B2B Payments

The EU’s Path to Cloud Regulation

By the end of 2015, Europe could change the way data is transferred across its Member States. The European Commission is knee-deep in exploring cloud computing regulations that would span the EU, but cloud technology often sparks fear of privacy breaches – especially within small businesses.

The way B2B does business in Europe could change significantly with these cloud computing rules, and the Commission will need to juggle the concerns and needs of the industry as it looks to rain the benefits of the cloud upon all businesses.

At the fourth annual Think Cloud for Government Conference held earlier this month, the European Commission’s head of software, services and cloud computing Pearse O’Donohue offered an update to the Commission’s cloud regulation efforts, which raises significant concerns for Europe’s B2B industry.

How the B2B Space Will Benefit

According to THINK Cloud for Government, 2015 will see the government boosting its IT spending on the cloud to 50 percent. At the event, O’Donohue encouraged the Commission to take insight offered by the UK’s so-called “G-Cloud” program, which implements cloud technology for the benefit of streamlining government procurement practices. It’s a crucial case study for the EU.

A streamlined cloud space in Europe, the Commission says, can be applied to myriad industries, but the as demonstrated by the UK’s G-Cloud program, both the public and private procurement sector could see significant benefits to the EU’s cloud regulations.

Overall, the Commission believes that because currently cloud regulations between EU member states are fragmented, streamlining these rules would offer a more comprehensive guide for businesses in any space, including the B2B industry, using the technology.

According to the Trusted Cloud Europe report, SMEs using cloud technology would be able to choose cloud service providers with confidence that those providers meet EU legal standards, while cloud service providers can offer services to EU business customers “without hindrance from national regulatory barriers.”

O’Donohue spoke strongly about involving SMEs in the EU’s development of cloud technology best practices and guidelines. “The larger companies can look after themselves,” he said, “it’s the SMEs who are a huge part – this is what our data shows us – SEMs are a huge part of the cloud supplier market and they need to be assisted, particularly when it comes to providing services across borders.”

With the involvement of SMEs in the EU’s cloud reform, officials will have a clear understanding of the needs of smaller vendors, especially those doing cross-border business with buyers, that utilize cloud technologies. In a survey conducted by the EU on its Trusted Cloud Europe report last Spring, the EU found that 68 percent of respondents agreed that cloud services and regulations would promote clearer and more efficient procurement processes across Member States.

O’Donohue also made it clear that data privacy and protection will be paramount in the EU’s cloud reform. While the official said the Commission would be focusing on areas of security, he stressed that the ability for data to flow across borders promotes competition and innovation. “There’s a very political debate going on about data sovereignty,” he said, “but the focus of our work is actually in relation to barriers that exist with regard to the freedom of movement of data and data services.”

Potential Downfall of Cloud Regulations for B2B

The EC’s Trusted Cloud Europe report found significant concerns about adopting cloud computing regulations, and data privacy remains one of the most troubling topics. Manufacturers, the report say, prioritize information security when considering cloud adoption, but nation-specific laws and norms are considered a major obstacle if the EU wishes to adopt EU-wide rules. Plus, the report says, nation-specific rules, especially in the financial sector, could discourage use of the cloud by some businesses altogether because they process high volumes of personal data.

A report conducted by the Federation of Small Businesses for the European Commission found that 80 percent of SMEs could benefit from cloud computing’s cost reductions, but recent research has found that 40 percent of small businesses say security fears are preventing them from adopting cloud computing services.

These implications could particularly become a problem for private-sector suppliers and buyers to conduct their business and payments over the cloud, especially in cross-border transactions – and O’Donohue noted that no decisions have been made on how to standardize data movement.

Overall, the Trusted Cloud Europe reports recognizes the imperativeness of promoting cross-border recognition of cloud technology best practices, and workshops with SMEs should work towards identifying these best practices.

According to the report, cloud-active procurement policies are an example of established best practices within the cloud industry that can be built upon. “While details vary from country to country, such policies generally require administrations to at least consider cloud technologies (including both public and private clouds) for their IT procurements, and to ensure that their requirements do not needlessly exclude cloud technologies,” the report notes. “The objective of such policies is to change the mindset of procurers, to stimulate cloud adoption, and to ensure that the benefits of the cloud can be maximized by re-using successful services whenever possible.”


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