On-premise is not dead

Despite the EU as a whole showing a year-on-year increase in the number of businesses using cloud services, some EU countries have seen a decline. 

As data from Eurostat shows us, by the end of 2023 we could see a 4.2% increase in the number of businesses using cloud services compared to 2021.

Source: Eurostat

Despite this, the chart also shows that in Sweden (SE), the Netherlands (NL), Belgium (BE), Slovenia (SI), Slovakia (SK), Estonia (EE) and France (FR) the trend is reversed, with fewer companies using the cloud in 2023 than before.

There may be several reasons why this is so: 

Skyrocketing costs of cloud services

Europe-wide price increases for Microsoft cloud products in spring 2023. In addition, there is a cloud sprawl phenomenon, especially in large companies with many branches and business units, as software is available and accessible at any time. On this basis, cost dynamics can quickly develop that are difficult to calculate and pose a significant financial risk.

Security risks in total cloud solutions

Whether it's ransomware, malware or availability attacks such as DDoS attacks, the threat scenarios for cloud service providers and their customers are vast.It's not for nothing that Microsoft recently announced that it is investing a double-digit billion-dollar investment in securing its cloud infrastructure.

Danger of over-dependency

More and more companies are consistently trying to reduce unilateral dependence on cloud providers, for example in the form of vendor lock-in.Instead, it is increasingly popular to use your own on-prem solutions where cloud services are not necessary or are at least partially dispensable due to workplace requirements.

Other reasons or country specifics also play a role. 

In some sectors, such as public administration, energy supply or healthcare, there are particularly high requirements for data sovereignty and security and strict compliance guidelines. In France, this means, among other things, that hospital companies are not yet allowed to implement and use cloud-based software. Combined with the already high cost pressures in the healthcare sector, this is leading to an increased interest in low-cost on-prem licenses.

One package for all users - really?

Another reason why the popularity of the cloud is declining is the fact that licenses are very often distributed in packages. Business Standard, Business Premium, Microsoft 365 E3. These packages often include dozens of services that, thanks to Microsoft's business strategy, the user buys but does not use. Often they don't even know what all services are included. For example, the average usage of features in the M365 E3 package in companies is around 10 - 15%.

How to reduce dependency on the cloud easily? Hybrid solutions

A current trend, especially in Western European markets, is so-called "hybrid solutions". This is usually a combination of cloud solutions and sub-services that are actually used in the organisation. The most common scenarios include replacing Microsoft Business Standard with Business Basic in combination with on-premise Microsoft Office 2021, where the payback for such a change is calculated in months.

Contact us for a quote to optimize the cost of Microsoft 365 licenses, we will tailor a customized plan with cost and functional efficiency in mind for your organization.