

While Germany is the economic powerhouse of Europe, Gartner expects 16% growth in public cloud services until 2022. This puts Germany into the ninth position of Gartner’s ranking of cloud-lagging countries (relative to the U.S.), behind other European countries such as the U.K., the Netherlands, Poland and France.

For tech CEOs of managed service providers (MSP), this setting offers a great growth opportunity and a challenge at once.

In Germany, MSPs typically deal with reserved organizations that do not have a high priority on an innovative culture. Gartner interactions show that a typical profile of a German midsize enterprise has the following characteristics:

  • Uncertain about the evolution of markets or demand – as a result, not open for change
  • Lack of necessary skills and limited internal resources to address priorities and execute
  • Consider technologies just as a supporting element
  • Small IT budgets force midsize enterprises to create a compelling business case for ROI
  • Lack information to support a business case for change and execution
  • Sensitive to the potential for security risks (including cyber-related risks)

Creating new business models is not a high priority in many German midsize enterprises, which explains the relatively low implementation of digital business solutions. Slow or no digital adoption may indicate that their scale or the industry requirements do not demand a full digital model for some German midsize enterprises, so it is lower on their list of priorities.

Given how global business is already being shaped by cloud-related technologies, and the huge opportunities it brings through digitalization, we believe it is of critical importance for all German midsize enterprise organizations to prepare for and execute digital business strategies. And cloud is the fundamental launch pad for the execution of these strategies.

Current Key Facts of Germany’s Immature Cloud Market

The cloud market in Germany is comparatively immature to other European markets.

  • 55% of organizations that use cloud services don’t follow a cloud-first strategy
  • 45% prioritize cloud enablement when purchasing new IT or digital services
  • 61% of German organizations prefer internal private clouds – compared with 43% who use public clouds
  • 28% of German organizations plan to use internal private clouds in the future while 38% plan to use public cloud

For Germany, this is not a surprising buying behavior. In general, German companies are laggards when it comes to the adoption of new or emerging technologies. Their overall measured approach relative to pace of change leaves them to typically wait for associated technologies to settle in with sufficient proof points and best practices. The infamous Silicon Valley mantra of “move fast and break things” simply does not belong in the German culture.

However, German organizations who use cloud prefer capabilities or features related to:

  • Data storage (67%)
  • Workforce collaboration (55%)
  • Business applications such as ERP and email (55%)

Email (50%), security (48%) and vertical-specific applications (46%) are primarily deployed via a cloud model. In doing so, 27% of application/workloads are noncloud applications utilizing cloud APIs and middleware, 18% are brand new cloud applications and 17% are noncloud applications running with modifications in a cloud environment.

By adopting cloud, German organizations report that they have achieved successful outcomes related to improved efficiency (35%), IT modernization (33%), improved productivity (28%) and enabling the digital business strategy (23%).

No Surprise: Security Concerns Surpass Them All

German organizations consider security by far as the most important characteristic of a cloud offering, followed by the ease of integration with other internal systems/infrastructure and feature functionality. Future viability and ongoing support services to meet industry-specific requirements are considered as other vital characteristics of cloud offerings as well.

However, security concerns of cloud services are the No. 1 reason (36%) why German organizations decide against the use of cloud environments, followed by the complexity of cloud migration (35%). Going deeper into German cloud security concerns, 49% fear that their cloud-based applications are being hacked, while 41% are anxious about having their data stolen from the cloud.

In our research note “How Tech CEOs of Managed Service Providers Can Seize Opportunity in Germany’s Cloud Market” we provide essential insight into how tech CEOs can seize the growing hybrid cloud opportunity in Germany’s still immature cloud market.

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*The data included in this research is based on Gartner’s annual Cloud Adoption Survey.
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If you want to engage with me, feel free to schedule an inquiry call (, book a vendor briefing (, follow me on Twitter (@ReneBuest) or connect with me on LinkedIn.

I am looking forward to talking to you!

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Category: product-strategy-and-launch-for-tech-ceos  

Rene Buest
Research Director
2 years at Gartner
21 years IT Industry

Rene Buest is a Senior Director, Analyst in Gartner's Tech CEO Research and Advisory team. Primary research coverage is infrastructure services and digital operations as well as managed services and intelligent automation. Read Full Bio

Thoughts on Managed Service Provider Can Seize Opportunity in Germany’s Still Immature Cloud Computing Market

  1. Daniel Sanchez Reina says:

    Really good one, Rene. National cultural traits can hinder the blindly-accepted mantras. National cultures are the frame within which an organizational culture can get its potential realized.

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