[Written by EY] [November ndash 2018]
Justice and
Consumers
Study on the Economic
Detriment to Small and Medium-Sized Enterprises
Arising from Unfair and
Unbalanced Cloud Computing Contracts
Final Report
Study on the economic detriment to small and medium-sized enterprises arising from
unfair and unbalanced cloud computing contracts
EUROPEAN COMMISSION
Directorate-General for Justice and Consumers Directorate A Civil and commercial justice Unit A2 ndash Contract Law Contact Unit A2 E-mail JUST-A2eceuropaeu European Commission B-1049 Brussels
EUROPEAN COMMISSION
Directorate-General for Justice and Consumers Directorate A Civil and commercial justice
Study on the economic detriment to small and
medium-sized enterprises arising from unfair and
unbalanced cloud computing
contracts
Final Report
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
This document has been prepared for the European Commission however it reflects the views
only of the authors and the Commission cannot be held responsible for any use which may
be made of the information contained therein
More information on the European Union is available on the Internet (httpeuropaeu)
Print ISBN 978-92-79-45908-5 doi102838397707 DS-AU-15-001-EN-C
PDF ISBN 978-92-79-96750-4 doi 102838962608 DS-03-18-421-EN-N
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The European Commission is not liable for any consequence stemming from the reuse of this publication
Luxembourg Publications Office of the European Union 2019
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Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
1
CONTENTS
List of abbreviations 2
Glossary 4
1 Introduction 7
11 The importance of contract-related problems 7
12 Objectives and scope of the study 10
13 Structure of this report 12
2 Research methodology 14
21 Overview of the approach 14
22 Main limitations encountered 35
3 Usage of cloud computing across EU SMEs the state of play 37
31 Cloud computing usage rate 37
32 Types of cloud computing services contracted 38
33 Types of contracts and relative costs 41
4 Contract-related problems encountered by SMEs 46
41 Types and frequency of encountered problems 46
42 The most serious problems encountered 49
43 Causes of the most serious problems encountered 51
44 Actions taken by SMEs 53
5 Consequences of the encountered problems 57
51 Qualitative assessment 57
52 Quantitative assessment 59
6 Impacts of the economic detriment 72
61 Direct impacts 73
62 Indirect impacts 74
63 Other qualitative impacts of contract-related problems 75
7 Conclusions 77
Annex 1 Methodology for the Survey of SMEs 82
Annex 2 Stakeholders list 84
Annex 3 Bibliography 86
Annex 4 Survey questionnaire 90
Annex 5 SME Survey results 101
Annex 6 Economic detriment ndash further results 114
Annex 7 Impacts on jobs and growth detailed results 136
Annex 8 Case study questionnaires by stakeholder type 146
Annex 9 Case study analysis 154
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
2
List of abbreviations
Acronym Description
CATI Computer Assisted Telephone Interviews
CTampC Contract terms and conditions
DG JUST Directorate-General Justice and Consumers
EC European Commission
EEN Enterprise Europe Network
EU European Union
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat Statistical Office of the European Communities
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GE250 Large enterprises of more than 250 employees
GFD Gross Financial Detriment
GVA Gross Value Added
IaaS Infrastructure as a Service
IOS International Organization for Standardization
MS Member State
NFD Net Financial Detriment
PaaS Platform as a Service
PC Personal computer
PPP Purchasing power parity
R Value of any redress
SaaS Software as a Service
SLA Service level agreement
SLALOM Service Level Agreement ‐ Legal and Open Model
SMEs Micro small and medium-sized enterprise
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
3
EU Member States
AT Austria
BE Belgium
BG Bulgaria
CY Cyprus
CZ The Czech Republic
DE Germany
DK Denmark
EE Estonia
EL Greece
ES Spain
FI Finland
FR France
HR Croatia
HU Hungary
IE Ireland
IT Italy
LV Latvia
LT Lithuania
LU Luxembourg
MT Malta
NL The Netherlands
PL Poland
PT Portugal
RO Romania
SE Sweden
SI Slovenia
SK Slovakia
UK The United Kingdom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
4
Glossary
Term Definition Source
Active enterprise
An enterprise that had either turnover or employment at any time during the reference
period
Eurostat
Cloud computing
A model for enabling ubiquitous convenient on-demand network access to a shared pool of configurable computing resources (such as networks servers storage applications and
services) that can be rapidly provisioned and released with minimal management effort and
service provider intervention
National Institute of Standards and Technology The NIST Definition of Cloud Computing 2011
Cloud Service
One or more capabilities offered via cloud computing invoked by using a defined interface
European Commission Cloud service level agreement standardisation guidelines
2014
Cloud service provider
A party which makes cloud services available European Commission Cloud service level agreement standardisation guidelines 2014
Cloud service agreement
The Cloud Service Agreement or CSA is the main document which sets out the terms and conditions of the contractual relationship between
the provider and the user in relation to the provision of cloud services
Slalom Project Model contract for Cloud Computing 2016
Data portability
Ability to easily transfer data from one system to another without being required to re-enter data
It is the ease of moving the data that is the essence here This might be achieved by the source system supplying the data in exactly the format that is accepted by the target system But even if the formats do not match the
transformation between them may be simple and straightforward to achieve with commonly available tools On the other hand a process of printing out the data and rekeying it for the
target system could not be described as lsquoeasyrsquo
International Organisation for Standardization Information technology mdash Cloud computing mdash Overview and vocabulary 2014
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat
EU15 Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg the Netherlands Portugal Spain Sweden and the
United Kingdom
Eurostat
EU28 Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands
Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom
Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
5
Term Definition Source
Frequency
(F)
The frequency shows how often the mentioned problem appeared and it is measured on a scale from 1 to 4 1 meaning lsquorarelyrsquo (at least once in the last 12 months)2 meaning lsquooccasionallyrsquo (at least once every 3 months) 3 meaning lsquofrequentlyrsquo (at least once a month) and 4 meaning lsquovery frequentlyrsquo (at least once a week)
EY Survey of SMEs 2018
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017Number of SMEs that contracted at least one cloud computing service during 2016-2017
EY Survey of SMEs 2018
Infrastructure as a Service (IaaS)
The capabilities provided to the cloud-service customer include processing storage networks and other fundamental computing resources where the cloud-service customer is able to deploy and run arbitrary software which may
include operating systems and applications The cloud-service customer does not manage or control the underlying cloud infrastructure but does have control over operating systems storage and deployed applications and possibly limited control of select networking components
(such as host firewalls)
European Commission Cloud service level agreement standardisation guidelines 2014
NACE Statistical Classification of Economic Activities in
the European Community
Eurostat
Purchasing power parity
(PPP)
The rate of currency conversion that equalises the purchasing power of different currencies by
eliminating the differences in price levels between countries In its simplest form PPP shows the ratio of prices in the national currency of the same good or service in different countries
Eurostat
Platform as a
Service (PaaS)
The capability provided to the cloud-service
customer is to deploy onto the cloud infrastructure customer-created or acquired applications created using programming languages libraries services and tools
supported by the cloud-service provider The cloud-service customer does not manage or control the underlying cloud infrastructure
including network servers operating systems or storage but does have control over the deployed applications and possibly configuration settings for the application-hosting environment
European Commission Cloud
service level agreement standardisation guidelines 2014
Service level agreement
A Service Level Agreement (SLA) is the service contract component between a service provider
and customer An SLA provides specific and measurable aspects related to service offerings
European Commission Cloud service level agreement
standardisation guidelines 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
6
Term Definition Source
Software as a Service (SaaS)
The capability provided to the cloud-service customer to use the providerrsquos applications running on a cloud infrastructure The applications are accessible from various client devices through either a thin client interface such as a web browser (for example web-based e-mail) or a programme interface The user does
not manage or control the underlying cloud infrastructure including network servers operating systems storage or even individual application capabilities with the possible exception of limited user-specific application
configuration settings
European Commission Cloud service level agreement standardisation guidelines 2014
Service availability
The property of being accessible and usable on demand by an authorised entity
European Commission Cloud service level agreement standardisation guidelines
2014
Service performance
The problem faced by SMEs characterised by the difficulty in understanding the level of performance or the quality of services that has been promised in the contract
European Commission Cloud service level agreement standardisation guidelines 2014
SMEs The category of small and medium-sized enterprises (SMEs) includes enterprises which employ fewer than 250 persons and which have
an annual turnover not exceeding euro50 million andor an annual balance sheet total not exceeding euro43 million
Within the SME category a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover andor annual balance sheet total does not exceed euro10 million
Within the SME category a microenterprise is defined as an enterprise which employs fewer
than 10 persons and whose annual turnover andor annual balance sheet total does not exceed euro2 million
Commission Recommendation of 6 May 2003 concerning the definition of micro small and
medium-sized enterprises (notified under document number C(2003) 1422)
Virtual Data Centre
A pool or collection of cloud infrastructure resources specifically designed for enterprise business needs The basic resources are the
processor (CPU) memory (RAM) storage (disk space) and networking (bandwidth) It is a virtual representation of a physical data centre complete with servers storage clusters and many networking components all of which reside in a virtual space being hosted by one or more actual
data centres
Altman amp Alt A Digital Library for the Dissemination and Replication of Quantitative
Social Science Research The Virtual Data Centre 2001
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
7
1 Introduction
This report represents the final deliverable responding to the request for services
JUST2016RCONFWCIVI0176 (201703) concerning a Study on the economic
detriment to small and medium-sized enterprises arising from unfair and
unbalanced cloud computing contracts The Request for service was issued by the
European Commission Directorate-General Justice and Consumers (DG JUST) Unit A2 -
Contract Law
11 The importance of contract-related problems
Cloud computing has been credited with increasing competitiveness through cost reduction
greater flexibility and optimal resource utilisation1 By using cloud computing services
enterprises are only paying for the amount of storage they are actually consuming and are
not responsible for the daily maintenance of the storage infrastructure
Demonstrable tangible economic benefits have been estimated in 2011 A report published
by the European Commission lsquoQuantitative Estimates of the Demand for Cloud Computing in
Europe and the Likely Barriers to Up-takersquo2 identified as main benefits the lower IT costs
more effective mobile working higher productivity standardisation of processes better ability
to enter new business areas and the ability to open up in new locations
All in all increasing the usage of cloud computing can have a relevant impact in terms of
increasing EU Gross Domestic Product (GDP) by up to euro250 billion and creating 38 million
jobs by 2020 compared to 20123
While the list of the above benefits is not exhaustive it certainly provides a perspective on
the potential economic advantages of the usage of cloud computing compared to more
traditional alternatives such as on-premises information technology infrastructure4
1 Rittinghouse J Ransome J (2009) Cloud Computing Boca Raton CRC Press USA 2 Based on a 2011 survey conducted on 479 enterprises already using cloud computing for their businesses 81 reported lower IT costs with a 10 to 20 reduction being typical but 12 reported
savings of 30 or more Business benefits included more effective mobile working (46) higher
productivity (41) more use of standard processes (35) better ability to enter new business areas (33) and the ability to open up in new locations (32) European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels 3 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe
and the Likely Barriers to Up-take SMART 20110045 Brussels 4 Traditional on-premises infrastructures consist of various pieces of hardware such as desktop computers which are connected to a network via a remote server This server is typically installed on the premises of an enterprise and provides all employees using the hardware with access to the companyrsquos stored data and applications Enterprises with this type of information technology model must purchase additional hardware and upgrades in order to scale up their data storage and services to support more users Mandatory software upgrades are also required with traditional information
technology infrastructure to ensure that failsafe systems are in place to in case a hardware failure occurs For many enterprises with information technology data centres an in-house information
technology department is needed to install and maintain the hardware
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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8
However Eurostat data indicate that in 2016 only 21 of EU small and medium-sized
enterprises (SMEs ie 10 ndash 250 employees) bought cloud computing services used over the
internet5 mostly for hosting their e-mail systems and electronically storing files
If micro enterprises (ie 1 ndash 9 employees) are considered Eurostat data are available only
for few countries (the United Kingdom Slovakia Sweden Portugal and Spain) For these
countries the percentage of micro enterprises that were buying cloud computing services used
over the internet in 2016 was around 11
With regard to the main factors affecting the adoption of cloud computing in most
sectors enterprises reported6 that insufficient knowledge of cloud computing prevented them
from using it (Figure 1) Expertise and sufficient knowledge of contractual and legal aspects
and the details of technical implementation are necessary prerequisites for an enterprise in
deciding to purchase cloud computing services In addition the risk of a security breach was
a key consideration for enterprises the concern over the risk of a security breach scored
highest for both large enterprises and small and medium-sized enterprises (SMEs) (57
and 38 respectively)7
Figure 1 Factors that limit cloud use
Source Eurostat (2016)
Clearly enterprises attach importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
A study commissioned by the Commission8 looked at the main contractual issues that are
of particular interest in a cloud context description of the service and Service Level
Agreement (SLA) acceptable-use policy data protection and disclosure of personal data
intellectual property and other proprietary rights and duties over content warranties direct
and indirect liability indemnification for third party claims the effect on data preservation of
contract termination modification of the contract terms and conditions (CTampC) and security
protection of data and loss of data
5 Eurostat data consider all enterprises with the exception of those in the financial sector consulted in April 2018 6 Eurostat Cloud computing - statistics on the use by enterprises Brussels 7 Ibidem 8 European Commission (2015) Comparative Study on Cloud Computing Contracts Publications Office
of the European Union Luxembourg
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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9
The Commission acknowledged the role of cloud contracts notably in relation to data
portability9 as lsquocontracts often exclude or severely limit the contractual liability of the cloud
provider if the data is no longer available or is unusable or they make it difficult to terminate
the contractrsquo10
Contract-related problems have been addressed by the Commission through various
initiatives
Firstly in 2013 the Commission set up an Expert Working Group on Cloud Computing
Contracts11 to work on identifying safe and fair contract terms for cloud computing services
with a view to addressing concerns of consumers and enterprises
Secondly specific actions have been taken forward on business-to-business cloud computing
contracts beyond the legislative field including
the work of the European Cloud Partnership and the ISO (International Organization
for Standardization) towards the standardisation of cloud SLAs
the SLA standardisation guidelines prepared in June 2014 by the Cloud Select Industry
Group on Service Level Agreements Subgroup (C-SIG SLA)12
the lsquoService Level Agreement Legal and Open Modelrsquo (SLALOM) project13 funded under
the Horizon 2020 Framework Programme which delivered a set of common legal
clauses to cover cloud SLAs and contracts and a standard technical SLA specification
Finally in April 2016 the Commission gave a new impetus to its work on cloud computing by
adopting the Communication on the European Cloud Initiative - Building a competitive
data and knowledge economy in Europe14 where further complementary actions under the
Digital Single Market strategy covering cloud contracts for business users and switching of
cloud services providers have been announced
Thus over recent years the Commission has adopted a true European Cloud Computing
Strategy aimed at removing barriers to cloud computing Additionally work is under way
towards a Code of conduct on switching and porting cloud data and services
A further development of this topic is represented by the lsquoProposal for a Regulation of the
European Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo launched in 201715
The objective of this proposal is to unlock the potential of the EU data market In order to do
so the proposal aims to address the following issues
9 Please see the Glossary for further information 10 European Commission (2012) Unleashing the Potential of Cloud Computing in Europe COM(2012)529 final Brussels 11 The Group has been set up within the framework of the Commission Communication (2015) lsquoA Digital
Single Market Strategy for Europersquo which aims at enhancing trust in cloud computing services and unlocking its potential for boosting economic productivity in Europe 12 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2018 13 The SLALOM project accessed 1 May 2018 14 European Commission (2016) European Cloud Initiative - Building a competitive data and knowledge economy in Europe COM(2016) 178 final Brussels 15 European Commission (2017) Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union COM(2017) 495 final
Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
10
improving the mobility of non-personal data across borders in the Single Market
which is limited today in many Member States by localisation restrictions or legal
uncertainty in the market
ensuring that the powers of competent authorities to request and receive access to
data for regulatory control purposes such as for inspection and audit remain
unaffected and
making it easier for professional users of data storage or other processing services to
switch service providers and to port data while not creating an excessive burden on
service providers or distorting the market
The impact assessment study16 that accompanies the legislative proposal addresses barriers
such as the legislative and administrative localisation restrictions data localisation driven by
legal uncertainty and the lack of trust in the market which is considered to inhibit data
mobility The impact assessment identifies as a preferred option a policy that would enhance
legal certainty maintain the current levels of security of data storage and processing and that
would rely on self-regulation by industry through the development of codes of conduct for
facilitating switching between providers and finally that would positive economic effects
resulting in lower compliance costs for cloud service providers The study took into
consideration that actions at the Member State level would not be able to achieve the legal
certainty necessary for conducting this type of business across the EU or to remedy the lack
of trust that is slowing the development of a thriving data storage andor processing sector
It is presumed that an EU intervention would contribute to further development of secure data
storage capacity for the entire EU
12 Objectives and scope of the study
Objectives
The studyrsquos main objective is to deliver the necessary evidence to support the Commission
in its assessment of the need for and extent of any further EU efforts to increase SMEsrsquo trust
in cloud services and allow them to bring in the full potential benefits of these types of
services
The main specific objectives of the study are
to identify the prevalence nature scope and scale of the contract-related problems
that SMEs encounter in relation to cloud computing services
to analyse whether and to what extent enterprises are able to protect themselves
against problems for example by means of enforcement of rules on business-to-
business unfair contract terms (where they exist)
to quantify the financial detriment as well as the detriment arising from time loss and
consequential damages (such as business interruption) suffered by SMEs in relation
to the contract-related problems encountered
to complement the quantitative measurement with a qualitative assessment of the
detriment suffered by SMEs
to model (in quantitative terms) the impact on growth and jobs of the quantified SME
detriment identified and provide a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and
competitiveness
16 European Parliament (2017) Commission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union SWD(2017) 304 final Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
11
Scope
Cloud computing services covered
The study covers the cloud computing services most commonly used by SMEs taking into
account i) the general delivery models used by the provider ie Infrastructure as a Service
(IaaS) Platform as a Service (PaaS) and Software as a Service (SaaS)17 ii) the core
categories of cloud services available in the market
The study covers cloud computing services provided both in exchange for money and provided
free of charge (ie not provided in exchange for a monetary counter-performance)
Contract-related problems encountered by SMEs
The study investigates the prevalence nature scope and scale of
problems in relation to the conformity of the service with the contract
problems with unfair CTampC
problems in exercising the users rights to remedies for non-conformity of the
service with the contract
Territorial scope
The study assesses the contract-related problems faced by SMEs in all EU28 Member States
Timeline
The study covers the usage of cloud computing services by EU SMEs over the period 2016 ndash
2017
Stakeholders
The following categories of stakeholders are covered
EU SMEs that contracted cloud computing services over the period 2016 ndash 2017
cloud computing providers
cloud computing brokers
National authorities competent in fields related to cloud computing (such as data
privacy protection personal data processing and data security)
the National SMEs Envoys Network18
Chambers of Commerce
the Enterprise Europe Network (EEN)19
SMEs associations
Please refer to Annex 2 for the full list of stakeholders
For the purpose of this study and in order to make the present report more intelligible
whenever the term SMEs is used in the text it refers to
medium-sized enterprises defined as enterprises which employ fewer than 250
persons (50-249) and whose annual turnover andor annual balance sheet total does
not exceed euro50 million
17 See the Glossary for the definition of these terms 18 The network of national SME Envoys was set up in 2011 as part of the review of the Small Business Act (SEC(2008) 2101) Each EU country has nominated a national SME Envoy to complement the role of the EU national SME Envoy who chairs the network The group of national SME Envoys makes up an SBA advisory group that promotes SME friendly regulation and policy making in all EU countries More
information is available at httpeceuropaeugrowthsmesbusiness-friendly-environmentsmall-
business-actsme-envoys_en 19 The Enterprise Europe Network helps businesses innovate and grow on an international scale It is the worldrsquos largest support network for SMEs with international ambitions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
12
small enterprises defined as enterprises which employ fewer than 50 persons (10-
49) and whose annual turnover andor annual balance sheet total does not exceed
euro10 million
micro enterprises defined as enterprises which employ fewer than 10 persons and
whose annual turnover andor annual balance sheet total does not exceed euro2 million
13 Structure of this report
The report is structured as follow
Chapter 1 recaps the objectives and the scope of the study and provides information
about the background of the study that justified the request for service
Chapter 2 presents the methodological framework and the main limitations
encountered Chapter 3 covers the findings related to
- the usage of cloud computing among EU SMEs over the period 2016-2017 and
the reasons for the limitations of the use of cloud computing
- types of cloud computing services that were contracted by SMEs
(complexity of the subscribed cloud computing packages the frequency of the
number of contracted services and the services contracted by SMEs size)
- types of cloud computing contracts and relative costs including the
negotiability of contract terms and conditions (CTampT)
Chapter 4 is dedicated to the analysis of contract-related problems encountered
by SMEs specifically types and frequency of encountered problems and actions taken
by SMEs to address these problems
Chapter 5 presents a qualitative assessment of the consequences faced by SMEs due
to contract-related problems These refer to
- negative effects on the business activity (ie loss of turnover or profit loss of
clients andor reputation damages)
- extra work done with internal or external resources while trying to resolve the
encountered problems
- legal actions taken to exercise the users rights to remedies for non-conformity
of service
Where possible these consequences have been quantified and monetised in order to
assess the economic detriment suffered by SMEs
Chapter 6 is dedicated to the impacts of the economic detriment The analysis
concerns
- direct impacts meaning the Gross Value Added (GVA) and employment
contents of the turnover lost by SMEs that are affected directly by the contract-
related problems
- indirect impacts in the supplier sectors
This chapter also discusses (in qualitative manner) impacts on market functioning and
competitiveness
Chapter 7 presents the conclusions of the overall analysis
Annexes including the following
- methodology for the survey of SMEs
- the list of stakeholders that have been involved in the case studies
- bibliography of consulted and relevant documents
- survey questionnaire used for conducting the survey of SMEs
- results of the survey of SMEs
- further results of the economic analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
13
- detailed results of the impacts on jobs and growth
- case study questionnaires by stakeholder type
- case study interviews and webinars analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
14
2 Research methodology
21 Overview of the approach
The study envisaged three main Tasks
Task 0 ndash Preparatory task Defining the methodological framework and the topics
to be investigated during the research as well as defining the standards and tools to
be used
Task 1 - Survey of SMEs Conducting an online survey on a representative sample
of SMEs and start-ups which are using cloud computing for the purposes of
conducting their business
Task 2 - Economic detriment Quantification of the overall economic detriment
sustained by SMEs in relation to the problems identified under Task 1 Based on these
results the impact on growth and jobs and on the economy as a whole has been
measured
Figure 2 provides an overview of the approach followed synthesising the main activities
objectives and methodstools
Figure 2 Overview of the project Tasks
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
15
Task 0 ndash Preparatory Task
This Task envisaged undertaking desk research that allowed the team to clearly define the
methodological framework of the study in terms of
cloud computing services commonly used by micro small and medium-sized
enterprises
potential contract-related problems that may be encountered while using cloud
computing
problem definition which provides an overview of the main causes and effects of the
identified problems It was used to
- better understand the context in which the problems occurred
- identify the intermediate effects and the main drivers
- structure the data collection tools (ie questionnaires for Computer Assisted
Telephone Interviews [CATI] and the online survey)
selecting a sample of countries and sectors to be analysed in depth in order to achieve
the project objectives The sampling strategy included
- the identification of a sample of Member States (MS) and economic sectors to
be analysed in depth
- the definition of a target for a representative sample of micro small and
medium-sized enterprises to be addressed through the survey under Task 1
- ensuring representativeness of the sample size
Table 1 provides the list of cloud computing services identified under Task 0
Table 1 Cloud computing services commonly used
Cloud computing
model
Cloud computing services
Details
SaaS Business applications
Applications used for accounting invoicing planning payments payroll human resources management
Collaboration and communication services
Video conference system business visualisation technology
instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring
Service and support tools
Project and portfolio management solutions services operations management
Big data Business intelligence and data analytics applications
Networking services Creation of an internal private cloud and virtual local networks utilising a pooled server for storing enterprise data and running applications needed each day
Security services Secure content management end point protection malware
protection
PaaS Sales and marketing services
Web configuration forms for marketing and sales purposes
Cloud enablement and information
technology operations
Application integration and monitoring business process management information technology operationrisk
management
Data management Datacontent management
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
16
Cloud
computing
model
Cloud computing services
Details
Mobile Usage of managed mobility to serve a multitude of mobile devices anywhere anytime
Platform to create
software applications
Conception and creation of applications through testing and
deployment
Internet of things Asset tracking deployable components intelligent spaces
IaaS Storage and hosting services
Server platform for online storage sharing hosting web-sites files images and similar content
Virtual data centre Usage of a pool of virtualised infrastructure as processor
memory storage space and networking components
High performance computing
Usage of high performance computing clusters workloads and applications
Source EY desk research20
The following potential contract-related problems have been identified
lack of timely updates of the cloud service
forced updates to the service that eliminated or changed a necessary function
unsatisfactory amount of data that could be processed
failure of the cloud provider to identify analyse and correct hazards and to prevent
future re-occurrences (incidence management)
low speed of the service
unsatisfactory availability or discontinuity of the service (due to a crash unannounced
maintenance or other interruptions of service)
unsatisfactory number of users that could access the service
lack of compatibility of the service with user hardware or software
limited data portability
limited data retrievability
extra costs imposed for data portability
data deletion upon contract termination
destruction or loss of data
loss or alteration of data transmitted stored or processed via the cloud service
unauthorised disclosure of or access to data
lack of protection of the data stored in the cloud against theft or viruses
lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
unilateral modification of the servicecontract by the cloud provider
limited liability of the cloud provider
termination of the contract and interruption of the service by the service provider with
no or little prior notice to the user
lack of clarity and transparency of CTampC
Based on the results of desk research the team finalised the methodological approach that
included the definition of the problem tree to clearly understand the links between problems
encountered by enterprises and possible consequences the preparation of the data collection
tools including the questionnaires for the survey of SMEs and the case study template
20 The bibliography serving as basis for the desk research can be found in Annex 3
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
17
Additionally desk research revealed that cloud computing users may encounter the following
problems in exercising their rights to remedy the non-conformity of service with the
contract
absence of a contact point to make a complaint or attempt to resolve issues
length and high cost of the procedure
applicability of foreign jurisdiction
language difficulties
impossibility to enforce the decision after the resolution
The problem definition was structured around the above-mentioned key contract-related
problems and their short- and long-term effects Essentially the problem definition allowed
the team to
identify the main-core problems and the underlying causes
identify who and what is affected and to what extent
foresee the possible evolution of the problems identified
Following the problem definition a problem tree (Box 1) was structured in order to summarise
the identified problems and related causes as well as the links between them
Box 1 Definition of the problem tree
A problem tree or ldquohierarchy of problemsrdquo is useful in providing an overview of the main causes and effects of the identified problems It is used to better understand the context in which the problems occur what the intermediate effects and the main drivers are
The analysis performed during the creation of a problem tree aims at identifying the real bottlenecks
to which stakeholders attach a high priority and which they wish to overcome A clear problem analysis thus provides a sound foundation on which to develop a set of relevant and focused project objectives
A problem tree analysis begins with the establishment of the core problem Using desk research the problem can be formulated in a more specific way Once the core problem has been identified we consider the direct causes and effects of the problem Each cause statement is written in negative terms These items should respect the MECE principle in that they should be Mutually Exclusive and Collectively Exhaustive In many respects the problem analysis is the most critical stage of project
planning as it then guides all subsequent analysis and decision-making on priorities
Once complete the problem tree represents a summary picture of the existing negative situation that can be further used by the decision makers in order to analyse the objectives by reversing the negative statements into possible solutions and then choose the most appropriate solution to be implemented
Source European Commission - Aid Delivery Methods (Vol 1 Project Cycle Management Guideline)
Among the most important sources of information that helped in refining the problem tree
especially with regard to the contract-related problems were21
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in
Europersquo COM(2012)529 final Brussels
Cloud Computing Experts Groups meetings 2013-2014
Cloud Service Level Agreement Standardisation Guidelines from 24 June 2014
European Commission (2015) lsquoComparative Study on cloud computing contractsrsquo
European Commission (2016) lsquoStudy on measuring the economic impact of cloud
computing in Europersquo
European Commission consultations about Cloud Computing (2016)
IDC (2016) lsquoSwitching of Cloud Services Providersrsquo
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprises and Business
Structure Statisticsrsquo
21 The results of the survey of SMEs as well as the case study results have been used in order to update the problem tree
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
18
European Commission (2017) lsquoFinal results of the European Market study measuring
the size and trends of the EU data economyrsquo
European Commission (2017) lsquoProposal for a Regulation of the European Parliament
and of the Council on a framework for the free flow of non-personal data in the
European Unionrsquo
European Parliament (2017) Commission Staff Working Document Impact
Assessment Accompanying the document lsquoProposal for a Regulation of the European
Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo
Figure 3 illustrates the problem tree that was created based on the studyrsquos desk research
The drivers of cloud computing problems are acknowledged in the different sources of
information consulted such as the Digital Single Market strategy This strategy identifies
concerns related to lsquosecurity compliance with fundamental rights and data
protectionrsquo22 as a result of technical and legislative barriers
Moreover the fragmentation of regulation across the EU could be a factor that limits the
usage of cloud computing due to the need for large providers to adapt their services to each
countryrsquos laws that regulate cloud computing23
A lack of fairness and balance in CTampC is considered a driver as lsquocontracts often exclude
or severely limit the contractual liability of the cloud providerrsquo24 By the same token
the unilateral modifications of the contract and the difficulties in exercising the userrsquos
rights are problems arising from the unfairness of CTampC Moreover when targeting SMEs
lsquothe contract is likely to be a take it or leave it contractrsquo25
The limited technical knowledge among SMEs is also a factor affecting the emergence of
the different problems shown in Figure 3 The limited technical knowledge of the users has
been considered when creating a Cloud Select Industry Group in Service Level Agreements
Subgroup26 This subgroup worked towards the development of standardisation guidelines
between cloud providers and cloud customers and these efforts coincide with complementary
action under the Digital Single Market strategy
The mentioned contract-related problems lead to a loss of business opportunities Within one
of the Expert Group Meetings it was concluded that an uninformed choice of terms and
conditions may lead to damages27 Other experts28 have stated that lsquocertain losses are
potentially huge and cannot be compensatedrsquo29 The present study tested the hypothesis that
contract-related problems may lead to losses of profit turnover clients and reputation
damage for SMEs over the short term Over the long term such problems can have a
negative impact on growth and jobs
Over time the lack of awareness of the benefits of cloud computing limits its usage and can
deter businesses from tapping into the full potential of the cloud Over the long term this
could also have a negative effect on GDP and jobs creation Although this scenario was
22 European Commission (2015) A digital Single Market Strategy for Europe COM(2015) 192 final
Brussels 23 Ibidem 24 Ibidem 25 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2017 26 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 2930 January 2014 27 Ibidem 28 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014 29 For example due to the unavailability of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
19
included in the problem tree it is not the purpose of this study to examine these larger
macroeconomic impacts30
The problem tree allowed the team to gain an understanding of the main issues to be
investigated within the study and for which evidence from stakeholders was needed
This understanding was reflected in the data collection tools These included
The Survey questionnaire The structure of the survey questionnaire31 reflected the
different layers of the problem tree It first focused on the usage of cloud computing
and the types of contracts SMEs tend to sign corresponding to the drivers section
Furthermore it addresses the problems that SMEs encounter the actions taken in
order to resolve them and the associated economic detriment32 in order to provide
information for the problems and short-term effects sections of the tree
Interview guidelines for case studies and webinars Findings from the interviews and
the webinars were used to complement the quantitative analysis with detailed
information on the contract-related problems and the costs sustained by SMEs while
trying to resolve the encountered problems
All collected information supported the estimations on the loss of GDP and the loss of jobs at
the EU level
30 The European Commission estimated that cloud computing can increase EU GDP up to euro250 billion and create 38 million jobs More information available in European Commission (2011) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-Take SMART 20110045 Brussels 31 Annex 4 presents the structure of the CATI and online questionnaire 32 The sections B C D and E cover use of cloud computing problems encountered with cloud computing services actions taken by the enterprise in order to address the most serious problem and the economic detriment related to the most serious problem encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
20
Figure 3 Problem tree33
Source EY desk research34
33 LT stands for lsquolong-term effectsrsquo and ST for lsquoshort-term effectsrsquo 34 Annex 3 contains the bibliography serving as basis for the desk research
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
21
Under Task 0 the team also defined the sampling strategy to select 12 MS five economic
sectors to be investigated in depth as well as the sample size of SMEs to be involved in the
survey
For the selection of the MS three criteria were considered (Table 2) In particular the
percentage of enterprises buying cloud computing services as per 2016 Eurostat
statistics was considered to be the best proxy variable35 available for the usage of cloud
computing and it has been used as one of the criteria for defining the sample of countries to
be analysed in greater depth
Table 2 Criteria used for MS selection
Criteria for MS selection Details (Table 3) Source
Percentage of enterprises
buying cloud computing
services
Number of SMEs that
declared they bought at
least one cloud computing service in 2016 out of the total number of SMEs active in the MS
Data on cloud computing service
usage among SMEs Eurostat 2017
[isoc_cicce_use]
Relevance of the country to the
study objectives
Number of SMEs that
declared they bought at least one cloud computing service in 2016 out of the total number of SMEs active in the EU28
Data on cloud computing service
usage among SMEs Eurostat 2017 [isoc_cicce_use]
Structural Business Statistics Eurostat 2017 [sbs_sc_sca_r2]
Geographical balance Balanced number of EU15
and EU13 MS in the sample
NA
Based on the above-mentioned criteria the following 12 MS were selected the Czech
Republic Estonia France Germany Ireland Italy Poland Portugal Romania Sweden
Spain and the Netherlands (Table 3)
A high level of representativeness of the EU is ensured because the selected sample
involves eight MS from the EU15 and four MS from the EU13
refers to countries where more than 70 of the EU SMEs that bought at least one of
the cloud computing services in 2016 (Figure 4) were established
35 A proxy variable is a variable that is used instead of the variable of interest when that variable of interest cannot be measured directly
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
22
Table 3 SMEs buying cloud computing services 2016
EU MS
A B C D E=B+D F=E(A+C) ETotal EU28
EU15 EU13
of active enterprises with 10-250 employees
of enterprises (10-250 empl) buying CC services
of enterprises with 1-9 employees
of enter (1-9 empl) buying CC services 36
Total active SMEs
(Country level)
(EU28 level)
AT 40393 646288 280850 31959 38422 1196 137 EU15
BE 31302 8139 569950 64858 72996 1214 261 EU15
BG 26991 1619 298559 33975 35594 1093 127 EU13
CY na na na na na na na EU13
CZ 38203 6877 961287 109390 116267 1163 416 EU13
DE 411527 61729 1985471 225938 287667 1200 1029 EU15
DK 22681 9072 187367 21322 30394 1447 109 EU15
EE 6439 1417 61513 7000 8416 1239 030 EU13
EL 15368 1383 764471 86993 88376 1133 316 EU15
ES 125000 21250 2337621 116881 138131 561 494 EU15
FI 19187 10361 209328 23821 34182 1496 122 EU15
FR 139335 22294 2765282 314677 336970 1160 1205 EU15
HR 12249 2695 134007 15249 17944 1227 064 EU13
HU 30852 3394 504904 57456 60850 1136 218 EU13
IE 5514 1930 224742 25575 27505 1195 098 EU15
IT 182182 38258 3497783 398032 436290 1186 1560 EU15
LT 13604 2177 172527 19633 21809 1172 078 EU13
LU 3939 670 27841 3168 3838 1208 014 EU15
LV 9226 738 100216 11404 12142 1109 043 EU13
MT 1885 509 24123 2745 3254 1251 012 EU13
NL 48115 15397 1042588 118642 134039 1229 479 EU15
PL 69282 4850 1534086 174572 179422 1119 642 EU13
PT 37353 6350 769043 53833 60183 746 215 EU15
RO 50987 3569 405493 46143 49712 1089 178 EU13
SE 36047 16221 649412 155859 172080 2510 615 EU15
SI 6912 1382 127603 14521 15903 1182 057 EU13
SK 14363 2442 414630 33170 35612 830 127 EU13
UK 199528 65844 1734989 312298 378142 1955 1352 EU15
Tot EU28
1598464 317028 21785686 2479112 2796141 12 100
Selected Countries
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics [sbs_sc_sca_r2])
36 The percentage of micro enterprises (ie enterprises with fewer than 10 employees) that bought at least one CC service is only available for the United Kingdom Slovakia Sweden Portugal and Spain For the other EU countries the average from those countries (1138) has been used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
23
Figure 4 The percentage of enterprises which bought cloud computing services in the
selected EU countries as compared to the total EU28 (2016)
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics
[sbs_sc_sca_r2])
For the selection of the economic sectors to be analysed in depth Eurostat statistics on the
percentage of enterprises buying cloud computing services were used in order to
identify those sectors with the highest usage of cloud computing
Eurostat statistics are available only for some sectors (Table 4) and only for the category 10
persons employed or more which also includes enterprises with more than 250 employees (ie
large enterprises GE250)
However Eurostat statistics have been considered to be relevant in selecting the sectors to be
analysed in depth as the number of enterprises with more than 250 employees represents a
negligible percentage of the overall number of active enterprises at the EU28 level (ie around
45000 out of 23 million enterprises corresponding to 02 of the total)
The sampling strategy envisaged the use of the same criteria used for the selection of MS (ie
percentage of enterprises buying cloud computing services relevance of the sector to the
study objectives)
As a result the five sectors selected included (grey rows in Table 4)
manufacturing (NACE37 code C)
wholesale and retail trade repair of motor vehicles and motorcycles (NACE code G)
professional scientific and technical activities (NACE code M69-M74 hereinafter
referred to as M)
administrative and support service activities (NACE code N)
information and communication (NACE code J)
37 Eurostat Nomenclature des Activiteacutes Eacuteconomiques dans la Communauteacute Europeacuteenne Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
24
Table 4 Economic sectors and usage of cloud computing services (2016)
NACE Code
Sectors
A B C = B100 x
A CD
of active enter (with
more than 10 empl) at
EU28 level
of enter (with more
than 10 empl)
buying CC services
of enter (with more
than 10 empl)
buying CC services
out of the total
C Manufacturing 364432 17 61953 23
D+E Electricity gas steam air conditioning and water supply
18732 19 3559 1
F Construction 200369 15 30055 11
G Wholesale and retail trade repair of motor vehicles and
motorcycles
351278 18 63230 24
H Transportation and storage 90718 16 14514 5
I55 Accommodation 15969 23 3672 1
J Information and communication
55905 52 29070 11
L Real estate activities 10661 24 2558 1
M Professional scientific and technical activities
97073 34 33004 12
N Administrative and support
service activities 121657 22 26764 10
Total 1326794 21 268384 (D) 100
Selected Sectors
Source Cloud computing services for 2016 (Eurostat [isoc_cicce_use]) Business Structure Statistics for 2015 (Eurostat [sbs_sc_sca_r2])
Although the financial and insurance activities sector (K under its respective NACE code) is
considered as one of the economic sectors with the highest usage of cloud computing38 it has
been excluded because of its limited relative weight at the EU28 level39
With the purpose of achieving statistically significant results a target of 500 SMEs that
use cloud computing has been defined This sample size has been chosen in order to ensure a
95 confidence interval and a maximum margin of error of 5 for all the estimates The
sample target size together with the random selection of the respondents ensure that - with
a probability of 95 - the true values of a phenomenon (eg average incidence of cloud
computing problems) in the entire population (ie all EU SMEs) is equal to the average values
observed in the studied sample plusminus the margin error
The box below presents the methodology behind the definition of the sample size
38 76 based on European Commission (2016) Measuring the economic impact of cloud computing in
Europe 39 Based on the lsquoAnnual detailed enterprise statistics for servicesrsquo [sbs_na_1a_se_r2] it was observed that in 2015 for the respective financial and insurance activities a total of approximately 14000 enterprises were active in the EU28 that is 01 of the total active enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
25
Box 2 Definition of the size of the sample
The formula for computing the representative sample size is
Sample size = [z2 p(1-p)e2][1 +( z2 p(1-p)e2N]
Where
N= population size e = margin of error (as a decimal) z = Z-score constant value eg 1645 for a 90 confidence interval 196 for a 95 confidence interval 258 for a 99 confidence interval
and p = average value of a specific indicator as observed in the population (as a decimal)
Our case
From Table 3 we have
N= 2796141 is the estimated number of SMEs that are using CC services
e = 5
Z = 196
P = when this value is not known conventionally is used the value 05
We can conclude that a target of 500 enterprise using CC services is appropriate to ensure a 95 confidence interval with a margin of error of 438 When we put the confidence level and the confidence interval together we can say that we are 95 sure that the true percentage of a phenomenon in the population is between +438 and -438 of the value observed in the studied sample For example if we ask a sample of 500 SMEs using CC if they encountered a certain problem
and 70 say lsquoYesrsquo we can be 95 certain that between 6562 and 7438 of all EU SMEs using CC encountered the same problem
Task 1 ndash Survey of SMEs
Task one was aimed at identifying
the types of cloud services most frequently contracted
the types of CTampC used to regulate the business relationships between users and
providers (for example determining whether enterprises are able to negotiate CTampC
andor to customise them to their needs)
the types the incidence and the frequency of contract-related problems
the types of actions taken by the enterprises in order to resolve the encountered
problems and the results of these actions
The collection of data was based on a questionnaire (see Annex 8) submitted through two
complementary channels
an online questionnaire (online Survey)
CATI
The online questionnaire was translated into the official languages of the MS covered by the
study Likewise the CATI was conducted by native speakers in order to avoid language
barriers
The online survey and the CATI have been developed tested and conducted on a
representative sample of EU SMEs which use the cloud for the purpose of conducting their
business
In order to achieve the above presented target (ie 500 SMEs using CC services)
the contacts of 13000 SMEs were identified during the design of the sampling strategy
3173 SMEs were reached within the 12 MS and the five sectors selected Table 5
presents the distribution of the reached SMEs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
26
1009 SMEs were willing to participate in the survey
Table 5 Distribution of SMEs reached per country and sector ( of respondents 3173)
Sector
Country
Admin and support service
activities
Inform and comm
Manufact
Profess scientific
and technical activities
Wholesale
and retail trade
Total
CZ 13 17 62 30 52 174
EE 5 22 8 12 15 62
FR 184 129 262 126 308 1009
DE 99 123 185 226 249 882
IE 4 18 6 6 13 47
IT 8 9 100 7 15 139
NL 36 49
24 37 146
PL 24 69 16 78 92 279
PT 7 2 9 2 24 44
RO 8 20 2 27 15 72
ES 7 11
26 21 65
SE 41 33 59 30 91 254
Total 436 502 709 594 932 3173
Source Survey of SMEs (2018)
Table 6 presents the participation rate per MS of the 1009 SMEs that agreed to provide
information about their use of cloud computing
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
27
Table 6 Participation rate by MS ( of respondents 3173)
Country
Number of
enterprises that expressed refusal
Number of enterprises
that were willing to participate in the survey
Total Participation
rate ()
A B C = A + B BC
CZ 131 43 174 25
DE 33 158 191 83
EE 715 29 744 4
ES 724 54 778 7
FR 16 294 310 95
IE 24 31 55 56
IT 97 115 212 54
NL 152 49 201 24
PL 11 127 138 92
PT 48 33 81 41
RO 11 24 35 69
SE 202 52 254 20
Total 2164 1009 3173 32
Source Survey of SMEs (2018)
The study targeted all different size categories the largest share of respondent being
represented by medium sized-enterprises (60 Figure 5) Contrary to the SMEs distribution
at the EU level the micro enterprises represented the smallest share of participants in the
survey The smaller the size of the enterprise the lower was its willingness to participate in
the survey
Figure 5 Distribution of participants in the survey by SME size ( of respondents 1009)
Source Survey of SMEs (2018)
The same applies to SME age enterprises active for more than 10 years are better represented
in our sample as compared to younger enterprises (Figure 6) This reflects their willingness to
participate as well as the greater difficulties encountered in reaching younger enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
28
Figure 6 Distribution of enterprises involved in the survey of SMEs by age ( of respondents
1009)
Source Survey of SMEs (2018)
Task 2 ndash Economic detriment and impacts on jobs and growth
Consequences of encountered problems at the micro level
The economic detriment was quantified along the lines recommended in the Guidelines on
impact assessment of the Better Regulation toolbox40 based on data collected from Task 1 and
on data from Eurostat Business Structure Statistics
The measurement of economic detriment41 considered a monetary assessment of the effects
of the problems faced by each SME in the survey and includes the following main dimensions
the gross financial detriment (GFD) associated with the problems encountered
the net financial detriment (NFD) associated with the problems encountered which
corresponds to the GFD associated with the problem encountered minus any remedies
offered by the cloud provider
The GFD incorporated the following components
119866119865119863 = 119871 + 119867119877 + 119874119862
Where
L is alternatively the loss of turnover or profits as perceived by each SME
HR is the costs of the human resources invested by each SME while taking action to
resolve or remedy the most serious encountered problem
OC other costs declared by each SME These include costs such as the costs related to
ensuring an alternative service the costs related to fixing the cloud service problem
using external support any legal costs costs related to reputation damage and costs
related to loss of client(s) and other residual costs
To allow for the measurement of the NFD the value of any redress (R) offered by the service
provider for the damages caused to each SME as reported in the survey questions was
computed
40 The Better Regulation Toolbox is a set of general guidelines that set out the principles that the European Commission follows when preparing new initiatives and proposals and when managing and evaluating existing legislation In this study those principles were considered generally as they were central in
defining the survey the sample and also the methodologies to measure economic detriment and estimate
the impact on growth and jobs 41 Measured using the principles put forward in European Commission (2017) Operational guidance document on measuring personal consumer detriment Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
29
The detailed procedure used to estimate the economic detriment at the EU28 level included
three main steps
The first step was the computation of the following parameters from the survey with the 95
confidence interval level and 5 margin of error
the loss of turnover or profits perceived by each SME
the costs of the human resources invested by each SME while taking action to resolve
or remedy the most serious problem
the other costs covered by each SME while taking action to resolve or remedy the most
serious problem
the value of any redress offered by the service provider for the damages caused to
each SME
The second step required the definition of the number of enterprises affected by contract-
related problems (119873119901)
119873119901 = 119890119906 times 119890119901 times 119864
Where
119890119906 is the proportion (ie the percentage) of enterprises that use cloud computing
services
119890119901 is the incidence (ie the percentage) of contract-related problems
E is the total number of active enterprises
The incidence rates of contract-related problems (119890119901) by country and sector or country and
size class and the proportion of enterprises that use cloud-computing services (119890119906) by country
and sector or country and size cannot be estimated from the sample with the 95 confidence
interval level and 5 margin of error given that the sample is only representative at the EU
level overall
In order to be able to estimate the total number of enterprises experiencing contract-
related problems by country and sector and by country and size class an RAS-based42
procedure has been applied
Box 3 RAS method for estimating the total number of enterprises experiencing contract-
related problems by country and sector
The RAS method is a well-known method for data reconciliation whose aim is to achieve consistency between the entries of some non-negative matrix and pre-specified row and column totals Mathematically the method is an iterative scaling method that can be applied in this case as we just
have non-negative matrices We redistribute proportionally the differences arising from applying the EU level sectorial or size class incidence rates or from country incidence levels considering in this
case as the binding constraint the country level incidence which has been estimated with confidence from the sample (we ensure that the incidence per country is respected)
The procedure started with a preliminary estimation of the number of enterprises (119873119894119895119901)
experiencing contract-related problems in country i and sector or size class j using the following
formula
119873119894119895119901 = (
119890119894119906 + 119890119895
119906
2) times (
119890119894119901 + 119890119895
119901
2) times 119864119894119895
42 See more information at httpseceuropaeueurostatcroscontentras-method_en
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
30
Where
for countries included in our sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the proportion of enterprises using cloud computing services in country i43
computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j44 for all the countries in the sample
- 119890119894119901 is the incidence of cloud computing problems in country i computed from the
survey
- 119890119895119901 is the incidence of cloud computing problems in sector or size class j
computed from the survey for the whole sample
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
While for countries not included in the sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the average proportion of enterprises using cloud computing services in all
countries of the sample computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j45 for all of the countries in the sample
- 119890119894119901 is the average incidence of cloud computing problems in all countries of the
sample as computed from the survey
- 119890119895119901 is the incidence of cloud computing problems in sectorsize class j computed
from the survey
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
In practice this formula takes the joint incidence by country and sector or by country and size
class to be the average of the two marginal incidences which would be the case if the two
distributions were independent In this way it allows a preliminary estimation of the number
of enterprises experiencing cloud computing problems in country i and sector or size class j
43 We use two alternative measures of incidence allowing us to develop two scenarios From the survey data we compute the incidence by country and sector and country and size class considering the answers given by respondents in two alternative ways In one case we compute the incidence as the ratio of
those enterprises that declared they are using cloud computing to all enterprises contacted that declared they are either using or not using cloud computing or that refused to respond to the survey based on criteria that can be seen as meaning that the survey does not apply to them (around 16) Alternatively also from the survey data we can compute the incidence of cloud computing usage as the ratio of those that declared they are using cloud services to the sum of those that explicitly mentioned that they are either using or not using cloud services (around 50) This second scenario can be considered as a theoretical but most unlikely future scenario where a consistent number of EU SMEs use
cloud computing 44 See the previous footnote 45 See the previous footnote
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
31
After obtaining that preliminary estimation 119873119894119895119901 the RAS method of reconciliation is applied by
considering as the binding constraint the total number of enterprises experiencing problems
as that value was estimated directly from the sample with the required confidence and error
levels
This reconciliation of totals performed by the RAS method dismisses the assumption of
independence as it distributes the error across the margins
Concerning the sectors not covered in the sample46 the total number of enterprises
experiencing contract-related problems by country and sector can also be computed by
following the same procedure as above In that case sector incidence would be replaced by
the European average incidence on the other sectors Given the sampling procedure that was
followed in which the sectors with the highest incidence of cloud computing usage were
selected to be covered by the survey applying those incidences of use of cloud computing as
representative to the other sectors would overestimate the impacts Given this situation only
the results for the selected sectors are presented and this constitutes a lower threshold for the
true detriment47
Once the values of the number of enterprises experiencing cloud computing problems for each
country and sector and country and size class are computed they can be aggregated to the
EU level just by summing up the number of enterprises experiencing cloud computing service
problems per country
Finally the third step was the computation of the total losscostvalue of redress by country
sector and size class by multiplying the number of enterprises that experienced contract-
related problems (as computed using the RAS model) by the 95 trimmed mean values
per enterprise for each variable (from the survey)48
The GFD is then computed considering alternatively lost turnover and lost profits and adding
the human resource costs and the other costs NFD is computed taking the two measures of
GFD and subtracting the value of any redress offered by the service provider for the damages
caused to each SME
Afterwards two measures are obtained covering both GFD and NFD computed at country and
sector country and size class and at EU level
Consequences of encountered problems at the macro level
Following the quantification of the economic detriment the consequent impact on growth
and jobs was estimated using one of the methodologies suggested in the impact assessment
toolbox presented by the Joint Research Centre49 of the European Commission
The goal was to estimate the overall GVA and employment content of the detriment In order
to do that the following methodology was used
The starting point was the declared turnover loss one of the components of total detriment
aggregated by country and sector and by country and SME size We first estimated the financial
detriment suffered by each enterprise by considering the different components of detriment
then we aggregated these effects to the EU28 level by summing up the effects suffered by
46 As previously stated only the following sectors were covered by the study Manufacturing (C) Wholesale and retail trade repair of motor vehicles and motorcycles (G) Professional scientific and technical activities (M) Administrative and support service activities (N) and Information and communication (J) 47 Recall that the selected sectors comprise a total of 797 of SMEs and GE250 using cloud computing
services 48 Given each variable the 95 trimmed version was obtained by discarding the 5 lowest and highest observations it is a statistic in the middle of the data range 49 EU Science Hub (2016) Input-output economics Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
32
each enterprise across all enterprises When estimating the macroeconomic effects of the
contract-related cloud computing problems one must consider the overall turnover loss that
was suffered by all enterprises that experienced those problems as turnover is the variable
that best summarises the overall enterprise-level effects that are transmitted into the
economic system through the supply chains and that can be related to aggregate economic
variables thus avoiding double counting
This allowed the team to estimate the so-called direct impacts (the direct consequences in
the enterprises that face contract-related cloud computing problems associated with the
reduction of their economic activity due to those problems) This was done by estimating the
GVA and employment contents of the turnover losses caused by contract-related cloud
computing problems at country and sector level by considering the GVA and employment
coefficients of total turnover at country and sector and country and size class level computed
from Eurostat Business Structure Statistics for 2015 (Eurostat)50
The results were aggregated at the EU level by summing up country results from calculating
the direct GVA and employment contents
Additionally at the aggregate EU level the so-called indirect impacts were also estimated
Indirect effects are the effects on the enterprises that are not directly affected by contract-
related cloud computing problems but that are indirectly affected in their activity by the losses
of turnover from the enterprises that directly experience the problem To estimate these
indirect effects we start by estimating the turnover losses in supplier industries These indirect
losses of turnover arise when the businesses that experience the direct turnover losses reduce
their demand for products from their suppliers and then those supplier enterprises also
experience turnover losses The input-output methodology is used to estimate the turnover
losses in supplier enterprises Essentially this methodology allows us to estimate the amount
of turnover that is lost in one supplier enterprise when the demand from another enterprise is
reduced given the existing technology A symmetric input-output table at basic prices (sector
by sector) available in Eurostat51 for the EU28 was used to estimate the technological
intersectoral relations in the EU economy The methodology used is described in the following
box
Box 4 The Input-Output Methodology
Input-output analysis is the most commonly used benchmark within the study of intersectoral relations The representation of the underlying economies either as a coherent statistical framework as a structural analysis tool of the productive systems or as an economic model is based on a correlation between production and demand through the proportions of the different branches (supply side) or products (demand side) that support that same economies The correspondence between a certain branch of activity and a certain group of products is thereby a condition for coherence of the
input-output analysis
The input-output tables appear as a synthesis of a large amount of statistical data processed in accordance with the goal of specifying the characteristics of the use of the productive factors and products to satisfy the demand ie the open and disaggregated flows (in sectorial terms) that link in both ways demand production and income
The matrix representation of the basic flows characterises the activities of a given economy in a given period It allows a two-dimensional interpretation of the relationships and balances in the flows to be used ie a horizontal (in line) interpretation ndash articulating production and demand that leads to a
separation between intermediate and final demand ndash and a vertical interpretation (in column) ndash
51 Eurostat Symmetric input-output table at basic prices (product by product) Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
33
articulating production and income that leads to the separation between intermediate inputs and
value added
Input-Output matrices
The general shape of an input-output table encompasses four quadrants that correspond to the intersectoral trade of products associated with intermediate consumption (1st quadrant) to the breakdown of each sectorrsquos production through the diverse final uses (2nd quadrant) to the sectorial
decomposition of the GVA (3rd quadrant) and to the nonmarket transfers between sectors of the economy (4th quadrant)
The first quadrant has a square shape (n x n sectors) while the 2nd and 3rd have a rectangular shape (depending on the number of final uses and the number of the GVA components considered) The
equilibrium conditions reflect sector by sector the usage of the production and the mobilised resources and the income generated in the production ie
119883119894 = sum 119883119894119895 + 119884119894
119895
(use logic to be read in line the gross production of each sector is depleted feeding the intermediate
and final demand)
119883119894 = sum 119883119894119895 + 119884119894
119894
(resources and income logic to be read in column the gross production of each sector integrates
the value of the intermediate consumption and of the income generated)
The sectorial equilibrium ie the equality between uses and resources (119883119894 = 119883119895 for 119894 = 119895) leads on
an aggregated level to a match between the sum of the elements of the 2nd and the 3rd quadrants that sustains the ldquothree approachesrdquo of national accounting expenditure income and production
Matrixes coefficients and multipliers
From the general tables we can obtain the technical coefficient matrix (matrix A) Each element of the matrix A (119886119894119895 = 119883119894119895119883119895) expresses the ldquotechnological demandrdquo from the sector j to the sector i ie
the production of the sector i used as an input for the production of the sector j This vertical proportion representing the technological support of the intersectoral flows and the deepening of the intermediate demand from the productive units into the technical characteristics of their respective productive processes is called the technical coefficient (of production)
The input-output analysis as an economic model uses these proportions or coefficients to represent
the function of the economy requiring the adoption of a set of hypotheses namely on the direction of the economic flows ie the role of the supply and demand dynamics
In formal terms the input-output model is considered to be based on the dynamics of the demand The production is obtained through an endogenous process supported by the technical coefficient matrix responding to a final demand determined exogenously Building up the Leontief model in its
OUTPUT (Demand)
INPUT
(Production)Intermediate inputs to
production
(1st Q)
Final demand
(2nd Q)
Primary inputs to
production
(3rd Q)
Primary inputs to final
demand
(4th Q)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
34
reduced form leads to a system of n simultaneous equations like 119883119894 = sum 119886119894119895119884119895119895 written as 119883 = (119868 minus 119860)minus1119884
in matricial notation
Input-output based modelling brings out a matrix (119868 minus 119860)minus1 whose elements are designated as 119886119894119895
The elements of the (119868 minus 119860)minus1 matrix express as coefficients of the simultaneous equations system
that allows to determinate the production according to the final demand the variation (direct and indirect) of the production of a sector according to the unitary change of the final demand of another sector These are called production multipliers also arising as sectorial interdependence indicators
The production multipliers can be partial when they indicate the variation of the production of a sector i led by a unitary variation of the final demand of a sector j and measured by the corresponding element of the matrix 119886119894119895 or total when they indicate a variation of the production of all sectors led
by a unitary variation of the final demand of a sector and measured by the sum of the corresponding column of the matrix (sum 119886119894119895119895 )
The nature of the measured effects
Taking into account the nature of the used multipliers it is possible to measure direct and indirect effects
Direct impacts Activity effects (value added employment income) associated directly with the value of the lost production due to contract-related problems
Indirect impacts Backward linkage effects meaning the activation of multiple ldquoexternalrdquo effects on demand linked to the loss in production due to contract-related problems They concern the supply
chains that are interrupted due to the production loss associated with contract-related problems
Once the indirect turnover losses were measured their GVA and employment contents were
estimated using the same methodology as for the direct effects
To compute the relative direct and indirect impacts we divided the estimated GVA and
employment content by the total GVA and employment at the EU level
Further qualitative analysis
In addition to the quantitative assessment of the overall impact on growth and jobs taking
into account the results of previous activities (namely the interviews within the case studies
and desk research) other more qualitative effects of the problems encountered namely in
terms of competition competitiveness and market functioning were qualitatively assessed To
this end case studies were used in order to have a more in-depth view of the topic
More generally the case studies allowed the study team to
produce useful insights on the specific problems that were identified in the survey
illustrate in practical terms the economic detriment to SMEs and to understand the
causal links between the signed contracts and the encountered problems
include the perspectives of those stakeholders that were not involved in the previous
study Tasks
This subtask included interviews (33) with eight types of stakeholders namely SMEs cloud
brokers service providers SMEs associations national authorities national SMEs Envoys EEN
associations and chambers of commerce This array of stakeholders contacted was used to
obtain a detailed view of the issue of the economic detriment to SMEs arising from unfair and
unbalanced cloud computing contracts52
nine SMEs
one cloud broker
10 service providers
three SMEs associations
six national authorities
one national SMEs Envoy
52 The questionnaires used detailing the topics covered during the interviews can be found in Annex 8
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
35
two EEN associations
one Chamber of Commerce
Finally three webinars were used to validate and disseminate the results of the study with the
main participating stakeholders
22 Main limitations encountered
This study mainly used data collected from CATI as this tool followed a more direct approach
in contacting SMEs by phone The online questionnaire proved not to be as effective during
the data collection phase as we succeeded in obtaining only three completed questionnaires
from a total of 141 requests to SMEs and European Associations contacted On the other hand
500 completed questionnaires were collected from the SMEs that use cloud computing through
the CATI
In order to maximise the possibility that the SMEs contacted will respond to the survey the
study chose to contact SMEs from the 12 countries that have the most usage of cloud
computing This approach was taken to achieve a twofold purpose to maximise the quality of
the survey results and to ensure that the minimum sample target of 500 questionnaires is
met Even if the sample is randomised the willingness to participate in the survey under these
circumstances might have been positively correlated with cloud computing usage This may
increase the risk of biased results
This limitation was overcome by involving a distinctive group of stakeholders with the aim of
complementing the information gathered The stakeholdersrsquo involvement during the case
studies ensured the accuracy of the results at the EU level
Furthermore it is important to underline that all estimates based on the gathered responses
to the questionnaire should be considered as statistically significant in representing the
average values that might be observed among EU SMEs that are using cloud computing
services Therefore any features presented at the country andor sector andor
company size level were included with the sole aim of documenting gathered
information
In order to be able to estimate results at the country andor sector andor enterprise size level
the RAS model was used to distribute the overall representative results to provide robust
estimates at that level The RAS model even allows estimating the usage rate and the incidence
of problems at enterprise size sectorial and country level
Two scenarios have been developed for the economic analysis that takes into account two
different hypotheses for estimating the usage rate of cloud computing extracted from the
survey
The method of analysis of economic detriment also has some limitations The first one is related
to the fact that only the consequences of the most serious problem are considered Even if the
survey tried to measure also the effects of the second most important problem the fact that
the number of respondents that quantified its effects was very small led to values that did not
seem to be robust enough to use in the analysis This causes the estimates of detriment
that were presented to be the lower thresholds to the actual detriment Yet the
magnitude of the underestimation is limited by the fact that the sectors with the highest cloud
computing usage rates were chosen to be in the sample and they are likely to experience
above average effects A second limitation arises from the fact that many enterprises seem
not to be able to fully assess the financial impacts of problems such as reputational damages
or loss of clients in terms of financial variables and this may also lead to some underestimation
of the true effects that we perceive that might be present but that we are not able to assess
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
36
In terms of measuring the indirect impacts not only does the possible underestimation of the
direct impacts on turnover also affect these impacts but also using the input-output
methodology has limitations While the input-output methodology allows measuring backward
linkages it does not allow considering the downstream effects on clients or final consumers
that are associated with the contract-related cloud computing problems due to relative changes
in the costs borne by enterprises and that are not fully absorbed and thus trickle down to the
consumer level as SMEs pass on the increased costs caused by the problems encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
37
3 Usage of cloud computing across EU SMEs the state of play
First this section presents the analysis of the services contracted by the SMEs the types of
contracts and the negotiability and customisation of CTampC Furthermore it investigates the
incidence and frequency of contract-related cloud computing problems experienced by SMEs
with an emphasis on the most serious problems encountered and their respective causes
Second it presents the types of actions taken by the SMEs in order to address the contract-
related problems as well as the results of the actions taken and possible difficulties encountered
while taking action
And finally it explores the reasons why some SMEs decided not to take action
31 Cloud computing usage rate
In conducting the survey 3173 SMEs replied have been collected out of which
503 from SMEs that declared that they had contracted at least one cloud computing
service during the period 2016ndash201753
509 from SMEs that declared they did not contract any cloud computing service during
the period 2016ndash2017
2164 from SMEs that refused to participate in the survey
The estimation of the rate of usage of cloud computing depends on the hypothesis about the
distribution of the willingness to participate in the survey
For the purpose of the study it was assumed that only SMEs not using cloud computing were
present among those SMEs that were not willing to provide information (2164) Under this
hypothesis the rate of usage of cloud computing services is 159 calculated as the
number of SMEs that declared they are using cloud computing services (503) divided by the
number of SMEs that replied (3173) This can be considered as the central scenario for this
study It provides an indication of the current detriments suffered by SMEs
A theoretical scenario has been constructed by assuming that SMEs using cloud computing
services and SMEs not using cloud computing services are equally distributed among the SMEs
that were not willing to provide information (2164)54 The purpose of this scenario is to provide
an indication of the theoretical evolution of the detriment in case of increasing usage of cloud
computing among EU SMEs
At 159 the rate of usage of cloud computing among SMEs still appears to be low especially
when compared with the 45 that is the most recent estimated usage rate among large
enterprises55
This can be due to a variety of different reasons During the interviews performed it emerged56
that
some SMEs are reluctant to use services that they cannot fully understand (for
example for micro and small enterprises it is difficult to assess how the new services
can improve their everyday work)
53 The distribution by country size and sector of the 503 SMEs that declared they contracted at least one cloud computing service can be found in Annex 5 54 Under this assumption the rate of usage of cloud computing services is 499 calculated as the number of SMEs that declared they are using cloud computing services (503) divided by the total of SMEs
that were willing to provide information (3173 ndash 2164 = 1009) 55 Eurostat Cloud computing - statistics on the use by enterprises Brussels 56 Case study interview with UEAPME European Association of Craft Small and Medium Enterprises representing about 12 million enterprises across Europe
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
38
other SMEs perceive that costs are still high and that it takes too long to recover
the investment (break-even point)
the division of responsibilities between SMEs and providers can sometimes be
a major source of problems as it is poorly documentedexplicated leading to overlaps
and gaps especially with respect to security aspects it is not uncommon for SMEs to
be confused about their responsibilities concerning security such as who makes
backups of data or software which type of failoverredundancy is offered by the
provider and what still needs to be done by the customer All of these issues can
persuade SMEs to not outsource cloud services
asymmetric information when it comes to negotiating and customising CTampC might
limit the capacity of SMEs to find solutions that fit their needs
in contrast to the traditional provision of on-site information technology resources the
multi-tenant nature of cloud computing usually raises questions with respect to
privacy confidentiality and data integrity Cloud computing presents its own set
of security issues coupled with the risks and threats inherent in traditional information
technology computing
32 Types of cloud computing services contracted
Figure 7 presents the most commonly contracted cloud computing services as resulted from
the survey
Two services are more frequently contracted because of their applicability and prevalence
in a wide range of sectors
collaboration and communication services (71) that might include among
others applications used for instant communication video conferencing business
visualisation e-mail antivirus for desktop or PC customer relationship management
or social media monitoring
storage and hosting services (65) that comprises services such as server
platforms for online storage sharing hosting websites files images and similar
content
The third most commonly contracted service (43) is associated to security support (this is
related to the need for protecting the corporate network when accessed via remote devices
such as laptops or other wireless and mobile devices)
The next eight significant types of cloud computing services contracted do not range far from
each other with their usage varying between 43 and 26
No significant differences emerged from the analysis at countrysector level (see section B
within Annex 5 for further details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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39
Figure 7 The cloud computing services most commonly contracted by SMEs during 2016-
2017 ( of respondents 503 of answers 2522)57
Source Survey of SMEs (2018)
A more detailed analysis of the numbers behind Figure 7 reveals the complexity of the
subscribed cloud computing packages
the answers from the (503) SMEs that declared that are using CC services also
revealed that 2522 services have been contracted over the period 2016 ndash 2017 (Table
7) that implies each SME contracted on average five different services
micro enterprises are the size class contracting the highest number of services (ie
55 on average Table 7) this might be related to the fact that the medium-sized
enterprises might have the financial and technical capacity to develop more
effectiveefficient solutions internally58
Table 7 The cloud computing services most commonly contracted by SMEs during 2016-2017 by SMEs size class ( of respondents 503)
SME size class
of respondents
of contracted services
Average of contracted
services Micro 91 503 55
Small 140 723 52
Medium 272 1296 48
Total 503 2522 50
Source Survey of SMEs (2018)
57 Multiple choice question 58 Eight out of the 10 service providers interviewed under Task 2 stated that the usage depends on the enterprisesrsquo size as medium-sized enterprises are better able to internalise most of the needed IT
services
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and unbalanced cloud computing contracts
40
Even the analysis of the frequency of the answers provided allowed the research team to better
understand how the usage of CC is evolving among SMEs (Figure 8) around 40 of SMEs
contracted a limited number of cloud services (one two or three)59
Figure 8 Frequency of the number of contracted services ( of respondents 503 of answers 2522)
Source Survey of SMEs (2018)
Furthermore the analysis of the mix of contracted services revealed that there are two
services lsquoPlatform to create software applicationsrsquo and lsquoStorage and hostingrsquo that are most
commonly contracted either alone (12) or together (6)
The number the types and the mix of contracted services showed that EU SMEs are having a
lsquobasicrsquo usage of cloud computing
This is also confirmed by the results reported in Table 8 services falling under the SaaS model
are the most contracted ones (47) This cloud computing model was the first one introduced
to the market (1999) and the easiest to use (as it includes applications that can be run directly
from a web browser without any downloads or installations required although some require
plug-ins)
The medium-sized enterprises present a different trend from the small and micro firms as
they probably need a more advanced package of services For the medium-sized enterprises
the IaaS model (47) is the most contracted followed by PaaS (30) and finally by SaaS
(21)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
41
Table 8 Services contracted by SMEs size ( of respondents 503 of answers 2522)
SMEs size Total
respondents of services contracted
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 252 149 97 5
50 30 19 1
Small 140 723 332 224 157 10
46 31 22 1
Medium 272 1296 609 393 276 18
21 30 47 1
Total 503 2522 1193 766 530 33
47 30 21 1
Source Survey of SMEs (2018)
33 Types of contracts and relative costs
In this section we analyse if SMEs have the possibility to negotiate CTampC the degree of
customisation of contracted services and the types of subscriptions chosen by SMEs
Negotiability of CTampC
In the survey SMEs that are using CC services were asked if they were able to negotiate CTampC
(Figure 9) The majority of the SMEs declared they signed standard terms and
conditions offered by the provider (ie 64 of SMEs either did not try to negotiate or were
not able to negotiate CTampC see Figure 9)
Figure 9 Negotiability of the CTampC among SMEs that contracted cloud computing services ( of respondents 503)
Source Survey of SMEs (2018)
Only 19 of the SMEs using cloud computing (97 out of 503) were able to negotiate
the CTampC in relation to all cloud computing contracted services while 17 were able
to negotiate contract terms and conditions for a limited number of services
This trend is maintained at the country and sectorial levels as well (see Annex 5 for further
details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
42
Together with the negotiability of CTampC also the reasons for not negotiating have been
investigated (Figure 10) The decision to adopt the standard CTampC is made either because
these meet the usersrsquo expectations (41) or because it is assumedknown that a negotiation
would have no chance to succeed (28)
Figure 10 Reasons provided by SMEs for not trying to negotiate ( of respondents 229)
Source Survey of SMEs (2018)
The possibility of the SMEs negotiating the services contracted correlates with the size class
As seen in Table 9 only 106 of the services contracted have been negotiated by the SMEs
It can be stated that on average SMEs negotiate CTampC related to less than one service out of
the average of five used
Table 9 Number of services for which SMEs were able to negotiate CTampC
SMEs
size
Total of
respond
of services
contracted
of customised
services
of services
SMEs were able to
negotiate
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 48 24 11 10 3 0
Small 140 723 123 89 36 31 20 2
Medium 272 1296 120 155 78 44 31 2
Total 503 2522 106 268 125 85 54 4
Source Survey of SMEs (2018)
After the negotiability of CTampC the research team explored the types of services for which
SMEs negotiated signed contracts (Figure 11) Surprisingly the most commonly contracted
services (ie collaboration and communication storage and hosting and security services)60
do not appear among the ones for which negotiating CTampC is possible Rather negotiability is
higher for those services that due to their nature are more lsquobusiness drivenrsquo (such as business
applications mobile services and data management) Figure 11 presents for each contracted
service the number of SMEs that were able to negotiate CTampC (in blue) and the number of
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
43
SMEs that signed standard CTampC for the specific service contracted (in grey) The total of the
numbers in each row represents the number of SMEs that declared contracting a specific
service61 Detailed information related to all services can be found in Annex 5
Figure 11 Services in relation to which SMEs were able to negotiate the CTampC ( of respondents 179 of answers 264)
Source Survey of SMEs (2018)
Customisation of contracted services
SMEs that didnrsquot sign standard CTampC were asked if the negotiation allowed the customisation
of the contracted services
Figure 12 shows that out of the 179 SMEs (36 of the SMEs that are using CC services) that
were able to negotiate the CTampC only 101 (representing 20 of all surveyed SMEs that
are using cloud services) pointed out that besides simply negotiating the CTampC they
were able to fully customise the service package according to their needs
61 For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service (cf Figure 7) only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
44
Figure 12 Share of SMEs that declared they were able to customise the service package
according to their specific needs ( of respondents 503)
Source Survey of SMEs (2018)
The ability of SMEs to customise the purchased service package correlates with the size class
(as illustrated in Figure 12)
Table 10 SMEs that declared they were able to customise the service package according to their specific needs by enterprise size ( of respondents 503)
Size category
Total
Respondents
SMEs that did
not negotiate
CTampC
SME negotiated CTampC
Full customisation
Partial customisation
No Customisation
Micro 91 69 16 6 0
100 76 17 7 0
Small 140 86 27 15 12
100 61 19 11 9
Medium 272 169 58 26 19
100 62 21 10 7
Total 503 324 101 47 31
100 64 56 26 17
Source Survey of SMEs (2018)
Types of contract subscription
The majority of respondents have signed a paid subscription with fixed or variable fees
(79 of the total users Figure 13) It should to be noted that 73 SMEs did not provide any
response as most of them did not know the type of subscription contracted
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
45
Figure 13 Type of cloud computing subscription ( of respondents 503 of answers 489)62
Source Survey of SMEs (2018)
This trend is maintained across both countries and sectors without any significant differences
62 Multiple choice question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
46
4 Contract-related problems encountered by SMEs
The current section presents an overview of the types and most frequent contract related
problems encountered by SMEs while using cloud computing services
Moreover the most serious problems (that is the problems that created the highest impact
on SMEsrsquo everyday activities andor in terms of costs faced to resolve them) have been
identified together with their causes
Finally actions taken by SMEs to remedy the encountered problems are analysed together
with results of the actions and the main difficulties encountered
41 Types and frequency of encountered problems
Nearly one-quarter (24) of the SMEs using cloud computing (ie 122 out of 503)
encountered contract-related problems during the period 2016ndash2017 (Figure 11)
The incidence seems to be higher for micro and medium-sized enterprises
Table 11 Share of respondents that indicated encounteringnot encountering problems by size
of SMEs Micro Small Medium Total
Did not encounter problems
66 116 199 381
Encountered problems
25 24 73 122
27 17 27 24
Source Survey of SMEs (2018)
Problems encountered by the SMEs have been further analysed by taking into account the
following two dimensions frequency and incidence
Table 12 Frequency and incidence of contract-related problems
Dimension of analysis Details
Frequency
(F)
The frequency shows how often did the mentioned problem appeared and it is measured on a scale from 1 to 4
1 - rarely (at least once in the last 12
months)
2 - occasionally (at least once every 3 months)
3 - frequently (at least once a month)
4 - very frequently (at least once a week)
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017number of SMEs that contracted at least one cloud computing service during 2016-2017
Source Survey of SMEs (2018)
Four problems have been faced by more than 25 of the cloud computing users (Figure 14)
low speed of service (55)
unsatisfactory availability or discontinuity of the service (49)
forced updates to the service (32)
lack of clarity of the instructions on how to use cloud computing services (26)
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
47
Figure 14 Incidence and frequency of contract-related problems among SMEs that declared they encountered problems during 2016-2017 ( of respondents 122 of answers 505)63
Source Survey of SMEs (2018)
63 Multiple choice question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
48
No significant differences emerged from the analysis at the sectorial and country levels
(please see Annex 5 for further details)
The cases studies64 included in-depth interviews with the SMEs that already contributed in
the survey In particular problems encountered by them were discussed with a special focus
on the following lack of clarity and transparency of contract terms and conditions unilateral
modification of the servicecontracts and limited liability of cloud providers
Five out of the eight SMEs that were interviewed recognised the fact that the lack of clarity
of the instructions on how to use cloud computing services is a problem that they are facing
This was explained by the fact that there is no common understanding of what cloud
computing is and how it operates The SME users expressed the need for better information
when contracting such services
The findings from the consultation of cloud providers (ten providers have been interviewed
during the case studied) indicated that business users for different reasons very often
encounter difficulties in understanding the CTampC This problem is particularly relevant
due to
lack of knowledge on how to use cloud computing services of the SME users
lack of attention of the SME users when signing the contracts
Two additional problems even if faced by less than 20 of the users are among the ones
that appeared most frequently65
lack of clarity and transparency of CTampCs (frequency = 215)
limited liability of the provider (frequency = 179)
During the consultations with national authorities and SMEs the participants indicated that
the limited liability of cloud providers commonly manifested when the following undesired
anomalies occurred
information access was interrupted or there was a problem of information
portability this group of anomalies encompasses technical aspects of the
information delivery including risks caused for example by denial-of-service attacks
These kinds of technical problems are most likely to cause liability Especially regular
updates can despite being administered properly result in downtime and thus in a
potential economic loss
data privacy and data protection were affected making information available to
the public can infringe on privacy and data protection provisions since cloud
computing services are of a cross-border nature privacy law conflicts between
national legislations are likely to occur Furthermore cloud computing services need
to comply with the principles of authenticity and integrity of information However the
entry into force of the General Data Protection Regulation (GDPR) (EU) 201667966
on 25 May 2018 is perceived as a factor that will effectively limit this issue in the
future
Even if affecting only a limited number of SMEs67 (less than 10 of the users participating in
the SMEs survey) problems related to security68 are quite frequent especially in regard to
64 See Annex 5 for further information 65 The incidence and frequency of the full list of SMEsrsquo problems can be found in Annex 5 66 Regulation (EU) 2016679 of the European Parliament and of the Council of 27 April 2016 on the
protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 9546EC (General Data Protection Regulation) OJ L 119
452016 67 More frequently among the micro and small enterprises 68 For further analysis see Annex 5
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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49
the lack of protection of the data stored in the cloud against theft or viruses and
unauthorised disclosure of or access to data
The analysis of the number of answers provided allows a deeper understanding of the
problems faced by SMEs
on average amongst the SMEs that experienced problems each SME encountered
four different problems over the period 2016 ndash 2017 (Table 13)
micro enterprises are the ones facing the highest number of problems (Table 13)
more than 23 of SMEs faced a high number of problems (between five and eight
Figure 15)69
Table 13 Number of problems faced by SMEs during 2016-2017 by SME size class ( of respondents 122)
SME size class
of SMEs that encountered problems
of encountered problems
Average of encountered problems
Micro 25 116 464
Small 24 92 383
Medium 73 290 397
Total 122 498 408
Source Survey of SMEs (2018)
Figure 15 Frequency of the number of encountered problems ( of respondents 122 of answers 494)
Source Survey of SMEs (2018)
42 The most serious problems encountered
Types of problems
After listing all problems encountered respondents were asked to mention the most serious
one among them survey results shows a correlation between the incidence of the declared
problems and the most serious problems experienced by the SMEs (Figure 16)
69 82 of SMEs that encountered problems declared 5 different problems 33 of SMEs faced 6 problems 66 of SMEs faced 7 problems and 49 of SMEs faced 8 different problems
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
50
Figure 16 The most serious problems experienced by the SMEs during 2016-2017 ( of
respondents 122)70
Source Survey of SMEs (2018)
Additionally the survey investigated the potential existence of a second most serious
problem Nearly half of the respondents (46) declared that they encountered only one
serious problem (Figure 17) However lsquolow speed of the servicersquo and lsquounsatisfactory
availability or discontinuity of the servicersquo remained the most prominent problems as
previously presented in Figure 16
Figure 17 The second most serious problem experienced by the SMEs during 2016-2017 ( of respondents 122)71
Source Survey of SMEs (2018)
Besides indicating the most serious problem SMEs were asked to assess the relevance of the
resulting cost (ie what percentage of costs deriving from all encountered problems was due
to the most serious problem only)
As presented in Table 14 more than 50 of the SMEs declared that the costs related to the
most serious problem represented a cost that counted for more than 80 of the overall
sustained costs The remaining 48 who declared that they had other problems did not
declare relevant costs related to the second most serious problem (either they provided values
that were not relevant72 or were not able to quantify the costs)
70 Incidence management is understood as the failure of the cloud provider to identify analyse and
correct hazards and prevent a future re-occurrence 71 Incidence management is understood as the failure of the cloud provider to identify analyse and correct hazards and prevent a future re-occurrence 72 Respondents declared values equal to zero
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51
Table 14 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by size class ( of respondents 122)
Size
Incidence of the costs related to the most serious problem compared with the total costs occurred
Below 50 Between 50 -
80 Above 80 10073 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Most affected service
All mentioned serious problems (both the first and second) were mainly related to the usage
of lsquocollaboration and communication servicesrsquo (Figure 18)74 which are indeed the most widely
used ones The next two types of cloud computing services linked to the most serious problem
are lsquobusiness applicationsrsquo and lsquostorage and hosting servicesrsquo Even though security services
are among the most widely used services (Figure 7) it seems they do not generate many
problems As also confirmed during the case studies75 (interviews with SMEs) security is often
perceived as the key risk when outsourcing information technology services because these
services may affect critical data However once cloud services are used problems related to
security appear only rarely
Figure 18 The type of cloud computing services linked with the most serious problems declared by the SMEs ( of respondents 122)76
Source Survey of SMEs (2018)
43 Causes of the most serious problems encountered
As previously illustrated the survey investigated also the causes of the most serious problems
encountered The main cause of the most serious problems is non-conformity of the
service provided with what was established in the contract (Figure 19)
73 Enterprises that declared they encountered only one problem 74 For the analysis of the second most serious problems and its link with used services please refer to
Annex 5 75 See Case study analysis for further information 76 Multiple choice question
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and unbalanced cloud computing contracts
52
Figure 19 The main causes of the most serious problems ( of respondents 122 of
responses provided 124)77
Source Survey of SMEs (2018)
The unfairness of CTampC78 is also perceived as a possible cause of the most serious problems
declared This was mentioned by 12 of the SMEs that encountered problems (ie 15
respondents out of 122)
However in 13 of the cases the problems encountered were not within the service
providerrsquos responsibility but resulted from technical issues with SME and internal factors
When providing further details the SMEs acknowledged that the problems may have been
caused by the enterprisersquos own mistake due to miscommunication limited training of the
employees or lack of capacityknowledge
The relevance of lsquonon conformity of the servicesrsquo lsquotechnical problemsrsquo and lsquounfairness of CTampCrsquo
is confirmed also when the analysis of the causes is restricted to most serious problems only79
(Table 15)
77 Multiple choice question 78 CTampC were considered unfair by the respondents because of the impossibility of negotiating its
content because the contract might have included limited liability of the providers andor the possibility for the provider to modify unilaterally one or more clauses 79 Unsatisfactory availability Low speed of the service and Forced updates to the service
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53
Table 15 The causes of the three most serious problems ( of respondents 122 of
responses provided 59)80
The 3 most serious
problems
of SMEs declaring
this as the most
serious problem
of SMEs that consider
lsquonon-conformity of the servicersquo as the cause
of SMEs that consider
lsquotechnical problemsrsquo as
the cause
of SMEs that consider lsquounfairness of CTampCrsquo as the cause
of SMEs that declared other causes for the most
serious problem
encountered
Unsatisfactory availability
32 23 3 3 3
100 73 9 9 9
Low speed of
the service
27 13 5 2 7
100 48 19 7 26
Forced updates to the service
16 6 2 4 4
100 38 13 25 25
Source Survey of SMEs (2018)
Even the second most serious problems are frequently due to similar causes (ie non-
conformity of the service provided with what was established in the contract Figure
20)
Figure 20 The main causes of the second most serious problems ( of respondents 66 of responses provided 70)81
Source Survey of SMEs (2018)
44 Actions taken by SMEs
As anticipated in the introduction of Section 4 actions taken by SMEs in order to remedy the
encountered problems have been investigated
Nearly three-quarters (74) of the SMEs that encountered contract-related problems
(90 out of the 122 respondents) chose to take action to resolve or to remedy the most
serious problem
The 32 respondents who declared that no action had been taken provided usually more than
one justification for their answer The results that stood out were given by the fact that the
80 Multiple choice question 81 Multiple choice question
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54
provider fixed the problem (16) that the problem was assessed as not that
important (8) and that the procedure was too complicated (5)
The overall trend regarding actions taken to resolve the problem is maintained for each
type of sector included in the study where between 60 and 90 of the SMEs chose to
take action (see Annex 5 for further details)
Two main actions have been taken by SMEs to resolve the encountered problems using the
direct support of the provider andor making a complaint to the customer support
service (Figure 21)
Figure 21 The actions taken by the SMEs to resolve or remedy the most serious problems
( of respondents 90 of answers 165)82
Source Survey of SMEs (2018)
Also interestingly there are two types of actions to address the problem which have not been
declared at all both concerning legal measures going to mediationarbitration and
filing an action with a court
The replies received from the service providers during the case studies83 reveal that there
were cases where SMEs went to court to obtain compensation for the time and money lost
However providers remark that from their experience the probability that SMEs will win
these legal disputes is limited since it is difficult to demonstrate objective responsibilities
Additional insights were gained by investigating the replies within the category lsquoothersrsquo
chosen by more than 20 of the SMEs that took actions This reveals that about half of them
(21) SMEs took some type of internal measure such as changing an internal procedure or
moving the cloud computing services internally
The results revealed also that on average SMEs take more than one action to resolve or
remedy the most serious problems
At the same time among the 90 SMEs that took action 78 affirmed that they did not
encounter any difficulties in resolving the most serious problem (see question D121
from Annex 5 for further details)84
82 Multiple choice question 83 See Case study analysis (Annex 9) 84 All respondents (ie 90) that declared they took action were requested to say if they encountered
any difficulties while trying to resolve or remedy the encountered problem
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55
Moreover the survey revealed that the most likely challenge for SMEs when trying to resolve
the most serious problem is the length of the procedure (Figure 22)85
Figure 22 Difficulties encountered when trying to resolve the most serious contract-related problem ( of respondents 20 of answers 34)86
Source Survey of SMEs (2018)
The findings from the case studies revealed (through interviews with providers) that different
forms of assistance are offered when needed and that the support did not depend on the
enterprisersquos size but rather on the severity of the issue Providers also mentioned that the
length of the remedy procedure varies from a minimum of a few hours to a maximum of three
or four days
Results of the actions
Following the actions taken the majority of the SMEs signalled that their problem was
either entirely resolved (70) or partially resolved (18) as shown in Figure 23
Figure 23 The results of the actions taken to resolve or remedy the most serious problem
( of respondents 90)
Source Survey of SMEs (2018)
85 The two responses regarding the lsquootherrsquo option were first related to the lack of a timely response from
the provider and secondly to the fact that the provider offered only partial help to resolve the problem 86 Multiple choice question The question was addressed to the 20 respondents that declared encountering problems when taking action to resolve or remedy the problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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56
The extent to which the problem was fully resolved varies across sectors ranging from 41
for administrative and support service activities to 89 for wholesale and retail trade (Figure
24)
Figure 24 Number of SMEs for which the problem was fully resolved as a result of the action(s) taken by sector ( of respondents 63)
Source Survey of SMEs (2018)
From the service providersrsquo viewpoint if the problem falls under the providersrsquo responsibility
they try to partially compensate for the cost of the service One specific provider declared
that the approach commonly used in the market is to compensate for administrative costs
but only in exceptional cases87 to also reimburse the entire costs of the subscribed package
The reimbursed amount varies between 5 and 15 of the monthly fees Moreover within
one Expert Group Meeting there was mention of lsquoa practice in Spain on a regulated market
where money is returned to customers for downtime within 60 daysrsquo88
87 These rare cases might vary according to the specific problem The provider might consider the
reimbursement of the entire cost if the unavailability of the services exceeds the scheduled period needed in order to fix the problem 88 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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57
5 Consequences of the encountered problems
This section investigates the nature of the financial detriment suffered by the SMEs as
consequence of the encountered problems as identified in Section 4
This might be related to
negative consequences for business activities such as
- potential loss of turnover or profits as a consequence of the encountered
problem
- loss of clients
- reputation damages
extra work that is done with internal human resources while taking action to
resolve the encountered problems
extra effort or costs to ensure an alternative service andor to fix the cloud
service problem
legal actions taken to exercise the users rights to remedies for non-conformity of
service
The prevalence of these consequences has been verified during the implementation of the
survey and their economic assessment where possible has been discussed and validated
during the case studies and webinars
This section also discusses some more qualitative aspects of how the encountered problems
may affect individual companies
51 Qualitative assessment
SMEs declared several negative consequences for business activities arising from contract-
related problems (Figure 25)
Figure 25 Perceived consequences for business activities ( of respondents 122)
Source Survey of SMEs (2018)
The limited availability of a service or its limited speed might reduce the capacity of SMEs to
respond to customersrsquo needs in a timely manner causing loss of clients or having a negative
impact on reputation Around one out of five SMEs that encountered problems declared that
those problems generated loss of clients or reputational damages
Reputation is a strategic intangible asset and it may play a very important role not only in
improving SMEsrsquo financial results but also (or even more importantly) in overcoming barriers
that significantly hinder their development The most important factor which builds a
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and unbalanced cloud computing contracts
58
companyrsquos reputation is the opinion and trust shared by stakeholders (especially customers
and third parties)
Interestingly Figure 25 also shows that the proportion of SMEs that perceive some financial
impacts arising from contract-related cloud computing problems in terms of lost profits or
turnover is slightly lower (16 and 14 respectively out of the 122 that faced contract-
related cloud computing problems) which suggests that at least some of those SMEs that
declared to have experienced negative consequences considered that they somehow managed
to counteract the impacts in terms of lost clients and reputational damages and that these
consequences did not translate into financial losses It is true that some of the effects of those
losses of clients or reputational damages that were reported may take some time to translate
into turnover losses and this helps in explaining why the proportion of enterprises that
declared to have experienced losses of turnover and profits is lower than that the one that
declared to have suffered from losses of clients or reputational damages Moreover this can
also be explained by the fact that it is not inherently an easy task to ask an SME to quantify
such costs as this might also depend on the person who answers and how knowledgeable he
is on the firmsrsquo accounts
Besides the consequences mentioned above the results of the survey and the findings of the
case studies confirmed that the most important consequence for cloud computing business
users is the extra work that had to be performed with internal human resources
overall 93 of the enterprises that encountered problems have had to mobilise some internal
human resources to sort out the problems (Table 16)
In particular while acting to resolve the encountered problems
76 of the enterprises have had to use technical staff to resolve the encountered
problems
administrative and senior officers and managers were used by nearly half of the
enterprises (48)
the complexity of the encountered problems forced 60 of the SMEs (73 out of 122
that encountered problems) to use at least two skill levels
Table 16 Number of enterprises in which human resources were invested while taking action to resolve or remedy the most serious problem by skill level of employee
( of respondents 122)
Skill level of
enterprises
Administrative 59 48
Technical 93 76
Senior officer(s)manager(s) 59 48
At least one of the above 113 93
Source Survey of SMEs (2018)
The importance and the prevalence of the extra work are also confirmed by the fact that about
one-third (31) of the SMEs that encountered problems reported no other consequences
besides human resources costs while taking action to resolve the most serious problem (Table
17)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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59
Table 17 Number of enterprises that have incurred costs (besides human resources) while
taking action to resolve or remedy the most serious problem by type of costs ( of respondents 122)89
Other costs encountered (different from costs related to internal HR)
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Other residual Costs 9 7
None 38 31
Source Survey of SMEs (2018)
It is interesting to note that when the problems were not resolved SMEs faced additional
costs related to ensuring an alternative service (34) and costs related to fixing the
cloud service problem with external support (32 Table 17)
Other hidden costs may also appear when SMEs face contract-related problems Even if legal
measures (ie going to mediationarbitration and filing an action with a court) were not
chosen as the action to resolve the problems (see Section 42 for further details) 18 of the
SMEs incurred some legal costs when exercising user rights to receiving remedies for non-
conformity of the contracted service
Whilst the perception of the nine SMEs that took part in the in-depth interviews is that the
encountered problems do not always have direct and important consequences for the financial
performance of the enterprises (ie loss of profit or turnover) it should also be noted that in
the survey not all SMEs were able to provide an estimate of the detriment encountered Such
estimation is indeed challenging and the unwillingnessincapability of the SMEs to provide an
estimate may also be due to the fact that effects on the balance sheet may only materialise
over a longer time horizon
However cloud services can be critical for SMEs This was reflected in some very high
estimates of detriment reported by individual SMEs For example this could be the case for
where the data lies at the core of the SMErsquos activity (eg an accounting firm) In extreme
cases the problem may cause the market exit of efficient companies The larger the costs
generated by the encountered problems the larger the risk of market inefficiencies
The next section is aimed at quantifying the monetary value of the consequences analysed so
far
52 Quantitative assessment
The quantification of the consequences suffered by SMEs (economic detriment) relied on the
computation of the following parameters90
proportion of enterprises that use cloud computing services (cloud computing usage
rate)91
the incidence of contract-related problems by sector--size classes (namely the
percentage of enterprises that encountered problems)
the 95 trimmed mean values by enterprise for
89 Multiple choice question 90 Please refer to Section 21 for further details on the methodology used to quantify the economic detriment 91 Please refer to Section 31 for further details
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60
- losses of turnover or alternatively losses of profits
- number of working days involved in resolving the problems
- the level of other costs incurred
- the value of any redress offered by the service provider as a compensation
All of these parameters have been quantified by using the results of the survey To compute
the average and 95 trimmed mean values for each dimension of detriment only the answers
of SMEs that quantified the detriment associated with that dimension were considered
For some dimensions SMEs were asked first whether they suffered some cost and then to
quantify it SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems but that were not able to provide an estimate of the detriment suffered
due to that cost cannot be considered in this quantification exercise This quantification
exercise must thus be regarded as an estimate of the financial consequences of contract-
related cloud computing problems
Table 18 presents in the first column the number of enterprises that declared that they
suffered each cost92 then in the second column it presents the number of SMEs that were
able to quantify the cost and in the third column the number of SMEs that declared some
positive value for each cost As it can be seen the difference between the number of
enterprises that declared that they suffered a cost and that were able to quantify its effect is
quite diverse across the different dimensions of detriment
Table 18 Enterprises that declared that they suffered some costs and that were able to
quantify these costs
Component
Number of
enterprises that declared
they suffered the cost
Number of
enterprises that
quantified the cost
Number of enterprises
that
quantified
with positive values
of enterprises
that
quantified
with positive values
Loss of turnover na 122 17 14
Loss of profits na 122 19 16
Internal human resource costs 113 113 105 93
Other costs (at least one) 90 78 31 40
Costs related to ensuring an alternative service
42 41 15 37
Costs related to fixing the cloud service problem
39 39 15 38
Legal costs 22 22 1 5
Costs related to reputation
damage 23 23 3 13
Costs related to loss of client(s)
25 24 2 8
Other residual costs 47 34 5 15
Redress 15 15 7 47
Source Survey of SMEs (2018)
92 For lost turnover and lost profits as it was not asked separately whether the SME experienced some loss there is no information (see Annex 4 section E for further details on how the data collection was structured)
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Regarding turnover and profit losses all companies had to answer the question in the survey
and in that sense had to quantify those dimensions of detriment Despite this fact and as
already discussed only 14 and 16 respectively provided numbers for their estimates of
losses of turnover and profits These low figures may be due to the fact that at least some of
those SMEs that declared to having experienced other negative consequences might have
managed to counteract the impacts related to lost clients and reputational damages and other
costs and that those costs did not translate into financial losses Yet it is also true that some
of the effects of those losses of clients or reputational damages that were reported may take
some time to translate into turnover losses and this may help to explain why the proportion
of enterprises that declared to have experienced losses of turnover and profits is lower than
that which declared to have suffered losses of clients or reputational damages
For internal human resources costs 93 of the enterprises that mobilised internal human
resources declared losses of some working days that were considered in the analysis of
detriment thus most enterprises were considered in the analysis
For other costs 78 (80) of the enterprises that declared to have borne some costs were
able to quantify at least one of these costs
It is important to point out that some of the SMEs that declared to have borne costs arising
from contract-related cloud computing problems were not able to provide an estimate of the
cost of the detriment suffered This means that while there is some under-reporting of the
percentage of enterprises that faced relevant costs it does not necessarily imply a bias in the
overall estimate of detriment given that calculating average values for the impact can correct
the under-reporting problem if the true values of those that are not able to quantify have the
same distribution as those that were able to do so In practice by taking into consideration
only those that SMEs that quantified the detriment may lead to underestimation
overestimation or no bias at all
The fact that enterprises only assess the current financial losses and are not able to foresee
the future financial losses associated with problems such as the loss of clients or reputation
damages can imply an underestimation of the true detriment
Computed values have been discussed and validated during the webinars realised under Task
3 (see Annex 9 for further details)
Cloud computing usage rate
Two possible scenarios for the estimate of the usage rate of cloud computing were considered
based on the survey of SMEs
the first which is the central scenario in this study considers all enterprises that
did not respond to the survey as not using cloud computing services arriving at a
universe of 3173 SMEs In this case the usage rate corresponds to a value of 159
in the second only those enterprises that explicitly declared that they are not using
cloud computing services are added to those that declare its use corresponding to a
universe of 1009 The usage rate in this case is higher reaching a value of 499
which can be regarded as an upper estimate representing a possible future situation
in which the usage rate of cloud computing increases significantly
Incidence of contract-related problems
The sample available from the survey also allows the calculation with a 95 confidence
interval level and 5 margin of error of the incidence of contract-related problems
Losses of turnover
For all cost categories (ie loss of turnoverprofit costs of human resources other costs) and
for the value of redress the research team considered the 95 trimmed mean of the values
from the survey
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Trimmed means are robust estimators of a general trend To compute the 95 trimmed
mean the research team i) removed 25 of observations on each side of the distribution
of survey answers ii) computed the average of the remaining observations
Using trimmed means confers one main advantage the standard error of the trimmed mean
is less affected by outliers and asymmetry than the mean93
The following tables present both trimmed mean and average values for all costs the latter
being included for illustrative purpose only
Table 19 Loss of turnover by enterprises
Value of
Losses (euro)
Number of
Enterprises
Relative frequency Cumulative
frequency
000 105 861 861
700 1 08 869
30000 1 08 877
104690 2 16 893
157035 1 08 902
200000 1 08 910
209380 1 08 918
500000 2 16 934
1000000 1 08 943
2000000 1 08 951
5000000 1 08 959
10469012 1 08 967
15000000 2 16 984
20000000 1 08 992
50000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Based on these values the value of the 95 trimmed mean is euro42094 Losses by sector
size class and country are presented in Annex 5
Loss of profit
Looking at profits (Table 20) we can see that also only 156 (19) of the enterprises out of
the 122 that suffered contract-related cloud computing problems declared a loss of profits
corresponding to a 95 trimmed mean of euro177 (Annex 5)95
Table 20 Loss of profits by enterprise
Value of Losses (euro)
Number of Enterprises
Relative frequency Cumulative frequency
000 103 844 844
1200 1 08 852
93 It must be emphasised that all very high value answers (outliers) have been double-checked and they do not seem to include errors in any case we take the more robust scenario (when the 95 trimmed
mean is used) to measure the impact and present the results considering the average values only as a
sensitivity in the appendix 94 The average value is euro985869 95 The average loss of profits per enterprise is about euro1913
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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63
Value of
Losses (euro)
Number of
Enterprises Relative frequency
Cumulative
frequency
20938 1 08 861
51500 1 08 869
52345 1 08 877
60000 1 08 885
90000 1 08 893
150000 1 08 902
157035 1 08 910
200000 2 16 926
209380 1 08 934
300000 1 08 943
500000 2 16 959
523451 1 08 967
2093802 1 08 975
3000000 1 08 984
5234506 1 08 992
10000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Internal human resources costs
When one considers the number of working days involved in resolving the problems96 there
is a significant level of dispersion and only 17 out of the 122 enterprises that suffered contract-
related cloud computing problems did not invest working days in resolving the problem97 The
95 trimmed mean was about 32 days98
To compute the human resources costs incurred when resolving the problems as the actual
values of wages of those involved in resolving the problems were not provided the number
of working days was multiplied by the average cost of labour per working day per country and
industry which was computed from Eurostat data as INDIC_SB - Personnel costs - million
euroINDIC_SB - Persons employed - number)260
Eurostat data are not differentiated by skill level but by using the average wage level by
sector and country during that period we have a robust estimate of the average cost of labour
on the affected enterprises and so the estimate is likely to be close to actual conditions
96 For the measurement of the detriment only the overall number of working days was used as the responses to the survey regarding wages were not robust and so the average wage for each country was used to estimate the human resources costs and accordingly only the overall number of working
days had to be used from the survey 97 This means that 93 of the enterprises that mobilised internal human resources to sort out the problems declared some losses of working days 98 The average number of working days involved in resolving the problem was about 72
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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64
Figure 26 Total number of working days involved in resolving the problem by enterprise
Source Survey of SMEs (2018)99
Other costs and value of redress
With regard to the other costs100 incurred by the SMEs to resolve the problem a qualitative
assessment has been presented in Section 51 above
With respect to these other costs Table 21 shows the number of SMEs that declared relevant
values as well as the trimmed mean and the average of the declared values for each of the
individual costs
The incidence of each of the individual other costs is quite different with the costs related to
ensuring an alternative service and costs related to fixing the cloud service problem as those
that are perceived as having greater impact Overall only seven enterprises experienced more
than one type of other costs
Table 21 Values for other costs
Component
Number of enterprises
that quantified
costs
Number of enterprises
that declared positive values
of total 122
95 trimmed
mean of the values
declared by enterprises
experiencing
each cost euro
Average of
the values declared by enterprises
experiencing each cost
euro
Costs related to ensuring an alternative service
41 15 123 1187 5892
Costs related to fixing the cloud service problem
39 15 123 1311 13657
99 See Annex 5 for further details 100 ie costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
65
Component
Number of enterprises
that quantified
costs
Number of enterprises
that
declared positive values
of total
122
95
trimmed
mean of the values
declared by enterprises
experiencing each cost
euro
Average of
the values declared by enterprises
experiencing each cost
euro
Legal costs 22 1 08 00 19
Costs related to reputation damage
23 3 25 00 2701
Costs related to loss of
client(s) 24 2 16 00 8663
Other residual costs 34 5 41 23 6255
Source Survey of SMEs (2018)
As discussed above not in all cases were consulted stakeholders able to associate an
economic value with the consequence that was faced or they simply considered the costs that
were borne as not relevant
Since for some of the individual other costs there were very few answers provided we chose
to consider an aggregate value of other costs in the assessment of the detriment suffered by
SMEs given that the use of an aggregate value increases the robustness of the estimate101
To arrive at the aggregate value we first computed the total value of other costs borne by
each enterprise (by adding up each of the individual other costs) and then computed the
trimmed mean of the aggregate declared other costs The 95 trimmed mean per
enterprise that suffered problems102 of the overall other costs borne was euro341 (Table
22)103
Table 22 Parameters used in detriment assessment
Component
Number of enterprises that
declared
relevant values ()
of the 122 enterprises that
faced problems
95 trimmed mean of the
values declared by enterprises
that quantified the component
euro
Average of the values declared by enterprises that quantified the component
euro
Turnover losses 17 139 41954 985869
Profit losses 19 156 17690 191346
Costs of human resources
105 861 36006 80621
Other costs 30 246 34124 371871
Redress 7 57 095 6042
Source Survey of SMEs (2018)
101 For this reason the trimmed mean based on total other costs has been used instead of the trimmed
means for each individual other cost 102 The trimmed mean has been computed over 122 SMEs 103 An average of euro3718 per enterprise
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66
Finally also the value of any redress offered by the service providers to compensate for
the problem has been computed Only seven enterprises out of the 122 that suffered contract-
related cloud computing problems (6) declared to having received a positive amount as
redress corresponding to a 95 trimmed mean of about euro1 per enterprise that
suffered problems104 which shows that SMEs are not able to be compensated for the costs
suffered
Table 22 summarises the parameters discussed above for each component of detriment that
is used in the quantitative analysis
Measuring the economic detriment
Having those parameters and the total number of enterprises that experienced contract-
related cloud computing problems it is possible to compute the value of the economic
detriment they suffered by using the formulas presented in Section 21 of this report
Gross financial detriment is measured by taking into account alternatively the loss of turnover
or profits as perceived by each SME and then adding the costs of the human resources
invested by each SME while taking action to resolve or remedy the most serious encountered
problem and the other costs declared by each SME including costs such as the costs related
to ensuring an alternative service the costs related to fixing the cloud service problem any
legal costs costs related to reputation damage and costs related to loss of client(s) and other
residual costs
The measures of gross financial detriment per enterprise computed from the previous
parameters are presented in Table 23 and those for net financial detriment are shown in Table
24
Table 23 Measures of gross and net financial detriment per enterprise considering lost turnover (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Turnover losses 4195 374 98587 685
Costs of human resources 3601 321 8062 56
Other costs 3412 304 37187 259
Gross detriment 11208 1000 143836 1000
Redress 10 604
Net detriment 11199 143232
Source Survey of SMEs (2018) and Eurostat Business Statistics
104 An average of euro6042
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67
Table 24 Measures of gross and net financial detriment per enterprise considering lost
profits (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Profit losses 1769 201 19135 297
Costs of human resources
3601 410 8062 125
Other costs 3412 389 37187 578
Gross detriment 8782 1000
64384 1000
Redress 10 604
Net detriment 8773 63780
Source Survey of SMEs (2018) and Eurostat Business Statistics
As mentioned above considering these values two scenarios have been developed that take
into account the two measures of cloud computing usage rate
The estimates presented are lower thresholds of the actual detriment as they only consider
the most serious problem which represents less than 80 of the total losses for 48 of the
companies105 The size of underestimation is limited by the fact that sectors with the highest
usage rates of cloud computing are considered in the analysis and they are likely to bear more
costs than the average sector
Table 25 to Table 30 below present the results for economic detriment at the EU level
The interpretation of the results on the economic detriment caused by contract-related
cloud computing problems shows that in the central scenario (when 159 of the total
number of enterprises use cloud computing) the number of enterprises that suffered contract-
related problems across the EU28 is around 583000 (Table 25) In the alternative
scenario (when about 50 of the enterprises use cloud computing) this value increases to
about 18 million
105 The risk of underestimation is less pronounced as the sectors selected for the sample are those for which the usage rate of cloud computing is higher
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68
Table 25 Number of enterprises at the EU28 level suffering economic detriment
Scenario 1
(average incidence of CC use
159)
Scenario 2
(average incidence of CC use
499)
(number)
Secto
r
Manufacturing 82256 245581
Wholesale and retail trade repair of motor vehicles and motorcycles
198877 628761
Information and communication 49890 156187
Professional scientific and technical activities
195098 599588
Administrative and support service activities
56803 203001
Total 582924 1833118
Siz
e
cla
ss Micro 548001 1722427
Small 22827 70148
Medium 12096 40543
Total 582924 1833118
Source Computations based on Survey of SMEs (2018) and Eurostat
When considering lost turnover and all other costs incurred (Table 24) contract-
related problems generated a gross economic detriment that ranges from approximately
euro650 million in the scenario of 159 cloud computing usage to about euro21 billion in the
scenario of 499 cloud computing usage When considering the lost profits and all other
costs incurred (Table 27) the value of gross detriment goes from just over euro500 million
in the scenario of 159 cloud computing usage to about euro16 billion in the scenario of
499 cloud computing usage
Table 26 Gross economic detriment at the EU28 level - considering lost turnover and all other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2947
Wholesale and retail trade repair of motor vehicles and motorcycles
1673 5235
Information and communication 369 1145
Professional scientific and technical
activities 1557 4723
Administrative and support service activities
1918 6495
Total 6534 20546
Siz
e
cla
ss Micro 4816 15124
Small 1144 3562
Medium 574 1861
Total 6534 20546
Source Computations based on Survey of SMEs (2018) and Eurostat
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69
Table 27 Gross economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 649 1906
Wholesale and retail trade repair
of motor vehicles and motorcycles 1548 4852
Information and communication 345 1074
Professional scientific and technical activities
1421 4323
Administrative and support service
activities 1157 3943
Total 5119 16098
Siz
e
cla
ss Micro 4013 12609
Small 801 2488
Medium 306 1002
Total 5119 16098
Source Computations based on Survey of SMEs (2018) and Eurostat
The value of the gross detriment per enterprise that faces problems when considering
lost turnover and all other costs incurred is about euro1100 When considering lost profits
and all the other costs incurred the value of the detriment per enterprise is around euro880
Table 28 Average gross economic detriment per SME
Average gross economic detriment per SME suffering economic
detriment euro
Considering lost turnover and all
other costs incurred
Considering lost profit and all other
costs incurred
Micro 8788 7323
Small 50116 35090
Medium 47454 25298
Total 11209 8782
The net economic detriment associated with contract-related cloud computing problems
ranges from around euro650 million to euro21 billion when considering lost turnover and
all other costs incurred (Table 29) and from euro501 million to euro16 billion when considering
the lost profits and all other costs incurred (Table 30)
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70
Table 29 Net economic detriment at the EU 28 level - considering lost turnover and all
other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2946
Wholesale and retail trade repair of
motor vehicles and motorcycles 1673 5234
Information and communication 369 1145
Professional scientific and technical activities
1556 4722
Administrative and support service
activities 1913 6481
Total 6528 20529
Siz
e
cla
ss Micro 4815 15118
Small 1143 3562
Medium 570 1850
Total 6528 20529
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 30 Net economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 648 1906
Wholesale and retail trade repair of motor vehicles and motorcycles
1548 4851
Information and communication 345 1074
Professional scientific and technical activities
1420 4322
Administrative and support service activities
1152 3928
Total 5114 16081
Siz
e
cla
ss Micro 4011 12603
Small 800 2488
Medium 302 990
Total 5114 16081
Source Computations based on Survey of SMEs (2018) and Eurostat
Moving to the analysis of the different components of detriment considering the more detailed
results presented in Annex 5 one can see that the overall turnover loss (Table 77) arising
from contract-related cloud computing problems across the EU28 ranges from euro245 million
to euro770 million when the 95 trimmed mean loss per enterprise is considered depending on
the cloud computing usage rate
In the measures of detriment that consider the lost turnover and all other costs incurred this
component is the most significant component of detriment in both scenarios with values
around 37 (Figure 27) When measuring detriment considering the lost profits and all other
costs incurred the most important component of detriment varies across the different
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71
scenarios being either the other costs covered106 or the costs of human resources invested
in resolving the problem
The costs of human resources involved in resolving the problem represent around 32 of
the total detriment when considering lost turnover (Table 23)
Even if figures by industry should be looked at carefully in all scenarios in which detriment is
measured considering the lost turnover and all other costs incurred the sectors lsquoWholesale
and retail trade repair of motor vehicles and motorcyclesrsquo lsquoProfessional scientific and
technical activitiesrsquo and lsquoAdministrative and support service activitiesrsquo together account for
about 90 of the overall gross detriment In the scenarios in which detriment is measured
considering lost profits and all other costs incurred lsquoWholesale and retail trade repair of
motor vehicles and motorcyclesrsquo and lsquoProfessional scientific and technical activitiesrsquo together
account for about 60 of the total detriment
In all scenarios micro enterprises account for close to 70 of the global economic detriment
106 These costs include costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
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72
6 Impacts of the economic detriment
This section assesses (in quantitative terms) the impact on growth and jobs of the quantified
SMEs detriment identified and provides a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and competitiveness
In order to quantify the effects on growth and jobs the research team estimated
the direct impact meaning the GVA and employment contents of the turnover lost
by SMEs that are affected directly by the contract-related problems This is done by
taking from Eurostat data for each countrysector
- the output per employee
- the output per unit of GVA107
Dividing the turnover losses estimated by these coefficients allows to estimate the GVA
associated with the turnover losses as follow
119863119868(119866119881119860)119894 = sum119871(119879)119894119895
119884119894119895 119866119881119860119894119895frasl
5
119895=1
Where
119863119868(119866119881119860)119894 is the direct impact in terms of GVA for the country i considering the five
sectors under the scope of the study
119871(119879)119894119895 is the loss turnover for the country i in the sector j
119884119894119895 is the average total output produced in the country i and in the sector j during the
period 2014-2016 computed from Eurostat National accounts aggregates by industry
(up to NACE A64) [nama_10_a64]
119866119881119860119894119895 is the average total GVA produced in the country i and in the sector j during
the period 2014-2016 computed from Eurostat National accounts aggregates by
industry (up to NACE A64) [nama_10_a64]
The same approach has been used for the estimate of the loss of jobs associated with the
turnover losses
119863119868(119864)119894 = sum119871(119879)119894119895
119884119894119895 119864119894119895frasl
5
119895=1
Where
- 119863119868(E)119894 is the direct impact in terms of employment for the country i considering
the five sectors under the scope of the study
- 119871(119879)119894119895 is the loss turnover for the country i in the sector j
- 119884119894119895 is the average total output produced in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64]
- 119864119894119895 is the average number of employees in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64_e]
107 Average values for 2014-2016 were considered to increase robustness and to cover almost the same period as we are considering in the assessment
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73
For instance in the first scenario the total turnover losses arising from contract-related cloud
computing problems in manufacturing in Belgium is euro448 million (Table 81) Since each
person in manufacturing in Belgium produces euro4293 thousand of output (Table 84) that
turnover is associated with 104 jobs And given that for each euro of GVA in manufacturing in
Belgium there are euro41 of turnover (Table 83) that turnover is associated euro 108 million of
GVA
indirect impacts also measured as GVA and employment losses but in the supplier
industries were also assessed by using the input-output methodology presented in
Box 4
The basic requirement is to estimate the amount of turnover that is lost in supplier industries
given the existing supply chains The input-output methodology allows estimating those losses
based on the interlinkages between sectors existing in a given economy We then use the
input-output tables for the EU28 to estimate how much turnover would be lost in the supplier
industries due to the turnover losses associated with contract-related cloud computing
problems in the industries directly affected by those problems After estimating the turnover
losses in the supplier industries it is possible to measure the GVA and employment contents
of the production lost in those industries by using the same procedure described above that
was used for direct effects The input-output analysis is only used to estimate the turnover
losses in supplier industries when the methodology described above is applied
61 Direct impacts
At the enterprise level we estimated the financial detriment suffered by each enterprise by
considering different components and then aggregated those measures to the EU28 level by
adding up the effects suffered by each enterprise across all enterprises
When estimating the macroeconomic effects of the contract-related problems as discussed in
the methodology one must consider the overall turnover losses that were sustained by all
enterprises that experienced those problems This is due to the fact that turnover is the
variable that summarises the overall effects at the enterprise level and that is transmitted to
the economic system through the supply chains and can be related to aggregate economic
variables At the same time by considering turnover as an overall effect helps to avoid double
counting
Estimated turnover losses are presented in section 52 by considering the average loss of
turnover experienced by each enterprise and the total number of enterprises that suffered
problems related to cloud computing As discussed in that section there may be some
underestimation of the loss of turnover as we are only considering the consequences of the
most serious problem and also because enterprises many times are not able to assess108 how
some costs such as loss of clients or reputational damages translate into turnover losses or
other financial losses
Keeping the previous considerations in mind the overall results show that depending on the
scenario of cloud computing usage the direct loss of jobs associated with the loss of turnover
caused by contract-related cloud computing problems ranges from 3672 to 11816 jobs At
maximum this represents 001 of the total employment in the EU28 showing that the
overall direct effects of contract-related problems in terms of jobs is quite limited
With respect to gross value added the direct impact of the losses of turnover caused by
contract-related cloud computing problems ranges from euro119 million to euro379 million which
is again negligible when considering the overall EU28 level
108 Namely because there is a time lag and no linear proportion between the costs and damage (eg reputational damage) and the turnover losses
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74
Table 31 Direct impact on growth and jobs of the losses of turnover caused by contract-
related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 1191 3788
EU GVA 000 000
Impact on jobs
Persons 3672 11816
EU
employment 000 001
Source Computations based on Survey of SMEs (2018) and Eurostat
Annex 7 presents tables that provide details by sector and country The tables that provide
details by country and sector show that effects are more significant in the sectors
lsquoProfessional scientific and technical activitiesrsquo and lsquoAdministrative and support service
activitiesrsquo One can also find some differences across countries
62 Indirect impacts
Turning to the indirect effects as mentioned we measured the consequences of the turnover
losses on supplier industries by using the input-output model to identify the supply chains
It is important to take into account that not only the described limitations related to the direct
effects do not fully translate into the indirect effects but the methodology used is also not
able to capture some opportunity costs that are particularly relevant for instance for human
resources or downstream effects namely on final consumers Thus the current
measurement of indirect effects must be seen as a lower threshold to the true indirect effects
Despite these limitations the input-output methodology is the best available methodology to
explore the interlinkages that exist between sectors and to estimate the indirect impacts
arising from contract-related problems
The measured indirect impacts on supplier industries are similar in magnitude to the direct
effects
Depending on the scenario of cloud computing usage the loss of jobs in supplier industries
associated with the loss of turnover caused by cloud computing contract-related problems
ranges from 1733 to 5402 Losses of GVA range from euro99 million to euro308 million
Overall adding direct and indirect effects we may refer to maximum impacts of about 5400
jobs (000 of EU28 employment) in scenario 1 and 17818 jobs in scenario 2 (001 of
total employment Regarding the loss of GVA the sum of direct and indirect effects adds up
to euro220 million in scenario 1 and to euro687 million in scenario 2 (both 000 of EU28 GVA)
which shows that the impact is not very significant at the EU28 level
Table 32 Indirect impact on growth and jobs of the losses of turnover caused by contract-related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 987 3079
EU GVA 000 000
Impact on jobs Persons 1733 5402
EU employment 000 000
Source Computations based on Survey of SMEs (2018) and Eurostat
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75
63 Other qualitative impacts of contract-related problems
The previous sections show that even with some possible underestimation the overall direct
and indirect impacts are not very significant for the time being but as was pointed out in the
analysis some companies have already experienced problems that had very significant effects
(demonstrated by the size of the average of all detriment components compared with the
95 trimmed mean presented in Table 22) and in a scenario of increasing usage rates these
effects are likely to become more relevant and more likely to affect the market
The analysis also revealed that some SMEs had difficulties in quantifying the costs relating to
cloud computing problems
However it is important to keep in mind that besides those quantitative impacts there might
be some other more qualitative effects arising from contract-related cloud computing
problems that create distortions affecting the allocative efficiency in the EU economy
eventually diminishing the overall welfare
The efficiency with which goods and services are produced or distributed is fundamental to
ensuring the competitiveness of the various business entities Using the best available
technologies and taking full advantage of them to reduce costs or improve the quality of the
goods and services provided are relevant factors in ensuring SMEsrsquo competitiveness
In the ongoing debate on macroeconomic imbalances and external competitiveness there has
been an increasing interest in competitiveness indicators regarding both cost competitiveness
and quality and non-cost competitiveness
General industrial economics theories show that contract-related problems as they increase
transaction costs may affect that competitiveness as they are a type of context cost which
are costs that affect the activity of enterprises and are not imputable to the investor to his
business or to his organisation These context costs gain increasing relevance with the
increasing integration of various enterprises into the global economy given that in a scenario
in which enterprises located in different territories face different contextual costs those costs
may significantly distort competition favouring the enterprises located in jurisdictions with
lower context costs
Contract-related problems are therefore a type of problem that may impact competitiveness
of enterprises and hinder their development in several different ways They may represent an
additional cost that reduces the price competitiveness of enterprises But they can also
constitute a non-cost barrier to competitiveness if they affect the presence of enterprises in
the market and their ability to efficiently supply their products namely if those problems
significantly reduce the possibility of accessing the best available technologies
Taking into account the previous considerations it is then important to analyse whether the
contract-related problems encountered and described above may have generated other
significant effects through both cost and non-cost competitiveness109
The analysis so far has already shown that contract-related problems have an impact in terms
of reputation and loss of clients besides the financial impacts on enterprise performance Even
if SMEs are not able to translate those effects into financial costs they are likely to have an
impact over the long run
During the interviews and case studies questions were also raised about whether the contract-
related problems might have caused other problems such as reputation damages or losses of
109 The outliers in the sample showed that in a few extreme cases the effects of contract related problems had very high effects and although these values have been excluded using the Trimmed Mean they should not be disregarded when trying to understand the whole context
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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76
competitiveness that may have impacted significantly on the economic performance of the
companies affected
For the time being it seems that given the fact that at the micro level (ie enterprise level)
most of the detriment is associated with extra work required to sort out the problems
enterprises are able to accommodate this effect at least to some extent
The relatively low value of detriment per enterprise perceived by SMEs as being caused by
contract-related problems suggests that enterprises consider they are able to absorb some of
those costs110 If those effects were greater they would have to transmit them more heavily
to their clients namely through increases in prices
Yet in considering all of the factors our general assessment is that even if enterprises are
able to partially absorb the costs they have incurred some of those costs will show up sooner
or later in financial variables and will translate into larger distortions that are likely to affect
allocative efficiency market functioning and competitiveness
110 Again the difficulties evidenced by some SMEs to quantify the costs arising from contract related problems suggests they might not be able to sufficiently account for the opportunity costs associated with solving those problems
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77
7 Conclusions
Demonstrable tangible economic benefits of cloud computing have been estimated and
confirmed for some years now The main benefits realised are lower information technology
costs more effective mobile working higher productivity standardisation of processes better
ability to enter new business areas and the ability to open up in new locations
While the above list of the benefits is not exhaustive it certainly provides an impression of
the high potential economic advantages that can be gained from the usage of cloud computing
compared to more traditional alternatives such as on-premises information technology
infrastructure
All in all the growing usage of cloud computing is expected to have a relevant impact on
increasing EU GDP and creating additional jobs111
The present study investigated the cloud computing services that are most commonly used
by micro small and medium-sized enterprises in the EU In particular a survey was
conducted on 3173 EU SMEs
The survey results allowed the estimation of the usage rate of cloud computing across SMEs
as 159 calculated from the number of SMEs that declared they are using cloud computing
services (503) divided by the number of SMEs reached (3173)
However EU SMEs are still only making basic use of cloud computing services in terms of the
number and types of contracted services
on average SMEs that declared that they used cloud services contracted five
different cloud computing services but one-third of the SMEs that used cloud
computing contracted only a limited number of services (up to three)
furthermore the use of cloud computing is mainly related to more mature applications
(such as collaboration and communication tools storage and hosting support)
Although the usage of cloud computing services is growing the following potential factors
limiting cloud computing usage were investigated during the interviews with different
stakeholders (including cloud services providersbrokers SMEs business associations ndash
including EEN associations Chamber of Commerce national authorities national SMEs
Envoy)
some SMEs have difficulties in assessing how the new services can improve their
everyday work
other SMEs perceive that costs of cloud services are still high and that it takes too
long to recover the investment
the division of responsibilities between SMEs and cloud providers can
sometimes become a major source of problems as it is not always clearly
documentedexplicated leading to overlaps and gaps especially with respect to
security aspects It is not uncommon for SMEs to be confused about their
responsibilities concerning security such as who makes backups of data or software
which type of failoverredundancy is offered by the provider and what still needs to
be done by the customer All of these issues can have an impact on the willingness of
SMEs to outsource cloud services
security matters generally influence SMEsrsquo decisions about what types of services to
be used One of the aspects that has been mentioned during the interviews as a factor
influencing the SMEsrsquo choices is the reputation of the provider more precisely
whether the cloud provider has had incidents of data breaches in the past
111 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels
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78
Another important factor discussed during the interviews is the asymmetry of information
when it comes to negotiating and customising the services covered by the CTampC and that
might limit the capacity of SMEs to find solutions that fit their needs
As a consequence the survey results showed that the SMEs tended to sign the standard
terms and conditions offered by the cloud provider (this is true for 64 out of 503 SMEs
that are using cloud computing services) either because they did not try at all to negotiate
(46) or were not able to do so (18) The decision to adopt the standard terms and
conditions was made either because these met the usersrsquo expectations (18) or because it
was assumedknown that a negotiation would have no chance to succeed (13)
In contrast to the traditional provision of on-premises IT resources the multi-tenant nature
of cloud computing usually raises concerns with respect to privacy confidentiality and
data integrity Cloud computing presents its own set of security issues which coupled with
the risks and threats inherent in traditional IT computing are also limiting its usage
However the stakeholders involved in the study indicated that the shortcomings in the SMEsrsquo
capacity for negotiating cloud computing contracts could be helped somewhat by the entry
into force of the GDPR as the new legislative framework gives SMEs more control over data
once the service providers apply the regulation
While the main objective of the study was to deliver the necessary evidence to support the
European Commission in its assessment of the need for and extent of any further EU efforts
to increase SMEsrsquo trust in cloud services it investigated
the prevalence nature scope and scale of the contract-related problems that SMEs
encounter in relation to cloud computing services
whether and to what extent enterprises are able to protect themselves against
contract-related problems when deciding to use cloud services
Based on the results of the survey it was estimated that around one SME cloud computing
user out of four (24) encountered contract-related problems during the period 2016-
2017 The main problems were related to the non-conformity of the service provided with
what was established in the contract concerning
the speed of service (55 of those SMEs who experienced problems)
the availability or continuity of the service (49)
updates to the service (32)
clarity of the instructions on how to use cloud computing services (26)
Problems related to security even if having impact on only a limited number of SMEs (less
than 10 of the cloud computing users that experienced problems) were quite frequent
especially with regard to the lack of protection of the data stored in the cloud against theft or
viruses and unauthorised disclosure of or access to data (both showing frequencies of almost
once every three months)
This was an important element arising from the study as security is often perceived as the
key risk when outsourcing information technology services because it may affect critical data
Clearly enterprises attach high importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
Cloud computing users who experienced problems in relation to cloud computing services
were asked to select the most serious among them (ie the problem that created the highest
impact on the everyday activities andor in terms of costs faced in order to resolve it) The
analysis of the results showed a correlation between the most frequent problems and the
problems with the highest impacts on enterprises Indeed unsatisfactory availability or
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
79
discontinuity of the service low speed of the service and forced updates were
considered as the most serious problems
The main cause of the most serious problems was the non-conformity of the service
provided with what was established in the contract (51 of the 122 SMEs declaring
that they encountered problems) The unfairness of contract terms was also perceived as a
possible cause for the most serious problems declared this being mentioned by 15
respondents out of 122 (12) Some practical examples were provided in the Surveyrsquos open
questions and the contract terms were considered to be unfair by the respondents when there
was no possibility of negotiating their content or when they included limited liability of the
providers or the possibility for them to unilaterally amend the contract
However in 19 of the cases the problems encountered were not under the service providerrsquos
responsibility but arose from technical issues and enterprisesrsquo internal factors112
In order to protect themselves the majority of the SMEs (74 of those that encountered
problems) chose to take action to resolve or to remedy the problems encountered
Conversely for those SMEs that decided not to take any action this was justified by the fact
that the cloud provider fixed the problem or that the problem was assessed as not important
or the procedure was considered to be too complicated Interestingly there are two types of
actions which SMEs showed reluctance to use both concerning legal measures going to
mediationarbitration and filing an action with a court This is because the costs associated
with these proceedings did not appear to be worth it
Following the actions taken to address the problem the majority of the SMEs indicated that
their problem was either entirely resolved (70) or partially resolved (18) but the vast
majority of the surveyed SMEs that experienced problems (88) were not offered any redress
by the cloud service providers for the damage caused
The research team estimated that 582924 micro small and medium-sized enterprises
have encountered contract-related problems while using cloud computing and have
faced an economic detriment that is related to different components
losses of turnover and profits
costs of human resources
other costs incurred113
Regarding the human resources invested by the SMEs to address problems members of the
technical staff were by far the most used (76 of the enterprises that faced problems
invested in such resources) Furthermore about one-third (31) of the SMEs reported no
other costs besides human resources when taking action to resolve the cloud computing
problems The ones that did indicate other actions mostly sustained costs related to ensuring
an alternative service (34) and costs related to fixing the cloud service problem (32)
Contract-related problems generated a gross economic detriment measured by
considering lost turnover and all other costs equal to euro6534 million
The loss of turnover was the most significant component of the detriment representing
37 of the total detriment while costs of human resources involved in resolving the
problem represent around 32 of the total detriment
Micro enterprises accounted for around 74 of the global economic detriment (compared to
175 for small and 88 for the medium) but it is in small enterprises that the average
112 When providing further details the cloud computing users acknowledged the fact that there were
cases where the enterprisersquos own mistake such as a miscommunication or lack of capacityknowledge
was admitted to be the cause of the cloud computing problem 113 These costs include overall costs in ensuring an alternative service and costs related to fixing the cloud service problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
80
gross detriment per enterprise was highest (ie euro 5012 compared to euro 4745 for medium
and euro878 for micro enterprises)
It is important to note that this estimate is a lower threshold of actual detriment as
not all SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems were able to provide an estimate of the detriment suffered
it only considers the costs associated with the most serious problem During the
survey 48 of the enterprises that encountered contract-related problems declared
that costs related to the most serious problem represented less than 80 of the total
losses However they were not able to provide relevant estimations regarding the
other encountered problems
However the magnitude of the underestimation is limited by the fact that the Member States
and the sectors chosen to be in the sample are those with highest cloud computing usage
rates and so are likely to bear costs above the average
Having computed the economic detriment suffered by micro small and medium-sized
enterprises the following have also been considered
direct impacts of a reduction in economic activity of the enterprises suffering from
contract-related cloud computing problems on their overall gross value added and
employment
effects on the gross value added and employment of supplier industries arising from
the turnover losses they suffer (indirect impacts)114
Direct impacts were estimated by considering the gross value added and employment
contents of the turnover losses at country and sector levels and the coefficients of total
turnover at country and sector levels computed from Eurostat data115
The overall results show that the 3672 direct jobs were lost in the sectors where contract-
related problems were encountered With respect to gross value added the direct impact of
the losses of turnover was a reduction of euro119 million within the same sectors
The indirect effects measured as gross value added and employment lost in the supplier
industries were still quite considerable The indirect impact associated with the loss of
turnover caused by contract-related cloud computing problems led to losses of 1733 jobs
and around euro987 million of Gross Value Added
Again it should be emphasised that the measured indirect effects must be seen as lower
thresholds to the actual indirect effects not only because of the above-mentioned limitations
but also because the input-output methodology while very good at estimating backward
linkages along the supply chain has some limitations in capturing opportunity costs and
intangibles or downstream effects of the problems in client industries or final consumers
Besides measuring the detriment caused by contract-related cloud computing service
problems the analysis addressed the issue of whether those problems might have generated
other effects
114 These indirect losses arise from the fact that the industries that suffered from the direct turnover losses reduced their demand for products from their suppliers 115 National accounts aggregated by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
81
Results show that contract-related cloud computing problems had an impact on enterprises
in dimensions such as reputational damages or loss of clients but that these effects did not
translate116 into very significant effects on financial variables during the period considered
The study covered the problems faced by SMEs during 2016ndash2017 The survey has been
implemented during 2018 The fact that some enterprises were not able to provide an
estimate of the detriment encountered may also be due to the fact that effects on the balance
sheet may only materialise over a longer time horizon
The analysis also has shown that most enterprises incurred internal human resources costs
or other external costs in order to resolve those problems The allocation of resources to
resolve those problems is likely to create some inefficiencies and to affect the competitiveness
of the companies
Given the size of the effects estimated and even if it is likely that there is some
underestimation enterprises are probably still able to at least partially absorb some of the
costs caused by cloud computing problems
But as we have seen there have already been some cases of contract-related cloud computing
problems that had very large impacts
Over time as increasing usage rates lead to rising incidence of contract-related cloud
computing problems and the longer term consequences of reputational damages and losses
of clients on financial variables become evident it will make it more likely that enterprises
will stop being able to absorb the effects of the encountered problems and this will increase
the impact of those problems on allocative efficiency market functioning and
competitiveness eventually affecting clients and final consumers and reducing the aggregate
welfare
116 The study covered the problems faced during 2016 ndash 2017 The survey has been implemented during
2018 The fact that some enterprises were not able to provide an estimate of the detriment encountered may also be due to the fact that effects on the balance sheet may only materialise over a longer time horizon
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
82
Annex 1 Methodology for the Survey of SMEs
In order to maximise the response to the survey of SMEs a detailed introduction to the online
survey and CATI was prepared and discussed with the EC for approval The introduction
presented the purpose of the study the sponsor and last but not least the reason it is
beneficial for the SME to cooperate with the study
During the interview phase it was of utmost importance to speak with the person in each
enterprise who has the most knowledge about the topic of cloud computing So we
recommended adding a so-called ldquoscreenerrdquo question in order to verify if the interviewer is
speaking with the most suitable interlocutor within the enterprise
The screener question can be found below
S1 Would you describe yourself as the person familiar with the services that your enterprise is using over the internet (cloud computing services) and have general knowledge about the enterprise
1 Yes that is me
2 No that is someone else
ltIf 1 go to Section Bgt
ltIf 2gt
lsquoI am sorry but I would like to speak to the person familiar with the services that the enterprise is using over the internet (cloud computing) and has general knowledge about the enterprise Can you give me hisher name or connect mersquo
ltIf connected to new person re-ask question S1gt
ltIf given name note down new name and make call back appointmentgt
In the CATI quotas were set at country level size classes and sectors in such a way that
when the target per country andor size class was achieved the remaining sample records of
this countrysize class were disabled automatically
The CATI was handled by the Global Data Collection Company (GDCC) The assigned project
manager of GDCC was responsible for drafting detailed briefing instructions for the
interviewers This assigned project manager was responsible for giving the initial briefing to
the interviewers in cooperation with the team leaders and senior interviewers depending on
the language of the questionnaire The initial briefing was held via web conference since the
project was implemented in various locations The team leaders were briefed using the English
version of the questionnaire and they went through the test link by clicking on all the available
options After this initial briefing the team leaders briefed the interviewers in all locations If
any changes were necessary during the process the team leaders held the briefings again
Whenever a new interviewer was added to the project heshe was additionally briefed
All briefings were held in one of the GDCC briefing rooms In these rooms up to 15
interviewers were instructed simultaneously on this project The questionnaire was projected
on the big screen during the briefings All relevant notesremarks from the briefings were
incorporated into the project briefing document and made electronically available to the
interviewers in the interview application
After the briefing the interviewers conducted dummy interviews in the so-called ldquotest moderdquo
of the data collection application in order to familiarise with the questionnaire
Relevant issues which arose during the fieldwork were promptly communicated to ALL
interviewers working on the project via a bulletin board in the CATI platform andor a revision
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
83
of the briefing form which was also available to the interviewer via the questionnaire in
electronically format
During the fieldwork a maximum of 10 phone calls were made to each SME in order to obtain
an interview If no interview was conducted after those 10 attempts the addressee was
considered as a non-response
Call-back appointments were not terminated after 10 attempts as experience has shown that
once a potential respondent has given permission to schedule a call to do the interview often
more attempts are needed to conduct the interview
The interviews for the survey were conducted as much as possible during the usual opening
hours of businesses in the respective countries
The team engaged in the fieldwork was comprised not only of a significant number of
experienced (native speaker) interviewers but for almost every EU country at least two native
speaker evaluators were available The evaluators aside from being very experienced
interviewers were selected for this ask because of their background (education) and
knowledge of the specific country Evaluators were responsible for the final check of the
translations and where necessary suggesting country-specific changes The final translation
checks however were performed by the GDCC translation department The research team
double-checked all the translations This methodology of centralising data collection
benefiting from the native speaker interviewersrsquo knowledge of the local markets has a proven
track record over many projects
All interviews were 100 recorded Aside from live listening-in particular parts of the
interviews were recorded in order to be listened to by a native speaker team leader or
evaluator Besides listening to the interviews the team leaders andor evaluators also called
back respondents who participated in an interview during this call-back a short interview
with verification questions about the recent interview was held The only reason for conducting
a call-back was to recollect information that was first collected incorrectly and further
questions needed to be asked All of the respondents who had completed interviews were
called back in order to record the name of the enterprise and to match the data from the
sample with the enterprise that had completed the survey The quality checking procedure
was generally random but there was also a focus on outliners where applicable117
Overall at least 10 of all interviews per country were covered by the quality control
procedures as mentioned above In the dataset the monitored interviews were labelled
accordingly
Besides this quality procedure the conducted CATI interviews were continuously checked for
outliers The data from interviews with (for example) a deviation in the average interview
time (too short or too long) were checked and when necessary corrective action was taken
This action either involved a telephone call in order to verify the data or the data were
removed from the dataset
After finalising the fieldwork a short fieldwork report was prepared
117 An outlier means something outside of the average therefore GDCC looked at interviewers who
conduct interviews much longershorter than the average or who had more or fewer refusals than the
average or who had a lower or higher incidence rate than the average Focusing on these main (outlier) points helped to determine if the interviewer was doing things correctly and if not the interviewer was retrained in order to help normalise the performance
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
84
Annex 2 Stakeholders list
No Category Member State InstitutionCompany Contribution
1 Cloud broker The
Netherlands BPdelivery Interview
2 EEN The Netherlands
The Dutch Chamber of Commerce Interview
3 EEN Romania ARIES T - Romanian Association for Electronic Industry and
Software - Transylvania Branch
Interview
4 EEN France CCI Paris IDF Interview
5 National authority
Italy The Italian Data Protection Authority
Interview and Webinar
6 National authority
Romania
Romanian National Computer
Security Incident Response Team (CERT)
Interview
7 National authority
Romania The National Supervisory Authority for Personal Data Processing of Romania
Interview
8 National authority
France
Commission Nationale de
lInformatique et des Liberteacutes (CNIL)
Interview
9 National authority
Poland Inspector General for the Protection of Personal Data
Interview and Webinar
10 National authority
Estonia Estonian Data Protection Inspectorate
Interview
11 Service provider
Sweden Glesys Interview
12 Service provider
Spain Ibermaacutetica Interview
13 Service provider
Spain Gigas Interview
14 Service provider
Sweden Hetzner Interview
15 Service provider
Ireland Blueface Interview
16 Service provider
Romania Star Storage Interview
17 Service provider
Romania GTS Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
85
No Category Member State InstitutionCompany Contribution
18 Service provider
Portugal PT Empresas Interview
19 Service
provider Romania Telekom Interview
20 Service provider
Ireland Salesforce Interview
21 SME Poland Biuro Rozwoju Gdanska Interview
22 SME Germany Quality Services International
GmbH Interview and Webinar
23 SME Germany Thieme Compliance GmbH Interview and Webinar
24 SME Germany Leibniz-Institut Fuumlr Astrophysik Potsdam (AIP)
Interview
25 SME Poland Konsorcjum Biuro Klub Sp Interview
26 SME France Qosmos Tech Interview
27 SME Poland Vsoft S A Interview
28 SME Spain Timbrados Elche Sl Interview
29 SME Spain Sistemas de Datos Interview and Webinar
30 SME Association
Belgium EUAPME Interview and Webinar
31 SME
Association Portugal
Associaccedilatildeo Industrial do Distrito de
Aveiro Interview
32 SME Association
The Netherlands
VNO-NCW Interview
33 SME Envoys Network
The Czech Republic
Ministry of Industry and Trade Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
86
Annex 3 Bibliography
Relevant legislation and policy documents
Committee of the Regions (2016) lsquoEuropean Cloud Initiative and ICT Standardisation
Priorities for the Digital Single Market 2016rsquo Opinion of the Committee of the Regions (SEDEC-
VI-012)
European Commission (2003) lsquoRecommendation of 6 May 2003 concerning the definition of
micro small and medium-sized enterprisesrsquo (notified under document number C(2003) 1422)
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in Europersquo
COM(2012)529 final Brussels
European Commission (2013a) lsquoCommission Decision of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404) OJ 1746
European Council (2013b) lsquoCouncil resolution of 10 December 2013 on unleashing the
potential of cloud computing in Europersquo
European Commission (2014 June) lsquoCloud Service Level Agreement Standardisation
Guidelinesrsquo httpseceuropaeudigital-single-marketennewscloud-service-level-
agreement-standardisation-guidelines
European Commission (2015a) lsquoA Digital Single Market Strategy for Europersquo (COM
(2015)0192) and the accompanying Commission staff working document (SWD(2015)0100)
European Commission (2015b) lsquoCommunication on cloud select industry group service level
agreementsrsquo httpseceuropaeudigital-single-marketencloud-select-industry-group-
service-level-agreements COM (2015) 634 final
European Commission (2015c) lsquoProposal for a Directive on certain aspects concerning
contracts for the supply of digital contentrsquo (COM(2015) 634 final)
European Commission (2015d) lsquoTowards a modern more European copyright frameworkrsquo
COM20150626 final
European Commission (2016a) lsquoEuropean Cloud Initiative ndash Building a competitive data and
knowledge economy in Europersquo (COM (2016)0178) and the accompanying Commission staff
working document (SWD (2016) 0106)
European Commission (2016b) lsquoICT Standardisation Priorities for the Digital Single Marketrsquo
(COM (2016)0176)
European Commission Directorate-General for Research amp Innovation (RTD) (2016c) lsquoOpen
Innovation Open Science Open to the World ndash A vision for Europersquo
European Commission (2017a) lsquoProposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Unionrsquo
COM(2017) 495 final Brussels
European Commission (2018a) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
European Commission (2018b) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo Annexes and Impact
Assessment
European Commission (2018c) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
87
European Parliament (2017) lsquoCommission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Union
SWD(2017) 304 final Brussels
European Council (2016) lsquoCouncil resolution of 19 January 2016 on Towards a Digital Single
Market Actrsquo
European Parliament and European Council (2001) lsquoRegulation (EC) 452001 of the European
Parliament and of the Council of 18 December 2000 on the protection of individuals with
regard to the processing of personal data by the Community institutions and bodies and on
the free movement of such datarsquo
European Parliament and European Council (2011) lsquoDirective 201183EU of the European
Parliament and of the Council of 25 October 2011 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council
and repealing Council Directive 85577EEC and Directive 977EC of the European Parliament
and of the Council Text with EEA relevancersquo
European Parliament and European Council (2015) lsquoProposal for a DIRECTIVE OF THE
EUROPEAN PARLIAMENT AND OF THE COUNCIL on certain aspects concerning contracts for
the supply of digital contentrsquo (Text with EEA relevance) SWD(2015) 274 final SWD(2015)
275 final
Reports studies and other documents
Alberto M Bento A K (2012) Cloud Computing Service and Deployment Models Layers
and Management IGI Global
Altman M Andreev L Diggory M King G Kolster E Sone A Verba S Kiskis DL
Krot (2001) lsquoOverview of The Virtual Data Center Project and Software Harvard Universityrsquo
JCDL rsquo01 First Joint Conference on Digital Libraries pp 203-204
Buyya R Broberg J and Goscinski A M (eds) (2010) Cloud computing Principles and
paradigms Vol 87 John Wiley amp Sons
Cave J Robinson N Kobzar S and Rebecca H (2015) lsquoUnderstanding Regulatory and
Consumer Interest in the Cloudrsquo Regulating the Cloud Policy for Computing Infrastructure
Cloud Security Alliance (2017) Custom Applications and IaaS Trends 2017
Department of Justice United States (2015) HERFINDAHL-HIRSCHMAN INDEX
El-Gazzar R F (2014) lsquoA literature review on cloud computing adoption issues in enterprisesrsquo
presented at the International Working Conference on Transfer and Diffusion of IT pp 214ndash
242
ESRC Centre for Competition Policy (2014 January) lsquoSmall Business as Consumers Are They
Sufficiently Well Protectedrsquo A report for the Federation of Small Businesses
European Commission (2013a) lsquoCOMMISSION DECISION of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404)
European Commission (2013b) Final Report of the study SMART 20130043- Uptake of Cloud
in Europe
European Commission (2013 2014) Cloud computing Experts groups meetings
European Commission (2015) Comparative Study on cloud computing contracts Publications
Office of the European Union Luxembourg
European Commission (2014b) European Commission - Strategy - Digital Single Market -
News Retrieved from European Commission - Digital Single Market
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
88
European Commission (2014c) Study regarding the Uptake of Cloud in Europe Follow-up of
IDC Study on Quantitative estimates of the demand for Cloud Computing in Europe and the
likely barriers to take-up
European Commission (2004d) Project Cycle Management Guidelines
European Commission (2016a) Consultation on Cloud Computing Research Innovation
Challenges for WP 2018-2020
European Commission (2016b) Measuring the economic impact of cloud computing in Europe
European Commission (2016c) Platform-to-business trading practices
European Commission (2017a) Collaboration in Research and Methodology for Official
Statistics RAS (Method)
European Commission (2017b) The Economic and Social Impact of Software and Services in
Competitiveness and Innovation
European Commission (2017c) Final results of the European Market study measuring the size
and trends of the EU data economy European Commission (2018) Consultations about Cloud
Computing
European Commission (2018a) 2018 reform of EU data protection rules
European Commission (2018b) Press release lsquoOnline platforms Commission sets new
standards on transparency and fairnessrsquo
European Commission (2018c) Operational guidance document on measuring personal
consumer detriment
Etro F (2009) lsquoThe economic impact of cloud computing on business creation employment
and output in Europersquo Review of Business and Economics vol 54 no 2 pp 179ndash208
Expert Group on Cloud Computing Contracts (2013-2014) Cloud Computing Expert Group
Gartner (2017) Predicts 2017 Cloud Computing Enters its Second Decade
Hon K Millar C and Walde I (2012) rsquoNegotiating Cloud Contract Looking at Clouds from
Both Sides Nowlsquo in Stanford Technology Law Review Vol 16 No 1
IDC Arthurrsquos Legal (2016) Switching Cloud Providers (SMART 20160032)
International Organization for Standardization (2014) lsquoInformation technology mdash Cloud
computing mdash Overview and vocabularyrsquo ISOIEC Retrieved from International Organization
for Standardization
Mahmood Z (2011) lsquoData Location and Security Issues in Cloud Computingrsquo Proceedings of
the 2nd International Conference on Emerging Intelligent Data and Web Technologies (EIDWT
rsquo11) (pp 49ndash54)
National Institute of Standards and Technology (2011) lsquoThe NIST Definition of Cloud
Computingrsquo Retrieved from National Institute of Standards and Technology
OECD (2014) Cloud computing The Concept Impacts and the Role of Government Policy
Opara-Martins J Sahandi R and Tian F (2015) lsquoA Business Analysis of Cloud Computing
Data Security and Contract Lock-in Issuesrsquo presented at P2P Parallel Grid Cloud and
Internet Computing (3PGCIC)
Pearson S (2013) lsquoPrivacy security and trust in cloud computingrsquo in Privacy and Security
for Cloud Computing Springer pp 3ndash42
Rabinobich M Rabinovich I (nd) A Dynamic Object Replication and Migration Protocol for
an
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
89
Rittinghouse J Ransome J (2009) Cloud Computing CRC Press Boca Raton
Rohrmann CA amp Cunha JFSR (2015) Some Legal Aspects of Cloud Computing Contracts
Journal of International Commercial Law and Technology Vol10 No1 May
SLALOM Project httpslalom-projecteu(2018)
Synergy Research Group (2017) httpswwwsrgresearchcomarticlesmicrosoft-google-
and-ibm-charge-public-cloud-expense-smaller-providers
Technopedia (2018) httpswwwtechopediacomdefinition30463virtual-data-center
Retrieved from Virtual Data Centre
Databases
Amadeus Database httpsamadeusbvdinfocomversion-
2016720homeservproduct=amadeusneo
Eurostat (2015) sbs_sc_sca_r2 Retrieved from Structural Business Statistics
httpappssoeurostateceuropaeunuishowdodataset=sbs_sc_sca_r2amplang=en
Eurostat (2016) Cloud Computing Services Retrieved from EUROSTAT - Digital Economy and
Society httpeceuropaeueurostatwebdigital-economy-and-societydatadatabase
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprisesrsquo
httpeceuropaeueurostatstatistics-explainedindexphpCloud_computing_-
_statistics_on_the_use_by_enterprises
Eurostat (2017) Cloud computing services [isoc_cicce_use]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
90
Annex 4 Survey questionnaire
A Background information
(Everyone answers section A)
A1 What is the name of your company
[open question]
A2 Where is your company located
(People who answer A2 m) are taken straight to the end of the survey)
[single choice question]
a) Czech Republic
b) Estonia c) France d) Germany e) Ireland f) Italy g) Poland h) Portugal
i) Romania
j) Sweden k) Spain l) Netherlands m) Other (please specify)
A3 In which sector is your company mainly active
(People who answer A3 f) are taken straight to the end of the survey)
[multiple choice question]
a) Manufacturing b) Wholesale and retail trade repair of motor vehicles and motorcycles c) Information and communication d) Professional scientific and technical activities e) Administrative and support service activities
f) Other (please specify)
A4 Since how long does your company exist
[single choice question]
a) Less than 1 year b) Between 1 and 5 years
c) Between 5 and 10 years d) Over 10 years
A5 What is the number of employees in your company
(People who answer A5 d) are taken straight to the end of the survey)
= Compulsory question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
91
(Everyone answers section A)
[single choice question]
Nordm of employees in FTE (full-time equivalent)
a) Less than 10 employees b) 10 to 49 employees c) 50 to 250 employees d) More than 250 employees
B Use of Cloud Computing Services
(Everyone answers Section B)
B1 In the last two years has your company used any of the following cloud computing services for
the purpose of conducting business
(People who answer B1 q) are taken straight to the end of the survey)
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business
visualisation technology instant communications applications e-mail account virtual
desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
websites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
n) Security services (eg secure content management endpoint protection malware protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
q) None of the above my company is not using cloud computing services
B11 For the cloud computing services that you have used in the last two years were you able to
negotiate contract terms and conditions
(People who answer B11 b) are taken to Question B111)
(People who answer B11 d) are taken to Question B113)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
92
(People who answer B11 a) or b) are taken to Question B112)
[single choice question]
a) Yes we were able to negotiate contract terms and conditions for all the cloud computing services used
b) Yes we were able to negotiate contract terms and conditions but only in relation to some
services c) No we were not able to negotiate any contract terms and conditions d) We didnrsquot try to negotiate
B111 Please specify in relation to which services were you able to negotiate the contract terms and
conditions
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components) j) High Performance Computing (eg usage of high performance computing clusters
workloads and applications) k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each
day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces)
p) Other (please specify)
B112 For the cloud computing services for which you negotiated the contract terms and conditions
were you able to customise the service package according to your specific needs
[single choice question]
a) Yes (please specify what you were able to customise) b) Partially (please specify what you werewere not able to customise) c) No (please specify)
B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
[single choice question]
a) We were pleased with the offered contract terms and conditions
b) We knew it would be pointless c) We assumed it would be pointless d) Could not find a contact
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
93
e) Other (please specify)
B2 What type of contract(s) did you have for cloud computing services during the last two years
(People who answer B3 d) are taken straight to section C)
[multiple choice question]
a) Paid subscription ndash Fixed Fees b) Paid subscription ndash Variable Fees c) Partly with and partly without payment d) Without payment (eg advertising financed) e) I donrsquot know (please specify)
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the average
amount you paid per month for the cloud computing services
(NB the amount declared should not include over-extra charges or hidden fees)
[open question]
Amount in local currency please specify the currency applied
C Problems encountered with cloud computing services
(Everyone answers Section C)
C1 What type of problems and how often did you encounter them in relation to cloud computing
services in the last two years
Problems
Very
frequently
(at least once a week)
Frequentl
y (at least once a month)
Occasiona
lly (at least
once every 3 months)
Rarely (at
least once in the last
12 months)
Never
a) Lack of timely updates of the cloud service
b) Forced updates to the service that eliminated or changed a necessary function
c) Unsatisfactory amount of data that could be processed
d) Failure of the cloud provider to identify analyse and correct
hazards and prevent a future re-occurrence (incidence management)
e) Low speed of the service
f) The lack of clarity and
completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or
discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions
of service)
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(Everyone answers Section C)
h) Unsatisfactory number of users that could have access to the
service
i) The lack of compatibility of the service with user hardware or software
j) Data could not be exported at all
k) Data could not be retrieved in
easily usable format
l) Extra costs were imposed for data portability
m) The provider deleted the data
upon contract termination
n) Destruction or loss of data
o) Loss or alteration of data transmitted stored or processed via the cloud service
p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses
r) Lack of clarity and transparency of contract terms and conditions
s) Termination of the contract and interruption of the service by the service provider with no or little prior notice to the user
t) Unilateral modification of the servicecontract by the cloud provider
u) Limited liability of the cloud provider
C2 Did you encounter any other problems in relation to cloud computing services in the last two
years
[single choice question]
a) Yes (please specify) b) No
C3 Which was the most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
[single choice question]
a) Lack of timely updates of the cloud service b) Forced updates to the service that eliminated or changed a necessary function c) Unsatisfactory amount of data that could be processed d) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) e) Low speed of the service
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(Everyone answers Section C)
f) The lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced
maintenance or other interruptions of service) h) Unsatisfactory number of users that could have access to the service i) The lack of compatibility of the service with user hardware or software j) Data could not be exported at all k) Data could not be retrieved in easily usable format l) Extra costs were imposed for data portability
m) The provider deleted the data upon contract termination n) Destruction or loss of data o) Loss or alteration of data transmitted stored or processed via the cloud service p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses r) Lack of clarity and transparency of contract terms and conditions s) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user t) Unilateral modification of the servicecontract by the cloud provider u) Limited liability of the cloud provider v) Other (please specify)
C31 What caused the most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the
contract b) The contract terms and conditions of the cloud provider were unfair
c) Other (please specify)
C32 To which type of cloud computing services was the most serious problem linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business
process management IT operationrisk management) e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
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n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
C4 Which was the second most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
People who select C4 a) are taken straight to Section D)
[single choice question]
a) I only encountered one serious problem in the last 2 years
b) Lack of timely updates of the cloud service c) Forced updates to the service that eliminated or changed a necessary function
d) Unsatisfactory amount of data that could be processed e) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) f) Low speed of the service g) The lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
h) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions of service)
i) Unsatisfactory number of users that could have access to the service j) The lack of compatibility of the service with user hardware or software k) Data could not be exported at all l) Data could not be retrieved in easily usable format
m) Extra costs were imposed for data portability
n) The provider deleted the data upon contract termination o) Destruction or loss of data p) Loss or alteration of data transmitted stored or processed via the cloud service q) Unauthorised disclosure of or access to data r) Lack of protection of the data stored in the cloud against theft or viruses s) Lack of clarity and transparency of contract terms and conditions t) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user u) Unilateral modification of the servicecontract by the cloud provider v) Limited liability of the cloud provider w) Other (please specify)
C41 What caused the second most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the contract
b) The contract terms and conditions of the cloud provider were unfair c) Other (please specify)
C42 To which type of cloud computing services was the second most serious problem
linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual
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desktop antivirus for server or PC applications for customer relationship management
social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications)
h) Storage and hosting services (eg server platform for online storage sharing hosting web-sites files images and similar content)
i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
D Actions taken by your company in order to address the most serious
problem
(Everyone who encountered problems answers Section D)
D1 Did your company take action to resolve or remedy the most serious problem experienced
(People who select D1 b) are taken straight to question D2)
a) Yes
b) No
D11 What actions has your company taken to resolve or remedy this problem
[multiple choice question]
a) Used the support services of the provider b) Made a complaint to the provider c) Withheld payment for the service
d) Asked the provider for a refund e) Asked the provider for compensation for damages or losses f) Changed provider g) Went to mediationarbitration (the dispute was taken to a third party mediatorarbitrator) h) Filed an action with a court i) Hired a third party expert to resolve the problem
j) Other (please specify)
D12 What was the result of the actions taken to resolve or remedy this problem
[single choice question]
a) The problem was fully resolved
b) The problem was partially resolved c) The problem was not yet resolved but I was informed that the investigation was ongoing
d) The problem was not resolved and I have not received any reply e) Not resolved and I decided not to do anything about it
D121 Did you encounter any difficulties when taking action to resolve or remedy this problem
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(Everyone who encountered problems answers Section D)
[multiple choice question]
a) No I did not encounter any difficulties b) Yes there was no contact point to make a complaint or attempt to resolve issues c) Yes the procedure took too long d) Yes the procedure was too expensive e) Yes foreign law applied
f) Yes the procedure was only possible abroad g) Yes language difficulties (eg the procedure was in a foreign language) h) Yes the action taken was not suited to resolve the problem i) Yes it was not possible to enforce the decision after the resolution j) Other (please specify)
D2 Why did your company decide not to take any action to resolve or remedy this problem
[multiple choice question]
a) Provider fixed the problem on its own
b) The cloud provider was unlikely to find a solution to the problem
c) The cloud provider excluded its liability for the problem
d) The cloud provider restricted its liability for damages (eg to a certain type of damage or
to a monetary threshold (a franchise or a maximum amount)
e) Limited access to dispute resolution (eg contract terms restrict how and where your
company can take legal action)
f) We tried to complain about other problems in the past but it was not successful
g) High cost of proceedings
h) It would take too long
i) The procedure was too complicated
j) We didnt know where to complain
k) Lack of knowledge how to start the proceeding
l) The applicable procedure is in a foreign country or in foreign language (specify which
foreign country)
m) The company did not want to damage business relationship with the cloud provider
n) The problem was not that important
o) Other (please specify)
E Economic detriment related to the most serious problems encountered
(Everyone who encountered problems answers Section E)
E1 What were the human resources invested by your company while taking action to resolve or
remedy the most serious problem
[open question]
Nordm of employees
involved in solving the problem separately per skill level of employee(s)
Nordm of work days
involved for solving the problem separately per skill level employee(s)
Average monthly
compensation of employee(s) involved in solving the problem (amount in local
currency)118
118 Total labour cost that includes gross wages and employer social security contributions
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(Everyone who encountered problems answers Section E)
Administrative
Technical
Senior
official(s)manager(s)
E2 Select what costs has your company covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
Please provide the costs without considering any reimbursement or compensation you may have
received from the provider(s) who rendered the service(s)
[multiple choice question]
a) Costs related to ensuring an alternative service (please specify the amount in local currency)
b) Costs related to fixing the cloud service problem (please specify the amount in local currency)
c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency) e) Costs related to loss of client(s) (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E3 What is the loss of turnover and profit caused by the most serious problem encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E4 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in
local currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
E5 Considering the costs human resources involved and loss of turnoverprofit related to the most
serious problem what share they represented of the total costs suffered by your company from
problems faced while using cloud computing services
(People who select E5 a) or b) are taken straight to section F)
(People who select C4 a) are taken straight to section F after answering E5)
[single choice question]
a) Above 80 b) 50 to 80 c) Below 50
E6 What were the human resources invested by your company while trying to resolve or remedy
the second most serious problem
[open question]
Nordm of employees
involved in solving the problem separately
Nordm of work days
involved for solving the problem separately
Average monthly
compensation of employee(s) involved
in solving the problem
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per skill level of
employee(s)
per skill level
employee(s)
(amount in local
currency)119
Administrative
Technical
Senior
official(s)manager(s)
E7 Select which costs has your company covered (besides the human resources mentioned before)
while taking action to resolve or remedy the second most serious problem
[multiple choice question] Please provide the costs without considering any reimbursement or
compensation you may have received from the provider(s) who rendered the service(s)
a) Costs related to ensuring an alternative service (please specify the amount in local
currency) b) Costs related to fixing the cloud service problem (please specify the amount in local
currency) c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency)
e) Costs related to loss of client (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E9 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in local
currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
F Background information on turnover and profit
G (Everyone answers Section F)
F1 Please complete the following table specifying the amount in local currency
[open question]
The annual turnover in
2016
The annual turnover in
2017
The annual profit before
tax in 2016
The annual profit before
tax in 2017
119 Total labour cost that includes gross wages and employer social security contributions
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Annex 5 SME Survey results
A Background information
A3 In which sector is your company mainly active
Type of sector Total
Manufacturing 137
Wholesale and retail trade 131
Information and communication 83
Professional scientific and technical activities 92
Administrative and support services 92
A4 Since how long does your company exist
A5 What is the number of employees in your company
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B Use of Cloud Computing Services
B1 In the last two years has your company used any of the following cloud computing services
for the purpose of conducting business
Services
Sectors
Collaboration and
communication services
Storage and hosting
services
Security
services
Networking
services
Administrative and support service activities
61 60 49 40
Information and communication 79 78 41 52
Manufacturing 70 54 48 42
Professional scientific and technical activities
71 70 40 39
Wholesale and retail trade 72 62 38 38
B11 For the cloud computing services that you have used in the last two years were you
able to negotiate contract terms and conditions
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B111 Please specify in relation to which services you were able to negotiate the contract
terms and conditions120
120 The first figure presents for each contracted service the number of SMEs that were able to negotiate
CTampC (in blue) and the number of SMEs that signed standard CTampC for the specific service contracted
(in grey) The total of the numbers in each row represents the number of SMEs that declared contracting a specific service For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
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B112 For the cloud computing services for which you negotiated the contract terms and
conditions were you able to customise the service package according to your specific needs
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B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
B2 What type of contract(s) did you have for cloud computing services during the last two
years
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the
average amount you paid per month for the cloud computing services
Country of answers Average in euros
CZ 18 850
EE 18 112
FR 34 4675
DE 33 861
IE 19 1127
IT 58 716
NL 21 6672
PL 20 411
PT 7 433
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Country of answers Average in euros
RO 7 278
ES 13 127
SE 19 2866
Total 267 1787
C Problems encountered with cloud computing services
C1 What types of problems and how often did you encounter them in relation to cloud
computing services in the last two years
C3 Which was the most serious problem you experienced in the last two years
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C31 What caused the most serious problem
C32 To which type of cloud computing services was the most serious problem linked
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C4 Which was the second most serious problem you experienced in the last two years
C41 What caused the second most serious problem
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C42 To which type of cloud computing services was the second most serious problem linked
D Actions taken by your company in order to address the most serious problem
D1 Did your company take action to resolve or remedy the most serious problem
experienced
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D11 What actions has your company taken to resolve or remedy this problem
D12 What was the result of the actions taken to resolve or remedy this problem
D121 Did you encounter any difficulties when taking action to resolve or remedy this
problem
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D2 Why did your company decide not to take any action to resolve or remedy this problem
E Economic detriment related to the most serious problems encountered
E1 What were the human resources invested by your company while taking action to resolve
or remedy the most serious problem
Human resources invested - working days involved in resolving the problem by sector
Sector Number of
enterprises
95 Trimmed
mean Average
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Human resources invested - working days involved in resolving the problem by size class
Size class Number of enterprises
95 Trimmed mean
Average
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Human resources invested - working days involved in solving the problem by country
Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
EE 5 222 220
FR 22 282 395
DE 19 471 1074
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
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Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
RO 1 200 200
ES 11 631 718
SE 18 251 361
Total 122 322 721
E2 Select what costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E3 What is the loss of turnover and profit caused by the most serious problem encountered
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E4 Did the cloud provider offer any redress for the damages caused to your company
of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
E5 Considering the costs human resources involved and loss of turnoverprofit related to the
most serious problem what share did they represent of the total costs suffered by your
company from problems faced while using cloud computing services of enterprises
Below 50 105 87
50 to 80 8 7
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of enterprises
Above 80 9 7
Total 122 100
E6 What were the human resources invested by your company while trying to resolve or
remedy the second most serious problem
Skill level of enterprises
Administrative 59 48
Technical 93 76
Senior officersmanager(s) 59 48
E7 Select which costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the second most serious problem of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered121
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E9 Did the cloud provider offer any redress for the damages caused to your company of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
121 Please see section 52 for a better understanding of why in the detriment equation it was considered only the most serious problem
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Annex 6 Economic detriment ndash further results
This annex presents more detailed results of the analyses that were performed to carry out
the economic detriment assessment allowing for more in-depth analysis of impact
Incidence cloud computing usage by sector size or country level
For the scenarios presented it is possible to compute the incidence of cloud computing usage
The sample answering the questionnaire is representative of the overall population of EU
SMEs We present in Table 33 to Table 35 some features at the country and enterprise
size or sector level with the sole aim of documenting the gathered information
The data show evidence of significant differences across those dimensions
Table 33 Incidence of cloud computing usage by sector
Sector Scenario 1 Scenario 2
Manufacturing 179 496
Wholesale and retail trade 111 364
Information and communication 199 613
Professional scientific and technical activities 195 574
Administrative and support service activities 131 543
Total 159 499
Source Survey of SMEs (2018)
Table 34 Incidence of cloud computing usage by enterprise size class
Size class Scenario 1 Scenario 2
Micro 178 535
Small 226 606
Medium 133 447
Total 159 499
Source Survey of SMEs (2018)
Table 35 Incidence of cloud computing usage by country
Country Scenario 1 Scenario 2
CZ 172 698
EE 323 690
FR 79 272
DE 80 449
IE 468 710
IT 719 870
NL 205 612
PL 143 315
PT 455 606
RO 278 833
ES 538 648
SE 138 673
Total 159 499
Source Survey of SMEs (2018)
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Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 36 to Table 46
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while resolving the most serious contract-
related cloud computing problem
Table 36 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the most serious problem by
country and skill level of employee ( of respondents 122)
Country Administrative Technical
Senior
officersmanager(s)
CZ 2 29 3 43 4 57
DE 9 47 15 79 8 42
EE 4 80 4 80 3 60
ES 4 36 6 55 5 45
FR 8 36 19 86 11 50
IE 1 25 2 50 3 75
IT 7 54 10 77 4 31
NL 4 67 6 100 4 67
PL 5 38 12 92 5 38
PT 1 33 2 67 0 0
RO 1 100 1 100 0 0
SE 13 72 13 72 12 67
Total 59 93 59
Source Survey of SMEs (2018)
Table 37 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by sector and skill level of employee ( of respondents 122)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 6 46 9 69 10 77
Information and commun 18 75 21 88 12 50
Manufacturing 13 42 22 71 11 35
Profess scientific and
technical activities 10 34 27 93 14 48
Wholesale and retail trade repair of motor vehicles and motorcycles
12 48 14 56 12 48
Total 59 93 59
Source Survey of SMEs (2018)
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Table 38 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by size class and skill level of employee ( of respondents 122)
Size class Administrative Technical
Senior officers
manager(s)
Micro 11 52 12 57 11 52
Small 24 75 22 69 16 50
Medium 24 35 59 86 32 46
Total 59 93 59
Source Survey of SMEs (2018)
Table 39 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious
problem by country and type of costs ( of respondents 122)
Co
un
try
Costs related to
ensuring an
alternative service
Costs related to
fixing the cloud
service problem
Legal costs
Costs
related to reputation
damage
Costs
related to loss of
client(s)
Other
costsNone
CZ 3 43 0 0 0 0 0 0 1 14 3 43
DE 4 21 6 32 2 11 2 11 3 16 5 26
EE 0 0 2 40 0 0 0 0 0 0 3 60
ES 7 64 1 9 0 0 0 0 0 0 3 27
FR 13 59 13 59 12
55 11 50 11 50 18 82
IE 1 25 3 75 0 0 0 0 1 25 0 0
IT 4 31 2 15 1 8 1 8 2 15 2 15
NL 1 17 1 17 1 17 2 33 1 17 5 83
PL 1 8 1 8 2 15 1 8 1 8 2 15
PT 1 33 1 33 0 0 1 33 1 33 0 0
RO 1 100 0 0 1 100 1 100 1 100 1 100
SE 6 33 9 50 3 17 4 22 3 17 5 28
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 40 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious problem by sector and type of costs ( of respondents 122)
Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related to loss of client(s)
Other
costsNone
Admin and support service
activities
5 38 1 8 2 15 1 8 1 8 6 46
Information and
commun 12 50 11 46 7 29 7 29 7 29 8 33
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Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related
to loss of client(s)
Other costsNone
Manufacturing 8 26 6 19 3 10 4 13 5 16 8 26
Profess
scientific and technical activities
13 45 12 41 10 34 10 34 11 38 16 55
Wholesale and
retail trade
repair of motor vehicles and motorcycles
4 16 9 36 0 0 1 4 1 4 9 36
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 41 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the most serious
problem by enterprise size class and type of costs ( of respondents 122)
Size class
Costs related to ensuring
an
alternative service
Costs related to fixing the
cloud
service problem
Legal costs
Costs related to
reputation
damage
Costs related to
loss of
client(s)
Other
costs
None
Micro 6 29 11 52 4 19 6 29 5 24 8 38
Small 13 41 12 38 9 28 7 22 8 25 13 41
Medium 23 33 16 23 9 13 10 14 12 17 26 38
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 42 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the most serious problem encountered by sector ( of
respondents 122)
Sector Loss of turnover Loss of profit
Administrative and support
service activities 2 15 2 15
Information and communication 4 17 4 17
Manufacturing 6 19 5 16
Professional scientific and
technical activities 1 3 3 10
Wholesale and retail trade repair
of motor vehicles and motorcycles 4 16 5 20
Total 17 19
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
118
Table 43 Number and of total enterprises that faced problems that reported loss of
turnover or profit caused by the most serious problem encountered by size class ( of respondents 122)
Size class Loss of turnover Loss of profit
Micro 2 10 4 19
Small 8 25 8 25
Medium 7 10 7 10
Total 17 19
Source Survey of SMEs (2018)
Table 44 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by country and type of redress ( of respondents
122)
Country
Financial
compensation
Reduction in the
cost of subscription
Other
The company did
not offer any redress
CZ 1 14 0 0 1 14 5 71
DE 0 0 0 0 1 5 18 95
EE 0 0 0 0 0 0 5 100
ES 0 0 0 0 0 0 11 100
FR 2 9 1 5 1 5 19 86
IE 0 0 0 0 0 0 4 100
IT 1 8 0 0 0 0 12 92
NL 0 0 2 33 1 17 4 67
PL 0 0 3 23 0 0 10 77
PT 0 0 1 33 0 0 2 67
RO 0 0 0 0 0 0 1 100
SE 0 0 1 6 1 6 16 89
Total 4 8 5 107
Source Survey of SMEs (2018)
Table 45 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress ( of respondents
122)
Sector
Financial compensation
Reduction in
the cost of subscription
Other
The company
did not offer any redress
Administrative and
support service activities 2 15 1 8 0 0 10 77
Information and communication
1 4 1 4 3 13 20 83
Manufacturing 0 0 2 6 1 3 29 94
Professional scientific and technical activities
1 3 2 7 1 3 25 86
Wholesale and retail trade repair of motor
vehicles and motorcycles 0 0 2 8 0 0 23 92
Total 4 8 5 107
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
119
Table 46 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by size class and type of redress ( of respondents 122)
Size class
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 1 5 1 5 0 0 19 90
Small 0 0 2 6 2 6 28 88
Medium 3 4 5 7 3 4 60 87
Total 4 8 5 107
Source Survey of SMEs (2018)
Distribution of enterprises by the weight of the most serious problem by sector enterprise
size or country level
Again with the sole aim of documenting the gathered information Table 47 to Table 49
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while solving the most serious contract-related
cloud computing problem
Table 47 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by country ( of respondents 122)
Country Below 50 50 to 80 Above 80 100122 Total
CZ 3 43 0 0 0 0 4 57 7
DE 3 60 0 0 0 0 2 40 5
EE 11 50 1 5 0 0 10 45 22
ES 11 58 1 5 1 5 6 32 19
FR 3 75 0 0 0 0 1 25 4
IE 5 38 0 0 0 0 8 62 13
IT 1 17 0 0 1 17 4 67 6
NL 5 38 0 0 1 8 7 54 13
PL 2 67 0 0 0 0 1 33 3
PT 1 11 0 0 0 0 8 89 9
RO 3 38 0 0 0 0 5 63 8
SE 7 10 2 3 4 6 56 81 69
Total 55 31 4 2 7 4 112 63 178
Source Survey of SMEs (2018)
122 Enterprises that declared they encountered only one problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
120
Table 48 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by sector ( of respondents 122)
Sector Below 50 50 to 80 Above 80 100123 Total
Administrative and support service activities
26 74 0 0 5 14 4 11 35
Information and communication
20 56 0 0 0 0 16 44 36
Manufacturing 30 64 3 6 0 0 14 30 47
Professional scientific and technical activities
39 65 8 13 1 2 12 20 60
Wholesale and retail
trade repair of motor vehicles and motorcycles
29 57 0 0 12 24 10 20 51
Total 144 63 11 5 18 8 56 24 229
Source Survey of SMEs (2018)
Table 49 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by size class ( of respondents 122) Below 50 Between 50 -
80 Above 80 100124 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the second most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 50 to Table 59
present the differences by country size and sector of the distribution of enterprises that
experienced the various costs while resolving the second most serious contract-related cloud
computing problem
Table 50 Number and of enterprises in which human resources were invested while
taking action to resolve or remedy the second most serious problem by country and skill
level of employee ( of respondents 55)
Country Administrative Technical
Senior officersmanager(s)
CZ 0 0 1 33 2 67
DE 5 45 9 82 3 27
EE 3 100 3 100 1 33
ES 1 33 2 67 1 33
FR 4 36 7 64 4 36
IE 1 33 2 67 1 33
IT 2 40 3 60 1 20
123 Enterprises that declared they encountered only one problem 124 Enterprises that declared they encountered only one problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
121
Country Administrative Technical
Senior
officersmanager(s)
NL 1 100 1 100 1 100
PL 2 40 5 100 0 0
PT 1 50 1 50 2 100
RO 0 0 0 0 0 0
SE 3 43 5 71 2 29
Total 23 39 18
Source Survey of SMEs (2018)
Table 51 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the second most serious problem
by sector and skill level of employee ( of respondents 55)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 3 50 4 67 2 33
Information and commun 7 70 9 90 4 40
Manufacturing 5 31 11 69 4 25
Profess scientific and
technical activities 3 27 8 73 3 27
Wholesale and retail trade
repair of motor vehicles and motorcycles
5 42 7 58 5 42
Total 23 39 18
Source Survey of SMEs (2018)
Table 52 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the second most serious problem
by size class and skill level of employee ( of respondents 55)
Size class Administrative Technical
Senior officers
manager(s)
Micro 3 38 5 63 2 25
Small 10 63 13 81 6 38
Medium 10 32 21 68 10 32
Total 23 39 18
Source Survey of SMEs (2018)
Table 53 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by country and type of costs ( of respondents 55)
Co
un
try Costs
related to
ensuring an
alternative service
Costs
related to
fixing the cloud
service problem
Legal costs
Costs related
to reputation damage
Costs
related to loss of
client(s)
Other
costsnone
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
122
CZ 0 0 0 0 0 0 0 0 0 0 3 100
DE 5 45 4 36 3 27 3 27 3 27 9 82
EE 0 0 2 67 0 0 0 0 0 0 1 33
ES 1 33 0 0 0 0 0 0 0 0 2 67
FR 6 55 5 45 5 45 5 45 5 45 10 91
IE 1 33 0 0 0 0 0 0 0 0 2 67
IT 2 40 1 20 1 20 1 20 2 40 3 60
NL 0 0 0 0 0 0 0 0 0 0 1 100
PL 0 0 1 20 1 20 1 20 1 20 2 40
PT 1 50 0 0 0 0 1 50 1 50 0 0
RO 1 100 1 100 1 100
1 100 1 100 1 100
SE 1 14 2 29 1 14 2 29 2 29 5 71
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 54 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the second most
serious problem by sector and type of costs ( of respondents 55)
Sector
Costs
related to ensuring
an alternative service
Costs
related to fixing the
cloud service problem
Legal costs
Costs related to reputation
damage
Costs related to
loss of client(s)
Other costs
none
Admin and support service
activities 1 17 1 17 2 33 1 17 1 17 5 83
Information and commun
3 30 3 30 1 10 2 20 2 20 6 60
manufacturing 4 25 5 31 4 25 4 25 4 25 15 94
Profess scientific and technical
activities
7 64 6 55 5 45 6 55 6 55 7 64
Wholesale and retail trade
repair of motor vehicles and motorcycles
3 25 1 8 0 0 1 8 2 17 6 50
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
123
Table 55 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by enterprise size class and type of costs ( of respondents 55)
Size class
Costs related to ensuring
an alternative
service
Costs related to fixing the
cloud service problem
Legal
costs
Costs related to
reputation damage
Costs related to
loss of client(s)
Other
costsnone
Micro 3 19 4 25 2 13 0 0 2 13 2 13
Small 12 39 8 26 7 23 0 0 9 29 10 32
Medium 3 38 4 50 3 38 5 63 3 38 3 38
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 56 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by size class (
of respondents 55)
Size class Loss of turnover Loss of profit
Micro 0 0 1 13
Small 5 31 5 31
Medium 2 6 2 6
Total 7 8
Source Survey of SMEs (2018)
Table 57 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by sector ( of
respondents 55)
Sector Loss of turnover Loss of profit
Administrative and support service activities
1 17 1 17
Information and communication 1 10 1 10
Manufacturing 2 13 2 13
Professional scientific and
technical activities 1 9 2 18
Wholesale and retail trade repair
of motor vehicles and motorcycles Total
2 17 2 17
Total 7 8
Source Survey of SMEs (2018)
Distribution of enterprises that have been provided any kind of redress for the damage caused
by the contract-related cloud computing problems by sector size or country level
Again with the sole aim of documenting the gathered information Table 58 to Table 60
present the differences by country size and sector of the distribution of enterprises that have
been provided any kind of redress for the damage caused by the contract-related cloud
computing problems
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
124
Table 58 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by country and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any
redress
CZ 1 33 0 0 0 0 2 67
DE 0 0 0 0 0 0 11 100
EE 0 0 0 0 0 0 3 100
ES 0 0 0 0 0 0 3 100
FR 1 9 0 0 0 0 10 91
IE 0 0 0 0 0 0 3 100
IT 0 0 0 0 0 0 5 100
NL 0 0 0 0 0 0 1 100
PL 0 0 1 20 0 0 4 80
PT 0 0 1 50 0 0 1 50
RO 0 0 0 0 0 0 1 100
SE 0 0 1 14 0 0 6 86
Total 2 3 0 50
Source Survey of SMEs (2018)
Table 59 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress
( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Administrative and support service activities
2 33 0 0 0 0 4 67
Information and
communication 0 0 0 0 0 0 10 100
Manufacturing 0 0 0 0 0 0 16 100
Professional
scientific and
technical activities
0 0 1 9 0 0 10 91
Wholesale and retail trade repair of motor vehicles and motorcycles
0 0 1 8 0 0 10 83
Total 2 3 0 50
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
125
Table 60 Number of enterprises that have been provided any kind of redress for the
damage caused by size class and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 0 0 2 13 0 0 14 88
Small 2 6 0 0 0 0 29 94
Medium 0 0 1 13 0 0 7 88
Total 2 3 0 50
Source Survey of SMEs (2018)
Distribution of loss of turnover by sector size or country level
Having estimated the different components of turnover Table 61 to Table 63 present the loss
of turnover in enterprises by country size and sector caused by the contract-related cloud
computing problems documenting significant differences
Table 61 Loss of turnover per enterprise by sector
Sectors
Number of
enterprises ()
95 Trimmed mean125
(euro)
Average
(euro)
Manufacturing 28 348469 1177465
Wholesale and retail trade 22 4759 232031
Information and communication 25 6599 27509
Professional scientific and technical activities 31 3226 490323
Administrative and support service activities 16 1827366 4144629
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 62 Loss of turnover per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 023 4217
Small 24 271159 1119043
Medium 73 99060 1278261
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 63 Loss of turnover per enterprise by country
Country Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 160819 894737
EE 5 117 140
125 A trimmed mean is a method of averaging that removes a small designated percentage of the largest and smallest values before calculating the mean
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
126
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
ES 11 000 000
FR 22 742424 3009091
IE 4 4583333 5125000
IT 13 192308 423077
NL 6 3889 5000
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 100166 613600
Total 122 41954 985869
Source Survey of SMEs (2018)
Distribution of loss of profits by sector size or country level
Table 64 to Table 66 present the loss of profits by country enterprise size and sector caused
by the contract-related cloud computing problems once again documenting significant
differences
Table 64 Loss of profits per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 43651 121207
Wholesale and retail trade 22 4980 242652
Information and communication 25 7720 14729
Professional scientific and technical activities 31 1452 9355
Administrative and support service activities 16 413456 872111
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 65 Loss of profits per enterprise by size class
Size class
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Micro 25 063 5742
Small 24 38235 50293
Medium 73 18681 301282
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 66 Loss of profits per enterprise by country
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 877 15789
EE 5 200 240
ES 11 000 000
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
127
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
FR 22 161111 613182
IE 4 152778 162500
IT 13 14957 38462
NL 6 17315 18583
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 221012 460637
Total 122 17690 191346
Source Survey of SMEs (2018)
Distribution of working days per enterprise involved in resolving the problem by sector size
or country level
Table 67 to Table 69 present the distribution of working days per enterprise involved in
resolving the problem caused by the contract-related cloud computing problems by country
size and sector again documenting significant differences
Table 67 Human resources invested - working days per enterprise involved in resolving the problem by sector
Sector
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Source Survey of SMEs (2018)
Table 68 Human resources invested - working days per enterprise involved in resolving the problem by size class
Size class
Number of
enterprises
()
95
Trimmed mean
( days)
Average
( days)
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
128
Table 69 Human resources Invested - working days per enterprise involved in resolving the
problem by country
Country
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
CZ 7 226 229
DE 19 471 1074
EE 5 222 220
ES 11 631 718
FR 22 282 395
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
RO 1 200 200
SE 18 251 361
Total 122 322 721
Source Survey of SMEs (2018)
Distribution of other costs covered per enterprise by sector size or country level
Table 70 to Table 72 present the other costs covered per enterprise to resolve the contract-
related cloud computing problems by country size and sector documenting again significant
differences
Table 70 Other costs covered per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 28919 706177
Wholesale and retail trade 22 141217 366265
Information and communication 25 11556 112400
Professional scientific and technical activities 31 50573 147290
Administrative and support service activities 16 150107 635096
Total 122 34124 371871
Source Survey of SMEs (2018)
Table 71 Other costs covered per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 2278 10725
Small 24 178472 389792
Medium 73 39973 489660
Total 122 34124 371871
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
129
Table 72 Other costs covered per enterprise by country
Country
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 387 535
DE 19 183333 665000
EE 5 6111 7000
ES 11 115657 229091
FR 22 682 50659
IE 4 166667 175000
IT 13 184615 416154
NL 6 15935 16917
PL 13 14575 37479
PT 3 3333 3333
RO 1 000 000
SE 18 332811 1241741
Total 122 34124 371871
Source Survey of SMEs (2018)
Distribution of the total value of redress received per enterprise by sector size or country
level
Table 73 to Table 75 present the total value of redress received per enterprise for contract-
related cloud computing problems by country size and sector
Table 73 Total value of redress received per enterprise by sector
Sector
Number of
enterprises
()
95 Trimmed
mean
(euro)
Average
(euro)
Manufacturing 28 000 1607
Wholesale and retail trade 22 000 1704
Information and communication 25 000 696
Professional scientific and technical activities 31 187 748
Administrative and support service activities 16 25195 38379
Total 122 095 6042
Source Survey of SMEs (2018)
Table 74 Total value of redress received per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 0 000 00
Small 0 000 00
Medium 7 17120 57096
Total 122 095 6042
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
130
Table 75 Total value of redress received per enterprise by country
Country Number of enterprises
(euro)
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 1867 5354
DE 19 000 000
EE 5 000 000
ES 11 000 000
FR 22 000 13636
IE 4 000 000
IT 13 1346 3462
NL 6 000 000
PL 13 2504 3123
PT 3 000 000
RO 1 000 000
SE 18 1939 17448
Total 122 095 6042
Source Survey of SMEs (2018)
Costs or labour per working day by sector and country level
Table 76 Cost of labour per working day (euro per day per worker)
Country Manufacturing
Wholesale and retail
trade repair of
motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
Total
economy
AT 2089 1323 2194 1331 1201 1616
BE 2285 1512 2294 1363 1190 1670
BG 705 691 1435 471 622 665
CY 705 691 1435 471 622 665
CZ 544 408 930 469 352 500
DE 2069 1080 2070 1568 821 1503
DK 1978 1601 2248 2281 1580 1871
EE 616 522 861 538 458 577
EL 721 434 945 307 407 505
ES 1352 827 1912 1072 725 1028
FI 1929 1366 2186 1764 1083 1639
FR 2055 1526 2487 2163 276 1791
HR 452 405 692 275 327 410
HU 506 336 662 368 309 424
IE 1967 1281 2605 2163 1189 1493
IT 1407 772 1702 659 840 1052
LT 383 305 627 317 317 351
LU 2204 1754 2862 2942 1192 2097
LV 969 315 590 333 276 347
MT 405 475 1017 333 571 477
NL 2083 1087 1970 1499 688 1286
PL 456 303 626 332 385 391
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
131
Country Manufacturing
Wholesale
and retail trade
repair of motor
vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Administrative and support
service activities
Total
economy
PT 640 524 1106 385 330 547
RO 290 236 576 333 230 287
SE 2197 1675 2618 2088 1259 1922
SI 871 731 980 523 546 762
SK 551 368 810 404 314 470
UK 1745 1047 2230 1989 1146 1455
EU 28 1491 1774 3687 1695 511 1118
Note Costs were computed as (INDIC_SB - Personnel costs - million euroINDIC_SB - Persons employed - number)260
Source Eurostat
Distribution of the overall components of financial detriment by sector and size class in the
different scenarios
The following tables present the distribution of the estimated components of financial
detriment by sector and enterprise size class for the different scenarios showing relevant
differences across those dimensions
Table 77 Lost turnover at the EU-28 level in SMEs experiencing cloud computing service problems
Scenario 1
(average incidence126 of CC
use 159)
Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 515 1450
Wholesale and retail trade repair of motor vehicles
and motorcycles 240 728
Information and communication 59 175
Professional scientific and technical activities 237 694
Administrative and support service activities 1395 4645
Total 2446 7691
Siz
e
cla
ss Micro 1405 4402
Small 598 1866
Medium 442 1423
Total 2446 7691
Source Computations based on Survey of SMEs (2018) and Eurostat
126 Average percentage of cloud computing services used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
132
Table 78 Lost profits at the EU28 level in SMEs experiencing cloud computing service
problems
Scenario 1 (average incidence of CC use 159)
(Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 146 409
Wholesale and retail trade repair of motor vehicles and motorcycles
114 345
Information and communication 35 103
Professional scientific and technical activities 101 293
Administrative and support service activities 634 2092
Total 1031 3243
Siz
e
cla
ss Micro 602 1887
Small 255 792
Medium 174 564
Total 1031 3243
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 79 Costs of human resources invested in resolving the problem in SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 341 1019
Wholesale and retail trade repair of motor vehicles and motorcycles
474 1511
Information and communication 236 741
Professional scientific and technical activities 816 2503
Administrative and support service activities 232 826
Total 2099 6600
Siz
e
cla
ss Micro 1961 6167
Small 97 295
Medium 41 138
Total 2099 6600
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 80 Other costs covered by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 162 479
Wholesale and retail trade repair of motor vehicles and motorcycles
959 2996
Information and communication 74 229
Professional scientific and technical activities 503 1527
Administrative and support service activities 291 1024
Total 1989 6255
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
133
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Siz
e
cla
ss Micro 1450 4555
Small 449 1401
Medium 90 300
Total 1989 6255
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 81 Total value of redress received by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 2
(average incidence of CC use 159)
Scenario 1
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 00 00
Wholesale and retail trade repair of motor vehicles
and motorcycles 00 01
Information and communication 00 00
Professional scientific and technical activities 00 01
Administrative and support service activities 05 15
Total 06 17
Siz
e
cla
ss Micro 02 06
Small 00 00
Medium 04 11
Total 06 17
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 27 Distribution by component of gross detriment considering lost turnover and all the other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 1 (average incidence of cloud computing use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
134
Figure 28 Distribution by sector of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 29 Distribution by enterprise size class of gross detriment considering lost turnover
and all other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 2 (average incidence of CC use 499)
Scenario 1 (average incidence of CC use 159)
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
135
Figure 30 Distribution by country of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
136
Annex 7 Impacts on jobs and growth detailed results
Inputs for the assessment of macroeconomic impacts
The following two tables present the results of the estimation of turnover losses by industry
and country in the two scenarios that are used as inputs on assessment of impacts on jobs
and growth
Table 82 Turnover losses arising from contract-related cloud computing service problems - Scenario 1 considering average incidence of CC use 159 (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor
vehicles and
motorcycles
Information
and communication
Professional
scientific
and technical activities
Administrative and support
service
activities
Total
AT 06 02 00 01 10 19
BE 54 01 00 01 50 106
BG 02 00 00 00 05 07
CY 08 03 01 05 44 61
CZ 40 68 19 69 80 275
DE 02 06 02 06 03 21
DK 41 29 09 36 138 254
EE 92 86 09 69 136 392
EL 62 02 01 01 108 173
ES 07 00 00 00 85 92
FI 13 02 01 02 29 47
FR 15 01 00 00 35 51
HR 39 02 00 01 189 231
HU 05 01 00 01 08 15
IE 18 01 01 02 105 128
IT 14 06 04 12 38 73
LT 03 01 00 01 15 19
LU 23 09 01 08 39 81
LV 12 05 01 02 18 37
MT 01 00 00 00 03 05
NL 02 01 00 01 08 11
PL 00 00 00 00 03 03
PT 12 03 01 04 41 61
RO 01 00 00 00 02 03
SE 04 01 00 01 13 20
SI 07 02 01 02 20 32
SK 05 01 00 01 08 15
UK 25 07 06 11 162 211
EU28 515 240 59 237 1395 2446
Note values refer to the turnover losses estimated by country and sector that are used in the assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
137
Table 83 Turnover losses arising from contract-related cloud computing service problems -
Scenario 2 considering average incidence of CC use 499 - (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor vehicles
and motorcycle
s
Information and
communication
Profession
al scientific
and technical activities
Administrative and
support service
activities
Total
AT 17 05 01 03 35 61
BE 156 03 01 02 172 333
BG 05 00 00 00 17 22
CY 22 09 03 13 144 191
CZ 112 211 57 198 288 866
DE 07 18 07 20 12 65
DK 110 91 26 98 474 800
EE 278 256 30 218 452 1234
EL 168 05 02 02 366 544
ES 18 01 00 00 271 290
FI 37 07 02 05 96 147
FR 42 02 00 01 115 160
HR 113 06 01 02 605 728
HU 15 03 01 02 27 48
IR 50 04 02 06 340 402
IT 38 19 11 32 129 230
LT 07 02 01 02 48 61
LU 66 29 03 23 135 256
LV 33 15 02 06 62 117
MT 04 01 00 01 10 16
NL 07 02 01 02 25 36
PL 01 01 00 01 08 11
PT 32 09 04 10 136 191
RO 02 01 00 01 07 10
SE 12 03 01 03 45 62
SI 19 06 02 07 67 101
SK 13 02 01 03 27 46
UK 67 19 16 31 530 663
EU28 1450 728 175 694 4645 769
1
Note values refer to the turnover losses estimated by country and sector that are used in the
assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
138
Parameters for the assessment of macroeconomic impacts
Table 84 Output per unit of GVA by sector
(euro value of turnover by euro of GVA ndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail trade
repair of motor vehicles
and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
AT 31 18 22 20 15
BE 41 20 22 21 20
BG 44 20 19 22 24
CY 33 17 30 15 16
CZ 38 21 19 25 29
DE 29 17 19 17 16
DK 27 18 21 19 21
EE 40 19 19 19 18
EL 36 19 20 18 22
ES 40 18 20 18 18
FI 35 19 20 18 17
FR 33 20 19 22 17
HR 29 19 19 18 20
HU 40 21 17 16 18
IE 24 18 39 19 19
IT 38 19 22 17 21
LT 30 14 16 16 17
LU 37 30 49 20 80
LV 32 18 19 17 21
MT 33 16 26 23 19
NL 41 17 20 19 15
PL 36 16 20 17 20
PT 38 16 22 21 16
RO 28 26 18 22 21
SE 30 16 20 18 18
SI 31 19 21 19 17
SK 46 20 20 24 26
UK 29 18 17 16 18
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat National accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
139
Table 85 Output per unit of employment by sector
(euro million of turnover by thousand persons employedndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail
trade repair of motor
vehicles and motorcycles
Information
and communication
Professional
scientific and
technical activities
Administrati
ve and support service
activities
AT 2789 1006 2094 1227 864
BE 4293 1566 2999 1533 788
BG 453 197 499 306 160
CY 871 468 2187 814 414
CZ 1106 466 1047 625 485
DE 2414 780 2031 1060 721
DK 3251 1214 2246 1564 1118
EE 967 497 740 712 626
ES 2754 616 1770 858 474
FI 3160 1078 2014 1100 748
FR 2862 1077 2263 1650 898
GR 1643 392 1263 416 476
HR 603 364 702 652 432
HU 1137 320 658 384 255
IR 8130 1091 11774 1822 2848
IT 2329 899 2006 977 754
LT 944 378 711 406 303
LU 2988 3000 8840 1977 4646
LV 689 378 648 389 387
MT 1084 513 1866 1264 617
NL 3923 1047 2190 1314 556
PL 862 467 824 646 378
PT 1151 537 1397 648 275
RO 584 323 917 958 337
SE 3272 1189 2874 1706 955
SI 1236 647 1072 609 354
SK 1452 456 962 760 485
UK 2550 910 1750 1080 708
Note These values express the value of output that is produced by one employee in each industry For instance each worker in manufacturing in Belgium produces and output of euro4293 thousand Source Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
140
Detailed results of the assessment of macroeconomic impacts
Table 86 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems ndash Scenario 1 considering average incidence of CC use 159
Co
un
try
Sectors
Manufact
Wholesale
and retail trade repair
of motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Admin and
support service
activities
Total
(
of ctry
GVA)
(euro million)
AT 02 01 00 01 13 18 000
BE 02 02 00 02 22 29 000
BG 03 02 00 01 08 14 000
CY 00 00 00 00 02 03 000
CZ 14 00 00 00 18 33 000
DE 14 17 05 21 85 143 000
DK 01 00 00 00 07 09 000
EE 00 00 00 00 03 03 000
EL 07 05 01 05 18 34 000
ES 10 01 00 00 107 118 000
FI 01 00 00 01 08 10 000
FR 12 33 10 31 47 133 000
HR 02 00 00 00 04 07 000
HU 03 01 01 02 23 31 000
IE 01 03 01 03 02 10 000
IT 24 44 04 41 64 178 000
LT 02 01 00 01 06 10 000
LU 00 00 00 00 00 01 000
LV 01 00 00 00 04 05 000
MT 00 00 00 00 01 02 000
NL 04 01 00 01 69 76 000
PL 17 01 00 00 55 74 000
PT 02 00 00 00 54 55 000
RO 05 00 00 00 17 23 000
SE 05 04 02 06 21 38 000
SI 02 00 00 01 05 07 000
SK 03 01 00 01 11 16 000
UK 09 04 03 07 89 112 000
To
tal
EUR
million 146 126 30 128 761 1191
of
total 000 000 000 na 001 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
141
Table 87 Direct employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 1 considering average incidence of CC use 159
Co
un
try
Sector
Manufact
Wholesale and retail
trade repair
of motor vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total ( of
ctry GVA)
(euro million)
BE 2 2 0 3 56 63 000
BG 26 25 1 7 112 171 001
CZ 49 2 0 1 103 155 000
DK 1 1 0 1 13 15 000
DE 17 38 5 34 191 285 000
EE 2 0 0 0 9 10 000
EL 14 24 1 19 83 141 000
IE 0 6 0 4 1 11 013
ES 14 3 0 1 398 417 000
HR 9 3 0 1 18 31 000
IT 39 96 5 71 180 391 002
CY 2 1 0 0 7 10 000
LV 4 2 0 2 19 27 001
LT 6 5 0 3 34 48 001
LU 0 0 0 0 1 1 000
HU 10 9 2 10 161 192 001
MT 1 0 0 0 3 5 000
NL 5 1 0 2 189 197 000
AT 3 2 0 2 23 30 000
PL 72 4 1 1 286 363 000
PT 6 0 0 0 311 317 000
RO 25 2 0 0 104 132 000
SI 4 1 0 2 23 29 001
SK 9 5 1 2 59 76 001
FI 1 1 0 1 18 21 000
SE 4 5 1 7 40 57 001
UK 10 7 3 10 229 260 000
To
tal Persons 348 306 31 225 2761 3672
of
total 000 000 000 000 002 000
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
142
Table 88 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems Scenario 2 considering average incidence of CC use 499 - euro million
Co
un
try
Sector
Manufact
Wholesale and retail trade
repair of
motor vehicles and
motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total
(
of ctry
GVA)
AT 06 04 01 03 43 57 000
BE 05 05 01 06 74 91 000
BG 07 08 01 03 26 45 001
CY 01 01 00 00 06 09 001
CZ 41 01 00 01 60 104 001
DE 38 53 13 57 293 455 000
DK 03 01 01 01 23 29 000
EE 01 00 00 00 10 11 001
EL 18 15 02 13 60 108 001
ES 28 03 00 01 342 376 000
FI 03 01 00 02 26 33 000
FR 33 104 30 90 169 427 000
HR 05 02 00 01 13 22 001
HU 08 04 02 06 77 98 001
IE 03 10 02 11 06 32 000
IT 73 132 14 129 211 560 000
LT 06 04 00 02 21 33 001
LU 00 00 00 00 01 02 000
LV 02 01 00 01 12 16 001
MT 01 00 00 00 03 05 001
NL 12 02 01 03 224 242 000
PL 46 03 01 01 186 237 001
PT 05 00 00 00 170 175 001
RO 15 01 00 00 56 72 001
SE 13 12 06 18 73 121 000
SI 04 01 00 02 16 23 001
SK 08 03 01 02 37 52 001
UK 23 10 09 19 292 354 000
To
tal
EUR
million 411 382 88 375 2532 3788
of
total 000 000 000 na 004 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
143
Table 89 Direct Employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 2 considering average incidence of CC use 499
Co
un
try
Sector
Manufac
t
Wholesale and retail
trade repair of
motor vehicles
and motorcy
cles
Informati
on and communi
cation
Professio
nal scientific
and technical activities
Admin and
support service
activities
Total ( of ctry
employment)
(Persons)
AT 7 6 1 6 77 97 000
BE 5 6 1 8 183 203 000
BG 72 76 4 19 384 555 002
CY 4 3 0 1 24 31 001
CZ 141 6 1 3 356 506 001
DE 46 117 13 93 657 925 000
DK 2 2 1 1 43 49 000
EE 5 0 0 0 28 33 001
EL 40 73 3 56 284 455 001
ES 41 10 0 3 1277 1331 001
FI 4 2 0 2 60 69 000
FR 39 196 25 120 321 701 000
HR 24 8 1 4 63 99 001
HU 28 28 5 27 535 623 001
IE 1 17 1 11 4 33 000
IT 119 284 15 223 599 1242 001
LT 18 14 1 8 116 157 001
LU 0 0 0 0 2 3 000
LV 10 5 1 4 65 85 001
MT 2 1 0 1 11 15 001
NL 13 4 1 5 612 634 001
PL 195 11 2 4 970 1182 001
PT 16 1 0 1 986 1004 002
RO 72 6 0 1 342 420 000
SE 12 16 4 19 136 186 000
SI 11 3 1 5 78 97 001
SK 25 14 2 7 199 247 001
UK 26 21 9 29 749 834 000
To
tal
Persons 977 930 92 660 9157 11816
of total 000 000 000 000 006 001
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
144
Table 90 Indirect loss of gross value added at EU28 level by sector
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(euro million)
Agriculture forestry and fishing 20 59
Mining and quarrying 09 27
Manufacturing 151 454
Electricity gas steam and air conditioning supply 22 68
Water supply sewerage waste management and remediation activities 13 39
Construction 20 64
Wholesale and retail trade repair of motor vehicles and motorcycles 98 301
Transportation and storage 76 237
Accommodation and food service activities 18 59
Information and communication 71 223
Financial and insurance activities 66 207
Real estate activities 72 226
Professional scientific and technical activities 157 493
Administrative and support service activities 155 498
Public administration and defence compulsory social security 11 33
Education 10 33
Human health and social work activities 02 07
Arts entertainment and recreation 05 17
Other service activities 10 33
Activities of households as employers undiff goods- and services-
producing activities of households for own use 00 00
Total euro million 987 3079
of EU28 total 000 000
Note Values refer to the GVA content of the indirect turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses
by the coefficients of GVA at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Table 91 Indirect loss of Employment at EU28 level by sector
Scenario 1 (average
incidence of CC use 159)
Scenario 2 (average
incidence of CC use 499)
(Persons)
Agriculture forestry and fishing 119 353
Mining and quarrying 8 24
Manufacturing 252 759
Electricity gas steam and air conditioning supply 13 39
Water supply sewerage waste management and remediation activities 16 50
Construction 43 135
Wholesale and retail trade repair of motor vehicles and motorcycles 241 739
Transportation and storage 137 428
Accommodation and food service activities 55 176
Information and communication 75 235
Financial and insurance activities 60 190
Real estate activities 12 39
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
145
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(Persons)
Professional scientific and technical activities 234 734
Administrative and support service activities 374 1203
Public administration and defence compulsory social security 20 63
Education 26 82
Human health and social work activities 6 18
Arts entertainment and recreation 13 40
Other service activities 29 93
Activities of households as employers undiff goods- and services-producing activities of households for own use
1 2
Total Persons 1733 5402
of EU28 total 000 000
Note Values refer to the employment content of the indirect turnover losses caused by contract-
related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses by the coefficients of employment at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
146
Annex 8 Case study questionnaires by stakeholder type
EY Interview Guide ndash Cloud computing contracts (service providers and cloud
brokers)
Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into to what extent SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
As part of the study an SME survey was conducted to get a better understanding of the
incidence and the scope of problems encountered with this type of service In order to
complement and to get a better understanding of the results we obtained from the survey
we also want to get a better understanding of the services offered to SMEs by providers and
what types of problems are notified to providers
Timing 2 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and
check whether this is the best representative to interview from the national authority
Can you tell a bit more about yourself and what position do you hold
Can you reply to our questionnaire and if not can you put us in contact with somebody who can
Can you tell us a little more about the cloud computing provider you work for What type of services do you offer
What can you tell us about the contracts being offered by the cloud computing provider to SMEs
Elements to be evaluated
Understanding of the function Understanding if the person is competent enough to give relevant answers to the topic in
question Understanding of the extent of knowledge that the person has of cloud computing contracts
and company
Timing 05 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
147
Services offered to SMEs and differences compared to services offered to larger enterprises
Cloud computing services offered to SMEs
The objective of this section is to get full understanding of whether and how the provider considers
SMEs as a specific type of customer
What kind of cloud computing contracts do you offer To what extent do SMEs rely on this service What is the size of the SMEs to which you provide this service Do you offer services for micro enterprises and what is the difference between the service
offered to micro and larger enterprises
Do you offer this service based on a fee or for free
How flexible are you on the contracts that you offer in terms of negotiating Do you have standard terms amp conditions for SMEs or are they negotiable Do companies tend to negotiate the terms of the contract or are they satisfied with the service
offered in the contract To what extent can SMEs monitor the performance of the contract
Elements to be discussed
Understanding of the company and type of services offered Understanding if and how SMEs are considered as a specific category of customer Knowledge and understanding on the type of the service used paid or not by SME customers
Knowledge and understanding of the whether the contracts are negotiated or not
Timing 10 min
Complaints received and actions taken by the provider to address the issues encountered
Complaints received from SMEs concerning the services provided
Objective is to get an understanding of the number and scope of complaints that providers receive and to what extent SME complaints are different from other complaints received
How often do you receive complaints from SME customers Compared to other customers is this higher or lower
What types of complaints do you receive from SMEs (different from other groups) Which was the most serious problem encountered that you received a complaint about and to
which type of cloud computing service was it related What caused these problems What is the internal procedure to handle these problems In the past 12 months did you receive complaints not directly from customers but through
3rd party complaints-handling bodies
To what extent was this complaint different from other complaints you received directly from customers
Elements to be discussed
Understanding of the types of complaints received from SMEs Understanding of severity and frequency of complaints received from SMEs
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
Low speed of services Unsatisfactory availability or discontinuity of the service
Forced updates to the service that eliminated or changed a necessary function
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
148
Lack of clarity and transparency of contract terms and conditions
Timing 10 min
Specific actions taken by provider in order to address the problems
What is the standard procedure to handle complaints To what extent do you as cloud computing provider provide assistance to the SMEs when they
encounter a problem
How much time does it in general take to solve issues encountered by SMEs (in line with other complaints handled for other customers)
When encountering a problem in general what type of action do SMEs expect you as provider to take
Have you experienced that consumers easily switch provider or terminate the contract Does
this happen more often after they have filed a complaint
What types of costs do you compensate to SME customers when they encounter a problem Do customers in general accept the offered remedies Have you encountered cases where the
SME customer was not happy with the solution offered What other solutions were offered in place
Did the complaint escalate Any court proceedings arbitrationhellip
Elements to be evaluated
Understanding of the actions taken by the cloud computing provider Were these remedies enough to solve the problem The resources involved and used in the resolving of the problem
Where there any extra costs covered by the company
Timing 10 min
Future perspectives on the topic
How will Cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made due
to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services
Legalpolicy consequences of potential future evolutions
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 2 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
149
EY Interview Guide ndash Cloud computing contracts (Associations of SMEs)
D Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Timing 2 min
General introduction questions
Generate understanding of the position and knowledge of the interviewee on the specific subject
Can you tell a bit more about the types of activities that the companies in your association
are performing
Timing 05 min
Cloud computing services used (IT)
The objective of this section is to get full understanding of what cloud computing services are used for by the members of the SME associations
Are you aware of any of the following Cloud Computing services being used by SMEs
Collaboration and communication services Storage and hosting services Security services
Networking services
Data management Business applications
Are you aware of any other cloud computing services being used by SMEs
Timing 5 min
Type of contracts (legal)
The objective of this section is to get full understanding of what kind of contract the SMEs which are part of the association have
What type of cloud computing contract do the companies in your association have (with or
without remuneration if with remuneration- how much do they pay per month) What is the average duration of the contracts
Do the companies in your association have a preferred provider or type of package of services Do the companies in your association negotiate their cloud computing contracts What parts
are they able to negotiate if any Are the companies in your association satisfied with the degree of customisation of the
contracts What specific needs do the companies in your association have regarding cloud computing
Do they succeed in covering them in the process of negotiating cloud computing contracts with the providers of cloud computing services
Timing 10 min
Problems encountered (legalIT)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
150
Objective is to get a better understanding of the problems encountered by the members of SME associations while contracting cloud computing services
Are you aware of any of the following problems existing with cloud computing services used by SMEs
low speed of the service unsatisfactory availability or discontinuity of the service forced updates to the service that eliminated or changed a necessary function
lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
lack of clarity and transparency of contract terms and conditions
Are you aware of any other problems existing with cloud computing services used by SMEs
What was the action taken by companies inside your association in order to resolve the issues
Do the companies in your association usually decide to take legal action
Do you believe that unfair contract terms and conditions of the cloud provider could be considered as
a cause of the problems of the companies that are members in your association
Why you diddid not consider security matters as one of the problems declared
Timing 15 min
Costs of the cloud computing services contract (legalIT)
Objective is to get an understanding of the costs sustained by the members of the SME associations while contracting cloud computing services
Would you consider that there have been any negative effects on the everyday business
activities of the companies in your association after facing the mentioned problem If yes please explain what the negative effects were
What types of costs have the companies sustained while resolving the problems Were they offered any compensation from the cloud provider
Timing 5 min
Future perspectives on the topic
How will the SMEs use the cloud computing services in the future
To what extend do you think cloud computing services will become moreless important for companies in the future
Do you see any other evolutionstrends that could be relevant with regard to cloud computing
services for SMEs
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 5 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
151
EY Interview Guide ndash Cloud computing contracts (National authorities and national
SMEs envoys)
E Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into the extent to which SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
More concretely the following services are included collaboration and communication
services storage and hosting services security service networking services data
management business applications service and support tools cloud enablement and IT
operations virtual data centre mobile data centre
As part of the study an SME survey was conducted Results of the survey show that the
incidence of problems is relatively high in ltyour countrygt The objective of this interview is
to get a better understanding of the national context with regard to this subject
Timing 5 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and check whether this is the best person to interview within the national authority
Can you tell a bit more about yourself and what position do you hold To what extent are you familiar with the subject of cloud computing services
Elements to be discussed
Understanding of the function Understanding if the person is competent to give relevant answers to the problematic in
question Understanding of the extent that the person has of cloud computing contracts
Timing 05 min
Legal framework of cloud computing contracts
Cloud computing contracts in ltyour countrygt
Generate understanding of the overall situation in the country policy attention given to the subject and the specific legal framework applicable
Cloud computing services are a relative new service To what extent are national authorities working on this issue
Any data available
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
152
Knowledgeawareness of the availability of these services in ltyour countrygt
Specific attention for this topic at policy level
Under what applicable legal framework do these services fall Are there specific national initiatives developed with regard to this type of services
Our study focuses specifically on the situation of cloud computing services used within SMEs Do you have any knowledge of the existence of specific rules applicable only to SMEs in your country
Do you think the legal framework is sufficiently protecting cloud computing users and more
specifically SMEs Do you think that Terms amp Conditions are clear for SMEs Should they have specific rules for
this group of customers What is (or should be) the possibility of SMEs to monitor performance of contract Terms and
Conditions
What remedies are at SMEsrsquo disposal Is switching providers a remedy
Elements to be discussed
Knowledge and understanding of the specific sector Knowledge and understanding of the extent that these services are used
Knowledge and understanding of the legal framework applicable in the country
Timing 10 min
Problems with regard to cloud computing services
Notifications received on problems encountered by SMEs
Are you aware of any problems existing with cloud computing services used by SMEs
Have you received any complaints with regard to this type of services
Have there been any complaints on the terms amp conditions of the contracts How are these complaints handled What is the intended procedure to follow
What follow up is given to complaints regarding cloud computing services
Do you as a national authority have sufficient competences to enforce regulations in your country
Elements to be discussed
Knowledge and understanding of the problems encountered by SMEs Understanding of the types of problems encountered
Understanding of how complaints are handled and if complaints did lead to further actions taken by public authorities
Relevant information
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
low speed of services unsatisfactory availability or discontinuity of the service
forced updates to the service that eliminated or changed a necessary function
lack of clarity and transparency of contract terms and conditions
Timing 10 min
Future perspectives on the topic
How will cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
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153
Do you consider it likely that more problems will arise with regard to cloud computing
services
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made
due to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services Legalpolicy consequences of potential future evolutions
To what extent national authorities are working on the topic or will address more attention to it in the future
Timing 10 min
Closing of Interview
Thank you for your interest and for your time
Any further questions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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154
Annex 9 Case study analysis
Case study interviews
Objectives
The objective of the case studies was to produce useful insights on the specific problems that
were identified by the survey and complement the results obtained by using CATI and the
online survey Additional information was gained through interviews that also involved
stakeholders that had not previously participated in the Online Survey and CATI thus these
inputs were used to further enrich the results that have been obtained so far
Scope
The case studies targeted the following categories of stakeholders
Cloud service providers
National authorities
SMEs that already provided information either in the online survey or during the CATI
and that declared their availability for an in-depth interview
National SMEs Envoy
European SMEs associations (including Enterprise Europe Network associations)
Cloud brokers
Chambers of Commerce
The topics discussed with each type of stakeholder involved in the case study interviews are
presented in Figure 31
Figure 31 Topics discussed with each type of stakeholder
Stakeholder category
Topics discussed
SMEs that declared their availability for
an in-depth interview127
- type of contract (services included duration service providers what has been negotiated - if any and what degree of customisation)
- possibility to monitor performance of contract if SMEs can or cannot monitor
service performance and if they only detect the most obvious and impactful service performance defects and what types of modifications occur in practice
- costs of the cloud computing services contract(s)
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint if the details regarding the internal procedure
of the provider (if any) were investigated how much time it took and how the
problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- actions taken (HR and financial costs of actions taken)
- results of the actions taken
- disruptionreduction of activity
127 The in-depth interviews with the SMEs already included in CATI involved discussing the problems encountered by them and with a special focus on the following contract-related problems lack of clarity
and transparency of contract terms and conditions unilateral modification of the servicecontracts and
limited liability of cloud providers The special emphasis on these problems is given with the aim of complementing the information already obtained by the CATI The interviews targeted three different departments where possible legal IT and managementfinance departments
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Stakeholder
category Topics discussed
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME affected by the problem encountered
- potential loss of competitiveness (business opportunities lost) in terms of profitturnover lost customers market shares
- additional costs (eg costs related to ensuring an alternative service)
Cloud service providers and cloud brokers
- types of cloud computing contracts offered to SMEs
- services offered to SMEs and differences from services offered to larger enterprises
- the level of negotiability and customisation of the services offered to SMEs
- flexibility regarding the negotiation of cloud computing contracts
- contract-related problems encountered by SMEs
- causes of the contract-related problems encountered by SMEs
- actions taken by service providers and cloud brokers to address contract-related problems encountered by SMEs
- costs compensations for contract-related problems encountered by SMEs
- escalation of contract-related issues to court proceedings
Competent national authorities
- familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs Envoy - familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs associations
- awareness of specific cloud computing services used by SMEs
- type of contract (services included duration service providers what has been negotiated - if any and what was the degree of customisation) concluded by the SMEs in the associations
- average duration of cloud computing contracts concluded by SMEs
- satisfaction of SMEs regarding the degree of customisation of cloud computing contracts
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint were the details regarding the internal procedure of the provider (if any) further investigated how much time it took and how the problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME
affected by the problem encountered
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Findings
During the CATI and the online survey 20 SMEs mentioned their availability to be contacted
for in-depth interviews Out of these 20 companies nine SMEs managed to take part in the
case study interviews They represented five sectors wholesale and retail trade repair of
motor vehicles and motorcycles professional scientific and technical activities information
and communication and manufacturing
Additionally in the process of conducting the interviews another 104 stakeholders from 12
Member States (see Figure 32) have been contacted Of these 24 agreed to participate in
the case study interviews
Figure 32 Stakeholders contacted for in-depth interviews
Finally in total 33 interviews were conducted with SMEs (see Figure 33 for SMEs involved by
country sector and size) and SMEs associations a Chamber of Commerce EEN National
Authorities an SME Envoy and service providers (see Figure 34 for the stakeholders list by
category country and name)
Figure 33 The list of SMEs involved
No Country Sector Size
1 Poland Manufacturing Medium-sized
2 Germany Manufacturing Small
3 Germany Information and communication Medium-sized
4 Germany Professional scientific and technical activities Medium-sized
5 Poland Information and communication Small
6 France Information and communication Medium-sized
7 Poland Professional scientific and technical activities Medium-sized
8 Spain Professional scientific and technical activities Small
9 Spain Information and communication Small
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Figure 34 Details of stakeholders who participated in the in-depth interviews
Category Country
Chamber of Commerce The Netherlands
Cloud broker The Netherlands
EEN Romania
France
National authority
Italy
Romania
Romania
France
Poland
Estonia
Service provider
Sweden
Spain
Spain
Sweden
Ireland
Romania
Romania
Portugal
Romania
Germany
SME Association
EU
Portugal
The Netherlands
SME Envoys Network The Czech Republic
Services contracted
Use and types of cloud computing services contracted by EU SMEs
The use of cloud computing services by SMEs is increasing Each type of stakeholder was
aware of the spread of the use of the service
More precisely the interviews revealed that 50 of the national authorities (three out of six
respondents) the national SME Envoy the members of EEN and one cloud broker shared the
opinion that SMEs are using more cloud computing services compared to previous years
A quarter of the cloud providers observed that the usage of a specific cloud computing model
depends on the enterprise size with smaller enterprises relying more on the SaaS model
especially in contracting communication and collaboration services This confirmed the CATI
results as it showed that 50 of the micro enterprises chose a service from the SaaS model
Security
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158
Security issues are generally an important matter for SMEs leading them to be concerned at
least about the general aspects of the security thresholds of the service provider Another
aspect that is taken into account is the reputation of the provider more precisely whether the
cloud provider has had incidents of data breaches in the past This was the case for 66 of
the respondents (six out of nine participants) One out of nine SME participants (11)
interviewed preferred to store its data on its own servers as a result of its complexity and of
privacy concerns Generally it can be observed from the in-depth interviews that if the
companyrsquos sector of activity is connected with IT services the more inclined it is to pay
attention to data security aspects
Types of contracts and relative costs
Duration and costs
Half of the service providers (five out of ten respondents) stated that they preferred to offer
flexibility regarding the duration of the contracts ranging from hourly contracts to yearly
subscriptions On average from the responses obtained from the providers during the case
study interviews it could be estimated that contracts had a duration of 12 months The Dutch
Chamber of Commerce also confirmed this information
Negotiability and customisation of CTampC
Most (90) of the service providers (nine out of ten respondents) and one cloud broker
affirmed that they offer SMEs the possibility of negotiating the CTampC to respond to the need
for customisation of service packages However the providers consider that SMEs might not
yet have formed a habit of negotiating cloud computing contracts The in-depth interviews
have shown that in most cases all representatives of SME associations and EEN members
said that their members do not try to negotiate cloud computing contracts Moreover 60
of service providers (six out of ten respondents) believe that SMEs are generally satisfied with
the degree of customisation of cloud computing services offered in standard contracts with
the only negotiation point being the price
Cloud providers indicated that the size of the enterprise was a factor in the initiation of the
negotiation and in the success in negotiating a cloud computing contract Hence 40 of cloud
computing providers (four out of ten respondents) and one cloud broker mentioned that
medium-sized enterprises have an increased tendency to negotiate their service contracts
Types of subscriptions
All of the SMEs interviewed stated that they had contracts with paid subscription Seven out
of the nine SMEs included in the case study interviews had contracts with fixed fees the rest
mentioning variable fees At the same time SMEs with variable fees prefer flexibility of
duration and costs either because of the limited need for the service inside the enterprise or
because they were still exploring the business opportunities that the service may offer One
exception was the SME active in the information and communication sector which had
concluded long-term fixed fees contracts This company purchased cloud computing services
in order to use them widely in the activity of the enterprise or to include them in the service
packages that they offer
Out of the total number of service providers that were interviewed half of them (five out of
ten providers) and one cloud broker only offered contracts with paid subscription and the
other 50 of service providers (five out of ten respondents) sometime offered free trials to
SMEs in the cases where they see potential for signing a more significant contract with paid
subscription afterwards
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159
Legal framework of contracts
In-depth interviews have revealed that stakeholders believe that the current legal framework
both at national and EU levels needs some improvement in order to make it more suitable to
the needs of SMEs and technological advancement
National authorities the Chamber of Commerce and the national SME Envoy specified that
the currently applicable legal framework is a mix of several legal acts which partially regulated
cloud computing services and mainly focus on general data protection cybersecurity or e-
privacy All of the national authorities interviewed had a positive attitude towards the adoption
of specific legislation targeting SMEs and cloud computing services at national and EU levels
One-fifth of the service providers (two out of ten respondents) and the cloud broker also
believed that the legal framework was not sufficient and argued that guidance through what
could be a code of conduct regarding cloud computing services and how to use it should be
provided at the EU level in order to raise awareness and have a better understanding about
cloud computing services
This opinion was shared by the SMEs as 56 of the participants (five out of nine respondents)
believed that the legal framework could be improved Their suggestions included introducing
a uniform legislation at the EU level and providing a fair contract template that would balance
the powers between service providers and users
Contract-related problems encountered by SMEs
SMEs encountered a moderate amount of issues related to cloud computing contracts Most
frequently they experienced three specific problems unavailability of service low speed and
forced updates Data security although not considered among the leading problems by any
of the SMEs included in the case studies was mentioned as being a constant concern
The most serious problems encountered by SMEs
More than three-quarters (78) of the SMEs (seven out of nine respondents) indicated that
the most serious problem that they encountered was unsatisfactory availability or
discontinuity of the service followed by 11 of SMEs (one out of nine respondents) that
reported low speed of the service and forced updates to the service that eliminated or changed
a necessary function
Other problems encountered by SMEs
The second most important problem indicated by 22 of the SMEs interviewed (two out of
nine respondents) was data security In particular for one SME that operates in the
professional scientific and technical activities sector data security was so important that it
preferred to store its data on its own servers rather than contracting cloud computing
services It maintained that the market didnrsquot offer sufficient information regarding data
protection in order for it to trust the available service providers
However in all but one case the issues either did not affect the day-to-day activities of the
enterprises or only affected the internal processes of the enterprises due to the lack of the
availability of the servers In one case however an SME whose cloud computing problems
affected external business operation chose to move this activity to its own data storage
solutions In this specific case the SME was an IT operating company with storage
infrastructure already in place so its costs were not as high as for any other SME experiencing
this
National authorities and SME Envoys have little information about contract-related problems
encountered by SMEs mentioning the fact that they received few complaints regarding cloud
computing services
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160
When asked about what they considered as the most significant problems encountered by
SMEs service providers provided responses that were similar to those of their customers
Unsatisfactory availability or discontinuity of the service was recognised as the most serious
problem Other problems mentioned include the failure of the provider to identify analyse
and correct hazards and prevent a future re-occurrence high subscription fee and lack of
alignment of the CTampC
Actions taken
In all cases the action that the SMEs first took in order to resolve issues related to cloud
computing service was to formally notify the providers As a result of the complaints in seven
of eight cases the cloud computing service providers resolved the issues The duration of the
action to resolve the problems ranged from a few hours to a few days None of the SMEs
chose to take legal actions when encountering issues with the cloud computing services either
because the issue was resolved quickly it didnrsquot have an impact on the activity of the business
or because they felt intimidated by the reputation and size of the provider
A second action that SMEs took was to involve their staff in resolving the issues Six of the
eight enterprises involved one or two members of the IT or technical departments in the
process of addressing the cloud computing issues The exception was represented by one
enterprise which after the incident decided to renounce the cloud computing contract given
that it took its IT staff 10 days to resolve the problem with its cloud computing service
Another enterprise chose to pay for one member of its IT staff to work during the weekend
to ensure that any issues would be immediately addressed
Nearly one-third (30) of the service providers (three out of ten respondents) and one cloud
broker who participated in the in-depth interviews consider that an important problem arises
from the SMEsrsquo limited technical knowledge that does not allow them to clearly understand
the problems that they encounter
Service providers offered different levels of support through online forums customer care
lines and if the problem was not resolved at the site of the client Exceptionally 10 of the
service providers (one out of ten respondents) offered 247 customer support at no additional
cost
Results of the actions
According to 90 of the service providers (nine out of ten respondents) finding a solution
can vary from a couple of minutes to three days depending on the problem encountered
Usually problems are resolved within a day in the order of arrival
In the cases where service providers required a longer period of time to resolve an issue
80 of service providers (eight out of ten respondents) withheld payment to compensate for
the time spent resolving the issue Moreover in cases when the problems significantly affect
the activity of an SME 50 of the service providers (five out of ten respondents) offered
compensation according to the type of contract and the level of damages or losses caused to
the SME on a case-by-case basis Compensations usually ranged between 5-15 of the
monthly fee for the contract Another 20 of service providers (two out of ten respondents)
did not offer any type of compensation
None of the SMEs interviewed escalated the problem to court for three reasons the issue was
resolved within a few days it did not impact the activity of the business or they felt intimidated
by the reputation and size of the service provider
Future perspectives on the topic
In the opinion of stakeholders cloud computing services will enable SMEs to become more
flexible develop faster compete with the larger enterprises in a complex market and also
generate more revenue
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In particular SMEs associations view the evolution of the cloud computing market toward
more affordable and specialised services More than two-thirds (70) of service providers
(seven out of ten respondents) argued that cloud computing services will evolve by developing
new features According to 20 of the service providers the features that will become
increasingly relevant are artificial intelligence block chain and data analysis
At the same time 66 of national authorities (four out of six respondents) and one national
SME Envoy believe that the right of awareness the right to privacy and data protection as
well as cybersecurity will become more important topics in the future Also the SME Envoy
mentioned possible issues emerging in the future such as non-standard functionalities of some
operational processes or defining a new model of operation of ICT services
The two associations within the EEN considered that the legal framework on how cloud
computing is regulated should be adapted to the emerging technologies Moreover the
associations consider that SMEs still have a long way to evolve in order to assimilate the
complexity of cloud computing services but a better regulated system might help them in
this direction The cloud broker further recognised the need for the authorities to work more
on this and he recommended applying European legislation rather than national legislation
to promote uniformity of the system
Case study interviews conclusions
The results of the case study interviews offered useful insights and complemented the results
already obtained through the CATI The various stakeholders involved confirmed the fact that
the usage of cloud computing across SMEs in the EU is growing and there is a need for
improvement of the current legal framework in order to follow the technological advancement
The interviews further explain the CATI results as the trend is that SMEs do to not try to
negotiate CTampC even if the cloud providers are offering this possibility Moreover the most
serious problems the actions taken to resolve them and the results of the actions are
confirmed by the information gained through the interviews and are comparable with the
earlier results of the study
Overall stakeholders who participated in the case study interviews believed that cloud
computing services will play more important role in the development of SMEs as they could
even help them compete with larger enterprises in a complex market achieve higher profits
and become more efficient
Validation Webinars
The webinars were organised with the objective of validating and triangulating the results of
the study Intended to be complementary to the tasks that were performed so far ie the
desk research CATI online survey and interviews with key stakeholders the webinars
focused on the most important topics of discussion that had emerged ensuring a higher level
of detail Therefore webinars have been used to validate the results obtained and to produce
further useful insights on the problems that were identified during the study in order to gain
a better understanding of the overall situation across the EU
In preparation of the webinars all 33 participants in the case study interviews were invited
to attend The invitation applied to four events in which the stakeholders could participate
Six stakeholders replied that they were available to participate in the webinars three SMEs
(two from Germany and one from Poland) two national authorities (one from Italy and one
from Poland) and one SME association representing the interests of European SMEs
businesses in the different sectors of the economy within the EU
In the end three webinars were held as a result of the preference of the stakeholders for the
time and date of the events
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162
The events were held using Zoomcopy128 a software tool that facilitates the organisation of
interactive conference calls The advantages considered when choosing the software included
the high quality of video audio and simultaneous screen sharing ease of use and features
that include screen sharing on iPhone and iPad and Zoom Rooms Other notable
characteristics include the software features specially designed for webinars that allow the
participants in the event to perform actions such as raising their hands to announce their
intention to take part in the conversation pooling and a questionanswer dialogue with live
or text answers and close captioning
The participants made contributions regarding
cloud computing services contracted by SMEs during the last two years
the negotiability and customisation of CTampC
the most important problems encountered by SMEs while using cloud computing and
the difficulties encountered when taking action
security problems as factors limiting cloud computing usage
the economic detriment
final conclusions of the study
Regarding the topic of cloud computing services contracted by SMEs during the last two years
the stakeholders involved agreed on the results obtained on the extent of usage at the EU
level
Regarding the negotiability of CTampC the SME association agreed with the information
presented and found it to be in line with its expectations based on the information that the
SME association had Furthermore in the view of the German SMEs and one Polish SME SMEs
donrsquot consider the negotiation of CTampT and the customisation of the cloud services when
acquiring cloud computing services confirming the CATI results that show that the largest
proportion of 46 of SMEs did not try to negotiate CTampC In particular the representatives
of SMEs added that the SME could only negotiate different IT infrastructures but not the
limitation of responsibility that would cover service shortages In their opinion this could be
a general issue for SMEs
Overall the SMEs representatives agreed with the results of the project and commented that
their enterprises can relate to the issues presented In particular concerning the incidence of
contract-related problems the participants discussed the link between the methodology of
sampling of the SMEs that participated in the survey and the data that was presented
concluding that the data was considered to be relevant at the EU level
Regarding the problems encountered by SMEs while using cloud computing services the
national authority representative mentioned receiving few complaints from SMEs on issues
related to cloud computing contracts Additionally the stakeholder mentioned that the
General Data Protection Regulation (GDPR) is already proving to be very useful since it
facilitates the attribution of responsibility for problems that may arise in the provision of cloud
computing services Additionally related to the issues that SMEs encounter when trying to
resolve difficulties with cloud computing services the SMEs representatives added that the
most important issue was finding the contact information of the employee of the service
provider who would be assigned to resolve the problem after a formal complaint to the service
provider was made These statements confirm the results of the CATI as 52 of the SMEs
interviewed stated that they had made a complaint to the provider and that the second
difficulty encountered when trying to solve the problem was trying to reach the appropriate
contact point (35)
The participants in the discussion on security problems mentioned the effects of the GDPR on
cloud computing contracts a topic raised mainly by the representatives of the national
128 Zoom
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163
authorities The representatives added that the lack of SME capacity in negotiating cloud
computing contracts could be helped by the GDPR as it would give SMEs more control over
their data after the service providers apply the regulation The GDPR is considered to place
new obligations on cloud providers that will affect how they implement cloud services The
GDPR will strengthen user privacy as it increases the obligations on providers to protect SMEsrsquo
data and secondly it grants users new powers over how their information is collected used
and stored129
Additionally the representative of the Italian national authority and the German SME
intervened regarding the topic of economic detriment asking if the indirect costs have been
considered It was mentioned that the study looked at the client losses and reputational
damages where the case and furthermore it addressed the overall costs involved in ensuring
an alternative service and costs related to fixing the cloud service problem with external
support The stakeholders commented that they agreed with the issues that were presented
during the webinar which they also experienced They also added that in their opinion there
is a need for more transparency and better regulated services that will eventually lead to
fewer economic losses
During the concluding remarks the participants had several comments and suggestions The
Italian national authority representative added that he would be interested in an updated
version of the study conducted a year after the webinar in order to see the effects of the
enforcement of the GDPR regulation Furthermore the SME from Germany agreed with the
observation of the national authority regarding the effects of the GDPR on cloud computing
contracts and considered that its evolution should be observed together with the issues
concerning internet services as a whole
The SME representatives suggested that a platform should be created that could facilitate a
comparison between cloud computing services in order to better present the types of services
and prices available on the market The SMEs complained about the fact that they all had
difficulties when choosing between cloud computing providers In this case the availability of
only standard services on the market would allow the SME to make a direct comparison
The stakeholders involved in the webinars found the study findings to be in accordance with
the developments in the cloud computing market They provided significant comments and
recommendations especially concerning the future influence that the GDPR could have on the
sector This could mean a better distribution of responsibility especially regarding data
privacy and data protection Moreover the study was seen as being representative at the EU
level and as cloud computing is rapidly evolving the stakeholders expressed the desire to
observe the progress made in SME usage of cloud computing services by supporting the idea
of performing a second study at a later date
129 Analysis performed by Insight Company which is a leading provider of computer hardware software cloud solutions and IT services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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164
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doi 102838962608
ISBN 978-92-79-96750-4
[Cata
logue n
um
ber]
DS-0
3-1
8-4
21-E
N-N
Study on the economic detriment to small and medium-sized enterprises arising from
unfair and unbalanced cloud computing contracts
EUROPEAN COMMISSION
Directorate-General for Justice and Consumers Directorate A Civil and commercial justice Unit A2 ndash Contract Law Contact Unit A2 E-mail JUST-A2eceuropaeu European Commission B-1049 Brussels
EUROPEAN COMMISSION
Directorate-General for Justice and Consumers Directorate A Civil and commercial justice
Study on the economic detriment to small and
medium-sized enterprises arising from unfair and
unbalanced cloud computing
contracts
Final Report
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
This document has been prepared for the European Commission however it reflects the views
only of the authors and the Commission cannot be held responsible for any use which may
be made of the information contained therein
More information on the European Union is available on the Internet (httpeuropaeu)
Print ISBN 978-92-79-45908-5 doi102838397707 DS-AU-15-001-EN-C
PDF ISBN 978-92-79-96750-4 doi 102838962608 DS-03-18-421-EN-N
copy European Union 2019
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The European Commission is not liable for any consequence stemming from the reuse of this publication
Luxembourg Publications Office of the European Union 2019
copy European Union 2019 Reuse is authorised provided the source is acknowledged The reuse policy of European Commission documents is regulated by Decision 2011833EU (OJ L 330 14122011 p 39) For any use or reproduction of photos or other material that is not under the copyright of the European
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Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
1
CONTENTS
List of abbreviations 2
Glossary 4
1 Introduction 7
11 The importance of contract-related problems 7
12 Objectives and scope of the study 10
13 Structure of this report 12
2 Research methodology 14
21 Overview of the approach 14
22 Main limitations encountered 35
3 Usage of cloud computing across EU SMEs the state of play 37
31 Cloud computing usage rate 37
32 Types of cloud computing services contracted 38
33 Types of contracts and relative costs 41
4 Contract-related problems encountered by SMEs 46
41 Types and frequency of encountered problems 46
42 The most serious problems encountered 49
43 Causes of the most serious problems encountered 51
44 Actions taken by SMEs 53
5 Consequences of the encountered problems 57
51 Qualitative assessment 57
52 Quantitative assessment 59
6 Impacts of the economic detriment 72
61 Direct impacts 73
62 Indirect impacts 74
63 Other qualitative impacts of contract-related problems 75
7 Conclusions 77
Annex 1 Methodology for the Survey of SMEs 82
Annex 2 Stakeholders list 84
Annex 3 Bibliography 86
Annex 4 Survey questionnaire 90
Annex 5 SME Survey results 101
Annex 6 Economic detriment ndash further results 114
Annex 7 Impacts on jobs and growth detailed results 136
Annex 8 Case study questionnaires by stakeholder type 146
Annex 9 Case study analysis 154
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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2
List of abbreviations
Acronym Description
CATI Computer Assisted Telephone Interviews
CTampC Contract terms and conditions
DG JUST Directorate-General Justice and Consumers
EC European Commission
EEN Enterprise Europe Network
EU European Union
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat Statistical Office of the European Communities
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GE250 Large enterprises of more than 250 employees
GFD Gross Financial Detriment
GVA Gross Value Added
IaaS Infrastructure as a Service
IOS International Organization for Standardization
MS Member State
NFD Net Financial Detriment
PaaS Platform as a Service
PC Personal computer
PPP Purchasing power parity
R Value of any redress
SaaS Software as a Service
SLA Service level agreement
SLALOM Service Level Agreement ‐ Legal and Open Model
SMEs Micro small and medium-sized enterprise
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
3
EU Member States
AT Austria
BE Belgium
BG Bulgaria
CY Cyprus
CZ The Czech Republic
DE Germany
DK Denmark
EE Estonia
EL Greece
ES Spain
FI Finland
FR France
HR Croatia
HU Hungary
IE Ireland
IT Italy
LV Latvia
LT Lithuania
LU Luxembourg
MT Malta
NL The Netherlands
PL Poland
PT Portugal
RO Romania
SE Sweden
SI Slovenia
SK Slovakia
UK The United Kingdom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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Glossary
Term Definition Source
Active enterprise
An enterprise that had either turnover or employment at any time during the reference
period
Eurostat
Cloud computing
A model for enabling ubiquitous convenient on-demand network access to a shared pool of configurable computing resources (such as networks servers storage applications and
services) that can be rapidly provisioned and released with minimal management effort and
service provider intervention
National Institute of Standards and Technology The NIST Definition of Cloud Computing 2011
Cloud Service
One or more capabilities offered via cloud computing invoked by using a defined interface
European Commission Cloud service level agreement standardisation guidelines
2014
Cloud service provider
A party which makes cloud services available European Commission Cloud service level agreement standardisation guidelines 2014
Cloud service agreement
The Cloud Service Agreement or CSA is the main document which sets out the terms and conditions of the contractual relationship between
the provider and the user in relation to the provision of cloud services
Slalom Project Model contract for Cloud Computing 2016
Data portability
Ability to easily transfer data from one system to another without being required to re-enter data
It is the ease of moving the data that is the essence here This might be achieved by the source system supplying the data in exactly the format that is accepted by the target system But even if the formats do not match the
transformation between them may be simple and straightforward to achieve with commonly available tools On the other hand a process of printing out the data and rekeying it for the
target system could not be described as lsquoeasyrsquo
International Organisation for Standardization Information technology mdash Cloud computing mdash Overview and vocabulary 2014
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat
EU15 Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg the Netherlands Portugal Spain Sweden and the
United Kingdom
Eurostat
EU28 Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands
Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom
Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
5
Term Definition Source
Frequency
(F)
The frequency shows how often the mentioned problem appeared and it is measured on a scale from 1 to 4 1 meaning lsquorarelyrsquo (at least once in the last 12 months)2 meaning lsquooccasionallyrsquo (at least once every 3 months) 3 meaning lsquofrequentlyrsquo (at least once a month) and 4 meaning lsquovery frequentlyrsquo (at least once a week)
EY Survey of SMEs 2018
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017Number of SMEs that contracted at least one cloud computing service during 2016-2017
EY Survey of SMEs 2018
Infrastructure as a Service (IaaS)
The capabilities provided to the cloud-service customer include processing storage networks and other fundamental computing resources where the cloud-service customer is able to deploy and run arbitrary software which may
include operating systems and applications The cloud-service customer does not manage or control the underlying cloud infrastructure but does have control over operating systems storage and deployed applications and possibly limited control of select networking components
(such as host firewalls)
European Commission Cloud service level agreement standardisation guidelines 2014
NACE Statistical Classification of Economic Activities in
the European Community
Eurostat
Purchasing power parity
(PPP)
The rate of currency conversion that equalises the purchasing power of different currencies by
eliminating the differences in price levels between countries In its simplest form PPP shows the ratio of prices in the national currency of the same good or service in different countries
Eurostat
Platform as a
Service (PaaS)
The capability provided to the cloud-service
customer is to deploy onto the cloud infrastructure customer-created or acquired applications created using programming languages libraries services and tools
supported by the cloud-service provider The cloud-service customer does not manage or control the underlying cloud infrastructure
including network servers operating systems or storage but does have control over the deployed applications and possibly configuration settings for the application-hosting environment
European Commission Cloud
service level agreement standardisation guidelines 2014
Service level agreement
A Service Level Agreement (SLA) is the service contract component between a service provider
and customer An SLA provides specific and measurable aspects related to service offerings
European Commission Cloud service level agreement
standardisation guidelines 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
6
Term Definition Source
Software as a Service (SaaS)
The capability provided to the cloud-service customer to use the providerrsquos applications running on a cloud infrastructure The applications are accessible from various client devices through either a thin client interface such as a web browser (for example web-based e-mail) or a programme interface The user does
not manage or control the underlying cloud infrastructure including network servers operating systems storage or even individual application capabilities with the possible exception of limited user-specific application
configuration settings
European Commission Cloud service level agreement standardisation guidelines 2014
Service availability
The property of being accessible and usable on demand by an authorised entity
European Commission Cloud service level agreement standardisation guidelines
2014
Service performance
The problem faced by SMEs characterised by the difficulty in understanding the level of performance or the quality of services that has been promised in the contract
European Commission Cloud service level agreement standardisation guidelines 2014
SMEs The category of small and medium-sized enterprises (SMEs) includes enterprises which employ fewer than 250 persons and which have
an annual turnover not exceeding euro50 million andor an annual balance sheet total not exceeding euro43 million
Within the SME category a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover andor annual balance sheet total does not exceed euro10 million
Within the SME category a microenterprise is defined as an enterprise which employs fewer
than 10 persons and whose annual turnover andor annual balance sheet total does not exceed euro2 million
Commission Recommendation of 6 May 2003 concerning the definition of micro small and
medium-sized enterprises (notified under document number C(2003) 1422)
Virtual Data Centre
A pool or collection of cloud infrastructure resources specifically designed for enterprise business needs The basic resources are the
processor (CPU) memory (RAM) storage (disk space) and networking (bandwidth) It is a virtual representation of a physical data centre complete with servers storage clusters and many networking components all of which reside in a virtual space being hosted by one or more actual
data centres
Altman amp Alt A Digital Library for the Dissemination and Replication of Quantitative
Social Science Research The Virtual Data Centre 2001
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
7
1 Introduction
This report represents the final deliverable responding to the request for services
JUST2016RCONFWCIVI0176 (201703) concerning a Study on the economic
detriment to small and medium-sized enterprises arising from unfair and
unbalanced cloud computing contracts The Request for service was issued by the
European Commission Directorate-General Justice and Consumers (DG JUST) Unit A2 -
Contract Law
11 The importance of contract-related problems
Cloud computing has been credited with increasing competitiveness through cost reduction
greater flexibility and optimal resource utilisation1 By using cloud computing services
enterprises are only paying for the amount of storage they are actually consuming and are
not responsible for the daily maintenance of the storage infrastructure
Demonstrable tangible economic benefits have been estimated in 2011 A report published
by the European Commission lsquoQuantitative Estimates of the Demand for Cloud Computing in
Europe and the Likely Barriers to Up-takersquo2 identified as main benefits the lower IT costs
more effective mobile working higher productivity standardisation of processes better ability
to enter new business areas and the ability to open up in new locations
All in all increasing the usage of cloud computing can have a relevant impact in terms of
increasing EU Gross Domestic Product (GDP) by up to euro250 billion and creating 38 million
jobs by 2020 compared to 20123
While the list of the above benefits is not exhaustive it certainly provides a perspective on
the potential economic advantages of the usage of cloud computing compared to more
traditional alternatives such as on-premises information technology infrastructure4
1 Rittinghouse J Ransome J (2009) Cloud Computing Boca Raton CRC Press USA 2 Based on a 2011 survey conducted on 479 enterprises already using cloud computing for their businesses 81 reported lower IT costs with a 10 to 20 reduction being typical but 12 reported
savings of 30 or more Business benefits included more effective mobile working (46) higher
productivity (41) more use of standard processes (35) better ability to enter new business areas (33) and the ability to open up in new locations (32) European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels 3 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe
and the Likely Barriers to Up-take SMART 20110045 Brussels 4 Traditional on-premises infrastructures consist of various pieces of hardware such as desktop computers which are connected to a network via a remote server This server is typically installed on the premises of an enterprise and provides all employees using the hardware with access to the companyrsquos stored data and applications Enterprises with this type of information technology model must purchase additional hardware and upgrades in order to scale up their data storage and services to support more users Mandatory software upgrades are also required with traditional information
technology infrastructure to ensure that failsafe systems are in place to in case a hardware failure occurs For many enterprises with information technology data centres an in-house information
technology department is needed to install and maintain the hardware
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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However Eurostat data indicate that in 2016 only 21 of EU small and medium-sized
enterprises (SMEs ie 10 ndash 250 employees) bought cloud computing services used over the
internet5 mostly for hosting their e-mail systems and electronically storing files
If micro enterprises (ie 1 ndash 9 employees) are considered Eurostat data are available only
for few countries (the United Kingdom Slovakia Sweden Portugal and Spain) For these
countries the percentage of micro enterprises that were buying cloud computing services used
over the internet in 2016 was around 11
With regard to the main factors affecting the adoption of cloud computing in most
sectors enterprises reported6 that insufficient knowledge of cloud computing prevented them
from using it (Figure 1) Expertise and sufficient knowledge of contractual and legal aspects
and the details of technical implementation are necessary prerequisites for an enterprise in
deciding to purchase cloud computing services In addition the risk of a security breach was
a key consideration for enterprises the concern over the risk of a security breach scored
highest for both large enterprises and small and medium-sized enterprises (SMEs) (57
and 38 respectively)7
Figure 1 Factors that limit cloud use
Source Eurostat (2016)
Clearly enterprises attach importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
A study commissioned by the Commission8 looked at the main contractual issues that are
of particular interest in a cloud context description of the service and Service Level
Agreement (SLA) acceptable-use policy data protection and disclosure of personal data
intellectual property and other proprietary rights and duties over content warranties direct
and indirect liability indemnification for third party claims the effect on data preservation of
contract termination modification of the contract terms and conditions (CTampC) and security
protection of data and loss of data
5 Eurostat data consider all enterprises with the exception of those in the financial sector consulted in April 2018 6 Eurostat Cloud computing - statistics on the use by enterprises Brussels 7 Ibidem 8 European Commission (2015) Comparative Study on Cloud Computing Contracts Publications Office
of the European Union Luxembourg
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9
The Commission acknowledged the role of cloud contracts notably in relation to data
portability9 as lsquocontracts often exclude or severely limit the contractual liability of the cloud
provider if the data is no longer available or is unusable or they make it difficult to terminate
the contractrsquo10
Contract-related problems have been addressed by the Commission through various
initiatives
Firstly in 2013 the Commission set up an Expert Working Group on Cloud Computing
Contracts11 to work on identifying safe and fair contract terms for cloud computing services
with a view to addressing concerns of consumers and enterprises
Secondly specific actions have been taken forward on business-to-business cloud computing
contracts beyond the legislative field including
the work of the European Cloud Partnership and the ISO (International Organization
for Standardization) towards the standardisation of cloud SLAs
the SLA standardisation guidelines prepared in June 2014 by the Cloud Select Industry
Group on Service Level Agreements Subgroup (C-SIG SLA)12
the lsquoService Level Agreement Legal and Open Modelrsquo (SLALOM) project13 funded under
the Horizon 2020 Framework Programme which delivered a set of common legal
clauses to cover cloud SLAs and contracts and a standard technical SLA specification
Finally in April 2016 the Commission gave a new impetus to its work on cloud computing by
adopting the Communication on the European Cloud Initiative - Building a competitive
data and knowledge economy in Europe14 where further complementary actions under the
Digital Single Market strategy covering cloud contracts for business users and switching of
cloud services providers have been announced
Thus over recent years the Commission has adopted a true European Cloud Computing
Strategy aimed at removing barriers to cloud computing Additionally work is under way
towards a Code of conduct on switching and porting cloud data and services
A further development of this topic is represented by the lsquoProposal for a Regulation of the
European Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo launched in 201715
The objective of this proposal is to unlock the potential of the EU data market In order to do
so the proposal aims to address the following issues
9 Please see the Glossary for further information 10 European Commission (2012) Unleashing the Potential of Cloud Computing in Europe COM(2012)529 final Brussels 11 The Group has been set up within the framework of the Commission Communication (2015) lsquoA Digital
Single Market Strategy for Europersquo which aims at enhancing trust in cloud computing services and unlocking its potential for boosting economic productivity in Europe 12 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2018 13 The SLALOM project accessed 1 May 2018 14 European Commission (2016) European Cloud Initiative - Building a competitive data and knowledge economy in Europe COM(2016) 178 final Brussels 15 European Commission (2017) Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union COM(2017) 495 final
Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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10
improving the mobility of non-personal data across borders in the Single Market
which is limited today in many Member States by localisation restrictions or legal
uncertainty in the market
ensuring that the powers of competent authorities to request and receive access to
data for regulatory control purposes such as for inspection and audit remain
unaffected and
making it easier for professional users of data storage or other processing services to
switch service providers and to port data while not creating an excessive burden on
service providers or distorting the market
The impact assessment study16 that accompanies the legislative proposal addresses barriers
such as the legislative and administrative localisation restrictions data localisation driven by
legal uncertainty and the lack of trust in the market which is considered to inhibit data
mobility The impact assessment identifies as a preferred option a policy that would enhance
legal certainty maintain the current levels of security of data storage and processing and that
would rely on self-regulation by industry through the development of codes of conduct for
facilitating switching between providers and finally that would positive economic effects
resulting in lower compliance costs for cloud service providers The study took into
consideration that actions at the Member State level would not be able to achieve the legal
certainty necessary for conducting this type of business across the EU or to remedy the lack
of trust that is slowing the development of a thriving data storage andor processing sector
It is presumed that an EU intervention would contribute to further development of secure data
storage capacity for the entire EU
12 Objectives and scope of the study
Objectives
The studyrsquos main objective is to deliver the necessary evidence to support the Commission
in its assessment of the need for and extent of any further EU efforts to increase SMEsrsquo trust
in cloud services and allow them to bring in the full potential benefits of these types of
services
The main specific objectives of the study are
to identify the prevalence nature scope and scale of the contract-related problems
that SMEs encounter in relation to cloud computing services
to analyse whether and to what extent enterprises are able to protect themselves
against problems for example by means of enforcement of rules on business-to-
business unfair contract terms (where they exist)
to quantify the financial detriment as well as the detriment arising from time loss and
consequential damages (such as business interruption) suffered by SMEs in relation
to the contract-related problems encountered
to complement the quantitative measurement with a qualitative assessment of the
detriment suffered by SMEs
to model (in quantitative terms) the impact on growth and jobs of the quantified SME
detriment identified and provide a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and
competitiveness
16 European Parliament (2017) Commission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union SWD(2017) 304 final Brussels
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11
Scope
Cloud computing services covered
The study covers the cloud computing services most commonly used by SMEs taking into
account i) the general delivery models used by the provider ie Infrastructure as a Service
(IaaS) Platform as a Service (PaaS) and Software as a Service (SaaS)17 ii) the core
categories of cloud services available in the market
The study covers cloud computing services provided both in exchange for money and provided
free of charge (ie not provided in exchange for a monetary counter-performance)
Contract-related problems encountered by SMEs
The study investigates the prevalence nature scope and scale of
problems in relation to the conformity of the service with the contract
problems with unfair CTampC
problems in exercising the users rights to remedies for non-conformity of the
service with the contract
Territorial scope
The study assesses the contract-related problems faced by SMEs in all EU28 Member States
Timeline
The study covers the usage of cloud computing services by EU SMEs over the period 2016 ndash
2017
Stakeholders
The following categories of stakeholders are covered
EU SMEs that contracted cloud computing services over the period 2016 ndash 2017
cloud computing providers
cloud computing brokers
National authorities competent in fields related to cloud computing (such as data
privacy protection personal data processing and data security)
the National SMEs Envoys Network18
Chambers of Commerce
the Enterprise Europe Network (EEN)19
SMEs associations
Please refer to Annex 2 for the full list of stakeholders
For the purpose of this study and in order to make the present report more intelligible
whenever the term SMEs is used in the text it refers to
medium-sized enterprises defined as enterprises which employ fewer than 250
persons (50-249) and whose annual turnover andor annual balance sheet total does
not exceed euro50 million
17 See the Glossary for the definition of these terms 18 The network of national SME Envoys was set up in 2011 as part of the review of the Small Business Act (SEC(2008) 2101) Each EU country has nominated a national SME Envoy to complement the role of the EU national SME Envoy who chairs the network The group of national SME Envoys makes up an SBA advisory group that promotes SME friendly regulation and policy making in all EU countries More
information is available at httpeceuropaeugrowthsmesbusiness-friendly-environmentsmall-
business-actsme-envoys_en 19 The Enterprise Europe Network helps businesses innovate and grow on an international scale It is the worldrsquos largest support network for SMEs with international ambitions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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12
small enterprises defined as enterprises which employ fewer than 50 persons (10-
49) and whose annual turnover andor annual balance sheet total does not exceed
euro10 million
micro enterprises defined as enterprises which employ fewer than 10 persons and
whose annual turnover andor annual balance sheet total does not exceed euro2 million
13 Structure of this report
The report is structured as follow
Chapter 1 recaps the objectives and the scope of the study and provides information
about the background of the study that justified the request for service
Chapter 2 presents the methodological framework and the main limitations
encountered Chapter 3 covers the findings related to
- the usage of cloud computing among EU SMEs over the period 2016-2017 and
the reasons for the limitations of the use of cloud computing
- types of cloud computing services that were contracted by SMEs
(complexity of the subscribed cloud computing packages the frequency of the
number of contracted services and the services contracted by SMEs size)
- types of cloud computing contracts and relative costs including the
negotiability of contract terms and conditions (CTampT)
Chapter 4 is dedicated to the analysis of contract-related problems encountered
by SMEs specifically types and frequency of encountered problems and actions taken
by SMEs to address these problems
Chapter 5 presents a qualitative assessment of the consequences faced by SMEs due
to contract-related problems These refer to
- negative effects on the business activity (ie loss of turnover or profit loss of
clients andor reputation damages)
- extra work done with internal or external resources while trying to resolve the
encountered problems
- legal actions taken to exercise the users rights to remedies for non-conformity
of service
Where possible these consequences have been quantified and monetised in order to
assess the economic detriment suffered by SMEs
Chapter 6 is dedicated to the impacts of the economic detriment The analysis
concerns
- direct impacts meaning the Gross Value Added (GVA) and employment
contents of the turnover lost by SMEs that are affected directly by the contract-
related problems
- indirect impacts in the supplier sectors
This chapter also discusses (in qualitative manner) impacts on market functioning and
competitiveness
Chapter 7 presents the conclusions of the overall analysis
Annexes including the following
- methodology for the survey of SMEs
- the list of stakeholders that have been involved in the case studies
- bibliography of consulted and relevant documents
- survey questionnaire used for conducting the survey of SMEs
- results of the survey of SMEs
- further results of the economic analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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13
- detailed results of the impacts on jobs and growth
- case study questionnaires by stakeholder type
- case study interviews and webinars analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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14
2 Research methodology
21 Overview of the approach
The study envisaged three main Tasks
Task 0 ndash Preparatory task Defining the methodological framework and the topics
to be investigated during the research as well as defining the standards and tools to
be used
Task 1 - Survey of SMEs Conducting an online survey on a representative sample
of SMEs and start-ups which are using cloud computing for the purposes of
conducting their business
Task 2 - Economic detriment Quantification of the overall economic detriment
sustained by SMEs in relation to the problems identified under Task 1 Based on these
results the impact on growth and jobs and on the economy as a whole has been
measured
Figure 2 provides an overview of the approach followed synthesising the main activities
objectives and methodstools
Figure 2 Overview of the project Tasks
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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15
Task 0 ndash Preparatory Task
This Task envisaged undertaking desk research that allowed the team to clearly define the
methodological framework of the study in terms of
cloud computing services commonly used by micro small and medium-sized
enterprises
potential contract-related problems that may be encountered while using cloud
computing
problem definition which provides an overview of the main causes and effects of the
identified problems It was used to
- better understand the context in which the problems occurred
- identify the intermediate effects and the main drivers
- structure the data collection tools (ie questionnaires for Computer Assisted
Telephone Interviews [CATI] and the online survey)
selecting a sample of countries and sectors to be analysed in depth in order to achieve
the project objectives The sampling strategy included
- the identification of a sample of Member States (MS) and economic sectors to
be analysed in depth
- the definition of a target for a representative sample of micro small and
medium-sized enterprises to be addressed through the survey under Task 1
- ensuring representativeness of the sample size
Table 1 provides the list of cloud computing services identified under Task 0
Table 1 Cloud computing services commonly used
Cloud computing
model
Cloud computing services
Details
SaaS Business applications
Applications used for accounting invoicing planning payments payroll human resources management
Collaboration and communication services
Video conference system business visualisation technology
instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring
Service and support tools
Project and portfolio management solutions services operations management
Big data Business intelligence and data analytics applications
Networking services Creation of an internal private cloud and virtual local networks utilising a pooled server for storing enterprise data and running applications needed each day
Security services Secure content management end point protection malware
protection
PaaS Sales and marketing services
Web configuration forms for marketing and sales purposes
Cloud enablement and information
technology operations
Application integration and monitoring business process management information technology operationrisk
management
Data management Datacontent management
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Cloud
computing
model
Cloud computing services
Details
Mobile Usage of managed mobility to serve a multitude of mobile devices anywhere anytime
Platform to create
software applications
Conception and creation of applications through testing and
deployment
Internet of things Asset tracking deployable components intelligent spaces
IaaS Storage and hosting services
Server platform for online storage sharing hosting web-sites files images and similar content
Virtual data centre Usage of a pool of virtualised infrastructure as processor
memory storage space and networking components
High performance computing
Usage of high performance computing clusters workloads and applications
Source EY desk research20
The following potential contract-related problems have been identified
lack of timely updates of the cloud service
forced updates to the service that eliminated or changed a necessary function
unsatisfactory amount of data that could be processed
failure of the cloud provider to identify analyse and correct hazards and to prevent
future re-occurrences (incidence management)
low speed of the service
unsatisfactory availability or discontinuity of the service (due to a crash unannounced
maintenance or other interruptions of service)
unsatisfactory number of users that could access the service
lack of compatibility of the service with user hardware or software
limited data portability
limited data retrievability
extra costs imposed for data portability
data deletion upon contract termination
destruction or loss of data
loss or alteration of data transmitted stored or processed via the cloud service
unauthorised disclosure of or access to data
lack of protection of the data stored in the cloud against theft or viruses
lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
unilateral modification of the servicecontract by the cloud provider
limited liability of the cloud provider
termination of the contract and interruption of the service by the service provider with
no or little prior notice to the user
lack of clarity and transparency of CTampC
Based on the results of desk research the team finalised the methodological approach that
included the definition of the problem tree to clearly understand the links between problems
encountered by enterprises and possible consequences the preparation of the data collection
tools including the questionnaires for the survey of SMEs and the case study template
20 The bibliography serving as basis for the desk research can be found in Annex 3
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
17
Additionally desk research revealed that cloud computing users may encounter the following
problems in exercising their rights to remedy the non-conformity of service with the
contract
absence of a contact point to make a complaint or attempt to resolve issues
length and high cost of the procedure
applicability of foreign jurisdiction
language difficulties
impossibility to enforce the decision after the resolution
The problem definition was structured around the above-mentioned key contract-related
problems and their short- and long-term effects Essentially the problem definition allowed
the team to
identify the main-core problems and the underlying causes
identify who and what is affected and to what extent
foresee the possible evolution of the problems identified
Following the problem definition a problem tree (Box 1) was structured in order to summarise
the identified problems and related causes as well as the links between them
Box 1 Definition of the problem tree
A problem tree or ldquohierarchy of problemsrdquo is useful in providing an overview of the main causes and effects of the identified problems It is used to better understand the context in which the problems occur what the intermediate effects and the main drivers are
The analysis performed during the creation of a problem tree aims at identifying the real bottlenecks
to which stakeholders attach a high priority and which they wish to overcome A clear problem analysis thus provides a sound foundation on which to develop a set of relevant and focused project objectives
A problem tree analysis begins with the establishment of the core problem Using desk research the problem can be formulated in a more specific way Once the core problem has been identified we consider the direct causes and effects of the problem Each cause statement is written in negative terms These items should respect the MECE principle in that they should be Mutually Exclusive and Collectively Exhaustive In many respects the problem analysis is the most critical stage of project
planning as it then guides all subsequent analysis and decision-making on priorities
Once complete the problem tree represents a summary picture of the existing negative situation that can be further used by the decision makers in order to analyse the objectives by reversing the negative statements into possible solutions and then choose the most appropriate solution to be implemented
Source European Commission - Aid Delivery Methods (Vol 1 Project Cycle Management Guideline)
Among the most important sources of information that helped in refining the problem tree
especially with regard to the contract-related problems were21
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in
Europersquo COM(2012)529 final Brussels
Cloud Computing Experts Groups meetings 2013-2014
Cloud Service Level Agreement Standardisation Guidelines from 24 June 2014
European Commission (2015) lsquoComparative Study on cloud computing contractsrsquo
European Commission (2016) lsquoStudy on measuring the economic impact of cloud
computing in Europersquo
European Commission consultations about Cloud Computing (2016)
IDC (2016) lsquoSwitching of Cloud Services Providersrsquo
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprises and Business
Structure Statisticsrsquo
21 The results of the survey of SMEs as well as the case study results have been used in order to update the problem tree
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
18
European Commission (2017) lsquoFinal results of the European Market study measuring
the size and trends of the EU data economyrsquo
European Commission (2017) lsquoProposal for a Regulation of the European Parliament
and of the Council on a framework for the free flow of non-personal data in the
European Unionrsquo
European Parliament (2017) Commission Staff Working Document Impact
Assessment Accompanying the document lsquoProposal for a Regulation of the European
Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo
Figure 3 illustrates the problem tree that was created based on the studyrsquos desk research
The drivers of cloud computing problems are acknowledged in the different sources of
information consulted such as the Digital Single Market strategy This strategy identifies
concerns related to lsquosecurity compliance with fundamental rights and data
protectionrsquo22 as a result of technical and legislative barriers
Moreover the fragmentation of regulation across the EU could be a factor that limits the
usage of cloud computing due to the need for large providers to adapt their services to each
countryrsquos laws that regulate cloud computing23
A lack of fairness and balance in CTampC is considered a driver as lsquocontracts often exclude
or severely limit the contractual liability of the cloud providerrsquo24 By the same token
the unilateral modifications of the contract and the difficulties in exercising the userrsquos
rights are problems arising from the unfairness of CTampC Moreover when targeting SMEs
lsquothe contract is likely to be a take it or leave it contractrsquo25
The limited technical knowledge among SMEs is also a factor affecting the emergence of
the different problems shown in Figure 3 The limited technical knowledge of the users has
been considered when creating a Cloud Select Industry Group in Service Level Agreements
Subgroup26 This subgroup worked towards the development of standardisation guidelines
between cloud providers and cloud customers and these efforts coincide with complementary
action under the Digital Single Market strategy
The mentioned contract-related problems lead to a loss of business opportunities Within one
of the Expert Group Meetings it was concluded that an uninformed choice of terms and
conditions may lead to damages27 Other experts28 have stated that lsquocertain losses are
potentially huge and cannot be compensatedrsquo29 The present study tested the hypothesis that
contract-related problems may lead to losses of profit turnover clients and reputation
damage for SMEs over the short term Over the long term such problems can have a
negative impact on growth and jobs
Over time the lack of awareness of the benefits of cloud computing limits its usage and can
deter businesses from tapping into the full potential of the cloud Over the long term this
could also have a negative effect on GDP and jobs creation Although this scenario was
22 European Commission (2015) A digital Single Market Strategy for Europe COM(2015) 192 final
Brussels 23 Ibidem 24 Ibidem 25 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2017 26 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 2930 January 2014 27 Ibidem 28 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014 29 For example due to the unavailability of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
19
included in the problem tree it is not the purpose of this study to examine these larger
macroeconomic impacts30
The problem tree allowed the team to gain an understanding of the main issues to be
investigated within the study and for which evidence from stakeholders was needed
This understanding was reflected in the data collection tools These included
The Survey questionnaire The structure of the survey questionnaire31 reflected the
different layers of the problem tree It first focused on the usage of cloud computing
and the types of contracts SMEs tend to sign corresponding to the drivers section
Furthermore it addresses the problems that SMEs encounter the actions taken in
order to resolve them and the associated economic detriment32 in order to provide
information for the problems and short-term effects sections of the tree
Interview guidelines for case studies and webinars Findings from the interviews and
the webinars were used to complement the quantitative analysis with detailed
information on the contract-related problems and the costs sustained by SMEs while
trying to resolve the encountered problems
All collected information supported the estimations on the loss of GDP and the loss of jobs at
the EU level
30 The European Commission estimated that cloud computing can increase EU GDP up to euro250 billion and create 38 million jobs More information available in European Commission (2011) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-Take SMART 20110045 Brussels 31 Annex 4 presents the structure of the CATI and online questionnaire 32 The sections B C D and E cover use of cloud computing problems encountered with cloud computing services actions taken by the enterprise in order to address the most serious problem and the economic detriment related to the most serious problem encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
20
Figure 3 Problem tree33
Source EY desk research34
33 LT stands for lsquolong-term effectsrsquo and ST for lsquoshort-term effectsrsquo 34 Annex 3 contains the bibliography serving as basis for the desk research
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
21
Under Task 0 the team also defined the sampling strategy to select 12 MS five economic
sectors to be investigated in depth as well as the sample size of SMEs to be involved in the
survey
For the selection of the MS three criteria were considered (Table 2) In particular the
percentage of enterprises buying cloud computing services as per 2016 Eurostat
statistics was considered to be the best proxy variable35 available for the usage of cloud
computing and it has been used as one of the criteria for defining the sample of countries to
be analysed in greater depth
Table 2 Criteria used for MS selection
Criteria for MS selection Details (Table 3) Source
Percentage of enterprises
buying cloud computing
services
Number of SMEs that
declared they bought at
least one cloud computing service in 2016 out of the total number of SMEs active in the MS
Data on cloud computing service
usage among SMEs Eurostat 2017
[isoc_cicce_use]
Relevance of the country to the
study objectives
Number of SMEs that
declared they bought at least one cloud computing service in 2016 out of the total number of SMEs active in the EU28
Data on cloud computing service
usage among SMEs Eurostat 2017 [isoc_cicce_use]
Structural Business Statistics Eurostat 2017 [sbs_sc_sca_r2]
Geographical balance Balanced number of EU15
and EU13 MS in the sample
NA
Based on the above-mentioned criteria the following 12 MS were selected the Czech
Republic Estonia France Germany Ireland Italy Poland Portugal Romania Sweden
Spain and the Netherlands (Table 3)
A high level of representativeness of the EU is ensured because the selected sample
involves eight MS from the EU15 and four MS from the EU13
refers to countries where more than 70 of the EU SMEs that bought at least one of
the cloud computing services in 2016 (Figure 4) were established
35 A proxy variable is a variable that is used instead of the variable of interest when that variable of interest cannot be measured directly
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
22
Table 3 SMEs buying cloud computing services 2016
EU MS
A B C D E=B+D F=E(A+C) ETotal EU28
EU15 EU13
of active enterprises with 10-250 employees
of enterprises (10-250 empl) buying CC services
of enterprises with 1-9 employees
of enter (1-9 empl) buying CC services 36
Total active SMEs
(Country level)
(EU28 level)
AT 40393 646288 280850 31959 38422 1196 137 EU15
BE 31302 8139 569950 64858 72996 1214 261 EU15
BG 26991 1619 298559 33975 35594 1093 127 EU13
CY na na na na na na na EU13
CZ 38203 6877 961287 109390 116267 1163 416 EU13
DE 411527 61729 1985471 225938 287667 1200 1029 EU15
DK 22681 9072 187367 21322 30394 1447 109 EU15
EE 6439 1417 61513 7000 8416 1239 030 EU13
EL 15368 1383 764471 86993 88376 1133 316 EU15
ES 125000 21250 2337621 116881 138131 561 494 EU15
FI 19187 10361 209328 23821 34182 1496 122 EU15
FR 139335 22294 2765282 314677 336970 1160 1205 EU15
HR 12249 2695 134007 15249 17944 1227 064 EU13
HU 30852 3394 504904 57456 60850 1136 218 EU13
IE 5514 1930 224742 25575 27505 1195 098 EU15
IT 182182 38258 3497783 398032 436290 1186 1560 EU15
LT 13604 2177 172527 19633 21809 1172 078 EU13
LU 3939 670 27841 3168 3838 1208 014 EU15
LV 9226 738 100216 11404 12142 1109 043 EU13
MT 1885 509 24123 2745 3254 1251 012 EU13
NL 48115 15397 1042588 118642 134039 1229 479 EU15
PL 69282 4850 1534086 174572 179422 1119 642 EU13
PT 37353 6350 769043 53833 60183 746 215 EU15
RO 50987 3569 405493 46143 49712 1089 178 EU13
SE 36047 16221 649412 155859 172080 2510 615 EU15
SI 6912 1382 127603 14521 15903 1182 057 EU13
SK 14363 2442 414630 33170 35612 830 127 EU13
UK 199528 65844 1734989 312298 378142 1955 1352 EU15
Tot EU28
1598464 317028 21785686 2479112 2796141 12 100
Selected Countries
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics [sbs_sc_sca_r2])
36 The percentage of micro enterprises (ie enterprises with fewer than 10 employees) that bought at least one CC service is only available for the United Kingdom Slovakia Sweden Portugal and Spain For the other EU countries the average from those countries (1138) has been used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
23
Figure 4 The percentage of enterprises which bought cloud computing services in the
selected EU countries as compared to the total EU28 (2016)
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics
[sbs_sc_sca_r2])
For the selection of the economic sectors to be analysed in depth Eurostat statistics on the
percentage of enterprises buying cloud computing services were used in order to
identify those sectors with the highest usage of cloud computing
Eurostat statistics are available only for some sectors (Table 4) and only for the category 10
persons employed or more which also includes enterprises with more than 250 employees (ie
large enterprises GE250)
However Eurostat statistics have been considered to be relevant in selecting the sectors to be
analysed in depth as the number of enterprises with more than 250 employees represents a
negligible percentage of the overall number of active enterprises at the EU28 level (ie around
45000 out of 23 million enterprises corresponding to 02 of the total)
The sampling strategy envisaged the use of the same criteria used for the selection of MS (ie
percentage of enterprises buying cloud computing services relevance of the sector to the
study objectives)
As a result the five sectors selected included (grey rows in Table 4)
manufacturing (NACE37 code C)
wholesale and retail trade repair of motor vehicles and motorcycles (NACE code G)
professional scientific and technical activities (NACE code M69-M74 hereinafter
referred to as M)
administrative and support service activities (NACE code N)
information and communication (NACE code J)
37 Eurostat Nomenclature des Activiteacutes Eacuteconomiques dans la Communauteacute Europeacuteenne Brussels
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24
Table 4 Economic sectors and usage of cloud computing services (2016)
NACE Code
Sectors
A B C = B100 x
A CD
of active enter (with
more than 10 empl) at
EU28 level
of enter (with more
than 10 empl)
buying CC services
of enter (with more
than 10 empl)
buying CC services
out of the total
C Manufacturing 364432 17 61953 23
D+E Electricity gas steam air conditioning and water supply
18732 19 3559 1
F Construction 200369 15 30055 11
G Wholesale and retail trade repair of motor vehicles and
motorcycles
351278 18 63230 24
H Transportation and storage 90718 16 14514 5
I55 Accommodation 15969 23 3672 1
J Information and communication
55905 52 29070 11
L Real estate activities 10661 24 2558 1
M Professional scientific and technical activities
97073 34 33004 12
N Administrative and support
service activities 121657 22 26764 10
Total 1326794 21 268384 (D) 100
Selected Sectors
Source Cloud computing services for 2016 (Eurostat [isoc_cicce_use]) Business Structure Statistics for 2015 (Eurostat [sbs_sc_sca_r2])
Although the financial and insurance activities sector (K under its respective NACE code) is
considered as one of the economic sectors with the highest usage of cloud computing38 it has
been excluded because of its limited relative weight at the EU28 level39
With the purpose of achieving statistically significant results a target of 500 SMEs that
use cloud computing has been defined This sample size has been chosen in order to ensure a
95 confidence interval and a maximum margin of error of 5 for all the estimates The
sample target size together with the random selection of the respondents ensure that - with
a probability of 95 - the true values of a phenomenon (eg average incidence of cloud
computing problems) in the entire population (ie all EU SMEs) is equal to the average values
observed in the studied sample plusminus the margin error
The box below presents the methodology behind the definition of the sample size
38 76 based on European Commission (2016) Measuring the economic impact of cloud computing in
Europe 39 Based on the lsquoAnnual detailed enterprise statistics for servicesrsquo [sbs_na_1a_se_r2] it was observed that in 2015 for the respective financial and insurance activities a total of approximately 14000 enterprises were active in the EU28 that is 01 of the total active enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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25
Box 2 Definition of the size of the sample
The formula for computing the representative sample size is
Sample size = [z2 p(1-p)e2][1 +( z2 p(1-p)e2N]
Where
N= population size e = margin of error (as a decimal) z = Z-score constant value eg 1645 for a 90 confidence interval 196 for a 95 confidence interval 258 for a 99 confidence interval
and p = average value of a specific indicator as observed in the population (as a decimal)
Our case
From Table 3 we have
N= 2796141 is the estimated number of SMEs that are using CC services
e = 5
Z = 196
P = when this value is not known conventionally is used the value 05
We can conclude that a target of 500 enterprise using CC services is appropriate to ensure a 95 confidence interval with a margin of error of 438 When we put the confidence level and the confidence interval together we can say that we are 95 sure that the true percentage of a phenomenon in the population is between +438 and -438 of the value observed in the studied sample For example if we ask a sample of 500 SMEs using CC if they encountered a certain problem
and 70 say lsquoYesrsquo we can be 95 certain that between 6562 and 7438 of all EU SMEs using CC encountered the same problem
Task 1 ndash Survey of SMEs
Task one was aimed at identifying
the types of cloud services most frequently contracted
the types of CTampC used to regulate the business relationships between users and
providers (for example determining whether enterprises are able to negotiate CTampC
andor to customise them to their needs)
the types the incidence and the frequency of contract-related problems
the types of actions taken by the enterprises in order to resolve the encountered
problems and the results of these actions
The collection of data was based on a questionnaire (see Annex 8) submitted through two
complementary channels
an online questionnaire (online Survey)
CATI
The online questionnaire was translated into the official languages of the MS covered by the
study Likewise the CATI was conducted by native speakers in order to avoid language
barriers
The online survey and the CATI have been developed tested and conducted on a
representative sample of EU SMEs which use the cloud for the purpose of conducting their
business
In order to achieve the above presented target (ie 500 SMEs using CC services)
the contacts of 13000 SMEs were identified during the design of the sampling strategy
3173 SMEs were reached within the 12 MS and the five sectors selected Table 5
presents the distribution of the reached SMEs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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26
1009 SMEs were willing to participate in the survey
Table 5 Distribution of SMEs reached per country and sector ( of respondents 3173)
Sector
Country
Admin and support service
activities
Inform and comm
Manufact
Profess scientific
and technical activities
Wholesale
and retail trade
Total
CZ 13 17 62 30 52 174
EE 5 22 8 12 15 62
FR 184 129 262 126 308 1009
DE 99 123 185 226 249 882
IE 4 18 6 6 13 47
IT 8 9 100 7 15 139
NL 36 49
24 37 146
PL 24 69 16 78 92 279
PT 7 2 9 2 24 44
RO 8 20 2 27 15 72
ES 7 11
26 21 65
SE 41 33 59 30 91 254
Total 436 502 709 594 932 3173
Source Survey of SMEs (2018)
Table 6 presents the participation rate per MS of the 1009 SMEs that agreed to provide
information about their use of cloud computing
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
27
Table 6 Participation rate by MS ( of respondents 3173)
Country
Number of
enterprises that expressed refusal
Number of enterprises
that were willing to participate in the survey
Total Participation
rate ()
A B C = A + B BC
CZ 131 43 174 25
DE 33 158 191 83
EE 715 29 744 4
ES 724 54 778 7
FR 16 294 310 95
IE 24 31 55 56
IT 97 115 212 54
NL 152 49 201 24
PL 11 127 138 92
PT 48 33 81 41
RO 11 24 35 69
SE 202 52 254 20
Total 2164 1009 3173 32
Source Survey of SMEs (2018)
The study targeted all different size categories the largest share of respondent being
represented by medium sized-enterprises (60 Figure 5) Contrary to the SMEs distribution
at the EU level the micro enterprises represented the smallest share of participants in the
survey The smaller the size of the enterprise the lower was its willingness to participate in
the survey
Figure 5 Distribution of participants in the survey by SME size ( of respondents 1009)
Source Survey of SMEs (2018)
The same applies to SME age enterprises active for more than 10 years are better represented
in our sample as compared to younger enterprises (Figure 6) This reflects their willingness to
participate as well as the greater difficulties encountered in reaching younger enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
28
Figure 6 Distribution of enterprises involved in the survey of SMEs by age ( of respondents
1009)
Source Survey of SMEs (2018)
Task 2 ndash Economic detriment and impacts on jobs and growth
Consequences of encountered problems at the micro level
The economic detriment was quantified along the lines recommended in the Guidelines on
impact assessment of the Better Regulation toolbox40 based on data collected from Task 1 and
on data from Eurostat Business Structure Statistics
The measurement of economic detriment41 considered a monetary assessment of the effects
of the problems faced by each SME in the survey and includes the following main dimensions
the gross financial detriment (GFD) associated with the problems encountered
the net financial detriment (NFD) associated with the problems encountered which
corresponds to the GFD associated with the problem encountered minus any remedies
offered by the cloud provider
The GFD incorporated the following components
119866119865119863 = 119871 + 119867119877 + 119874119862
Where
L is alternatively the loss of turnover or profits as perceived by each SME
HR is the costs of the human resources invested by each SME while taking action to
resolve or remedy the most serious encountered problem
OC other costs declared by each SME These include costs such as the costs related to
ensuring an alternative service the costs related to fixing the cloud service problem
using external support any legal costs costs related to reputation damage and costs
related to loss of client(s) and other residual costs
To allow for the measurement of the NFD the value of any redress (R) offered by the service
provider for the damages caused to each SME as reported in the survey questions was
computed
40 The Better Regulation Toolbox is a set of general guidelines that set out the principles that the European Commission follows when preparing new initiatives and proposals and when managing and evaluating existing legislation In this study those principles were considered generally as they were central in
defining the survey the sample and also the methodologies to measure economic detriment and estimate
the impact on growth and jobs 41 Measured using the principles put forward in European Commission (2017) Operational guidance document on measuring personal consumer detriment Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
29
The detailed procedure used to estimate the economic detriment at the EU28 level included
three main steps
The first step was the computation of the following parameters from the survey with the 95
confidence interval level and 5 margin of error
the loss of turnover or profits perceived by each SME
the costs of the human resources invested by each SME while taking action to resolve
or remedy the most serious problem
the other costs covered by each SME while taking action to resolve or remedy the most
serious problem
the value of any redress offered by the service provider for the damages caused to
each SME
The second step required the definition of the number of enterprises affected by contract-
related problems (119873119901)
119873119901 = 119890119906 times 119890119901 times 119864
Where
119890119906 is the proportion (ie the percentage) of enterprises that use cloud computing
services
119890119901 is the incidence (ie the percentage) of contract-related problems
E is the total number of active enterprises
The incidence rates of contract-related problems (119890119901) by country and sector or country and
size class and the proportion of enterprises that use cloud-computing services (119890119906) by country
and sector or country and size cannot be estimated from the sample with the 95 confidence
interval level and 5 margin of error given that the sample is only representative at the EU
level overall
In order to be able to estimate the total number of enterprises experiencing contract-
related problems by country and sector and by country and size class an RAS-based42
procedure has been applied
Box 3 RAS method for estimating the total number of enterprises experiencing contract-
related problems by country and sector
The RAS method is a well-known method for data reconciliation whose aim is to achieve consistency between the entries of some non-negative matrix and pre-specified row and column totals Mathematically the method is an iterative scaling method that can be applied in this case as we just
have non-negative matrices We redistribute proportionally the differences arising from applying the EU level sectorial or size class incidence rates or from country incidence levels considering in this
case as the binding constraint the country level incidence which has been estimated with confidence from the sample (we ensure that the incidence per country is respected)
The procedure started with a preliminary estimation of the number of enterprises (119873119894119895119901)
experiencing contract-related problems in country i and sector or size class j using the following
formula
119873119894119895119901 = (
119890119894119906 + 119890119895
119906
2) times (
119890119894119901 + 119890119895
119901
2) times 119864119894119895
42 See more information at httpseceuropaeueurostatcroscontentras-method_en
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
30
Where
for countries included in our sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the proportion of enterprises using cloud computing services in country i43
computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j44 for all the countries in the sample
- 119890119894119901 is the incidence of cloud computing problems in country i computed from the
survey
- 119890119895119901 is the incidence of cloud computing problems in sector or size class j
computed from the survey for the whole sample
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
While for countries not included in the sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the average proportion of enterprises using cloud computing services in all
countries of the sample computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j45 for all of the countries in the sample
- 119890119894119901 is the average incidence of cloud computing problems in all countries of the
sample as computed from the survey
- 119890119895119901 is the incidence of cloud computing problems in sectorsize class j computed
from the survey
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
In practice this formula takes the joint incidence by country and sector or by country and size
class to be the average of the two marginal incidences which would be the case if the two
distributions were independent In this way it allows a preliminary estimation of the number
of enterprises experiencing cloud computing problems in country i and sector or size class j
43 We use two alternative measures of incidence allowing us to develop two scenarios From the survey data we compute the incidence by country and sector and country and size class considering the answers given by respondents in two alternative ways In one case we compute the incidence as the ratio of
those enterprises that declared they are using cloud computing to all enterprises contacted that declared they are either using or not using cloud computing or that refused to respond to the survey based on criteria that can be seen as meaning that the survey does not apply to them (around 16) Alternatively also from the survey data we can compute the incidence of cloud computing usage as the ratio of those that declared they are using cloud services to the sum of those that explicitly mentioned that they are either using or not using cloud services (around 50) This second scenario can be considered as a theoretical but most unlikely future scenario where a consistent number of EU SMEs use
cloud computing 44 See the previous footnote 45 See the previous footnote
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
31
After obtaining that preliminary estimation 119873119894119895119901 the RAS method of reconciliation is applied by
considering as the binding constraint the total number of enterprises experiencing problems
as that value was estimated directly from the sample with the required confidence and error
levels
This reconciliation of totals performed by the RAS method dismisses the assumption of
independence as it distributes the error across the margins
Concerning the sectors not covered in the sample46 the total number of enterprises
experiencing contract-related problems by country and sector can also be computed by
following the same procedure as above In that case sector incidence would be replaced by
the European average incidence on the other sectors Given the sampling procedure that was
followed in which the sectors with the highest incidence of cloud computing usage were
selected to be covered by the survey applying those incidences of use of cloud computing as
representative to the other sectors would overestimate the impacts Given this situation only
the results for the selected sectors are presented and this constitutes a lower threshold for the
true detriment47
Once the values of the number of enterprises experiencing cloud computing problems for each
country and sector and country and size class are computed they can be aggregated to the
EU level just by summing up the number of enterprises experiencing cloud computing service
problems per country
Finally the third step was the computation of the total losscostvalue of redress by country
sector and size class by multiplying the number of enterprises that experienced contract-
related problems (as computed using the RAS model) by the 95 trimmed mean values
per enterprise for each variable (from the survey)48
The GFD is then computed considering alternatively lost turnover and lost profits and adding
the human resource costs and the other costs NFD is computed taking the two measures of
GFD and subtracting the value of any redress offered by the service provider for the damages
caused to each SME
Afterwards two measures are obtained covering both GFD and NFD computed at country and
sector country and size class and at EU level
Consequences of encountered problems at the macro level
Following the quantification of the economic detriment the consequent impact on growth
and jobs was estimated using one of the methodologies suggested in the impact assessment
toolbox presented by the Joint Research Centre49 of the European Commission
The goal was to estimate the overall GVA and employment content of the detriment In order
to do that the following methodology was used
The starting point was the declared turnover loss one of the components of total detriment
aggregated by country and sector and by country and SME size We first estimated the financial
detriment suffered by each enterprise by considering the different components of detriment
then we aggregated these effects to the EU28 level by summing up the effects suffered by
46 As previously stated only the following sectors were covered by the study Manufacturing (C) Wholesale and retail trade repair of motor vehicles and motorcycles (G) Professional scientific and technical activities (M) Administrative and support service activities (N) and Information and communication (J) 47 Recall that the selected sectors comprise a total of 797 of SMEs and GE250 using cloud computing
services 48 Given each variable the 95 trimmed version was obtained by discarding the 5 lowest and highest observations it is a statistic in the middle of the data range 49 EU Science Hub (2016) Input-output economics Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
32
each enterprise across all enterprises When estimating the macroeconomic effects of the
contract-related cloud computing problems one must consider the overall turnover loss that
was suffered by all enterprises that experienced those problems as turnover is the variable
that best summarises the overall enterprise-level effects that are transmitted into the
economic system through the supply chains and that can be related to aggregate economic
variables thus avoiding double counting
This allowed the team to estimate the so-called direct impacts (the direct consequences in
the enterprises that face contract-related cloud computing problems associated with the
reduction of their economic activity due to those problems) This was done by estimating the
GVA and employment contents of the turnover losses caused by contract-related cloud
computing problems at country and sector level by considering the GVA and employment
coefficients of total turnover at country and sector and country and size class level computed
from Eurostat Business Structure Statistics for 2015 (Eurostat)50
The results were aggregated at the EU level by summing up country results from calculating
the direct GVA and employment contents
Additionally at the aggregate EU level the so-called indirect impacts were also estimated
Indirect effects are the effects on the enterprises that are not directly affected by contract-
related cloud computing problems but that are indirectly affected in their activity by the losses
of turnover from the enterprises that directly experience the problem To estimate these
indirect effects we start by estimating the turnover losses in supplier industries These indirect
losses of turnover arise when the businesses that experience the direct turnover losses reduce
their demand for products from their suppliers and then those supplier enterprises also
experience turnover losses The input-output methodology is used to estimate the turnover
losses in supplier enterprises Essentially this methodology allows us to estimate the amount
of turnover that is lost in one supplier enterprise when the demand from another enterprise is
reduced given the existing technology A symmetric input-output table at basic prices (sector
by sector) available in Eurostat51 for the EU28 was used to estimate the technological
intersectoral relations in the EU economy The methodology used is described in the following
box
Box 4 The Input-Output Methodology
Input-output analysis is the most commonly used benchmark within the study of intersectoral relations The representation of the underlying economies either as a coherent statistical framework as a structural analysis tool of the productive systems or as an economic model is based on a correlation between production and demand through the proportions of the different branches (supply side) or products (demand side) that support that same economies The correspondence between a certain branch of activity and a certain group of products is thereby a condition for coherence of the
input-output analysis
The input-output tables appear as a synthesis of a large amount of statistical data processed in accordance with the goal of specifying the characteristics of the use of the productive factors and products to satisfy the demand ie the open and disaggregated flows (in sectorial terms) that link in both ways demand production and income
The matrix representation of the basic flows characterises the activities of a given economy in a given period It allows a two-dimensional interpretation of the relationships and balances in the flows to be used ie a horizontal (in line) interpretation ndash articulating production and demand that leads to a
separation between intermediate and final demand ndash and a vertical interpretation (in column) ndash
51 Eurostat Symmetric input-output table at basic prices (product by product) Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
33
articulating production and income that leads to the separation between intermediate inputs and
value added
Input-Output matrices
The general shape of an input-output table encompasses four quadrants that correspond to the intersectoral trade of products associated with intermediate consumption (1st quadrant) to the breakdown of each sectorrsquos production through the diverse final uses (2nd quadrant) to the sectorial
decomposition of the GVA (3rd quadrant) and to the nonmarket transfers between sectors of the economy (4th quadrant)
The first quadrant has a square shape (n x n sectors) while the 2nd and 3rd have a rectangular shape (depending on the number of final uses and the number of the GVA components considered) The
equilibrium conditions reflect sector by sector the usage of the production and the mobilised resources and the income generated in the production ie
119883119894 = sum 119883119894119895 + 119884119894
119895
(use logic to be read in line the gross production of each sector is depleted feeding the intermediate
and final demand)
119883119894 = sum 119883119894119895 + 119884119894
119894
(resources and income logic to be read in column the gross production of each sector integrates
the value of the intermediate consumption and of the income generated)
The sectorial equilibrium ie the equality between uses and resources (119883119894 = 119883119895 for 119894 = 119895) leads on
an aggregated level to a match between the sum of the elements of the 2nd and the 3rd quadrants that sustains the ldquothree approachesrdquo of national accounting expenditure income and production
Matrixes coefficients and multipliers
From the general tables we can obtain the technical coefficient matrix (matrix A) Each element of the matrix A (119886119894119895 = 119883119894119895119883119895) expresses the ldquotechnological demandrdquo from the sector j to the sector i ie
the production of the sector i used as an input for the production of the sector j This vertical proportion representing the technological support of the intersectoral flows and the deepening of the intermediate demand from the productive units into the technical characteristics of their respective productive processes is called the technical coefficient (of production)
The input-output analysis as an economic model uses these proportions or coefficients to represent
the function of the economy requiring the adoption of a set of hypotheses namely on the direction of the economic flows ie the role of the supply and demand dynamics
In formal terms the input-output model is considered to be based on the dynamics of the demand The production is obtained through an endogenous process supported by the technical coefficient matrix responding to a final demand determined exogenously Building up the Leontief model in its
OUTPUT (Demand)
INPUT
(Production)Intermediate inputs to
production
(1st Q)
Final demand
(2nd Q)
Primary inputs to
production
(3rd Q)
Primary inputs to final
demand
(4th Q)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
34
reduced form leads to a system of n simultaneous equations like 119883119894 = sum 119886119894119895119884119895119895 written as 119883 = (119868 minus 119860)minus1119884
in matricial notation
Input-output based modelling brings out a matrix (119868 minus 119860)minus1 whose elements are designated as 119886119894119895
The elements of the (119868 minus 119860)minus1 matrix express as coefficients of the simultaneous equations system
that allows to determinate the production according to the final demand the variation (direct and indirect) of the production of a sector according to the unitary change of the final demand of another sector These are called production multipliers also arising as sectorial interdependence indicators
The production multipliers can be partial when they indicate the variation of the production of a sector i led by a unitary variation of the final demand of a sector j and measured by the corresponding element of the matrix 119886119894119895 or total when they indicate a variation of the production of all sectors led
by a unitary variation of the final demand of a sector and measured by the sum of the corresponding column of the matrix (sum 119886119894119895119895 )
The nature of the measured effects
Taking into account the nature of the used multipliers it is possible to measure direct and indirect effects
Direct impacts Activity effects (value added employment income) associated directly with the value of the lost production due to contract-related problems
Indirect impacts Backward linkage effects meaning the activation of multiple ldquoexternalrdquo effects on demand linked to the loss in production due to contract-related problems They concern the supply
chains that are interrupted due to the production loss associated with contract-related problems
Once the indirect turnover losses were measured their GVA and employment contents were
estimated using the same methodology as for the direct effects
To compute the relative direct and indirect impacts we divided the estimated GVA and
employment content by the total GVA and employment at the EU level
Further qualitative analysis
In addition to the quantitative assessment of the overall impact on growth and jobs taking
into account the results of previous activities (namely the interviews within the case studies
and desk research) other more qualitative effects of the problems encountered namely in
terms of competition competitiveness and market functioning were qualitatively assessed To
this end case studies were used in order to have a more in-depth view of the topic
More generally the case studies allowed the study team to
produce useful insights on the specific problems that were identified in the survey
illustrate in practical terms the economic detriment to SMEs and to understand the
causal links between the signed contracts and the encountered problems
include the perspectives of those stakeholders that were not involved in the previous
study Tasks
This subtask included interviews (33) with eight types of stakeholders namely SMEs cloud
brokers service providers SMEs associations national authorities national SMEs Envoys EEN
associations and chambers of commerce This array of stakeholders contacted was used to
obtain a detailed view of the issue of the economic detriment to SMEs arising from unfair and
unbalanced cloud computing contracts52
nine SMEs
one cloud broker
10 service providers
three SMEs associations
six national authorities
one national SMEs Envoy
52 The questionnaires used detailing the topics covered during the interviews can be found in Annex 8
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
35
two EEN associations
one Chamber of Commerce
Finally three webinars were used to validate and disseminate the results of the study with the
main participating stakeholders
22 Main limitations encountered
This study mainly used data collected from CATI as this tool followed a more direct approach
in contacting SMEs by phone The online questionnaire proved not to be as effective during
the data collection phase as we succeeded in obtaining only three completed questionnaires
from a total of 141 requests to SMEs and European Associations contacted On the other hand
500 completed questionnaires were collected from the SMEs that use cloud computing through
the CATI
In order to maximise the possibility that the SMEs contacted will respond to the survey the
study chose to contact SMEs from the 12 countries that have the most usage of cloud
computing This approach was taken to achieve a twofold purpose to maximise the quality of
the survey results and to ensure that the minimum sample target of 500 questionnaires is
met Even if the sample is randomised the willingness to participate in the survey under these
circumstances might have been positively correlated with cloud computing usage This may
increase the risk of biased results
This limitation was overcome by involving a distinctive group of stakeholders with the aim of
complementing the information gathered The stakeholdersrsquo involvement during the case
studies ensured the accuracy of the results at the EU level
Furthermore it is important to underline that all estimates based on the gathered responses
to the questionnaire should be considered as statistically significant in representing the
average values that might be observed among EU SMEs that are using cloud computing
services Therefore any features presented at the country andor sector andor
company size level were included with the sole aim of documenting gathered
information
In order to be able to estimate results at the country andor sector andor enterprise size level
the RAS model was used to distribute the overall representative results to provide robust
estimates at that level The RAS model even allows estimating the usage rate and the incidence
of problems at enterprise size sectorial and country level
Two scenarios have been developed for the economic analysis that takes into account two
different hypotheses for estimating the usage rate of cloud computing extracted from the
survey
The method of analysis of economic detriment also has some limitations The first one is related
to the fact that only the consequences of the most serious problem are considered Even if the
survey tried to measure also the effects of the second most important problem the fact that
the number of respondents that quantified its effects was very small led to values that did not
seem to be robust enough to use in the analysis This causes the estimates of detriment
that were presented to be the lower thresholds to the actual detriment Yet the
magnitude of the underestimation is limited by the fact that the sectors with the highest cloud
computing usage rates were chosen to be in the sample and they are likely to experience
above average effects A second limitation arises from the fact that many enterprises seem
not to be able to fully assess the financial impacts of problems such as reputational damages
or loss of clients in terms of financial variables and this may also lead to some underestimation
of the true effects that we perceive that might be present but that we are not able to assess
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
36
In terms of measuring the indirect impacts not only does the possible underestimation of the
direct impacts on turnover also affect these impacts but also using the input-output
methodology has limitations While the input-output methodology allows measuring backward
linkages it does not allow considering the downstream effects on clients or final consumers
that are associated with the contract-related cloud computing problems due to relative changes
in the costs borne by enterprises and that are not fully absorbed and thus trickle down to the
consumer level as SMEs pass on the increased costs caused by the problems encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
37
3 Usage of cloud computing across EU SMEs the state of play
First this section presents the analysis of the services contracted by the SMEs the types of
contracts and the negotiability and customisation of CTampC Furthermore it investigates the
incidence and frequency of contract-related cloud computing problems experienced by SMEs
with an emphasis on the most serious problems encountered and their respective causes
Second it presents the types of actions taken by the SMEs in order to address the contract-
related problems as well as the results of the actions taken and possible difficulties encountered
while taking action
And finally it explores the reasons why some SMEs decided not to take action
31 Cloud computing usage rate
In conducting the survey 3173 SMEs replied have been collected out of which
503 from SMEs that declared that they had contracted at least one cloud computing
service during the period 2016ndash201753
509 from SMEs that declared they did not contract any cloud computing service during
the period 2016ndash2017
2164 from SMEs that refused to participate in the survey
The estimation of the rate of usage of cloud computing depends on the hypothesis about the
distribution of the willingness to participate in the survey
For the purpose of the study it was assumed that only SMEs not using cloud computing were
present among those SMEs that were not willing to provide information (2164) Under this
hypothesis the rate of usage of cloud computing services is 159 calculated as the
number of SMEs that declared they are using cloud computing services (503) divided by the
number of SMEs that replied (3173) This can be considered as the central scenario for this
study It provides an indication of the current detriments suffered by SMEs
A theoretical scenario has been constructed by assuming that SMEs using cloud computing
services and SMEs not using cloud computing services are equally distributed among the SMEs
that were not willing to provide information (2164)54 The purpose of this scenario is to provide
an indication of the theoretical evolution of the detriment in case of increasing usage of cloud
computing among EU SMEs
At 159 the rate of usage of cloud computing among SMEs still appears to be low especially
when compared with the 45 that is the most recent estimated usage rate among large
enterprises55
This can be due to a variety of different reasons During the interviews performed it emerged56
that
some SMEs are reluctant to use services that they cannot fully understand (for
example for micro and small enterprises it is difficult to assess how the new services
can improve their everyday work)
53 The distribution by country size and sector of the 503 SMEs that declared they contracted at least one cloud computing service can be found in Annex 5 54 Under this assumption the rate of usage of cloud computing services is 499 calculated as the number of SMEs that declared they are using cloud computing services (503) divided by the total of SMEs
that were willing to provide information (3173 ndash 2164 = 1009) 55 Eurostat Cloud computing - statistics on the use by enterprises Brussels 56 Case study interview with UEAPME European Association of Craft Small and Medium Enterprises representing about 12 million enterprises across Europe
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
38
other SMEs perceive that costs are still high and that it takes too long to recover
the investment (break-even point)
the division of responsibilities between SMEs and providers can sometimes be
a major source of problems as it is poorly documentedexplicated leading to overlaps
and gaps especially with respect to security aspects it is not uncommon for SMEs to
be confused about their responsibilities concerning security such as who makes
backups of data or software which type of failoverredundancy is offered by the
provider and what still needs to be done by the customer All of these issues can
persuade SMEs to not outsource cloud services
asymmetric information when it comes to negotiating and customising CTampC might
limit the capacity of SMEs to find solutions that fit their needs
in contrast to the traditional provision of on-site information technology resources the
multi-tenant nature of cloud computing usually raises questions with respect to
privacy confidentiality and data integrity Cloud computing presents its own set
of security issues coupled with the risks and threats inherent in traditional information
technology computing
32 Types of cloud computing services contracted
Figure 7 presents the most commonly contracted cloud computing services as resulted from
the survey
Two services are more frequently contracted because of their applicability and prevalence
in a wide range of sectors
collaboration and communication services (71) that might include among
others applications used for instant communication video conferencing business
visualisation e-mail antivirus for desktop or PC customer relationship management
or social media monitoring
storage and hosting services (65) that comprises services such as server
platforms for online storage sharing hosting websites files images and similar
content
The third most commonly contracted service (43) is associated to security support (this is
related to the need for protecting the corporate network when accessed via remote devices
such as laptops or other wireless and mobile devices)
The next eight significant types of cloud computing services contracted do not range far from
each other with their usage varying between 43 and 26
No significant differences emerged from the analysis at countrysector level (see section B
within Annex 5 for further details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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39
Figure 7 The cloud computing services most commonly contracted by SMEs during 2016-
2017 ( of respondents 503 of answers 2522)57
Source Survey of SMEs (2018)
A more detailed analysis of the numbers behind Figure 7 reveals the complexity of the
subscribed cloud computing packages
the answers from the (503) SMEs that declared that are using CC services also
revealed that 2522 services have been contracted over the period 2016 ndash 2017 (Table
7) that implies each SME contracted on average five different services
micro enterprises are the size class contracting the highest number of services (ie
55 on average Table 7) this might be related to the fact that the medium-sized
enterprises might have the financial and technical capacity to develop more
effectiveefficient solutions internally58
Table 7 The cloud computing services most commonly contracted by SMEs during 2016-2017 by SMEs size class ( of respondents 503)
SME size class
of respondents
of contracted services
Average of contracted
services Micro 91 503 55
Small 140 723 52
Medium 272 1296 48
Total 503 2522 50
Source Survey of SMEs (2018)
57 Multiple choice question 58 Eight out of the 10 service providers interviewed under Task 2 stated that the usage depends on the enterprisesrsquo size as medium-sized enterprises are better able to internalise most of the needed IT
services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
40
Even the analysis of the frequency of the answers provided allowed the research team to better
understand how the usage of CC is evolving among SMEs (Figure 8) around 40 of SMEs
contracted a limited number of cloud services (one two or three)59
Figure 8 Frequency of the number of contracted services ( of respondents 503 of answers 2522)
Source Survey of SMEs (2018)
Furthermore the analysis of the mix of contracted services revealed that there are two
services lsquoPlatform to create software applicationsrsquo and lsquoStorage and hostingrsquo that are most
commonly contracted either alone (12) or together (6)
The number the types and the mix of contracted services showed that EU SMEs are having a
lsquobasicrsquo usage of cloud computing
This is also confirmed by the results reported in Table 8 services falling under the SaaS model
are the most contracted ones (47) This cloud computing model was the first one introduced
to the market (1999) and the easiest to use (as it includes applications that can be run directly
from a web browser without any downloads or installations required although some require
plug-ins)
The medium-sized enterprises present a different trend from the small and micro firms as
they probably need a more advanced package of services For the medium-sized enterprises
the IaaS model (47) is the most contracted followed by PaaS (30) and finally by SaaS
(21)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
41
Table 8 Services contracted by SMEs size ( of respondents 503 of answers 2522)
SMEs size Total
respondents of services contracted
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 252 149 97 5
50 30 19 1
Small 140 723 332 224 157 10
46 31 22 1
Medium 272 1296 609 393 276 18
21 30 47 1
Total 503 2522 1193 766 530 33
47 30 21 1
Source Survey of SMEs (2018)
33 Types of contracts and relative costs
In this section we analyse if SMEs have the possibility to negotiate CTampC the degree of
customisation of contracted services and the types of subscriptions chosen by SMEs
Negotiability of CTampC
In the survey SMEs that are using CC services were asked if they were able to negotiate CTampC
(Figure 9) The majority of the SMEs declared they signed standard terms and
conditions offered by the provider (ie 64 of SMEs either did not try to negotiate or were
not able to negotiate CTampC see Figure 9)
Figure 9 Negotiability of the CTampC among SMEs that contracted cloud computing services ( of respondents 503)
Source Survey of SMEs (2018)
Only 19 of the SMEs using cloud computing (97 out of 503) were able to negotiate
the CTampC in relation to all cloud computing contracted services while 17 were able
to negotiate contract terms and conditions for a limited number of services
This trend is maintained at the country and sectorial levels as well (see Annex 5 for further
details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
42
Together with the negotiability of CTampC also the reasons for not negotiating have been
investigated (Figure 10) The decision to adopt the standard CTampC is made either because
these meet the usersrsquo expectations (41) or because it is assumedknown that a negotiation
would have no chance to succeed (28)
Figure 10 Reasons provided by SMEs for not trying to negotiate ( of respondents 229)
Source Survey of SMEs (2018)
The possibility of the SMEs negotiating the services contracted correlates with the size class
As seen in Table 9 only 106 of the services contracted have been negotiated by the SMEs
It can be stated that on average SMEs negotiate CTampC related to less than one service out of
the average of five used
Table 9 Number of services for which SMEs were able to negotiate CTampC
SMEs
size
Total of
respond
of services
contracted
of customised
services
of services
SMEs were able to
negotiate
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 48 24 11 10 3 0
Small 140 723 123 89 36 31 20 2
Medium 272 1296 120 155 78 44 31 2
Total 503 2522 106 268 125 85 54 4
Source Survey of SMEs (2018)
After the negotiability of CTampC the research team explored the types of services for which
SMEs negotiated signed contracts (Figure 11) Surprisingly the most commonly contracted
services (ie collaboration and communication storage and hosting and security services)60
do not appear among the ones for which negotiating CTampC is possible Rather negotiability is
higher for those services that due to their nature are more lsquobusiness drivenrsquo (such as business
applications mobile services and data management) Figure 11 presents for each contracted
service the number of SMEs that were able to negotiate CTampC (in blue) and the number of
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
43
SMEs that signed standard CTampC for the specific service contracted (in grey) The total of the
numbers in each row represents the number of SMEs that declared contracting a specific
service61 Detailed information related to all services can be found in Annex 5
Figure 11 Services in relation to which SMEs were able to negotiate the CTampC ( of respondents 179 of answers 264)
Source Survey of SMEs (2018)
Customisation of contracted services
SMEs that didnrsquot sign standard CTampC were asked if the negotiation allowed the customisation
of the contracted services
Figure 12 shows that out of the 179 SMEs (36 of the SMEs that are using CC services) that
were able to negotiate the CTampC only 101 (representing 20 of all surveyed SMEs that
are using cloud services) pointed out that besides simply negotiating the CTampC they
were able to fully customise the service package according to their needs
61 For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service (cf Figure 7) only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
44
Figure 12 Share of SMEs that declared they were able to customise the service package
according to their specific needs ( of respondents 503)
Source Survey of SMEs (2018)
The ability of SMEs to customise the purchased service package correlates with the size class
(as illustrated in Figure 12)
Table 10 SMEs that declared they were able to customise the service package according to their specific needs by enterprise size ( of respondents 503)
Size category
Total
Respondents
SMEs that did
not negotiate
CTampC
SME negotiated CTampC
Full customisation
Partial customisation
No Customisation
Micro 91 69 16 6 0
100 76 17 7 0
Small 140 86 27 15 12
100 61 19 11 9
Medium 272 169 58 26 19
100 62 21 10 7
Total 503 324 101 47 31
100 64 56 26 17
Source Survey of SMEs (2018)
Types of contract subscription
The majority of respondents have signed a paid subscription with fixed or variable fees
(79 of the total users Figure 13) It should to be noted that 73 SMEs did not provide any
response as most of them did not know the type of subscription contracted
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
45
Figure 13 Type of cloud computing subscription ( of respondents 503 of answers 489)62
Source Survey of SMEs (2018)
This trend is maintained across both countries and sectors without any significant differences
62 Multiple choice question
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46
4 Contract-related problems encountered by SMEs
The current section presents an overview of the types and most frequent contract related
problems encountered by SMEs while using cloud computing services
Moreover the most serious problems (that is the problems that created the highest impact
on SMEsrsquo everyday activities andor in terms of costs faced to resolve them) have been
identified together with their causes
Finally actions taken by SMEs to remedy the encountered problems are analysed together
with results of the actions and the main difficulties encountered
41 Types and frequency of encountered problems
Nearly one-quarter (24) of the SMEs using cloud computing (ie 122 out of 503)
encountered contract-related problems during the period 2016ndash2017 (Figure 11)
The incidence seems to be higher for micro and medium-sized enterprises
Table 11 Share of respondents that indicated encounteringnot encountering problems by size
of SMEs Micro Small Medium Total
Did not encounter problems
66 116 199 381
Encountered problems
25 24 73 122
27 17 27 24
Source Survey of SMEs (2018)
Problems encountered by the SMEs have been further analysed by taking into account the
following two dimensions frequency and incidence
Table 12 Frequency and incidence of contract-related problems
Dimension of analysis Details
Frequency
(F)
The frequency shows how often did the mentioned problem appeared and it is measured on a scale from 1 to 4
1 - rarely (at least once in the last 12
months)
2 - occasionally (at least once every 3 months)
3 - frequently (at least once a month)
4 - very frequently (at least once a week)
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017number of SMEs that contracted at least one cloud computing service during 2016-2017
Source Survey of SMEs (2018)
Four problems have been faced by more than 25 of the cloud computing users (Figure 14)
low speed of service (55)
unsatisfactory availability or discontinuity of the service (49)
forced updates to the service (32)
lack of clarity of the instructions on how to use cloud computing services (26)
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
47
Figure 14 Incidence and frequency of contract-related problems among SMEs that declared they encountered problems during 2016-2017 ( of respondents 122 of answers 505)63
Source Survey of SMEs (2018)
63 Multiple choice question
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and unbalanced cloud computing contracts
48
No significant differences emerged from the analysis at the sectorial and country levels
(please see Annex 5 for further details)
The cases studies64 included in-depth interviews with the SMEs that already contributed in
the survey In particular problems encountered by them were discussed with a special focus
on the following lack of clarity and transparency of contract terms and conditions unilateral
modification of the servicecontracts and limited liability of cloud providers
Five out of the eight SMEs that were interviewed recognised the fact that the lack of clarity
of the instructions on how to use cloud computing services is a problem that they are facing
This was explained by the fact that there is no common understanding of what cloud
computing is and how it operates The SME users expressed the need for better information
when contracting such services
The findings from the consultation of cloud providers (ten providers have been interviewed
during the case studied) indicated that business users for different reasons very often
encounter difficulties in understanding the CTampC This problem is particularly relevant
due to
lack of knowledge on how to use cloud computing services of the SME users
lack of attention of the SME users when signing the contracts
Two additional problems even if faced by less than 20 of the users are among the ones
that appeared most frequently65
lack of clarity and transparency of CTampCs (frequency = 215)
limited liability of the provider (frequency = 179)
During the consultations with national authorities and SMEs the participants indicated that
the limited liability of cloud providers commonly manifested when the following undesired
anomalies occurred
information access was interrupted or there was a problem of information
portability this group of anomalies encompasses technical aspects of the
information delivery including risks caused for example by denial-of-service attacks
These kinds of technical problems are most likely to cause liability Especially regular
updates can despite being administered properly result in downtime and thus in a
potential economic loss
data privacy and data protection were affected making information available to
the public can infringe on privacy and data protection provisions since cloud
computing services are of a cross-border nature privacy law conflicts between
national legislations are likely to occur Furthermore cloud computing services need
to comply with the principles of authenticity and integrity of information However the
entry into force of the General Data Protection Regulation (GDPR) (EU) 201667966
on 25 May 2018 is perceived as a factor that will effectively limit this issue in the
future
Even if affecting only a limited number of SMEs67 (less than 10 of the users participating in
the SMEs survey) problems related to security68 are quite frequent especially in regard to
64 See Annex 5 for further information 65 The incidence and frequency of the full list of SMEsrsquo problems can be found in Annex 5 66 Regulation (EU) 2016679 of the European Parliament and of the Council of 27 April 2016 on the
protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 9546EC (General Data Protection Regulation) OJ L 119
452016 67 More frequently among the micro and small enterprises 68 For further analysis see Annex 5
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
49
the lack of protection of the data stored in the cloud against theft or viruses and
unauthorised disclosure of or access to data
The analysis of the number of answers provided allows a deeper understanding of the
problems faced by SMEs
on average amongst the SMEs that experienced problems each SME encountered
four different problems over the period 2016 ndash 2017 (Table 13)
micro enterprises are the ones facing the highest number of problems (Table 13)
more than 23 of SMEs faced a high number of problems (between five and eight
Figure 15)69
Table 13 Number of problems faced by SMEs during 2016-2017 by SME size class ( of respondents 122)
SME size class
of SMEs that encountered problems
of encountered problems
Average of encountered problems
Micro 25 116 464
Small 24 92 383
Medium 73 290 397
Total 122 498 408
Source Survey of SMEs (2018)
Figure 15 Frequency of the number of encountered problems ( of respondents 122 of answers 494)
Source Survey of SMEs (2018)
42 The most serious problems encountered
Types of problems
After listing all problems encountered respondents were asked to mention the most serious
one among them survey results shows a correlation between the incidence of the declared
problems and the most serious problems experienced by the SMEs (Figure 16)
69 82 of SMEs that encountered problems declared 5 different problems 33 of SMEs faced 6 problems 66 of SMEs faced 7 problems and 49 of SMEs faced 8 different problems
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
50
Figure 16 The most serious problems experienced by the SMEs during 2016-2017 ( of
respondents 122)70
Source Survey of SMEs (2018)
Additionally the survey investigated the potential existence of a second most serious
problem Nearly half of the respondents (46) declared that they encountered only one
serious problem (Figure 17) However lsquolow speed of the servicersquo and lsquounsatisfactory
availability or discontinuity of the servicersquo remained the most prominent problems as
previously presented in Figure 16
Figure 17 The second most serious problem experienced by the SMEs during 2016-2017 ( of respondents 122)71
Source Survey of SMEs (2018)
Besides indicating the most serious problem SMEs were asked to assess the relevance of the
resulting cost (ie what percentage of costs deriving from all encountered problems was due
to the most serious problem only)
As presented in Table 14 more than 50 of the SMEs declared that the costs related to the
most serious problem represented a cost that counted for more than 80 of the overall
sustained costs The remaining 48 who declared that they had other problems did not
declare relevant costs related to the second most serious problem (either they provided values
that were not relevant72 or were not able to quantify the costs)
70 Incidence management is understood as the failure of the cloud provider to identify analyse and
correct hazards and prevent a future re-occurrence 71 Incidence management is understood as the failure of the cloud provider to identify analyse and correct hazards and prevent a future re-occurrence 72 Respondents declared values equal to zero
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51
Table 14 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by size class ( of respondents 122)
Size
Incidence of the costs related to the most serious problem compared with the total costs occurred
Below 50 Between 50 -
80 Above 80 10073 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Most affected service
All mentioned serious problems (both the first and second) were mainly related to the usage
of lsquocollaboration and communication servicesrsquo (Figure 18)74 which are indeed the most widely
used ones The next two types of cloud computing services linked to the most serious problem
are lsquobusiness applicationsrsquo and lsquostorage and hosting servicesrsquo Even though security services
are among the most widely used services (Figure 7) it seems they do not generate many
problems As also confirmed during the case studies75 (interviews with SMEs) security is often
perceived as the key risk when outsourcing information technology services because these
services may affect critical data However once cloud services are used problems related to
security appear only rarely
Figure 18 The type of cloud computing services linked with the most serious problems declared by the SMEs ( of respondents 122)76
Source Survey of SMEs (2018)
43 Causes of the most serious problems encountered
As previously illustrated the survey investigated also the causes of the most serious problems
encountered The main cause of the most serious problems is non-conformity of the
service provided with what was established in the contract (Figure 19)
73 Enterprises that declared they encountered only one problem 74 For the analysis of the second most serious problems and its link with used services please refer to
Annex 5 75 See Case study analysis for further information 76 Multiple choice question
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52
Figure 19 The main causes of the most serious problems ( of respondents 122 of
responses provided 124)77
Source Survey of SMEs (2018)
The unfairness of CTampC78 is also perceived as a possible cause of the most serious problems
declared This was mentioned by 12 of the SMEs that encountered problems (ie 15
respondents out of 122)
However in 13 of the cases the problems encountered were not within the service
providerrsquos responsibility but resulted from technical issues with SME and internal factors
When providing further details the SMEs acknowledged that the problems may have been
caused by the enterprisersquos own mistake due to miscommunication limited training of the
employees or lack of capacityknowledge
The relevance of lsquonon conformity of the servicesrsquo lsquotechnical problemsrsquo and lsquounfairness of CTampCrsquo
is confirmed also when the analysis of the causes is restricted to most serious problems only79
(Table 15)
77 Multiple choice question 78 CTampC were considered unfair by the respondents because of the impossibility of negotiating its
content because the contract might have included limited liability of the providers andor the possibility for the provider to modify unilaterally one or more clauses 79 Unsatisfactory availability Low speed of the service and Forced updates to the service
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53
Table 15 The causes of the three most serious problems ( of respondents 122 of
responses provided 59)80
The 3 most serious
problems
of SMEs declaring
this as the most
serious problem
of SMEs that consider
lsquonon-conformity of the servicersquo as the cause
of SMEs that consider
lsquotechnical problemsrsquo as
the cause
of SMEs that consider lsquounfairness of CTampCrsquo as the cause
of SMEs that declared other causes for the most
serious problem
encountered
Unsatisfactory availability
32 23 3 3 3
100 73 9 9 9
Low speed of
the service
27 13 5 2 7
100 48 19 7 26
Forced updates to the service
16 6 2 4 4
100 38 13 25 25
Source Survey of SMEs (2018)
Even the second most serious problems are frequently due to similar causes (ie non-
conformity of the service provided with what was established in the contract Figure
20)
Figure 20 The main causes of the second most serious problems ( of respondents 66 of responses provided 70)81
Source Survey of SMEs (2018)
44 Actions taken by SMEs
As anticipated in the introduction of Section 4 actions taken by SMEs in order to remedy the
encountered problems have been investigated
Nearly three-quarters (74) of the SMEs that encountered contract-related problems
(90 out of the 122 respondents) chose to take action to resolve or to remedy the most
serious problem
The 32 respondents who declared that no action had been taken provided usually more than
one justification for their answer The results that stood out were given by the fact that the
80 Multiple choice question 81 Multiple choice question
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54
provider fixed the problem (16) that the problem was assessed as not that
important (8) and that the procedure was too complicated (5)
The overall trend regarding actions taken to resolve the problem is maintained for each
type of sector included in the study where between 60 and 90 of the SMEs chose to
take action (see Annex 5 for further details)
Two main actions have been taken by SMEs to resolve the encountered problems using the
direct support of the provider andor making a complaint to the customer support
service (Figure 21)
Figure 21 The actions taken by the SMEs to resolve or remedy the most serious problems
( of respondents 90 of answers 165)82
Source Survey of SMEs (2018)
Also interestingly there are two types of actions to address the problem which have not been
declared at all both concerning legal measures going to mediationarbitration and
filing an action with a court
The replies received from the service providers during the case studies83 reveal that there
were cases where SMEs went to court to obtain compensation for the time and money lost
However providers remark that from their experience the probability that SMEs will win
these legal disputes is limited since it is difficult to demonstrate objective responsibilities
Additional insights were gained by investigating the replies within the category lsquoothersrsquo
chosen by more than 20 of the SMEs that took actions This reveals that about half of them
(21) SMEs took some type of internal measure such as changing an internal procedure or
moving the cloud computing services internally
The results revealed also that on average SMEs take more than one action to resolve or
remedy the most serious problems
At the same time among the 90 SMEs that took action 78 affirmed that they did not
encounter any difficulties in resolving the most serious problem (see question D121
from Annex 5 for further details)84
82 Multiple choice question 83 See Case study analysis (Annex 9) 84 All respondents (ie 90) that declared they took action were requested to say if they encountered
any difficulties while trying to resolve or remedy the encountered problem
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55
Moreover the survey revealed that the most likely challenge for SMEs when trying to resolve
the most serious problem is the length of the procedure (Figure 22)85
Figure 22 Difficulties encountered when trying to resolve the most serious contract-related problem ( of respondents 20 of answers 34)86
Source Survey of SMEs (2018)
The findings from the case studies revealed (through interviews with providers) that different
forms of assistance are offered when needed and that the support did not depend on the
enterprisersquos size but rather on the severity of the issue Providers also mentioned that the
length of the remedy procedure varies from a minimum of a few hours to a maximum of three
or four days
Results of the actions
Following the actions taken the majority of the SMEs signalled that their problem was
either entirely resolved (70) or partially resolved (18) as shown in Figure 23
Figure 23 The results of the actions taken to resolve or remedy the most serious problem
( of respondents 90)
Source Survey of SMEs (2018)
85 The two responses regarding the lsquootherrsquo option were first related to the lack of a timely response from
the provider and secondly to the fact that the provider offered only partial help to resolve the problem 86 Multiple choice question The question was addressed to the 20 respondents that declared encountering problems when taking action to resolve or remedy the problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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56
The extent to which the problem was fully resolved varies across sectors ranging from 41
for administrative and support service activities to 89 for wholesale and retail trade (Figure
24)
Figure 24 Number of SMEs for which the problem was fully resolved as a result of the action(s) taken by sector ( of respondents 63)
Source Survey of SMEs (2018)
From the service providersrsquo viewpoint if the problem falls under the providersrsquo responsibility
they try to partially compensate for the cost of the service One specific provider declared
that the approach commonly used in the market is to compensate for administrative costs
but only in exceptional cases87 to also reimburse the entire costs of the subscribed package
The reimbursed amount varies between 5 and 15 of the monthly fees Moreover within
one Expert Group Meeting there was mention of lsquoa practice in Spain on a regulated market
where money is returned to customers for downtime within 60 daysrsquo88
87 These rare cases might vary according to the specific problem The provider might consider the
reimbursement of the entire cost if the unavailability of the services exceeds the scheduled period needed in order to fix the problem 88 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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57
5 Consequences of the encountered problems
This section investigates the nature of the financial detriment suffered by the SMEs as
consequence of the encountered problems as identified in Section 4
This might be related to
negative consequences for business activities such as
- potential loss of turnover or profits as a consequence of the encountered
problem
- loss of clients
- reputation damages
extra work that is done with internal human resources while taking action to
resolve the encountered problems
extra effort or costs to ensure an alternative service andor to fix the cloud
service problem
legal actions taken to exercise the users rights to remedies for non-conformity of
service
The prevalence of these consequences has been verified during the implementation of the
survey and their economic assessment where possible has been discussed and validated
during the case studies and webinars
This section also discusses some more qualitative aspects of how the encountered problems
may affect individual companies
51 Qualitative assessment
SMEs declared several negative consequences for business activities arising from contract-
related problems (Figure 25)
Figure 25 Perceived consequences for business activities ( of respondents 122)
Source Survey of SMEs (2018)
The limited availability of a service or its limited speed might reduce the capacity of SMEs to
respond to customersrsquo needs in a timely manner causing loss of clients or having a negative
impact on reputation Around one out of five SMEs that encountered problems declared that
those problems generated loss of clients or reputational damages
Reputation is a strategic intangible asset and it may play a very important role not only in
improving SMEsrsquo financial results but also (or even more importantly) in overcoming barriers
that significantly hinder their development The most important factor which builds a
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and unbalanced cloud computing contracts
58
companyrsquos reputation is the opinion and trust shared by stakeholders (especially customers
and third parties)
Interestingly Figure 25 also shows that the proportion of SMEs that perceive some financial
impacts arising from contract-related cloud computing problems in terms of lost profits or
turnover is slightly lower (16 and 14 respectively out of the 122 that faced contract-
related cloud computing problems) which suggests that at least some of those SMEs that
declared to have experienced negative consequences considered that they somehow managed
to counteract the impacts in terms of lost clients and reputational damages and that these
consequences did not translate into financial losses It is true that some of the effects of those
losses of clients or reputational damages that were reported may take some time to translate
into turnover losses and this helps in explaining why the proportion of enterprises that
declared to have experienced losses of turnover and profits is lower than that the one that
declared to have suffered from losses of clients or reputational damages Moreover this can
also be explained by the fact that it is not inherently an easy task to ask an SME to quantify
such costs as this might also depend on the person who answers and how knowledgeable he
is on the firmsrsquo accounts
Besides the consequences mentioned above the results of the survey and the findings of the
case studies confirmed that the most important consequence for cloud computing business
users is the extra work that had to be performed with internal human resources
overall 93 of the enterprises that encountered problems have had to mobilise some internal
human resources to sort out the problems (Table 16)
In particular while acting to resolve the encountered problems
76 of the enterprises have had to use technical staff to resolve the encountered
problems
administrative and senior officers and managers were used by nearly half of the
enterprises (48)
the complexity of the encountered problems forced 60 of the SMEs (73 out of 122
that encountered problems) to use at least two skill levels
Table 16 Number of enterprises in which human resources were invested while taking action to resolve or remedy the most serious problem by skill level of employee
( of respondents 122)
Skill level of
enterprises
Administrative 59 48
Technical 93 76
Senior officer(s)manager(s) 59 48
At least one of the above 113 93
Source Survey of SMEs (2018)
The importance and the prevalence of the extra work are also confirmed by the fact that about
one-third (31) of the SMEs that encountered problems reported no other consequences
besides human resources costs while taking action to resolve the most serious problem (Table
17)
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59
Table 17 Number of enterprises that have incurred costs (besides human resources) while
taking action to resolve or remedy the most serious problem by type of costs ( of respondents 122)89
Other costs encountered (different from costs related to internal HR)
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Other residual Costs 9 7
None 38 31
Source Survey of SMEs (2018)
It is interesting to note that when the problems were not resolved SMEs faced additional
costs related to ensuring an alternative service (34) and costs related to fixing the
cloud service problem with external support (32 Table 17)
Other hidden costs may also appear when SMEs face contract-related problems Even if legal
measures (ie going to mediationarbitration and filing an action with a court) were not
chosen as the action to resolve the problems (see Section 42 for further details) 18 of the
SMEs incurred some legal costs when exercising user rights to receiving remedies for non-
conformity of the contracted service
Whilst the perception of the nine SMEs that took part in the in-depth interviews is that the
encountered problems do not always have direct and important consequences for the financial
performance of the enterprises (ie loss of profit or turnover) it should also be noted that in
the survey not all SMEs were able to provide an estimate of the detriment encountered Such
estimation is indeed challenging and the unwillingnessincapability of the SMEs to provide an
estimate may also be due to the fact that effects on the balance sheet may only materialise
over a longer time horizon
However cloud services can be critical for SMEs This was reflected in some very high
estimates of detriment reported by individual SMEs For example this could be the case for
where the data lies at the core of the SMErsquos activity (eg an accounting firm) In extreme
cases the problem may cause the market exit of efficient companies The larger the costs
generated by the encountered problems the larger the risk of market inefficiencies
The next section is aimed at quantifying the monetary value of the consequences analysed so
far
52 Quantitative assessment
The quantification of the consequences suffered by SMEs (economic detriment) relied on the
computation of the following parameters90
proportion of enterprises that use cloud computing services (cloud computing usage
rate)91
the incidence of contract-related problems by sector--size classes (namely the
percentage of enterprises that encountered problems)
the 95 trimmed mean values by enterprise for
89 Multiple choice question 90 Please refer to Section 21 for further details on the methodology used to quantify the economic detriment 91 Please refer to Section 31 for further details
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60
- losses of turnover or alternatively losses of profits
- number of working days involved in resolving the problems
- the level of other costs incurred
- the value of any redress offered by the service provider as a compensation
All of these parameters have been quantified by using the results of the survey To compute
the average and 95 trimmed mean values for each dimension of detriment only the answers
of SMEs that quantified the detriment associated with that dimension were considered
For some dimensions SMEs were asked first whether they suffered some cost and then to
quantify it SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems but that were not able to provide an estimate of the detriment suffered
due to that cost cannot be considered in this quantification exercise This quantification
exercise must thus be regarded as an estimate of the financial consequences of contract-
related cloud computing problems
Table 18 presents in the first column the number of enterprises that declared that they
suffered each cost92 then in the second column it presents the number of SMEs that were
able to quantify the cost and in the third column the number of SMEs that declared some
positive value for each cost As it can be seen the difference between the number of
enterprises that declared that they suffered a cost and that were able to quantify its effect is
quite diverse across the different dimensions of detriment
Table 18 Enterprises that declared that they suffered some costs and that were able to
quantify these costs
Component
Number of
enterprises that declared
they suffered the cost
Number of
enterprises that
quantified the cost
Number of enterprises
that
quantified
with positive values
of enterprises
that
quantified
with positive values
Loss of turnover na 122 17 14
Loss of profits na 122 19 16
Internal human resource costs 113 113 105 93
Other costs (at least one) 90 78 31 40
Costs related to ensuring an alternative service
42 41 15 37
Costs related to fixing the cloud service problem
39 39 15 38
Legal costs 22 22 1 5
Costs related to reputation
damage 23 23 3 13
Costs related to loss of client(s)
25 24 2 8
Other residual costs 47 34 5 15
Redress 15 15 7 47
Source Survey of SMEs (2018)
92 For lost turnover and lost profits as it was not asked separately whether the SME experienced some loss there is no information (see Annex 4 section E for further details on how the data collection was structured)
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Regarding turnover and profit losses all companies had to answer the question in the survey
and in that sense had to quantify those dimensions of detriment Despite this fact and as
already discussed only 14 and 16 respectively provided numbers for their estimates of
losses of turnover and profits These low figures may be due to the fact that at least some of
those SMEs that declared to having experienced other negative consequences might have
managed to counteract the impacts related to lost clients and reputational damages and other
costs and that those costs did not translate into financial losses Yet it is also true that some
of the effects of those losses of clients or reputational damages that were reported may take
some time to translate into turnover losses and this may help to explain why the proportion
of enterprises that declared to have experienced losses of turnover and profits is lower than
that which declared to have suffered losses of clients or reputational damages
For internal human resources costs 93 of the enterprises that mobilised internal human
resources declared losses of some working days that were considered in the analysis of
detriment thus most enterprises were considered in the analysis
For other costs 78 (80) of the enterprises that declared to have borne some costs were
able to quantify at least one of these costs
It is important to point out that some of the SMEs that declared to have borne costs arising
from contract-related cloud computing problems were not able to provide an estimate of the
cost of the detriment suffered This means that while there is some under-reporting of the
percentage of enterprises that faced relevant costs it does not necessarily imply a bias in the
overall estimate of detriment given that calculating average values for the impact can correct
the under-reporting problem if the true values of those that are not able to quantify have the
same distribution as those that were able to do so In practice by taking into consideration
only those that SMEs that quantified the detriment may lead to underestimation
overestimation or no bias at all
The fact that enterprises only assess the current financial losses and are not able to foresee
the future financial losses associated with problems such as the loss of clients or reputation
damages can imply an underestimation of the true detriment
Computed values have been discussed and validated during the webinars realised under Task
3 (see Annex 9 for further details)
Cloud computing usage rate
Two possible scenarios for the estimate of the usage rate of cloud computing were considered
based on the survey of SMEs
the first which is the central scenario in this study considers all enterprises that
did not respond to the survey as not using cloud computing services arriving at a
universe of 3173 SMEs In this case the usage rate corresponds to a value of 159
in the second only those enterprises that explicitly declared that they are not using
cloud computing services are added to those that declare its use corresponding to a
universe of 1009 The usage rate in this case is higher reaching a value of 499
which can be regarded as an upper estimate representing a possible future situation
in which the usage rate of cloud computing increases significantly
Incidence of contract-related problems
The sample available from the survey also allows the calculation with a 95 confidence
interval level and 5 margin of error of the incidence of contract-related problems
Losses of turnover
For all cost categories (ie loss of turnoverprofit costs of human resources other costs) and
for the value of redress the research team considered the 95 trimmed mean of the values
from the survey
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Trimmed means are robust estimators of a general trend To compute the 95 trimmed
mean the research team i) removed 25 of observations on each side of the distribution
of survey answers ii) computed the average of the remaining observations
Using trimmed means confers one main advantage the standard error of the trimmed mean
is less affected by outliers and asymmetry than the mean93
The following tables present both trimmed mean and average values for all costs the latter
being included for illustrative purpose only
Table 19 Loss of turnover by enterprises
Value of
Losses (euro)
Number of
Enterprises
Relative frequency Cumulative
frequency
000 105 861 861
700 1 08 869
30000 1 08 877
104690 2 16 893
157035 1 08 902
200000 1 08 910
209380 1 08 918
500000 2 16 934
1000000 1 08 943
2000000 1 08 951
5000000 1 08 959
10469012 1 08 967
15000000 2 16 984
20000000 1 08 992
50000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Based on these values the value of the 95 trimmed mean is euro42094 Losses by sector
size class and country are presented in Annex 5
Loss of profit
Looking at profits (Table 20) we can see that also only 156 (19) of the enterprises out of
the 122 that suffered contract-related cloud computing problems declared a loss of profits
corresponding to a 95 trimmed mean of euro177 (Annex 5)95
Table 20 Loss of profits by enterprise
Value of Losses (euro)
Number of Enterprises
Relative frequency Cumulative frequency
000 103 844 844
1200 1 08 852
93 It must be emphasised that all very high value answers (outliers) have been double-checked and they do not seem to include errors in any case we take the more robust scenario (when the 95 trimmed
mean is used) to measure the impact and present the results considering the average values only as a
sensitivity in the appendix 94 The average value is euro985869 95 The average loss of profits per enterprise is about euro1913
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63
Value of
Losses (euro)
Number of
Enterprises Relative frequency
Cumulative
frequency
20938 1 08 861
51500 1 08 869
52345 1 08 877
60000 1 08 885
90000 1 08 893
150000 1 08 902
157035 1 08 910
200000 2 16 926
209380 1 08 934
300000 1 08 943
500000 2 16 959
523451 1 08 967
2093802 1 08 975
3000000 1 08 984
5234506 1 08 992
10000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Internal human resources costs
When one considers the number of working days involved in resolving the problems96 there
is a significant level of dispersion and only 17 out of the 122 enterprises that suffered contract-
related cloud computing problems did not invest working days in resolving the problem97 The
95 trimmed mean was about 32 days98
To compute the human resources costs incurred when resolving the problems as the actual
values of wages of those involved in resolving the problems were not provided the number
of working days was multiplied by the average cost of labour per working day per country and
industry which was computed from Eurostat data as INDIC_SB - Personnel costs - million
euroINDIC_SB - Persons employed - number)260
Eurostat data are not differentiated by skill level but by using the average wage level by
sector and country during that period we have a robust estimate of the average cost of labour
on the affected enterprises and so the estimate is likely to be close to actual conditions
96 For the measurement of the detriment only the overall number of working days was used as the responses to the survey regarding wages were not robust and so the average wage for each country was used to estimate the human resources costs and accordingly only the overall number of working
days had to be used from the survey 97 This means that 93 of the enterprises that mobilised internal human resources to sort out the problems declared some losses of working days 98 The average number of working days involved in resolving the problem was about 72
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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64
Figure 26 Total number of working days involved in resolving the problem by enterprise
Source Survey of SMEs (2018)99
Other costs and value of redress
With regard to the other costs100 incurred by the SMEs to resolve the problem a qualitative
assessment has been presented in Section 51 above
With respect to these other costs Table 21 shows the number of SMEs that declared relevant
values as well as the trimmed mean and the average of the declared values for each of the
individual costs
The incidence of each of the individual other costs is quite different with the costs related to
ensuring an alternative service and costs related to fixing the cloud service problem as those
that are perceived as having greater impact Overall only seven enterprises experienced more
than one type of other costs
Table 21 Values for other costs
Component
Number of enterprises
that quantified
costs
Number of enterprises
that declared positive values
of total 122
95 trimmed
mean of the values
declared by enterprises
experiencing
each cost euro
Average of
the values declared by enterprises
experiencing each cost
euro
Costs related to ensuring an alternative service
41 15 123 1187 5892
Costs related to fixing the cloud service problem
39 15 123 1311 13657
99 See Annex 5 for further details 100 ie costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
65
Component
Number of enterprises
that quantified
costs
Number of enterprises
that
declared positive values
of total
122
95
trimmed
mean of the values
declared by enterprises
experiencing each cost
euro
Average of
the values declared by enterprises
experiencing each cost
euro
Legal costs 22 1 08 00 19
Costs related to reputation damage
23 3 25 00 2701
Costs related to loss of
client(s) 24 2 16 00 8663
Other residual costs 34 5 41 23 6255
Source Survey of SMEs (2018)
As discussed above not in all cases were consulted stakeholders able to associate an
economic value with the consequence that was faced or they simply considered the costs that
were borne as not relevant
Since for some of the individual other costs there were very few answers provided we chose
to consider an aggregate value of other costs in the assessment of the detriment suffered by
SMEs given that the use of an aggregate value increases the robustness of the estimate101
To arrive at the aggregate value we first computed the total value of other costs borne by
each enterprise (by adding up each of the individual other costs) and then computed the
trimmed mean of the aggregate declared other costs The 95 trimmed mean per
enterprise that suffered problems102 of the overall other costs borne was euro341 (Table
22)103
Table 22 Parameters used in detriment assessment
Component
Number of enterprises that
declared
relevant values ()
of the 122 enterprises that
faced problems
95 trimmed mean of the
values declared by enterprises
that quantified the component
euro
Average of the values declared by enterprises that quantified the component
euro
Turnover losses 17 139 41954 985869
Profit losses 19 156 17690 191346
Costs of human resources
105 861 36006 80621
Other costs 30 246 34124 371871
Redress 7 57 095 6042
Source Survey of SMEs (2018)
101 For this reason the trimmed mean based on total other costs has been used instead of the trimmed
means for each individual other cost 102 The trimmed mean has been computed over 122 SMEs 103 An average of euro3718 per enterprise
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66
Finally also the value of any redress offered by the service providers to compensate for
the problem has been computed Only seven enterprises out of the 122 that suffered contract-
related cloud computing problems (6) declared to having received a positive amount as
redress corresponding to a 95 trimmed mean of about euro1 per enterprise that
suffered problems104 which shows that SMEs are not able to be compensated for the costs
suffered
Table 22 summarises the parameters discussed above for each component of detriment that
is used in the quantitative analysis
Measuring the economic detriment
Having those parameters and the total number of enterprises that experienced contract-
related cloud computing problems it is possible to compute the value of the economic
detriment they suffered by using the formulas presented in Section 21 of this report
Gross financial detriment is measured by taking into account alternatively the loss of turnover
or profits as perceived by each SME and then adding the costs of the human resources
invested by each SME while taking action to resolve or remedy the most serious encountered
problem and the other costs declared by each SME including costs such as the costs related
to ensuring an alternative service the costs related to fixing the cloud service problem any
legal costs costs related to reputation damage and costs related to loss of client(s) and other
residual costs
The measures of gross financial detriment per enterprise computed from the previous
parameters are presented in Table 23 and those for net financial detriment are shown in Table
24
Table 23 Measures of gross and net financial detriment per enterprise considering lost turnover (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Turnover losses 4195 374 98587 685
Costs of human resources 3601 321 8062 56
Other costs 3412 304 37187 259
Gross detriment 11208 1000 143836 1000
Redress 10 604
Net detriment 11199 143232
Source Survey of SMEs (2018) and Eurostat Business Statistics
104 An average of euro6042
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and unbalanced cloud computing contracts
67
Table 24 Measures of gross and net financial detriment per enterprise considering lost
profits (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Profit losses 1769 201 19135 297
Costs of human resources
3601 410 8062 125
Other costs 3412 389 37187 578
Gross detriment 8782 1000
64384 1000
Redress 10 604
Net detriment 8773 63780
Source Survey of SMEs (2018) and Eurostat Business Statistics
As mentioned above considering these values two scenarios have been developed that take
into account the two measures of cloud computing usage rate
The estimates presented are lower thresholds of the actual detriment as they only consider
the most serious problem which represents less than 80 of the total losses for 48 of the
companies105 The size of underestimation is limited by the fact that sectors with the highest
usage rates of cloud computing are considered in the analysis and they are likely to bear more
costs than the average sector
Table 25 to Table 30 below present the results for economic detriment at the EU level
The interpretation of the results on the economic detriment caused by contract-related
cloud computing problems shows that in the central scenario (when 159 of the total
number of enterprises use cloud computing) the number of enterprises that suffered contract-
related problems across the EU28 is around 583000 (Table 25) In the alternative
scenario (when about 50 of the enterprises use cloud computing) this value increases to
about 18 million
105 The risk of underestimation is less pronounced as the sectors selected for the sample are those for which the usage rate of cloud computing is higher
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68
Table 25 Number of enterprises at the EU28 level suffering economic detriment
Scenario 1
(average incidence of CC use
159)
Scenario 2
(average incidence of CC use
499)
(number)
Secto
r
Manufacturing 82256 245581
Wholesale and retail trade repair of motor vehicles and motorcycles
198877 628761
Information and communication 49890 156187
Professional scientific and technical activities
195098 599588
Administrative and support service activities
56803 203001
Total 582924 1833118
Siz
e
cla
ss Micro 548001 1722427
Small 22827 70148
Medium 12096 40543
Total 582924 1833118
Source Computations based on Survey of SMEs (2018) and Eurostat
When considering lost turnover and all other costs incurred (Table 24) contract-
related problems generated a gross economic detriment that ranges from approximately
euro650 million in the scenario of 159 cloud computing usage to about euro21 billion in the
scenario of 499 cloud computing usage When considering the lost profits and all other
costs incurred (Table 27) the value of gross detriment goes from just over euro500 million
in the scenario of 159 cloud computing usage to about euro16 billion in the scenario of
499 cloud computing usage
Table 26 Gross economic detriment at the EU28 level - considering lost turnover and all other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2947
Wholesale and retail trade repair of motor vehicles and motorcycles
1673 5235
Information and communication 369 1145
Professional scientific and technical
activities 1557 4723
Administrative and support service activities
1918 6495
Total 6534 20546
Siz
e
cla
ss Micro 4816 15124
Small 1144 3562
Medium 574 1861
Total 6534 20546
Source Computations based on Survey of SMEs (2018) and Eurostat
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69
Table 27 Gross economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 649 1906
Wholesale and retail trade repair
of motor vehicles and motorcycles 1548 4852
Information and communication 345 1074
Professional scientific and technical activities
1421 4323
Administrative and support service
activities 1157 3943
Total 5119 16098
Siz
e
cla
ss Micro 4013 12609
Small 801 2488
Medium 306 1002
Total 5119 16098
Source Computations based on Survey of SMEs (2018) and Eurostat
The value of the gross detriment per enterprise that faces problems when considering
lost turnover and all other costs incurred is about euro1100 When considering lost profits
and all the other costs incurred the value of the detriment per enterprise is around euro880
Table 28 Average gross economic detriment per SME
Average gross economic detriment per SME suffering economic
detriment euro
Considering lost turnover and all
other costs incurred
Considering lost profit and all other
costs incurred
Micro 8788 7323
Small 50116 35090
Medium 47454 25298
Total 11209 8782
The net economic detriment associated with contract-related cloud computing problems
ranges from around euro650 million to euro21 billion when considering lost turnover and
all other costs incurred (Table 29) and from euro501 million to euro16 billion when considering
the lost profits and all other costs incurred (Table 30)
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70
Table 29 Net economic detriment at the EU 28 level - considering lost turnover and all
other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2946
Wholesale and retail trade repair of
motor vehicles and motorcycles 1673 5234
Information and communication 369 1145
Professional scientific and technical activities
1556 4722
Administrative and support service
activities 1913 6481
Total 6528 20529
Siz
e
cla
ss Micro 4815 15118
Small 1143 3562
Medium 570 1850
Total 6528 20529
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 30 Net economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 648 1906
Wholesale and retail trade repair of motor vehicles and motorcycles
1548 4851
Information and communication 345 1074
Professional scientific and technical activities
1420 4322
Administrative and support service activities
1152 3928
Total 5114 16081
Siz
e
cla
ss Micro 4011 12603
Small 800 2488
Medium 302 990
Total 5114 16081
Source Computations based on Survey of SMEs (2018) and Eurostat
Moving to the analysis of the different components of detriment considering the more detailed
results presented in Annex 5 one can see that the overall turnover loss (Table 77) arising
from contract-related cloud computing problems across the EU28 ranges from euro245 million
to euro770 million when the 95 trimmed mean loss per enterprise is considered depending on
the cloud computing usage rate
In the measures of detriment that consider the lost turnover and all other costs incurred this
component is the most significant component of detriment in both scenarios with values
around 37 (Figure 27) When measuring detriment considering the lost profits and all other
costs incurred the most important component of detriment varies across the different
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and unbalanced cloud computing contracts
71
scenarios being either the other costs covered106 or the costs of human resources invested
in resolving the problem
The costs of human resources involved in resolving the problem represent around 32 of
the total detriment when considering lost turnover (Table 23)
Even if figures by industry should be looked at carefully in all scenarios in which detriment is
measured considering the lost turnover and all other costs incurred the sectors lsquoWholesale
and retail trade repair of motor vehicles and motorcyclesrsquo lsquoProfessional scientific and
technical activitiesrsquo and lsquoAdministrative and support service activitiesrsquo together account for
about 90 of the overall gross detriment In the scenarios in which detriment is measured
considering lost profits and all other costs incurred lsquoWholesale and retail trade repair of
motor vehicles and motorcyclesrsquo and lsquoProfessional scientific and technical activitiesrsquo together
account for about 60 of the total detriment
In all scenarios micro enterprises account for close to 70 of the global economic detriment
106 These costs include costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
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72
6 Impacts of the economic detriment
This section assesses (in quantitative terms) the impact on growth and jobs of the quantified
SMEs detriment identified and provides a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and competitiveness
In order to quantify the effects on growth and jobs the research team estimated
the direct impact meaning the GVA and employment contents of the turnover lost
by SMEs that are affected directly by the contract-related problems This is done by
taking from Eurostat data for each countrysector
- the output per employee
- the output per unit of GVA107
Dividing the turnover losses estimated by these coefficients allows to estimate the GVA
associated with the turnover losses as follow
119863119868(119866119881119860)119894 = sum119871(119879)119894119895
119884119894119895 119866119881119860119894119895frasl
5
119895=1
Where
119863119868(119866119881119860)119894 is the direct impact in terms of GVA for the country i considering the five
sectors under the scope of the study
119871(119879)119894119895 is the loss turnover for the country i in the sector j
119884119894119895 is the average total output produced in the country i and in the sector j during the
period 2014-2016 computed from Eurostat National accounts aggregates by industry
(up to NACE A64) [nama_10_a64]
119866119881119860119894119895 is the average total GVA produced in the country i and in the sector j during
the period 2014-2016 computed from Eurostat National accounts aggregates by
industry (up to NACE A64) [nama_10_a64]
The same approach has been used for the estimate of the loss of jobs associated with the
turnover losses
119863119868(119864)119894 = sum119871(119879)119894119895
119884119894119895 119864119894119895frasl
5
119895=1
Where
- 119863119868(E)119894 is the direct impact in terms of employment for the country i considering
the five sectors under the scope of the study
- 119871(119879)119894119895 is the loss turnover for the country i in the sector j
- 119884119894119895 is the average total output produced in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64]
- 119864119894119895 is the average number of employees in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64_e]
107 Average values for 2014-2016 were considered to increase robustness and to cover almost the same period as we are considering in the assessment
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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73
For instance in the first scenario the total turnover losses arising from contract-related cloud
computing problems in manufacturing in Belgium is euro448 million (Table 81) Since each
person in manufacturing in Belgium produces euro4293 thousand of output (Table 84) that
turnover is associated with 104 jobs And given that for each euro of GVA in manufacturing in
Belgium there are euro41 of turnover (Table 83) that turnover is associated euro 108 million of
GVA
indirect impacts also measured as GVA and employment losses but in the supplier
industries were also assessed by using the input-output methodology presented in
Box 4
The basic requirement is to estimate the amount of turnover that is lost in supplier industries
given the existing supply chains The input-output methodology allows estimating those losses
based on the interlinkages between sectors existing in a given economy We then use the
input-output tables for the EU28 to estimate how much turnover would be lost in the supplier
industries due to the turnover losses associated with contract-related cloud computing
problems in the industries directly affected by those problems After estimating the turnover
losses in the supplier industries it is possible to measure the GVA and employment contents
of the production lost in those industries by using the same procedure described above that
was used for direct effects The input-output analysis is only used to estimate the turnover
losses in supplier industries when the methodology described above is applied
61 Direct impacts
At the enterprise level we estimated the financial detriment suffered by each enterprise by
considering different components and then aggregated those measures to the EU28 level by
adding up the effects suffered by each enterprise across all enterprises
When estimating the macroeconomic effects of the contract-related problems as discussed in
the methodology one must consider the overall turnover losses that were sustained by all
enterprises that experienced those problems This is due to the fact that turnover is the
variable that summarises the overall effects at the enterprise level and that is transmitted to
the economic system through the supply chains and can be related to aggregate economic
variables At the same time by considering turnover as an overall effect helps to avoid double
counting
Estimated turnover losses are presented in section 52 by considering the average loss of
turnover experienced by each enterprise and the total number of enterprises that suffered
problems related to cloud computing As discussed in that section there may be some
underestimation of the loss of turnover as we are only considering the consequences of the
most serious problem and also because enterprises many times are not able to assess108 how
some costs such as loss of clients or reputational damages translate into turnover losses or
other financial losses
Keeping the previous considerations in mind the overall results show that depending on the
scenario of cloud computing usage the direct loss of jobs associated with the loss of turnover
caused by contract-related cloud computing problems ranges from 3672 to 11816 jobs At
maximum this represents 001 of the total employment in the EU28 showing that the
overall direct effects of contract-related problems in terms of jobs is quite limited
With respect to gross value added the direct impact of the losses of turnover caused by
contract-related cloud computing problems ranges from euro119 million to euro379 million which
is again negligible when considering the overall EU28 level
108 Namely because there is a time lag and no linear proportion between the costs and damage (eg reputational damage) and the turnover losses
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74
Table 31 Direct impact on growth and jobs of the losses of turnover caused by contract-
related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 1191 3788
EU GVA 000 000
Impact on jobs
Persons 3672 11816
EU
employment 000 001
Source Computations based on Survey of SMEs (2018) and Eurostat
Annex 7 presents tables that provide details by sector and country The tables that provide
details by country and sector show that effects are more significant in the sectors
lsquoProfessional scientific and technical activitiesrsquo and lsquoAdministrative and support service
activitiesrsquo One can also find some differences across countries
62 Indirect impacts
Turning to the indirect effects as mentioned we measured the consequences of the turnover
losses on supplier industries by using the input-output model to identify the supply chains
It is important to take into account that not only the described limitations related to the direct
effects do not fully translate into the indirect effects but the methodology used is also not
able to capture some opportunity costs that are particularly relevant for instance for human
resources or downstream effects namely on final consumers Thus the current
measurement of indirect effects must be seen as a lower threshold to the true indirect effects
Despite these limitations the input-output methodology is the best available methodology to
explore the interlinkages that exist between sectors and to estimate the indirect impacts
arising from contract-related problems
The measured indirect impacts on supplier industries are similar in magnitude to the direct
effects
Depending on the scenario of cloud computing usage the loss of jobs in supplier industries
associated with the loss of turnover caused by cloud computing contract-related problems
ranges from 1733 to 5402 Losses of GVA range from euro99 million to euro308 million
Overall adding direct and indirect effects we may refer to maximum impacts of about 5400
jobs (000 of EU28 employment) in scenario 1 and 17818 jobs in scenario 2 (001 of
total employment Regarding the loss of GVA the sum of direct and indirect effects adds up
to euro220 million in scenario 1 and to euro687 million in scenario 2 (both 000 of EU28 GVA)
which shows that the impact is not very significant at the EU28 level
Table 32 Indirect impact on growth and jobs of the losses of turnover caused by contract-related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 987 3079
EU GVA 000 000
Impact on jobs Persons 1733 5402
EU employment 000 000
Source Computations based on Survey of SMEs (2018) and Eurostat
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75
63 Other qualitative impacts of contract-related problems
The previous sections show that even with some possible underestimation the overall direct
and indirect impacts are not very significant for the time being but as was pointed out in the
analysis some companies have already experienced problems that had very significant effects
(demonstrated by the size of the average of all detriment components compared with the
95 trimmed mean presented in Table 22) and in a scenario of increasing usage rates these
effects are likely to become more relevant and more likely to affect the market
The analysis also revealed that some SMEs had difficulties in quantifying the costs relating to
cloud computing problems
However it is important to keep in mind that besides those quantitative impacts there might
be some other more qualitative effects arising from contract-related cloud computing
problems that create distortions affecting the allocative efficiency in the EU economy
eventually diminishing the overall welfare
The efficiency with which goods and services are produced or distributed is fundamental to
ensuring the competitiveness of the various business entities Using the best available
technologies and taking full advantage of them to reduce costs or improve the quality of the
goods and services provided are relevant factors in ensuring SMEsrsquo competitiveness
In the ongoing debate on macroeconomic imbalances and external competitiveness there has
been an increasing interest in competitiveness indicators regarding both cost competitiveness
and quality and non-cost competitiveness
General industrial economics theories show that contract-related problems as they increase
transaction costs may affect that competitiveness as they are a type of context cost which
are costs that affect the activity of enterprises and are not imputable to the investor to his
business or to his organisation These context costs gain increasing relevance with the
increasing integration of various enterprises into the global economy given that in a scenario
in which enterprises located in different territories face different contextual costs those costs
may significantly distort competition favouring the enterprises located in jurisdictions with
lower context costs
Contract-related problems are therefore a type of problem that may impact competitiveness
of enterprises and hinder their development in several different ways They may represent an
additional cost that reduces the price competitiveness of enterprises But they can also
constitute a non-cost barrier to competitiveness if they affect the presence of enterprises in
the market and their ability to efficiently supply their products namely if those problems
significantly reduce the possibility of accessing the best available technologies
Taking into account the previous considerations it is then important to analyse whether the
contract-related problems encountered and described above may have generated other
significant effects through both cost and non-cost competitiveness109
The analysis so far has already shown that contract-related problems have an impact in terms
of reputation and loss of clients besides the financial impacts on enterprise performance Even
if SMEs are not able to translate those effects into financial costs they are likely to have an
impact over the long run
During the interviews and case studies questions were also raised about whether the contract-
related problems might have caused other problems such as reputation damages or losses of
109 The outliers in the sample showed that in a few extreme cases the effects of contract related problems had very high effects and although these values have been excluded using the Trimmed Mean they should not be disregarded when trying to understand the whole context
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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76
competitiveness that may have impacted significantly on the economic performance of the
companies affected
For the time being it seems that given the fact that at the micro level (ie enterprise level)
most of the detriment is associated with extra work required to sort out the problems
enterprises are able to accommodate this effect at least to some extent
The relatively low value of detriment per enterprise perceived by SMEs as being caused by
contract-related problems suggests that enterprises consider they are able to absorb some of
those costs110 If those effects were greater they would have to transmit them more heavily
to their clients namely through increases in prices
Yet in considering all of the factors our general assessment is that even if enterprises are
able to partially absorb the costs they have incurred some of those costs will show up sooner
or later in financial variables and will translate into larger distortions that are likely to affect
allocative efficiency market functioning and competitiveness
110 Again the difficulties evidenced by some SMEs to quantify the costs arising from contract related problems suggests they might not be able to sufficiently account for the opportunity costs associated with solving those problems
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7 Conclusions
Demonstrable tangible economic benefits of cloud computing have been estimated and
confirmed for some years now The main benefits realised are lower information technology
costs more effective mobile working higher productivity standardisation of processes better
ability to enter new business areas and the ability to open up in new locations
While the above list of the benefits is not exhaustive it certainly provides an impression of
the high potential economic advantages that can be gained from the usage of cloud computing
compared to more traditional alternatives such as on-premises information technology
infrastructure
All in all the growing usage of cloud computing is expected to have a relevant impact on
increasing EU GDP and creating additional jobs111
The present study investigated the cloud computing services that are most commonly used
by micro small and medium-sized enterprises in the EU In particular a survey was
conducted on 3173 EU SMEs
The survey results allowed the estimation of the usage rate of cloud computing across SMEs
as 159 calculated from the number of SMEs that declared they are using cloud computing
services (503) divided by the number of SMEs reached (3173)
However EU SMEs are still only making basic use of cloud computing services in terms of the
number and types of contracted services
on average SMEs that declared that they used cloud services contracted five
different cloud computing services but one-third of the SMEs that used cloud
computing contracted only a limited number of services (up to three)
furthermore the use of cloud computing is mainly related to more mature applications
(such as collaboration and communication tools storage and hosting support)
Although the usage of cloud computing services is growing the following potential factors
limiting cloud computing usage were investigated during the interviews with different
stakeholders (including cloud services providersbrokers SMEs business associations ndash
including EEN associations Chamber of Commerce national authorities national SMEs
Envoy)
some SMEs have difficulties in assessing how the new services can improve their
everyday work
other SMEs perceive that costs of cloud services are still high and that it takes too
long to recover the investment
the division of responsibilities between SMEs and cloud providers can
sometimes become a major source of problems as it is not always clearly
documentedexplicated leading to overlaps and gaps especially with respect to
security aspects It is not uncommon for SMEs to be confused about their
responsibilities concerning security such as who makes backups of data or software
which type of failoverredundancy is offered by the provider and what still needs to
be done by the customer All of these issues can have an impact on the willingness of
SMEs to outsource cloud services
security matters generally influence SMEsrsquo decisions about what types of services to
be used One of the aspects that has been mentioned during the interviews as a factor
influencing the SMEsrsquo choices is the reputation of the provider more precisely
whether the cloud provider has had incidents of data breaches in the past
111 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels
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78
Another important factor discussed during the interviews is the asymmetry of information
when it comes to negotiating and customising the services covered by the CTampC and that
might limit the capacity of SMEs to find solutions that fit their needs
As a consequence the survey results showed that the SMEs tended to sign the standard
terms and conditions offered by the cloud provider (this is true for 64 out of 503 SMEs
that are using cloud computing services) either because they did not try at all to negotiate
(46) or were not able to do so (18) The decision to adopt the standard terms and
conditions was made either because these met the usersrsquo expectations (18) or because it
was assumedknown that a negotiation would have no chance to succeed (13)
In contrast to the traditional provision of on-premises IT resources the multi-tenant nature
of cloud computing usually raises concerns with respect to privacy confidentiality and
data integrity Cloud computing presents its own set of security issues which coupled with
the risks and threats inherent in traditional IT computing are also limiting its usage
However the stakeholders involved in the study indicated that the shortcomings in the SMEsrsquo
capacity for negotiating cloud computing contracts could be helped somewhat by the entry
into force of the GDPR as the new legislative framework gives SMEs more control over data
once the service providers apply the regulation
While the main objective of the study was to deliver the necessary evidence to support the
European Commission in its assessment of the need for and extent of any further EU efforts
to increase SMEsrsquo trust in cloud services it investigated
the prevalence nature scope and scale of the contract-related problems that SMEs
encounter in relation to cloud computing services
whether and to what extent enterprises are able to protect themselves against
contract-related problems when deciding to use cloud services
Based on the results of the survey it was estimated that around one SME cloud computing
user out of four (24) encountered contract-related problems during the period 2016-
2017 The main problems were related to the non-conformity of the service provided with
what was established in the contract concerning
the speed of service (55 of those SMEs who experienced problems)
the availability or continuity of the service (49)
updates to the service (32)
clarity of the instructions on how to use cloud computing services (26)
Problems related to security even if having impact on only a limited number of SMEs (less
than 10 of the cloud computing users that experienced problems) were quite frequent
especially with regard to the lack of protection of the data stored in the cloud against theft or
viruses and unauthorised disclosure of or access to data (both showing frequencies of almost
once every three months)
This was an important element arising from the study as security is often perceived as the
key risk when outsourcing information technology services because it may affect critical data
Clearly enterprises attach high importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
Cloud computing users who experienced problems in relation to cloud computing services
were asked to select the most serious among them (ie the problem that created the highest
impact on the everyday activities andor in terms of costs faced in order to resolve it) The
analysis of the results showed a correlation between the most frequent problems and the
problems with the highest impacts on enterprises Indeed unsatisfactory availability or
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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79
discontinuity of the service low speed of the service and forced updates were
considered as the most serious problems
The main cause of the most serious problems was the non-conformity of the service
provided with what was established in the contract (51 of the 122 SMEs declaring
that they encountered problems) The unfairness of contract terms was also perceived as a
possible cause for the most serious problems declared this being mentioned by 15
respondents out of 122 (12) Some practical examples were provided in the Surveyrsquos open
questions and the contract terms were considered to be unfair by the respondents when there
was no possibility of negotiating their content or when they included limited liability of the
providers or the possibility for them to unilaterally amend the contract
However in 19 of the cases the problems encountered were not under the service providerrsquos
responsibility but arose from technical issues and enterprisesrsquo internal factors112
In order to protect themselves the majority of the SMEs (74 of those that encountered
problems) chose to take action to resolve or to remedy the problems encountered
Conversely for those SMEs that decided not to take any action this was justified by the fact
that the cloud provider fixed the problem or that the problem was assessed as not important
or the procedure was considered to be too complicated Interestingly there are two types of
actions which SMEs showed reluctance to use both concerning legal measures going to
mediationarbitration and filing an action with a court This is because the costs associated
with these proceedings did not appear to be worth it
Following the actions taken to address the problem the majority of the SMEs indicated that
their problem was either entirely resolved (70) or partially resolved (18) but the vast
majority of the surveyed SMEs that experienced problems (88) were not offered any redress
by the cloud service providers for the damage caused
The research team estimated that 582924 micro small and medium-sized enterprises
have encountered contract-related problems while using cloud computing and have
faced an economic detriment that is related to different components
losses of turnover and profits
costs of human resources
other costs incurred113
Regarding the human resources invested by the SMEs to address problems members of the
technical staff were by far the most used (76 of the enterprises that faced problems
invested in such resources) Furthermore about one-third (31) of the SMEs reported no
other costs besides human resources when taking action to resolve the cloud computing
problems The ones that did indicate other actions mostly sustained costs related to ensuring
an alternative service (34) and costs related to fixing the cloud service problem (32)
Contract-related problems generated a gross economic detriment measured by
considering lost turnover and all other costs equal to euro6534 million
The loss of turnover was the most significant component of the detriment representing
37 of the total detriment while costs of human resources involved in resolving the
problem represent around 32 of the total detriment
Micro enterprises accounted for around 74 of the global economic detriment (compared to
175 for small and 88 for the medium) but it is in small enterprises that the average
112 When providing further details the cloud computing users acknowledged the fact that there were
cases where the enterprisersquos own mistake such as a miscommunication or lack of capacityknowledge
was admitted to be the cause of the cloud computing problem 113 These costs include overall costs in ensuring an alternative service and costs related to fixing the cloud service problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
80
gross detriment per enterprise was highest (ie euro 5012 compared to euro 4745 for medium
and euro878 for micro enterprises)
It is important to note that this estimate is a lower threshold of actual detriment as
not all SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems were able to provide an estimate of the detriment suffered
it only considers the costs associated with the most serious problem During the
survey 48 of the enterprises that encountered contract-related problems declared
that costs related to the most serious problem represented less than 80 of the total
losses However they were not able to provide relevant estimations regarding the
other encountered problems
However the magnitude of the underestimation is limited by the fact that the Member States
and the sectors chosen to be in the sample are those with highest cloud computing usage
rates and so are likely to bear costs above the average
Having computed the economic detriment suffered by micro small and medium-sized
enterprises the following have also been considered
direct impacts of a reduction in economic activity of the enterprises suffering from
contract-related cloud computing problems on their overall gross value added and
employment
effects on the gross value added and employment of supplier industries arising from
the turnover losses they suffer (indirect impacts)114
Direct impacts were estimated by considering the gross value added and employment
contents of the turnover losses at country and sector levels and the coefficients of total
turnover at country and sector levels computed from Eurostat data115
The overall results show that the 3672 direct jobs were lost in the sectors where contract-
related problems were encountered With respect to gross value added the direct impact of
the losses of turnover was a reduction of euro119 million within the same sectors
The indirect effects measured as gross value added and employment lost in the supplier
industries were still quite considerable The indirect impact associated with the loss of
turnover caused by contract-related cloud computing problems led to losses of 1733 jobs
and around euro987 million of Gross Value Added
Again it should be emphasised that the measured indirect effects must be seen as lower
thresholds to the actual indirect effects not only because of the above-mentioned limitations
but also because the input-output methodology while very good at estimating backward
linkages along the supply chain has some limitations in capturing opportunity costs and
intangibles or downstream effects of the problems in client industries or final consumers
Besides measuring the detriment caused by contract-related cloud computing service
problems the analysis addressed the issue of whether those problems might have generated
other effects
114 These indirect losses arise from the fact that the industries that suffered from the direct turnover losses reduced their demand for products from their suppliers 115 National accounts aggregated by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
81
Results show that contract-related cloud computing problems had an impact on enterprises
in dimensions such as reputational damages or loss of clients but that these effects did not
translate116 into very significant effects on financial variables during the period considered
The study covered the problems faced by SMEs during 2016ndash2017 The survey has been
implemented during 2018 The fact that some enterprises were not able to provide an
estimate of the detriment encountered may also be due to the fact that effects on the balance
sheet may only materialise over a longer time horizon
The analysis also has shown that most enterprises incurred internal human resources costs
or other external costs in order to resolve those problems The allocation of resources to
resolve those problems is likely to create some inefficiencies and to affect the competitiveness
of the companies
Given the size of the effects estimated and even if it is likely that there is some
underestimation enterprises are probably still able to at least partially absorb some of the
costs caused by cloud computing problems
But as we have seen there have already been some cases of contract-related cloud computing
problems that had very large impacts
Over time as increasing usage rates lead to rising incidence of contract-related cloud
computing problems and the longer term consequences of reputational damages and losses
of clients on financial variables become evident it will make it more likely that enterprises
will stop being able to absorb the effects of the encountered problems and this will increase
the impact of those problems on allocative efficiency market functioning and
competitiveness eventually affecting clients and final consumers and reducing the aggregate
welfare
116 The study covered the problems faced during 2016 ndash 2017 The survey has been implemented during
2018 The fact that some enterprises were not able to provide an estimate of the detriment encountered may also be due to the fact that effects on the balance sheet may only materialise over a longer time horizon
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
82
Annex 1 Methodology for the Survey of SMEs
In order to maximise the response to the survey of SMEs a detailed introduction to the online
survey and CATI was prepared and discussed with the EC for approval The introduction
presented the purpose of the study the sponsor and last but not least the reason it is
beneficial for the SME to cooperate with the study
During the interview phase it was of utmost importance to speak with the person in each
enterprise who has the most knowledge about the topic of cloud computing So we
recommended adding a so-called ldquoscreenerrdquo question in order to verify if the interviewer is
speaking with the most suitable interlocutor within the enterprise
The screener question can be found below
S1 Would you describe yourself as the person familiar with the services that your enterprise is using over the internet (cloud computing services) and have general knowledge about the enterprise
1 Yes that is me
2 No that is someone else
ltIf 1 go to Section Bgt
ltIf 2gt
lsquoI am sorry but I would like to speak to the person familiar with the services that the enterprise is using over the internet (cloud computing) and has general knowledge about the enterprise Can you give me hisher name or connect mersquo
ltIf connected to new person re-ask question S1gt
ltIf given name note down new name and make call back appointmentgt
In the CATI quotas were set at country level size classes and sectors in such a way that
when the target per country andor size class was achieved the remaining sample records of
this countrysize class were disabled automatically
The CATI was handled by the Global Data Collection Company (GDCC) The assigned project
manager of GDCC was responsible for drafting detailed briefing instructions for the
interviewers This assigned project manager was responsible for giving the initial briefing to
the interviewers in cooperation with the team leaders and senior interviewers depending on
the language of the questionnaire The initial briefing was held via web conference since the
project was implemented in various locations The team leaders were briefed using the English
version of the questionnaire and they went through the test link by clicking on all the available
options After this initial briefing the team leaders briefed the interviewers in all locations If
any changes were necessary during the process the team leaders held the briefings again
Whenever a new interviewer was added to the project heshe was additionally briefed
All briefings were held in one of the GDCC briefing rooms In these rooms up to 15
interviewers were instructed simultaneously on this project The questionnaire was projected
on the big screen during the briefings All relevant notesremarks from the briefings were
incorporated into the project briefing document and made electronically available to the
interviewers in the interview application
After the briefing the interviewers conducted dummy interviews in the so-called ldquotest moderdquo
of the data collection application in order to familiarise with the questionnaire
Relevant issues which arose during the fieldwork were promptly communicated to ALL
interviewers working on the project via a bulletin board in the CATI platform andor a revision
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
83
of the briefing form which was also available to the interviewer via the questionnaire in
electronically format
During the fieldwork a maximum of 10 phone calls were made to each SME in order to obtain
an interview If no interview was conducted after those 10 attempts the addressee was
considered as a non-response
Call-back appointments were not terminated after 10 attempts as experience has shown that
once a potential respondent has given permission to schedule a call to do the interview often
more attempts are needed to conduct the interview
The interviews for the survey were conducted as much as possible during the usual opening
hours of businesses in the respective countries
The team engaged in the fieldwork was comprised not only of a significant number of
experienced (native speaker) interviewers but for almost every EU country at least two native
speaker evaluators were available The evaluators aside from being very experienced
interviewers were selected for this ask because of their background (education) and
knowledge of the specific country Evaluators were responsible for the final check of the
translations and where necessary suggesting country-specific changes The final translation
checks however were performed by the GDCC translation department The research team
double-checked all the translations This methodology of centralising data collection
benefiting from the native speaker interviewersrsquo knowledge of the local markets has a proven
track record over many projects
All interviews were 100 recorded Aside from live listening-in particular parts of the
interviews were recorded in order to be listened to by a native speaker team leader or
evaluator Besides listening to the interviews the team leaders andor evaluators also called
back respondents who participated in an interview during this call-back a short interview
with verification questions about the recent interview was held The only reason for conducting
a call-back was to recollect information that was first collected incorrectly and further
questions needed to be asked All of the respondents who had completed interviews were
called back in order to record the name of the enterprise and to match the data from the
sample with the enterprise that had completed the survey The quality checking procedure
was generally random but there was also a focus on outliners where applicable117
Overall at least 10 of all interviews per country were covered by the quality control
procedures as mentioned above In the dataset the monitored interviews were labelled
accordingly
Besides this quality procedure the conducted CATI interviews were continuously checked for
outliers The data from interviews with (for example) a deviation in the average interview
time (too short or too long) were checked and when necessary corrective action was taken
This action either involved a telephone call in order to verify the data or the data were
removed from the dataset
After finalising the fieldwork a short fieldwork report was prepared
117 An outlier means something outside of the average therefore GDCC looked at interviewers who
conduct interviews much longershorter than the average or who had more or fewer refusals than the
average or who had a lower or higher incidence rate than the average Focusing on these main (outlier) points helped to determine if the interviewer was doing things correctly and if not the interviewer was retrained in order to help normalise the performance
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
84
Annex 2 Stakeholders list
No Category Member State InstitutionCompany Contribution
1 Cloud broker The
Netherlands BPdelivery Interview
2 EEN The Netherlands
The Dutch Chamber of Commerce Interview
3 EEN Romania ARIES T - Romanian Association for Electronic Industry and
Software - Transylvania Branch
Interview
4 EEN France CCI Paris IDF Interview
5 National authority
Italy The Italian Data Protection Authority
Interview and Webinar
6 National authority
Romania
Romanian National Computer
Security Incident Response Team (CERT)
Interview
7 National authority
Romania The National Supervisory Authority for Personal Data Processing of Romania
Interview
8 National authority
France
Commission Nationale de
lInformatique et des Liberteacutes (CNIL)
Interview
9 National authority
Poland Inspector General for the Protection of Personal Data
Interview and Webinar
10 National authority
Estonia Estonian Data Protection Inspectorate
Interview
11 Service provider
Sweden Glesys Interview
12 Service provider
Spain Ibermaacutetica Interview
13 Service provider
Spain Gigas Interview
14 Service provider
Sweden Hetzner Interview
15 Service provider
Ireland Blueface Interview
16 Service provider
Romania Star Storage Interview
17 Service provider
Romania GTS Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
85
No Category Member State InstitutionCompany Contribution
18 Service provider
Portugal PT Empresas Interview
19 Service
provider Romania Telekom Interview
20 Service provider
Ireland Salesforce Interview
21 SME Poland Biuro Rozwoju Gdanska Interview
22 SME Germany Quality Services International
GmbH Interview and Webinar
23 SME Germany Thieme Compliance GmbH Interview and Webinar
24 SME Germany Leibniz-Institut Fuumlr Astrophysik Potsdam (AIP)
Interview
25 SME Poland Konsorcjum Biuro Klub Sp Interview
26 SME France Qosmos Tech Interview
27 SME Poland Vsoft S A Interview
28 SME Spain Timbrados Elche Sl Interview
29 SME Spain Sistemas de Datos Interview and Webinar
30 SME Association
Belgium EUAPME Interview and Webinar
31 SME
Association Portugal
Associaccedilatildeo Industrial do Distrito de
Aveiro Interview
32 SME Association
The Netherlands
VNO-NCW Interview
33 SME Envoys Network
The Czech Republic
Ministry of Industry and Trade Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
86
Annex 3 Bibliography
Relevant legislation and policy documents
Committee of the Regions (2016) lsquoEuropean Cloud Initiative and ICT Standardisation
Priorities for the Digital Single Market 2016rsquo Opinion of the Committee of the Regions (SEDEC-
VI-012)
European Commission (2003) lsquoRecommendation of 6 May 2003 concerning the definition of
micro small and medium-sized enterprisesrsquo (notified under document number C(2003) 1422)
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in Europersquo
COM(2012)529 final Brussels
European Commission (2013a) lsquoCommission Decision of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404) OJ 1746
European Council (2013b) lsquoCouncil resolution of 10 December 2013 on unleashing the
potential of cloud computing in Europersquo
European Commission (2014 June) lsquoCloud Service Level Agreement Standardisation
Guidelinesrsquo httpseceuropaeudigital-single-marketennewscloud-service-level-
agreement-standardisation-guidelines
European Commission (2015a) lsquoA Digital Single Market Strategy for Europersquo (COM
(2015)0192) and the accompanying Commission staff working document (SWD(2015)0100)
European Commission (2015b) lsquoCommunication on cloud select industry group service level
agreementsrsquo httpseceuropaeudigital-single-marketencloud-select-industry-group-
service-level-agreements COM (2015) 634 final
European Commission (2015c) lsquoProposal for a Directive on certain aspects concerning
contracts for the supply of digital contentrsquo (COM(2015) 634 final)
European Commission (2015d) lsquoTowards a modern more European copyright frameworkrsquo
COM20150626 final
European Commission (2016a) lsquoEuropean Cloud Initiative ndash Building a competitive data and
knowledge economy in Europersquo (COM (2016)0178) and the accompanying Commission staff
working document (SWD (2016) 0106)
European Commission (2016b) lsquoICT Standardisation Priorities for the Digital Single Marketrsquo
(COM (2016)0176)
European Commission Directorate-General for Research amp Innovation (RTD) (2016c) lsquoOpen
Innovation Open Science Open to the World ndash A vision for Europersquo
European Commission (2017a) lsquoProposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Unionrsquo
COM(2017) 495 final Brussels
European Commission (2018a) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
European Commission (2018b) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo Annexes and Impact
Assessment
European Commission (2018c) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
87
European Parliament (2017) lsquoCommission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Union
SWD(2017) 304 final Brussels
European Council (2016) lsquoCouncil resolution of 19 January 2016 on Towards a Digital Single
Market Actrsquo
European Parliament and European Council (2001) lsquoRegulation (EC) 452001 of the European
Parliament and of the Council of 18 December 2000 on the protection of individuals with
regard to the processing of personal data by the Community institutions and bodies and on
the free movement of such datarsquo
European Parliament and European Council (2011) lsquoDirective 201183EU of the European
Parliament and of the Council of 25 October 2011 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council
and repealing Council Directive 85577EEC and Directive 977EC of the European Parliament
and of the Council Text with EEA relevancersquo
European Parliament and European Council (2015) lsquoProposal for a DIRECTIVE OF THE
EUROPEAN PARLIAMENT AND OF THE COUNCIL on certain aspects concerning contracts for
the supply of digital contentrsquo (Text with EEA relevance) SWD(2015) 274 final SWD(2015)
275 final
Reports studies and other documents
Alberto M Bento A K (2012) Cloud Computing Service and Deployment Models Layers
and Management IGI Global
Altman M Andreev L Diggory M King G Kolster E Sone A Verba S Kiskis DL
Krot (2001) lsquoOverview of The Virtual Data Center Project and Software Harvard Universityrsquo
JCDL rsquo01 First Joint Conference on Digital Libraries pp 203-204
Buyya R Broberg J and Goscinski A M (eds) (2010) Cloud computing Principles and
paradigms Vol 87 John Wiley amp Sons
Cave J Robinson N Kobzar S and Rebecca H (2015) lsquoUnderstanding Regulatory and
Consumer Interest in the Cloudrsquo Regulating the Cloud Policy for Computing Infrastructure
Cloud Security Alliance (2017) Custom Applications and IaaS Trends 2017
Department of Justice United States (2015) HERFINDAHL-HIRSCHMAN INDEX
El-Gazzar R F (2014) lsquoA literature review on cloud computing adoption issues in enterprisesrsquo
presented at the International Working Conference on Transfer and Diffusion of IT pp 214ndash
242
ESRC Centre for Competition Policy (2014 January) lsquoSmall Business as Consumers Are They
Sufficiently Well Protectedrsquo A report for the Federation of Small Businesses
European Commission (2013a) lsquoCOMMISSION DECISION of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404)
European Commission (2013b) Final Report of the study SMART 20130043- Uptake of Cloud
in Europe
European Commission (2013 2014) Cloud computing Experts groups meetings
European Commission (2015) Comparative Study on cloud computing contracts Publications
Office of the European Union Luxembourg
European Commission (2014b) European Commission - Strategy - Digital Single Market -
News Retrieved from European Commission - Digital Single Market
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
88
European Commission (2014c) Study regarding the Uptake of Cloud in Europe Follow-up of
IDC Study on Quantitative estimates of the demand for Cloud Computing in Europe and the
likely barriers to take-up
European Commission (2004d) Project Cycle Management Guidelines
European Commission (2016a) Consultation on Cloud Computing Research Innovation
Challenges for WP 2018-2020
European Commission (2016b) Measuring the economic impact of cloud computing in Europe
European Commission (2016c) Platform-to-business trading practices
European Commission (2017a) Collaboration in Research and Methodology for Official
Statistics RAS (Method)
European Commission (2017b) The Economic and Social Impact of Software and Services in
Competitiveness and Innovation
European Commission (2017c) Final results of the European Market study measuring the size
and trends of the EU data economy European Commission (2018) Consultations about Cloud
Computing
European Commission (2018a) 2018 reform of EU data protection rules
European Commission (2018b) Press release lsquoOnline platforms Commission sets new
standards on transparency and fairnessrsquo
European Commission (2018c) Operational guidance document on measuring personal
consumer detriment
Etro F (2009) lsquoThe economic impact of cloud computing on business creation employment
and output in Europersquo Review of Business and Economics vol 54 no 2 pp 179ndash208
Expert Group on Cloud Computing Contracts (2013-2014) Cloud Computing Expert Group
Gartner (2017) Predicts 2017 Cloud Computing Enters its Second Decade
Hon K Millar C and Walde I (2012) rsquoNegotiating Cloud Contract Looking at Clouds from
Both Sides Nowlsquo in Stanford Technology Law Review Vol 16 No 1
IDC Arthurrsquos Legal (2016) Switching Cloud Providers (SMART 20160032)
International Organization for Standardization (2014) lsquoInformation technology mdash Cloud
computing mdash Overview and vocabularyrsquo ISOIEC Retrieved from International Organization
for Standardization
Mahmood Z (2011) lsquoData Location and Security Issues in Cloud Computingrsquo Proceedings of
the 2nd International Conference on Emerging Intelligent Data and Web Technologies (EIDWT
rsquo11) (pp 49ndash54)
National Institute of Standards and Technology (2011) lsquoThe NIST Definition of Cloud
Computingrsquo Retrieved from National Institute of Standards and Technology
OECD (2014) Cloud computing The Concept Impacts and the Role of Government Policy
Opara-Martins J Sahandi R and Tian F (2015) lsquoA Business Analysis of Cloud Computing
Data Security and Contract Lock-in Issuesrsquo presented at P2P Parallel Grid Cloud and
Internet Computing (3PGCIC)
Pearson S (2013) lsquoPrivacy security and trust in cloud computingrsquo in Privacy and Security
for Cloud Computing Springer pp 3ndash42
Rabinobich M Rabinovich I (nd) A Dynamic Object Replication and Migration Protocol for
an
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
89
Rittinghouse J Ransome J (2009) Cloud Computing CRC Press Boca Raton
Rohrmann CA amp Cunha JFSR (2015) Some Legal Aspects of Cloud Computing Contracts
Journal of International Commercial Law and Technology Vol10 No1 May
SLALOM Project httpslalom-projecteu(2018)
Synergy Research Group (2017) httpswwwsrgresearchcomarticlesmicrosoft-google-
and-ibm-charge-public-cloud-expense-smaller-providers
Technopedia (2018) httpswwwtechopediacomdefinition30463virtual-data-center
Retrieved from Virtual Data Centre
Databases
Amadeus Database httpsamadeusbvdinfocomversion-
2016720homeservproduct=amadeusneo
Eurostat (2015) sbs_sc_sca_r2 Retrieved from Structural Business Statistics
httpappssoeurostateceuropaeunuishowdodataset=sbs_sc_sca_r2amplang=en
Eurostat (2016) Cloud Computing Services Retrieved from EUROSTAT - Digital Economy and
Society httpeceuropaeueurostatwebdigital-economy-and-societydatadatabase
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprisesrsquo
httpeceuropaeueurostatstatistics-explainedindexphpCloud_computing_-
_statistics_on_the_use_by_enterprises
Eurostat (2017) Cloud computing services [isoc_cicce_use]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
90
Annex 4 Survey questionnaire
A Background information
(Everyone answers section A)
A1 What is the name of your company
[open question]
A2 Where is your company located
(People who answer A2 m) are taken straight to the end of the survey)
[single choice question]
a) Czech Republic
b) Estonia c) France d) Germany e) Ireland f) Italy g) Poland h) Portugal
i) Romania
j) Sweden k) Spain l) Netherlands m) Other (please specify)
A3 In which sector is your company mainly active
(People who answer A3 f) are taken straight to the end of the survey)
[multiple choice question]
a) Manufacturing b) Wholesale and retail trade repair of motor vehicles and motorcycles c) Information and communication d) Professional scientific and technical activities e) Administrative and support service activities
f) Other (please specify)
A4 Since how long does your company exist
[single choice question]
a) Less than 1 year b) Between 1 and 5 years
c) Between 5 and 10 years d) Over 10 years
A5 What is the number of employees in your company
(People who answer A5 d) are taken straight to the end of the survey)
= Compulsory question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
91
(Everyone answers section A)
[single choice question]
Nordm of employees in FTE (full-time equivalent)
a) Less than 10 employees b) 10 to 49 employees c) 50 to 250 employees d) More than 250 employees
B Use of Cloud Computing Services
(Everyone answers Section B)
B1 In the last two years has your company used any of the following cloud computing services for
the purpose of conducting business
(People who answer B1 q) are taken straight to the end of the survey)
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business
visualisation technology instant communications applications e-mail account virtual
desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
websites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
n) Security services (eg secure content management endpoint protection malware protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
q) None of the above my company is not using cloud computing services
B11 For the cloud computing services that you have used in the last two years were you able to
negotiate contract terms and conditions
(People who answer B11 b) are taken to Question B111)
(People who answer B11 d) are taken to Question B113)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
92
(People who answer B11 a) or b) are taken to Question B112)
[single choice question]
a) Yes we were able to negotiate contract terms and conditions for all the cloud computing services used
b) Yes we were able to negotiate contract terms and conditions but only in relation to some
services c) No we were not able to negotiate any contract terms and conditions d) We didnrsquot try to negotiate
B111 Please specify in relation to which services were you able to negotiate the contract terms and
conditions
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components) j) High Performance Computing (eg usage of high performance computing clusters
workloads and applications) k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each
day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces)
p) Other (please specify)
B112 For the cloud computing services for which you negotiated the contract terms and conditions
were you able to customise the service package according to your specific needs
[single choice question]
a) Yes (please specify what you were able to customise) b) Partially (please specify what you werewere not able to customise) c) No (please specify)
B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
[single choice question]
a) We were pleased with the offered contract terms and conditions
b) We knew it would be pointless c) We assumed it would be pointless d) Could not find a contact
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
93
e) Other (please specify)
B2 What type of contract(s) did you have for cloud computing services during the last two years
(People who answer B3 d) are taken straight to section C)
[multiple choice question]
a) Paid subscription ndash Fixed Fees b) Paid subscription ndash Variable Fees c) Partly with and partly without payment d) Without payment (eg advertising financed) e) I donrsquot know (please specify)
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the average
amount you paid per month for the cloud computing services
(NB the amount declared should not include over-extra charges or hidden fees)
[open question]
Amount in local currency please specify the currency applied
C Problems encountered with cloud computing services
(Everyone answers Section C)
C1 What type of problems and how often did you encounter them in relation to cloud computing
services in the last two years
Problems
Very
frequently
(at least once a week)
Frequentl
y (at least once a month)
Occasiona
lly (at least
once every 3 months)
Rarely (at
least once in the last
12 months)
Never
a) Lack of timely updates of the cloud service
b) Forced updates to the service that eliminated or changed a necessary function
c) Unsatisfactory amount of data that could be processed
d) Failure of the cloud provider to identify analyse and correct
hazards and prevent a future re-occurrence (incidence management)
e) Low speed of the service
f) The lack of clarity and
completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or
discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions
of service)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
94
(Everyone answers Section C)
h) Unsatisfactory number of users that could have access to the
service
i) The lack of compatibility of the service with user hardware or software
j) Data could not be exported at all
k) Data could not be retrieved in
easily usable format
l) Extra costs were imposed for data portability
m) The provider deleted the data
upon contract termination
n) Destruction or loss of data
o) Loss or alteration of data transmitted stored or processed via the cloud service
p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses
r) Lack of clarity and transparency of contract terms and conditions
s) Termination of the contract and interruption of the service by the service provider with no or little prior notice to the user
t) Unilateral modification of the servicecontract by the cloud provider
u) Limited liability of the cloud provider
C2 Did you encounter any other problems in relation to cloud computing services in the last two
years
[single choice question]
a) Yes (please specify) b) No
C3 Which was the most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
[single choice question]
a) Lack of timely updates of the cloud service b) Forced updates to the service that eliminated or changed a necessary function c) Unsatisfactory amount of data that could be processed d) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) e) Low speed of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
95
(Everyone answers Section C)
f) The lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced
maintenance or other interruptions of service) h) Unsatisfactory number of users that could have access to the service i) The lack of compatibility of the service with user hardware or software j) Data could not be exported at all k) Data could not be retrieved in easily usable format l) Extra costs were imposed for data portability
m) The provider deleted the data upon contract termination n) Destruction or loss of data o) Loss or alteration of data transmitted stored or processed via the cloud service p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses r) Lack of clarity and transparency of contract terms and conditions s) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user t) Unilateral modification of the servicecontract by the cloud provider u) Limited liability of the cloud provider v) Other (please specify)
C31 What caused the most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the
contract b) The contract terms and conditions of the cloud provider were unfair
c) Other (please specify)
C32 To which type of cloud computing services was the most serious problem linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business
process management IT operationrisk management) e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
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n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
C4 Which was the second most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
People who select C4 a) are taken straight to Section D)
[single choice question]
a) I only encountered one serious problem in the last 2 years
b) Lack of timely updates of the cloud service c) Forced updates to the service that eliminated or changed a necessary function
d) Unsatisfactory amount of data that could be processed e) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) f) Low speed of the service g) The lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
h) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions of service)
i) Unsatisfactory number of users that could have access to the service j) The lack of compatibility of the service with user hardware or software k) Data could not be exported at all l) Data could not be retrieved in easily usable format
m) Extra costs were imposed for data portability
n) The provider deleted the data upon contract termination o) Destruction or loss of data p) Loss or alteration of data transmitted stored or processed via the cloud service q) Unauthorised disclosure of or access to data r) Lack of protection of the data stored in the cloud against theft or viruses s) Lack of clarity and transparency of contract terms and conditions t) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user u) Unilateral modification of the servicecontract by the cloud provider v) Limited liability of the cloud provider w) Other (please specify)
C41 What caused the second most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the contract
b) The contract terms and conditions of the cloud provider were unfair c) Other (please specify)
C42 To which type of cloud computing services was the second most serious problem
linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual
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desktop antivirus for server or PC applications for customer relationship management
social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications)
h) Storage and hosting services (eg server platform for online storage sharing hosting web-sites files images and similar content)
i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
D Actions taken by your company in order to address the most serious
problem
(Everyone who encountered problems answers Section D)
D1 Did your company take action to resolve or remedy the most serious problem experienced
(People who select D1 b) are taken straight to question D2)
a) Yes
b) No
D11 What actions has your company taken to resolve or remedy this problem
[multiple choice question]
a) Used the support services of the provider b) Made a complaint to the provider c) Withheld payment for the service
d) Asked the provider for a refund e) Asked the provider for compensation for damages or losses f) Changed provider g) Went to mediationarbitration (the dispute was taken to a third party mediatorarbitrator) h) Filed an action with a court i) Hired a third party expert to resolve the problem
j) Other (please specify)
D12 What was the result of the actions taken to resolve or remedy this problem
[single choice question]
a) The problem was fully resolved
b) The problem was partially resolved c) The problem was not yet resolved but I was informed that the investigation was ongoing
d) The problem was not resolved and I have not received any reply e) Not resolved and I decided not to do anything about it
D121 Did you encounter any difficulties when taking action to resolve or remedy this problem
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(Everyone who encountered problems answers Section D)
[multiple choice question]
a) No I did not encounter any difficulties b) Yes there was no contact point to make a complaint or attempt to resolve issues c) Yes the procedure took too long d) Yes the procedure was too expensive e) Yes foreign law applied
f) Yes the procedure was only possible abroad g) Yes language difficulties (eg the procedure was in a foreign language) h) Yes the action taken was not suited to resolve the problem i) Yes it was not possible to enforce the decision after the resolution j) Other (please specify)
D2 Why did your company decide not to take any action to resolve or remedy this problem
[multiple choice question]
a) Provider fixed the problem on its own
b) The cloud provider was unlikely to find a solution to the problem
c) The cloud provider excluded its liability for the problem
d) The cloud provider restricted its liability for damages (eg to a certain type of damage or
to a monetary threshold (a franchise or a maximum amount)
e) Limited access to dispute resolution (eg contract terms restrict how and where your
company can take legal action)
f) We tried to complain about other problems in the past but it was not successful
g) High cost of proceedings
h) It would take too long
i) The procedure was too complicated
j) We didnt know where to complain
k) Lack of knowledge how to start the proceeding
l) The applicable procedure is in a foreign country or in foreign language (specify which
foreign country)
m) The company did not want to damage business relationship with the cloud provider
n) The problem was not that important
o) Other (please specify)
E Economic detriment related to the most serious problems encountered
(Everyone who encountered problems answers Section E)
E1 What were the human resources invested by your company while taking action to resolve or
remedy the most serious problem
[open question]
Nordm of employees
involved in solving the problem separately per skill level of employee(s)
Nordm of work days
involved for solving the problem separately per skill level employee(s)
Average monthly
compensation of employee(s) involved in solving the problem (amount in local
currency)118
118 Total labour cost that includes gross wages and employer social security contributions
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(Everyone who encountered problems answers Section E)
Administrative
Technical
Senior
official(s)manager(s)
E2 Select what costs has your company covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
Please provide the costs without considering any reimbursement or compensation you may have
received from the provider(s) who rendered the service(s)
[multiple choice question]
a) Costs related to ensuring an alternative service (please specify the amount in local currency)
b) Costs related to fixing the cloud service problem (please specify the amount in local currency)
c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency) e) Costs related to loss of client(s) (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E3 What is the loss of turnover and profit caused by the most serious problem encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E4 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in
local currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
E5 Considering the costs human resources involved and loss of turnoverprofit related to the most
serious problem what share they represented of the total costs suffered by your company from
problems faced while using cloud computing services
(People who select E5 a) or b) are taken straight to section F)
(People who select C4 a) are taken straight to section F after answering E5)
[single choice question]
a) Above 80 b) 50 to 80 c) Below 50
E6 What were the human resources invested by your company while trying to resolve or remedy
the second most serious problem
[open question]
Nordm of employees
involved in solving the problem separately
Nordm of work days
involved for solving the problem separately
Average monthly
compensation of employee(s) involved
in solving the problem
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per skill level of
employee(s)
per skill level
employee(s)
(amount in local
currency)119
Administrative
Technical
Senior
official(s)manager(s)
E7 Select which costs has your company covered (besides the human resources mentioned before)
while taking action to resolve or remedy the second most serious problem
[multiple choice question] Please provide the costs without considering any reimbursement or
compensation you may have received from the provider(s) who rendered the service(s)
a) Costs related to ensuring an alternative service (please specify the amount in local
currency) b) Costs related to fixing the cloud service problem (please specify the amount in local
currency) c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency)
e) Costs related to loss of client (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E9 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in local
currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
F Background information on turnover and profit
G (Everyone answers Section F)
F1 Please complete the following table specifying the amount in local currency
[open question]
The annual turnover in
2016
The annual turnover in
2017
The annual profit before
tax in 2016
The annual profit before
tax in 2017
119 Total labour cost that includes gross wages and employer social security contributions
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Annex 5 SME Survey results
A Background information
A3 In which sector is your company mainly active
Type of sector Total
Manufacturing 137
Wholesale and retail trade 131
Information and communication 83
Professional scientific and technical activities 92
Administrative and support services 92
A4 Since how long does your company exist
A5 What is the number of employees in your company
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B Use of Cloud Computing Services
B1 In the last two years has your company used any of the following cloud computing services
for the purpose of conducting business
Services
Sectors
Collaboration and
communication services
Storage and hosting
services
Security
services
Networking
services
Administrative and support service activities
61 60 49 40
Information and communication 79 78 41 52
Manufacturing 70 54 48 42
Professional scientific and technical activities
71 70 40 39
Wholesale and retail trade 72 62 38 38
B11 For the cloud computing services that you have used in the last two years were you
able to negotiate contract terms and conditions
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B111 Please specify in relation to which services you were able to negotiate the contract
terms and conditions120
120 The first figure presents for each contracted service the number of SMEs that were able to negotiate
CTampC (in blue) and the number of SMEs that signed standard CTampC for the specific service contracted
(in grey) The total of the numbers in each row represents the number of SMEs that declared contracting a specific service For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
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B112 For the cloud computing services for which you negotiated the contract terms and
conditions were you able to customise the service package according to your specific needs
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B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
B2 What type of contract(s) did you have for cloud computing services during the last two
years
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the
average amount you paid per month for the cloud computing services
Country of answers Average in euros
CZ 18 850
EE 18 112
FR 34 4675
DE 33 861
IE 19 1127
IT 58 716
NL 21 6672
PL 20 411
PT 7 433
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Country of answers Average in euros
RO 7 278
ES 13 127
SE 19 2866
Total 267 1787
C Problems encountered with cloud computing services
C1 What types of problems and how often did you encounter them in relation to cloud
computing services in the last two years
C3 Which was the most serious problem you experienced in the last two years
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C31 What caused the most serious problem
C32 To which type of cloud computing services was the most serious problem linked
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C4 Which was the second most serious problem you experienced in the last two years
C41 What caused the second most serious problem
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C42 To which type of cloud computing services was the second most serious problem linked
D Actions taken by your company in order to address the most serious problem
D1 Did your company take action to resolve or remedy the most serious problem
experienced
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D11 What actions has your company taken to resolve or remedy this problem
D12 What was the result of the actions taken to resolve or remedy this problem
D121 Did you encounter any difficulties when taking action to resolve or remedy this
problem
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D2 Why did your company decide not to take any action to resolve or remedy this problem
E Economic detriment related to the most serious problems encountered
E1 What were the human resources invested by your company while taking action to resolve
or remedy the most serious problem
Human resources invested - working days involved in resolving the problem by sector
Sector Number of
enterprises
95 Trimmed
mean Average
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Human resources invested - working days involved in resolving the problem by size class
Size class Number of enterprises
95 Trimmed mean
Average
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Human resources invested - working days involved in solving the problem by country
Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
EE 5 222 220
FR 22 282 395
DE 19 471 1074
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
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Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
RO 1 200 200
ES 11 631 718
SE 18 251 361
Total 122 322 721
E2 Select what costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E3 What is the loss of turnover and profit caused by the most serious problem encountered
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E4 Did the cloud provider offer any redress for the damages caused to your company
of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
E5 Considering the costs human resources involved and loss of turnoverprofit related to the
most serious problem what share did they represent of the total costs suffered by your
company from problems faced while using cloud computing services of enterprises
Below 50 105 87
50 to 80 8 7
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of enterprises
Above 80 9 7
Total 122 100
E6 What were the human resources invested by your company while trying to resolve or
remedy the second most serious problem
Skill level of enterprises
Administrative 59 48
Technical 93 76
Senior officersmanager(s) 59 48
E7 Select which costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the second most serious problem of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered121
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E9 Did the cloud provider offer any redress for the damages caused to your company of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
121 Please see section 52 for a better understanding of why in the detriment equation it was considered only the most serious problem
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Annex 6 Economic detriment ndash further results
This annex presents more detailed results of the analyses that were performed to carry out
the economic detriment assessment allowing for more in-depth analysis of impact
Incidence cloud computing usage by sector size or country level
For the scenarios presented it is possible to compute the incidence of cloud computing usage
The sample answering the questionnaire is representative of the overall population of EU
SMEs We present in Table 33 to Table 35 some features at the country and enterprise
size or sector level with the sole aim of documenting the gathered information
The data show evidence of significant differences across those dimensions
Table 33 Incidence of cloud computing usage by sector
Sector Scenario 1 Scenario 2
Manufacturing 179 496
Wholesale and retail trade 111 364
Information and communication 199 613
Professional scientific and technical activities 195 574
Administrative and support service activities 131 543
Total 159 499
Source Survey of SMEs (2018)
Table 34 Incidence of cloud computing usage by enterprise size class
Size class Scenario 1 Scenario 2
Micro 178 535
Small 226 606
Medium 133 447
Total 159 499
Source Survey of SMEs (2018)
Table 35 Incidence of cloud computing usage by country
Country Scenario 1 Scenario 2
CZ 172 698
EE 323 690
FR 79 272
DE 80 449
IE 468 710
IT 719 870
NL 205 612
PL 143 315
PT 455 606
RO 278 833
ES 538 648
SE 138 673
Total 159 499
Source Survey of SMEs (2018)
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Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 36 to Table 46
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while resolving the most serious contract-
related cloud computing problem
Table 36 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the most serious problem by
country and skill level of employee ( of respondents 122)
Country Administrative Technical
Senior
officersmanager(s)
CZ 2 29 3 43 4 57
DE 9 47 15 79 8 42
EE 4 80 4 80 3 60
ES 4 36 6 55 5 45
FR 8 36 19 86 11 50
IE 1 25 2 50 3 75
IT 7 54 10 77 4 31
NL 4 67 6 100 4 67
PL 5 38 12 92 5 38
PT 1 33 2 67 0 0
RO 1 100 1 100 0 0
SE 13 72 13 72 12 67
Total 59 93 59
Source Survey of SMEs (2018)
Table 37 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by sector and skill level of employee ( of respondents 122)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 6 46 9 69 10 77
Information and commun 18 75 21 88 12 50
Manufacturing 13 42 22 71 11 35
Profess scientific and
technical activities 10 34 27 93 14 48
Wholesale and retail trade repair of motor vehicles and motorcycles
12 48 14 56 12 48
Total 59 93 59
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Table 38 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by size class and skill level of employee ( of respondents 122)
Size class Administrative Technical
Senior officers
manager(s)
Micro 11 52 12 57 11 52
Small 24 75 22 69 16 50
Medium 24 35 59 86 32 46
Total 59 93 59
Source Survey of SMEs (2018)
Table 39 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious
problem by country and type of costs ( of respondents 122)
Co
un
try
Costs related to
ensuring an
alternative service
Costs related to
fixing the cloud
service problem
Legal costs
Costs
related to reputation
damage
Costs
related to loss of
client(s)
Other
costsNone
CZ 3 43 0 0 0 0 0 0 1 14 3 43
DE 4 21 6 32 2 11 2 11 3 16 5 26
EE 0 0 2 40 0 0 0 0 0 0 3 60
ES 7 64 1 9 0 0 0 0 0 0 3 27
FR 13 59 13 59 12
55 11 50 11 50 18 82
IE 1 25 3 75 0 0 0 0 1 25 0 0
IT 4 31 2 15 1 8 1 8 2 15 2 15
NL 1 17 1 17 1 17 2 33 1 17 5 83
PL 1 8 1 8 2 15 1 8 1 8 2 15
PT 1 33 1 33 0 0 1 33 1 33 0 0
RO 1 100 0 0 1 100 1 100 1 100 1 100
SE 6 33 9 50 3 17 4 22 3 17 5 28
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 40 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious problem by sector and type of costs ( of respondents 122)
Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related to loss of client(s)
Other
costsNone
Admin and support service
activities
5 38 1 8 2 15 1 8 1 8 6 46
Information and
commun 12 50 11 46 7 29 7 29 7 29 8 33
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Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related
to loss of client(s)
Other costsNone
Manufacturing 8 26 6 19 3 10 4 13 5 16 8 26
Profess
scientific and technical activities
13 45 12 41 10 34 10 34 11 38 16 55
Wholesale and
retail trade
repair of motor vehicles and motorcycles
4 16 9 36 0 0 1 4 1 4 9 36
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 41 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the most serious
problem by enterprise size class and type of costs ( of respondents 122)
Size class
Costs related to ensuring
an
alternative service
Costs related to fixing the
cloud
service problem
Legal costs
Costs related to
reputation
damage
Costs related to
loss of
client(s)
Other
costs
None
Micro 6 29 11 52 4 19 6 29 5 24 8 38
Small 13 41 12 38 9 28 7 22 8 25 13 41
Medium 23 33 16 23 9 13 10 14 12 17 26 38
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 42 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the most serious problem encountered by sector ( of
respondents 122)
Sector Loss of turnover Loss of profit
Administrative and support
service activities 2 15 2 15
Information and communication 4 17 4 17
Manufacturing 6 19 5 16
Professional scientific and
technical activities 1 3 3 10
Wholesale and retail trade repair
of motor vehicles and motorcycles 4 16 5 20
Total 17 19
Source Survey of SMEs (2018)
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Table 43 Number and of total enterprises that faced problems that reported loss of
turnover or profit caused by the most serious problem encountered by size class ( of respondents 122)
Size class Loss of turnover Loss of profit
Micro 2 10 4 19
Small 8 25 8 25
Medium 7 10 7 10
Total 17 19
Source Survey of SMEs (2018)
Table 44 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by country and type of redress ( of respondents
122)
Country
Financial
compensation
Reduction in the
cost of subscription
Other
The company did
not offer any redress
CZ 1 14 0 0 1 14 5 71
DE 0 0 0 0 1 5 18 95
EE 0 0 0 0 0 0 5 100
ES 0 0 0 0 0 0 11 100
FR 2 9 1 5 1 5 19 86
IE 0 0 0 0 0 0 4 100
IT 1 8 0 0 0 0 12 92
NL 0 0 2 33 1 17 4 67
PL 0 0 3 23 0 0 10 77
PT 0 0 1 33 0 0 2 67
RO 0 0 0 0 0 0 1 100
SE 0 0 1 6 1 6 16 89
Total 4 8 5 107
Source Survey of SMEs (2018)
Table 45 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress ( of respondents
122)
Sector
Financial compensation
Reduction in
the cost of subscription
Other
The company
did not offer any redress
Administrative and
support service activities 2 15 1 8 0 0 10 77
Information and communication
1 4 1 4 3 13 20 83
Manufacturing 0 0 2 6 1 3 29 94
Professional scientific and technical activities
1 3 2 7 1 3 25 86
Wholesale and retail trade repair of motor
vehicles and motorcycles 0 0 2 8 0 0 23 92
Total 4 8 5 107
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
119
Table 46 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by size class and type of redress ( of respondents 122)
Size class
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 1 5 1 5 0 0 19 90
Small 0 0 2 6 2 6 28 88
Medium 3 4 5 7 3 4 60 87
Total 4 8 5 107
Source Survey of SMEs (2018)
Distribution of enterprises by the weight of the most serious problem by sector enterprise
size or country level
Again with the sole aim of documenting the gathered information Table 47 to Table 49
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while solving the most serious contract-related
cloud computing problem
Table 47 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by country ( of respondents 122)
Country Below 50 50 to 80 Above 80 100122 Total
CZ 3 43 0 0 0 0 4 57 7
DE 3 60 0 0 0 0 2 40 5
EE 11 50 1 5 0 0 10 45 22
ES 11 58 1 5 1 5 6 32 19
FR 3 75 0 0 0 0 1 25 4
IE 5 38 0 0 0 0 8 62 13
IT 1 17 0 0 1 17 4 67 6
NL 5 38 0 0 1 8 7 54 13
PL 2 67 0 0 0 0 1 33 3
PT 1 11 0 0 0 0 8 89 9
RO 3 38 0 0 0 0 5 63 8
SE 7 10 2 3 4 6 56 81 69
Total 55 31 4 2 7 4 112 63 178
Source Survey of SMEs (2018)
122 Enterprises that declared they encountered only one problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
120
Table 48 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by sector ( of respondents 122)
Sector Below 50 50 to 80 Above 80 100123 Total
Administrative and support service activities
26 74 0 0 5 14 4 11 35
Information and communication
20 56 0 0 0 0 16 44 36
Manufacturing 30 64 3 6 0 0 14 30 47
Professional scientific and technical activities
39 65 8 13 1 2 12 20 60
Wholesale and retail
trade repair of motor vehicles and motorcycles
29 57 0 0 12 24 10 20 51
Total 144 63 11 5 18 8 56 24 229
Source Survey of SMEs (2018)
Table 49 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by size class ( of respondents 122) Below 50 Between 50 -
80 Above 80 100124 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the second most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 50 to Table 59
present the differences by country size and sector of the distribution of enterprises that
experienced the various costs while resolving the second most serious contract-related cloud
computing problem
Table 50 Number and of enterprises in which human resources were invested while
taking action to resolve or remedy the second most serious problem by country and skill
level of employee ( of respondents 55)
Country Administrative Technical
Senior officersmanager(s)
CZ 0 0 1 33 2 67
DE 5 45 9 82 3 27
EE 3 100 3 100 1 33
ES 1 33 2 67 1 33
FR 4 36 7 64 4 36
IE 1 33 2 67 1 33
IT 2 40 3 60 1 20
123 Enterprises that declared they encountered only one problem 124 Enterprises that declared they encountered only one problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
121
Country Administrative Technical
Senior
officersmanager(s)
NL 1 100 1 100 1 100
PL 2 40 5 100 0 0
PT 1 50 1 50 2 100
RO 0 0 0 0 0 0
SE 3 43 5 71 2 29
Total 23 39 18
Source Survey of SMEs (2018)
Table 51 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the second most serious problem
by sector and skill level of employee ( of respondents 55)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 3 50 4 67 2 33
Information and commun 7 70 9 90 4 40
Manufacturing 5 31 11 69 4 25
Profess scientific and
technical activities 3 27 8 73 3 27
Wholesale and retail trade
repair of motor vehicles and motorcycles
5 42 7 58 5 42
Total 23 39 18
Source Survey of SMEs (2018)
Table 52 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the second most serious problem
by size class and skill level of employee ( of respondents 55)
Size class Administrative Technical
Senior officers
manager(s)
Micro 3 38 5 63 2 25
Small 10 63 13 81 6 38
Medium 10 32 21 68 10 32
Total 23 39 18
Source Survey of SMEs (2018)
Table 53 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by country and type of costs ( of respondents 55)
Co
un
try Costs
related to
ensuring an
alternative service
Costs
related to
fixing the cloud
service problem
Legal costs
Costs related
to reputation damage
Costs
related to loss of
client(s)
Other
costsnone
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
122
CZ 0 0 0 0 0 0 0 0 0 0 3 100
DE 5 45 4 36 3 27 3 27 3 27 9 82
EE 0 0 2 67 0 0 0 0 0 0 1 33
ES 1 33 0 0 0 0 0 0 0 0 2 67
FR 6 55 5 45 5 45 5 45 5 45 10 91
IE 1 33 0 0 0 0 0 0 0 0 2 67
IT 2 40 1 20 1 20 1 20 2 40 3 60
NL 0 0 0 0 0 0 0 0 0 0 1 100
PL 0 0 1 20 1 20 1 20 1 20 2 40
PT 1 50 0 0 0 0 1 50 1 50 0 0
RO 1 100 1 100 1 100
1 100 1 100 1 100
SE 1 14 2 29 1 14 2 29 2 29 5 71
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 54 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the second most
serious problem by sector and type of costs ( of respondents 55)
Sector
Costs
related to ensuring
an alternative service
Costs
related to fixing the
cloud service problem
Legal costs
Costs related to reputation
damage
Costs related to
loss of client(s)
Other costs
none
Admin and support service
activities 1 17 1 17 2 33 1 17 1 17 5 83
Information and commun
3 30 3 30 1 10 2 20 2 20 6 60
manufacturing 4 25 5 31 4 25 4 25 4 25 15 94
Profess scientific and technical
activities
7 64 6 55 5 45 6 55 6 55 7 64
Wholesale and retail trade
repair of motor vehicles and motorcycles
3 25 1 8 0 0 1 8 2 17 6 50
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
123
Table 55 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by enterprise size class and type of costs ( of respondents 55)
Size class
Costs related to ensuring
an alternative
service
Costs related to fixing the
cloud service problem
Legal
costs
Costs related to
reputation damage
Costs related to
loss of client(s)
Other
costsnone
Micro 3 19 4 25 2 13 0 0 2 13 2 13
Small 12 39 8 26 7 23 0 0 9 29 10 32
Medium 3 38 4 50 3 38 5 63 3 38 3 38
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 56 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by size class (
of respondents 55)
Size class Loss of turnover Loss of profit
Micro 0 0 1 13
Small 5 31 5 31
Medium 2 6 2 6
Total 7 8
Source Survey of SMEs (2018)
Table 57 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by sector ( of
respondents 55)
Sector Loss of turnover Loss of profit
Administrative and support service activities
1 17 1 17
Information and communication 1 10 1 10
Manufacturing 2 13 2 13
Professional scientific and
technical activities 1 9 2 18
Wholesale and retail trade repair
of motor vehicles and motorcycles Total
2 17 2 17
Total 7 8
Source Survey of SMEs (2018)
Distribution of enterprises that have been provided any kind of redress for the damage caused
by the contract-related cloud computing problems by sector size or country level
Again with the sole aim of documenting the gathered information Table 58 to Table 60
present the differences by country size and sector of the distribution of enterprises that have
been provided any kind of redress for the damage caused by the contract-related cloud
computing problems
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
124
Table 58 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by country and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any
redress
CZ 1 33 0 0 0 0 2 67
DE 0 0 0 0 0 0 11 100
EE 0 0 0 0 0 0 3 100
ES 0 0 0 0 0 0 3 100
FR 1 9 0 0 0 0 10 91
IE 0 0 0 0 0 0 3 100
IT 0 0 0 0 0 0 5 100
NL 0 0 0 0 0 0 1 100
PL 0 0 1 20 0 0 4 80
PT 0 0 1 50 0 0 1 50
RO 0 0 0 0 0 0 1 100
SE 0 0 1 14 0 0 6 86
Total 2 3 0 50
Source Survey of SMEs (2018)
Table 59 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress
( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Administrative and support service activities
2 33 0 0 0 0 4 67
Information and
communication 0 0 0 0 0 0 10 100
Manufacturing 0 0 0 0 0 0 16 100
Professional
scientific and
technical activities
0 0 1 9 0 0 10 91
Wholesale and retail trade repair of motor vehicles and motorcycles
0 0 1 8 0 0 10 83
Total 2 3 0 50
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
125
Table 60 Number of enterprises that have been provided any kind of redress for the
damage caused by size class and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 0 0 2 13 0 0 14 88
Small 2 6 0 0 0 0 29 94
Medium 0 0 1 13 0 0 7 88
Total 2 3 0 50
Source Survey of SMEs (2018)
Distribution of loss of turnover by sector size or country level
Having estimated the different components of turnover Table 61 to Table 63 present the loss
of turnover in enterprises by country size and sector caused by the contract-related cloud
computing problems documenting significant differences
Table 61 Loss of turnover per enterprise by sector
Sectors
Number of
enterprises ()
95 Trimmed mean125
(euro)
Average
(euro)
Manufacturing 28 348469 1177465
Wholesale and retail trade 22 4759 232031
Information and communication 25 6599 27509
Professional scientific and technical activities 31 3226 490323
Administrative and support service activities 16 1827366 4144629
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 62 Loss of turnover per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 023 4217
Small 24 271159 1119043
Medium 73 99060 1278261
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 63 Loss of turnover per enterprise by country
Country Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 160819 894737
EE 5 117 140
125 A trimmed mean is a method of averaging that removes a small designated percentage of the largest and smallest values before calculating the mean
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
126
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
ES 11 000 000
FR 22 742424 3009091
IE 4 4583333 5125000
IT 13 192308 423077
NL 6 3889 5000
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 100166 613600
Total 122 41954 985869
Source Survey of SMEs (2018)
Distribution of loss of profits by sector size or country level
Table 64 to Table 66 present the loss of profits by country enterprise size and sector caused
by the contract-related cloud computing problems once again documenting significant
differences
Table 64 Loss of profits per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 43651 121207
Wholesale and retail trade 22 4980 242652
Information and communication 25 7720 14729
Professional scientific and technical activities 31 1452 9355
Administrative and support service activities 16 413456 872111
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 65 Loss of profits per enterprise by size class
Size class
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Micro 25 063 5742
Small 24 38235 50293
Medium 73 18681 301282
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 66 Loss of profits per enterprise by country
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 877 15789
EE 5 200 240
ES 11 000 000
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
127
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
FR 22 161111 613182
IE 4 152778 162500
IT 13 14957 38462
NL 6 17315 18583
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 221012 460637
Total 122 17690 191346
Source Survey of SMEs (2018)
Distribution of working days per enterprise involved in resolving the problem by sector size
or country level
Table 67 to Table 69 present the distribution of working days per enterprise involved in
resolving the problem caused by the contract-related cloud computing problems by country
size and sector again documenting significant differences
Table 67 Human resources invested - working days per enterprise involved in resolving the problem by sector
Sector
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Source Survey of SMEs (2018)
Table 68 Human resources invested - working days per enterprise involved in resolving the problem by size class
Size class
Number of
enterprises
()
95
Trimmed mean
( days)
Average
( days)
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
128
Table 69 Human resources Invested - working days per enterprise involved in resolving the
problem by country
Country
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
CZ 7 226 229
DE 19 471 1074
EE 5 222 220
ES 11 631 718
FR 22 282 395
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
RO 1 200 200
SE 18 251 361
Total 122 322 721
Source Survey of SMEs (2018)
Distribution of other costs covered per enterprise by sector size or country level
Table 70 to Table 72 present the other costs covered per enterprise to resolve the contract-
related cloud computing problems by country size and sector documenting again significant
differences
Table 70 Other costs covered per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 28919 706177
Wholesale and retail trade 22 141217 366265
Information and communication 25 11556 112400
Professional scientific and technical activities 31 50573 147290
Administrative and support service activities 16 150107 635096
Total 122 34124 371871
Source Survey of SMEs (2018)
Table 71 Other costs covered per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 2278 10725
Small 24 178472 389792
Medium 73 39973 489660
Total 122 34124 371871
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
129
Table 72 Other costs covered per enterprise by country
Country
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 387 535
DE 19 183333 665000
EE 5 6111 7000
ES 11 115657 229091
FR 22 682 50659
IE 4 166667 175000
IT 13 184615 416154
NL 6 15935 16917
PL 13 14575 37479
PT 3 3333 3333
RO 1 000 000
SE 18 332811 1241741
Total 122 34124 371871
Source Survey of SMEs (2018)
Distribution of the total value of redress received per enterprise by sector size or country
level
Table 73 to Table 75 present the total value of redress received per enterprise for contract-
related cloud computing problems by country size and sector
Table 73 Total value of redress received per enterprise by sector
Sector
Number of
enterprises
()
95 Trimmed
mean
(euro)
Average
(euro)
Manufacturing 28 000 1607
Wholesale and retail trade 22 000 1704
Information and communication 25 000 696
Professional scientific and technical activities 31 187 748
Administrative and support service activities 16 25195 38379
Total 122 095 6042
Source Survey of SMEs (2018)
Table 74 Total value of redress received per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 0 000 00
Small 0 000 00
Medium 7 17120 57096
Total 122 095 6042
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
130
Table 75 Total value of redress received per enterprise by country
Country Number of enterprises
(euro)
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 1867 5354
DE 19 000 000
EE 5 000 000
ES 11 000 000
FR 22 000 13636
IE 4 000 000
IT 13 1346 3462
NL 6 000 000
PL 13 2504 3123
PT 3 000 000
RO 1 000 000
SE 18 1939 17448
Total 122 095 6042
Source Survey of SMEs (2018)
Costs or labour per working day by sector and country level
Table 76 Cost of labour per working day (euro per day per worker)
Country Manufacturing
Wholesale and retail
trade repair of
motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
Total
economy
AT 2089 1323 2194 1331 1201 1616
BE 2285 1512 2294 1363 1190 1670
BG 705 691 1435 471 622 665
CY 705 691 1435 471 622 665
CZ 544 408 930 469 352 500
DE 2069 1080 2070 1568 821 1503
DK 1978 1601 2248 2281 1580 1871
EE 616 522 861 538 458 577
EL 721 434 945 307 407 505
ES 1352 827 1912 1072 725 1028
FI 1929 1366 2186 1764 1083 1639
FR 2055 1526 2487 2163 276 1791
HR 452 405 692 275 327 410
HU 506 336 662 368 309 424
IE 1967 1281 2605 2163 1189 1493
IT 1407 772 1702 659 840 1052
LT 383 305 627 317 317 351
LU 2204 1754 2862 2942 1192 2097
LV 969 315 590 333 276 347
MT 405 475 1017 333 571 477
NL 2083 1087 1970 1499 688 1286
PL 456 303 626 332 385 391
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
131
Country Manufacturing
Wholesale
and retail trade
repair of motor
vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Administrative and support
service activities
Total
economy
PT 640 524 1106 385 330 547
RO 290 236 576 333 230 287
SE 2197 1675 2618 2088 1259 1922
SI 871 731 980 523 546 762
SK 551 368 810 404 314 470
UK 1745 1047 2230 1989 1146 1455
EU 28 1491 1774 3687 1695 511 1118
Note Costs were computed as (INDIC_SB - Personnel costs - million euroINDIC_SB - Persons employed - number)260
Source Eurostat
Distribution of the overall components of financial detriment by sector and size class in the
different scenarios
The following tables present the distribution of the estimated components of financial
detriment by sector and enterprise size class for the different scenarios showing relevant
differences across those dimensions
Table 77 Lost turnover at the EU-28 level in SMEs experiencing cloud computing service problems
Scenario 1
(average incidence126 of CC
use 159)
Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 515 1450
Wholesale and retail trade repair of motor vehicles
and motorcycles 240 728
Information and communication 59 175
Professional scientific and technical activities 237 694
Administrative and support service activities 1395 4645
Total 2446 7691
Siz
e
cla
ss Micro 1405 4402
Small 598 1866
Medium 442 1423
Total 2446 7691
Source Computations based on Survey of SMEs (2018) and Eurostat
126 Average percentage of cloud computing services used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
132
Table 78 Lost profits at the EU28 level in SMEs experiencing cloud computing service
problems
Scenario 1 (average incidence of CC use 159)
(Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 146 409
Wholesale and retail trade repair of motor vehicles and motorcycles
114 345
Information and communication 35 103
Professional scientific and technical activities 101 293
Administrative and support service activities 634 2092
Total 1031 3243
Siz
e
cla
ss Micro 602 1887
Small 255 792
Medium 174 564
Total 1031 3243
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 79 Costs of human resources invested in resolving the problem in SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 341 1019
Wholesale and retail trade repair of motor vehicles and motorcycles
474 1511
Information and communication 236 741
Professional scientific and technical activities 816 2503
Administrative and support service activities 232 826
Total 2099 6600
Siz
e
cla
ss Micro 1961 6167
Small 97 295
Medium 41 138
Total 2099 6600
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 80 Other costs covered by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 162 479
Wholesale and retail trade repair of motor vehicles and motorcycles
959 2996
Information and communication 74 229
Professional scientific and technical activities 503 1527
Administrative and support service activities 291 1024
Total 1989 6255
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
133
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Siz
e
cla
ss Micro 1450 4555
Small 449 1401
Medium 90 300
Total 1989 6255
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 81 Total value of redress received by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 2
(average incidence of CC use 159)
Scenario 1
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 00 00
Wholesale and retail trade repair of motor vehicles
and motorcycles 00 01
Information and communication 00 00
Professional scientific and technical activities 00 01
Administrative and support service activities 05 15
Total 06 17
Siz
e
cla
ss Micro 02 06
Small 00 00
Medium 04 11
Total 06 17
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 27 Distribution by component of gross detriment considering lost turnover and all the other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 1 (average incidence of cloud computing use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
134
Figure 28 Distribution by sector of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 29 Distribution by enterprise size class of gross detriment considering lost turnover
and all other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 2 (average incidence of CC use 499)
Scenario 1 (average incidence of CC use 159)
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
135
Figure 30 Distribution by country of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
136
Annex 7 Impacts on jobs and growth detailed results
Inputs for the assessment of macroeconomic impacts
The following two tables present the results of the estimation of turnover losses by industry
and country in the two scenarios that are used as inputs on assessment of impacts on jobs
and growth
Table 82 Turnover losses arising from contract-related cloud computing service problems - Scenario 1 considering average incidence of CC use 159 (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor
vehicles and
motorcycles
Information
and communication
Professional
scientific
and technical activities
Administrative and support
service
activities
Total
AT 06 02 00 01 10 19
BE 54 01 00 01 50 106
BG 02 00 00 00 05 07
CY 08 03 01 05 44 61
CZ 40 68 19 69 80 275
DE 02 06 02 06 03 21
DK 41 29 09 36 138 254
EE 92 86 09 69 136 392
EL 62 02 01 01 108 173
ES 07 00 00 00 85 92
FI 13 02 01 02 29 47
FR 15 01 00 00 35 51
HR 39 02 00 01 189 231
HU 05 01 00 01 08 15
IE 18 01 01 02 105 128
IT 14 06 04 12 38 73
LT 03 01 00 01 15 19
LU 23 09 01 08 39 81
LV 12 05 01 02 18 37
MT 01 00 00 00 03 05
NL 02 01 00 01 08 11
PL 00 00 00 00 03 03
PT 12 03 01 04 41 61
RO 01 00 00 00 02 03
SE 04 01 00 01 13 20
SI 07 02 01 02 20 32
SK 05 01 00 01 08 15
UK 25 07 06 11 162 211
EU28 515 240 59 237 1395 2446
Note values refer to the turnover losses estimated by country and sector that are used in the assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
137
Table 83 Turnover losses arising from contract-related cloud computing service problems -
Scenario 2 considering average incidence of CC use 499 - (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor vehicles
and motorcycle
s
Information and
communication
Profession
al scientific
and technical activities
Administrative and
support service
activities
Total
AT 17 05 01 03 35 61
BE 156 03 01 02 172 333
BG 05 00 00 00 17 22
CY 22 09 03 13 144 191
CZ 112 211 57 198 288 866
DE 07 18 07 20 12 65
DK 110 91 26 98 474 800
EE 278 256 30 218 452 1234
EL 168 05 02 02 366 544
ES 18 01 00 00 271 290
FI 37 07 02 05 96 147
FR 42 02 00 01 115 160
HR 113 06 01 02 605 728
HU 15 03 01 02 27 48
IR 50 04 02 06 340 402
IT 38 19 11 32 129 230
LT 07 02 01 02 48 61
LU 66 29 03 23 135 256
LV 33 15 02 06 62 117
MT 04 01 00 01 10 16
NL 07 02 01 02 25 36
PL 01 01 00 01 08 11
PT 32 09 04 10 136 191
RO 02 01 00 01 07 10
SE 12 03 01 03 45 62
SI 19 06 02 07 67 101
SK 13 02 01 03 27 46
UK 67 19 16 31 530 663
EU28 1450 728 175 694 4645 769
1
Note values refer to the turnover losses estimated by country and sector that are used in the
assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
138
Parameters for the assessment of macroeconomic impacts
Table 84 Output per unit of GVA by sector
(euro value of turnover by euro of GVA ndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail trade
repair of motor vehicles
and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
AT 31 18 22 20 15
BE 41 20 22 21 20
BG 44 20 19 22 24
CY 33 17 30 15 16
CZ 38 21 19 25 29
DE 29 17 19 17 16
DK 27 18 21 19 21
EE 40 19 19 19 18
EL 36 19 20 18 22
ES 40 18 20 18 18
FI 35 19 20 18 17
FR 33 20 19 22 17
HR 29 19 19 18 20
HU 40 21 17 16 18
IE 24 18 39 19 19
IT 38 19 22 17 21
LT 30 14 16 16 17
LU 37 30 49 20 80
LV 32 18 19 17 21
MT 33 16 26 23 19
NL 41 17 20 19 15
PL 36 16 20 17 20
PT 38 16 22 21 16
RO 28 26 18 22 21
SE 30 16 20 18 18
SI 31 19 21 19 17
SK 46 20 20 24 26
UK 29 18 17 16 18
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat National accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
139
Table 85 Output per unit of employment by sector
(euro million of turnover by thousand persons employedndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail
trade repair of motor
vehicles and motorcycles
Information
and communication
Professional
scientific and
technical activities
Administrati
ve and support service
activities
AT 2789 1006 2094 1227 864
BE 4293 1566 2999 1533 788
BG 453 197 499 306 160
CY 871 468 2187 814 414
CZ 1106 466 1047 625 485
DE 2414 780 2031 1060 721
DK 3251 1214 2246 1564 1118
EE 967 497 740 712 626
ES 2754 616 1770 858 474
FI 3160 1078 2014 1100 748
FR 2862 1077 2263 1650 898
GR 1643 392 1263 416 476
HR 603 364 702 652 432
HU 1137 320 658 384 255
IR 8130 1091 11774 1822 2848
IT 2329 899 2006 977 754
LT 944 378 711 406 303
LU 2988 3000 8840 1977 4646
LV 689 378 648 389 387
MT 1084 513 1866 1264 617
NL 3923 1047 2190 1314 556
PL 862 467 824 646 378
PT 1151 537 1397 648 275
RO 584 323 917 958 337
SE 3272 1189 2874 1706 955
SI 1236 647 1072 609 354
SK 1452 456 962 760 485
UK 2550 910 1750 1080 708
Note These values express the value of output that is produced by one employee in each industry For instance each worker in manufacturing in Belgium produces and output of euro4293 thousand Source Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
140
Detailed results of the assessment of macroeconomic impacts
Table 86 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems ndash Scenario 1 considering average incidence of CC use 159
Co
un
try
Sectors
Manufact
Wholesale
and retail trade repair
of motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Admin and
support service
activities
Total
(
of ctry
GVA)
(euro million)
AT 02 01 00 01 13 18 000
BE 02 02 00 02 22 29 000
BG 03 02 00 01 08 14 000
CY 00 00 00 00 02 03 000
CZ 14 00 00 00 18 33 000
DE 14 17 05 21 85 143 000
DK 01 00 00 00 07 09 000
EE 00 00 00 00 03 03 000
EL 07 05 01 05 18 34 000
ES 10 01 00 00 107 118 000
FI 01 00 00 01 08 10 000
FR 12 33 10 31 47 133 000
HR 02 00 00 00 04 07 000
HU 03 01 01 02 23 31 000
IE 01 03 01 03 02 10 000
IT 24 44 04 41 64 178 000
LT 02 01 00 01 06 10 000
LU 00 00 00 00 00 01 000
LV 01 00 00 00 04 05 000
MT 00 00 00 00 01 02 000
NL 04 01 00 01 69 76 000
PL 17 01 00 00 55 74 000
PT 02 00 00 00 54 55 000
RO 05 00 00 00 17 23 000
SE 05 04 02 06 21 38 000
SI 02 00 00 01 05 07 000
SK 03 01 00 01 11 16 000
UK 09 04 03 07 89 112 000
To
tal
EUR
million 146 126 30 128 761 1191
of
total 000 000 000 na 001 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
141
Table 87 Direct employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 1 considering average incidence of CC use 159
Co
un
try
Sector
Manufact
Wholesale and retail
trade repair
of motor vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total ( of
ctry GVA)
(euro million)
BE 2 2 0 3 56 63 000
BG 26 25 1 7 112 171 001
CZ 49 2 0 1 103 155 000
DK 1 1 0 1 13 15 000
DE 17 38 5 34 191 285 000
EE 2 0 0 0 9 10 000
EL 14 24 1 19 83 141 000
IE 0 6 0 4 1 11 013
ES 14 3 0 1 398 417 000
HR 9 3 0 1 18 31 000
IT 39 96 5 71 180 391 002
CY 2 1 0 0 7 10 000
LV 4 2 0 2 19 27 001
LT 6 5 0 3 34 48 001
LU 0 0 0 0 1 1 000
HU 10 9 2 10 161 192 001
MT 1 0 0 0 3 5 000
NL 5 1 0 2 189 197 000
AT 3 2 0 2 23 30 000
PL 72 4 1 1 286 363 000
PT 6 0 0 0 311 317 000
RO 25 2 0 0 104 132 000
SI 4 1 0 2 23 29 001
SK 9 5 1 2 59 76 001
FI 1 1 0 1 18 21 000
SE 4 5 1 7 40 57 001
UK 10 7 3 10 229 260 000
To
tal Persons 348 306 31 225 2761 3672
of
total 000 000 000 000 002 000
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
142
Table 88 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems Scenario 2 considering average incidence of CC use 499 - euro million
Co
un
try
Sector
Manufact
Wholesale and retail trade
repair of
motor vehicles and
motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total
(
of ctry
GVA)
AT 06 04 01 03 43 57 000
BE 05 05 01 06 74 91 000
BG 07 08 01 03 26 45 001
CY 01 01 00 00 06 09 001
CZ 41 01 00 01 60 104 001
DE 38 53 13 57 293 455 000
DK 03 01 01 01 23 29 000
EE 01 00 00 00 10 11 001
EL 18 15 02 13 60 108 001
ES 28 03 00 01 342 376 000
FI 03 01 00 02 26 33 000
FR 33 104 30 90 169 427 000
HR 05 02 00 01 13 22 001
HU 08 04 02 06 77 98 001
IE 03 10 02 11 06 32 000
IT 73 132 14 129 211 560 000
LT 06 04 00 02 21 33 001
LU 00 00 00 00 01 02 000
LV 02 01 00 01 12 16 001
MT 01 00 00 00 03 05 001
NL 12 02 01 03 224 242 000
PL 46 03 01 01 186 237 001
PT 05 00 00 00 170 175 001
RO 15 01 00 00 56 72 001
SE 13 12 06 18 73 121 000
SI 04 01 00 02 16 23 001
SK 08 03 01 02 37 52 001
UK 23 10 09 19 292 354 000
To
tal
EUR
million 411 382 88 375 2532 3788
of
total 000 000 000 na 004 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
143
Table 89 Direct Employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 2 considering average incidence of CC use 499
Co
un
try
Sector
Manufac
t
Wholesale and retail
trade repair of
motor vehicles
and motorcy
cles
Informati
on and communi
cation
Professio
nal scientific
and technical activities
Admin and
support service
activities
Total ( of ctry
employment)
(Persons)
AT 7 6 1 6 77 97 000
BE 5 6 1 8 183 203 000
BG 72 76 4 19 384 555 002
CY 4 3 0 1 24 31 001
CZ 141 6 1 3 356 506 001
DE 46 117 13 93 657 925 000
DK 2 2 1 1 43 49 000
EE 5 0 0 0 28 33 001
EL 40 73 3 56 284 455 001
ES 41 10 0 3 1277 1331 001
FI 4 2 0 2 60 69 000
FR 39 196 25 120 321 701 000
HR 24 8 1 4 63 99 001
HU 28 28 5 27 535 623 001
IE 1 17 1 11 4 33 000
IT 119 284 15 223 599 1242 001
LT 18 14 1 8 116 157 001
LU 0 0 0 0 2 3 000
LV 10 5 1 4 65 85 001
MT 2 1 0 1 11 15 001
NL 13 4 1 5 612 634 001
PL 195 11 2 4 970 1182 001
PT 16 1 0 1 986 1004 002
RO 72 6 0 1 342 420 000
SE 12 16 4 19 136 186 000
SI 11 3 1 5 78 97 001
SK 25 14 2 7 199 247 001
UK 26 21 9 29 749 834 000
To
tal
Persons 977 930 92 660 9157 11816
of total 000 000 000 000 006 001
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
144
Table 90 Indirect loss of gross value added at EU28 level by sector
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(euro million)
Agriculture forestry and fishing 20 59
Mining and quarrying 09 27
Manufacturing 151 454
Electricity gas steam and air conditioning supply 22 68
Water supply sewerage waste management and remediation activities 13 39
Construction 20 64
Wholesale and retail trade repair of motor vehicles and motorcycles 98 301
Transportation and storage 76 237
Accommodation and food service activities 18 59
Information and communication 71 223
Financial and insurance activities 66 207
Real estate activities 72 226
Professional scientific and technical activities 157 493
Administrative and support service activities 155 498
Public administration and defence compulsory social security 11 33
Education 10 33
Human health and social work activities 02 07
Arts entertainment and recreation 05 17
Other service activities 10 33
Activities of households as employers undiff goods- and services-
producing activities of households for own use 00 00
Total euro million 987 3079
of EU28 total 000 000
Note Values refer to the GVA content of the indirect turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses
by the coefficients of GVA at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Table 91 Indirect loss of Employment at EU28 level by sector
Scenario 1 (average
incidence of CC use 159)
Scenario 2 (average
incidence of CC use 499)
(Persons)
Agriculture forestry and fishing 119 353
Mining and quarrying 8 24
Manufacturing 252 759
Electricity gas steam and air conditioning supply 13 39
Water supply sewerage waste management and remediation activities 16 50
Construction 43 135
Wholesale and retail trade repair of motor vehicles and motorcycles 241 739
Transportation and storage 137 428
Accommodation and food service activities 55 176
Information and communication 75 235
Financial and insurance activities 60 190
Real estate activities 12 39
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
145
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(Persons)
Professional scientific and technical activities 234 734
Administrative and support service activities 374 1203
Public administration and defence compulsory social security 20 63
Education 26 82
Human health and social work activities 6 18
Arts entertainment and recreation 13 40
Other service activities 29 93
Activities of households as employers undiff goods- and services-producing activities of households for own use
1 2
Total Persons 1733 5402
of EU28 total 000 000
Note Values refer to the employment content of the indirect turnover losses caused by contract-
related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses by the coefficients of employment at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
146
Annex 8 Case study questionnaires by stakeholder type
EY Interview Guide ndash Cloud computing contracts (service providers and cloud
brokers)
Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into to what extent SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
As part of the study an SME survey was conducted to get a better understanding of the
incidence and the scope of problems encountered with this type of service In order to
complement and to get a better understanding of the results we obtained from the survey
we also want to get a better understanding of the services offered to SMEs by providers and
what types of problems are notified to providers
Timing 2 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and
check whether this is the best representative to interview from the national authority
Can you tell a bit more about yourself and what position do you hold
Can you reply to our questionnaire and if not can you put us in contact with somebody who can
Can you tell us a little more about the cloud computing provider you work for What type of services do you offer
What can you tell us about the contracts being offered by the cloud computing provider to SMEs
Elements to be evaluated
Understanding of the function Understanding if the person is competent enough to give relevant answers to the topic in
question Understanding of the extent of knowledge that the person has of cloud computing contracts
and company
Timing 05 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
147
Services offered to SMEs and differences compared to services offered to larger enterprises
Cloud computing services offered to SMEs
The objective of this section is to get full understanding of whether and how the provider considers
SMEs as a specific type of customer
What kind of cloud computing contracts do you offer To what extent do SMEs rely on this service What is the size of the SMEs to which you provide this service Do you offer services for micro enterprises and what is the difference between the service
offered to micro and larger enterprises
Do you offer this service based on a fee or for free
How flexible are you on the contracts that you offer in terms of negotiating Do you have standard terms amp conditions for SMEs or are they negotiable Do companies tend to negotiate the terms of the contract or are they satisfied with the service
offered in the contract To what extent can SMEs monitor the performance of the contract
Elements to be discussed
Understanding of the company and type of services offered Understanding if and how SMEs are considered as a specific category of customer Knowledge and understanding on the type of the service used paid or not by SME customers
Knowledge and understanding of the whether the contracts are negotiated or not
Timing 10 min
Complaints received and actions taken by the provider to address the issues encountered
Complaints received from SMEs concerning the services provided
Objective is to get an understanding of the number and scope of complaints that providers receive and to what extent SME complaints are different from other complaints received
How often do you receive complaints from SME customers Compared to other customers is this higher or lower
What types of complaints do you receive from SMEs (different from other groups) Which was the most serious problem encountered that you received a complaint about and to
which type of cloud computing service was it related What caused these problems What is the internal procedure to handle these problems In the past 12 months did you receive complaints not directly from customers but through
3rd party complaints-handling bodies
To what extent was this complaint different from other complaints you received directly from customers
Elements to be discussed
Understanding of the types of complaints received from SMEs Understanding of severity and frequency of complaints received from SMEs
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
Low speed of services Unsatisfactory availability or discontinuity of the service
Forced updates to the service that eliminated or changed a necessary function
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
148
Lack of clarity and transparency of contract terms and conditions
Timing 10 min
Specific actions taken by provider in order to address the problems
What is the standard procedure to handle complaints To what extent do you as cloud computing provider provide assistance to the SMEs when they
encounter a problem
How much time does it in general take to solve issues encountered by SMEs (in line with other complaints handled for other customers)
When encountering a problem in general what type of action do SMEs expect you as provider to take
Have you experienced that consumers easily switch provider or terminate the contract Does
this happen more often after they have filed a complaint
What types of costs do you compensate to SME customers when they encounter a problem Do customers in general accept the offered remedies Have you encountered cases where the
SME customer was not happy with the solution offered What other solutions were offered in place
Did the complaint escalate Any court proceedings arbitrationhellip
Elements to be evaluated
Understanding of the actions taken by the cloud computing provider Were these remedies enough to solve the problem The resources involved and used in the resolving of the problem
Where there any extra costs covered by the company
Timing 10 min
Future perspectives on the topic
How will Cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made due
to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services
Legalpolicy consequences of potential future evolutions
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 2 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
149
EY Interview Guide ndash Cloud computing contracts (Associations of SMEs)
D Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Timing 2 min
General introduction questions
Generate understanding of the position and knowledge of the interviewee on the specific subject
Can you tell a bit more about the types of activities that the companies in your association
are performing
Timing 05 min
Cloud computing services used (IT)
The objective of this section is to get full understanding of what cloud computing services are used for by the members of the SME associations
Are you aware of any of the following Cloud Computing services being used by SMEs
Collaboration and communication services Storage and hosting services Security services
Networking services
Data management Business applications
Are you aware of any other cloud computing services being used by SMEs
Timing 5 min
Type of contracts (legal)
The objective of this section is to get full understanding of what kind of contract the SMEs which are part of the association have
What type of cloud computing contract do the companies in your association have (with or
without remuneration if with remuneration- how much do they pay per month) What is the average duration of the contracts
Do the companies in your association have a preferred provider or type of package of services Do the companies in your association negotiate their cloud computing contracts What parts
are they able to negotiate if any Are the companies in your association satisfied with the degree of customisation of the
contracts What specific needs do the companies in your association have regarding cloud computing
Do they succeed in covering them in the process of negotiating cloud computing contracts with the providers of cloud computing services
Timing 10 min
Problems encountered (legalIT)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
150
Objective is to get a better understanding of the problems encountered by the members of SME associations while contracting cloud computing services
Are you aware of any of the following problems existing with cloud computing services used by SMEs
low speed of the service unsatisfactory availability or discontinuity of the service forced updates to the service that eliminated or changed a necessary function
lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
lack of clarity and transparency of contract terms and conditions
Are you aware of any other problems existing with cloud computing services used by SMEs
What was the action taken by companies inside your association in order to resolve the issues
Do the companies in your association usually decide to take legal action
Do you believe that unfair contract terms and conditions of the cloud provider could be considered as
a cause of the problems of the companies that are members in your association
Why you diddid not consider security matters as one of the problems declared
Timing 15 min
Costs of the cloud computing services contract (legalIT)
Objective is to get an understanding of the costs sustained by the members of the SME associations while contracting cloud computing services
Would you consider that there have been any negative effects on the everyday business
activities of the companies in your association after facing the mentioned problem If yes please explain what the negative effects were
What types of costs have the companies sustained while resolving the problems Were they offered any compensation from the cloud provider
Timing 5 min
Future perspectives on the topic
How will the SMEs use the cloud computing services in the future
To what extend do you think cloud computing services will become moreless important for companies in the future
Do you see any other evolutionstrends that could be relevant with regard to cloud computing
services for SMEs
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 5 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
151
EY Interview Guide ndash Cloud computing contracts (National authorities and national
SMEs envoys)
E Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into the extent to which SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
More concretely the following services are included collaboration and communication
services storage and hosting services security service networking services data
management business applications service and support tools cloud enablement and IT
operations virtual data centre mobile data centre
As part of the study an SME survey was conducted Results of the survey show that the
incidence of problems is relatively high in ltyour countrygt The objective of this interview is
to get a better understanding of the national context with regard to this subject
Timing 5 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and check whether this is the best person to interview within the national authority
Can you tell a bit more about yourself and what position do you hold To what extent are you familiar with the subject of cloud computing services
Elements to be discussed
Understanding of the function Understanding if the person is competent to give relevant answers to the problematic in
question Understanding of the extent that the person has of cloud computing contracts
Timing 05 min
Legal framework of cloud computing contracts
Cloud computing contracts in ltyour countrygt
Generate understanding of the overall situation in the country policy attention given to the subject and the specific legal framework applicable
Cloud computing services are a relative new service To what extent are national authorities working on this issue
Any data available
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
152
Knowledgeawareness of the availability of these services in ltyour countrygt
Specific attention for this topic at policy level
Under what applicable legal framework do these services fall Are there specific national initiatives developed with regard to this type of services
Our study focuses specifically on the situation of cloud computing services used within SMEs Do you have any knowledge of the existence of specific rules applicable only to SMEs in your country
Do you think the legal framework is sufficiently protecting cloud computing users and more
specifically SMEs Do you think that Terms amp Conditions are clear for SMEs Should they have specific rules for
this group of customers What is (or should be) the possibility of SMEs to monitor performance of contract Terms and
Conditions
What remedies are at SMEsrsquo disposal Is switching providers a remedy
Elements to be discussed
Knowledge and understanding of the specific sector Knowledge and understanding of the extent that these services are used
Knowledge and understanding of the legal framework applicable in the country
Timing 10 min
Problems with regard to cloud computing services
Notifications received on problems encountered by SMEs
Are you aware of any problems existing with cloud computing services used by SMEs
Have you received any complaints with regard to this type of services
Have there been any complaints on the terms amp conditions of the contracts How are these complaints handled What is the intended procedure to follow
What follow up is given to complaints regarding cloud computing services
Do you as a national authority have sufficient competences to enforce regulations in your country
Elements to be discussed
Knowledge and understanding of the problems encountered by SMEs Understanding of the types of problems encountered
Understanding of how complaints are handled and if complaints did lead to further actions taken by public authorities
Relevant information
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
low speed of services unsatisfactory availability or discontinuity of the service
forced updates to the service that eliminated or changed a necessary function
lack of clarity and transparency of contract terms and conditions
Timing 10 min
Future perspectives on the topic
How will cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
153
Do you consider it likely that more problems will arise with regard to cloud computing
services
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made
due to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services Legalpolicy consequences of potential future evolutions
To what extent national authorities are working on the topic or will address more attention to it in the future
Timing 10 min
Closing of Interview
Thank you for your interest and for your time
Any further questions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
154
Annex 9 Case study analysis
Case study interviews
Objectives
The objective of the case studies was to produce useful insights on the specific problems that
were identified by the survey and complement the results obtained by using CATI and the
online survey Additional information was gained through interviews that also involved
stakeholders that had not previously participated in the Online Survey and CATI thus these
inputs were used to further enrich the results that have been obtained so far
Scope
The case studies targeted the following categories of stakeholders
Cloud service providers
National authorities
SMEs that already provided information either in the online survey or during the CATI
and that declared their availability for an in-depth interview
National SMEs Envoy
European SMEs associations (including Enterprise Europe Network associations)
Cloud brokers
Chambers of Commerce
The topics discussed with each type of stakeholder involved in the case study interviews are
presented in Figure 31
Figure 31 Topics discussed with each type of stakeholder
Stakeholder category
Topics discussed
SMEs that declared their availability for
an in-depth interview127
- type of contract (services included duration service providers what has been negotiated - if any and what degree of customisation)
- possibility to monitor performance of contract if SMEs can or cannot monitor
service performance and if they only detect the most obvious and impactful service performance defects and what types of modifications occur in practice
- costs of the cloud computing services contract(s)
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint if the details regarding the internal procedure
of the provider (if any) were investigated how much time it took and how the
problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- actions taken (HR and financial costs of actions taken)
- results of the actions taken
- disruptionreduction of activity
127 The in-depth interviews with the SMEs already included in CATI involved discussing the problems encountered by them and with a special focus on the following contract-related problems lack of clarity
and transparency of contract terms and conditions unilateral modification of the servicecontracts and
limited liability of cloud providers The special emphasis on these problems is given with the aim of complementing the information already obtained by the CATI The interviews targeted three different departments where possible legal IT and managementfinance departments
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
155
Stakeholder
category Topics discussed
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME affected by the problem encountered
- potential loss of competitiveness (business opportunities lost) in terms of profitturnover lost customers market shares
- additional costs (eg costs related to ensuring an alternative service)
Cloud service providers and cloud brokers
- types of cloud computing contracts offered to SMEs
- services offered to SMEs and differences from services offered to larger enterprises
- the level of negotiability and customisation of the services offered to SMEs
- flexibility regarding the negotiation of cloud computing contracts
- contract-related problems encountered by SMEs
- causes of the contract-related problems encountered by SMEs
- actions taken by service providers and cloud brokers to address contract-related problems encountered by SMEs
- costs compensations for contract-related problems encountered by SMEs
- escalation of contract-related issues to court proceedings
Competent national authorities
- familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs Envoy - familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs associations
- awareness of specific cloud computing services used by SMEs
- type of contract (services included duration service providers what has been negotiated - if any and what was the degree of customisation) concluded by the SMEs in the associations
- average duration of cloud computing contracts concluded by SMEs
- satisfaction of SMEs regarding the degree of customisation of cloud computing contracts
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint were the details regarding the internal procedure of the provider (if any) further investigated how much time it took and how the problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME
affected by the problem encountered
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156
Findings
During the CATI and the online survey 20 SMEs mentioned their availability to be contacted
for in-depth interviews Out of these 20 companies nine SMEs managed to take part in the
case study interviews They represented five sectors wholesale and retail trade repair of
motor vehicles and motorcycles professional scientific and technical activities information
and communication and manufacturing
Additionally in the process of conducting the interviews another 104 stakeholders from 12
Member States (see Figure 32) have been contacted Of these 24 agreed to participate in
the case study interviews
Figure 32 Stakeholders contacted for in-depth interviews
Finally in total 33 interviews were conducted with SMEs (see Figure 33 for SMEs involved by
country sector and size) and SMEs associations a Chamber of Commerce EEN National
Authorities an SME Envoy and service providers (see Figure 34 for the stakeholders list by
category country and name)
Figure 33 The list of SMEs involved
No Country Sector Size
1 Poland Manufacturing Medium-sized
2 Germany Manufacturing Small
3 Germany Information and communication Medium-sized
4 Germany Professional scientific and technical activities Medium-sized
5 Poland Information and communication Small
6 France Information and communication Medium-sized
7 Poland Professional scientific and technical activities Medium-sized
8 Spain Professional scientific and technical activities Small
9 Spain Information and communication Small
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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157
Figure 34 Details of stakeholders who participated in the in-depth interviews
Category Country
Chamber of Commerce The Netherlands
Cloud broker The Netherlands
EEN Romania
France
National authority
Italy
Romania
Romania
France
Poland
Estonia
Service provider
Sweden
Spain
Spain
Sweden
Ireland
Romania
Romania
Portugal
Romania
Germany
SME Association
EU
Portugal
The Netherlands
SME Envoys Network The Czech Republic
Services contracted
Use and types of cloud computing services contracted by EU SMEs
The use of cloud computing services by SMEs is increasing Each type of stakeholder was
aware of the spread of the use of the service
More precisely the interviews revealed that 50 of the national authorities (three out of six
respondents) the national SME Envoy the members of EEN and one cloud broker shared the
opinion that SMEs are using more cloud computing services compared to previous years
A quarter of the cloud providers observed that the usage of a specific cloud computing model
depends on the enterprise size with smaller enterprises relying more on the SaaS model
especially in contracting communication and collaboration services This confirmed the CATI
results as it showed that 50 of the micro enterprises chose a service from the SaaS model
Security
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
158
Security issues are generally an important matter for SMEs leading them to be concerned at
least about the general aspects of the security thresholds of the service provider Another
aspect that is taken into account is the reputation of the provider more precisely whether the
cloud provider has had incidents of data breaches in the past This was the case for 66 of
the respondents (six out of nine participants) One out of nine SME participants (11)
interviewed preferred to store its data on its own servers as a result of its complexity and of
privacy concerns Generally it can be observed from the in-depth interviews that if the
companyrsquos sector of activity is connected with IT services the more inclined it is to pay
attention to data security aspects
Types of contracts and relative costs
Duration and costs
Half of the service providers (five out of ten respondents) stated that they preferred to offer
flexibility regarding the duration of the contracts ranging from hourly contracts to yearly
subscriptions On average from the responses obtained from the providers during the case
study interviews it could be estimated that contracts had a duration of 12 months The Dutch
Chamber of Commerce also confirmed this information
Negotiability and customisation of CTampC
Most (90) of the service providers (nine out of ten respondents) and one cloud broker
affirmed that they offer SMEs the possibility of negotiating the CTampC to respond to the need
for customisation of service packages However the providers consider that SMEs might not
yet have formed a habit of negotiating cloud computing contracts The in-depth interviews
have shown that in most cases all representatives of SME associations and EEN members
said that their members do not try to negotiate cloud computing contracts Moreover 60
of service providers (six out of ten respondents) believe that SMEs are generally satisfied with
the degree of customisation of cloud computing services offered in standard contracts with
the only negotiation point being the price
Cloud providers indicated that the size of the enterprise was a factor in the initiation of the
negotiation and in the success in negotiating a cloud computing contract Hence 40 of cloud
computing providers (four out of ten respondents) and one cloud broker mentioned that
medium-sized enterprises have an increased tendency to negotiate their service contracts
Types of subscriptions
All of the SMEs interviewed stated that they had contracts with paid subscription Seven out
of the nine SMEs included in the case study interviews had contracts with fixed fees the rest
mentioning variable fees At the same time SMEs with variable fees prefer flexibility of
duration and costs either because of the limited need for the service inside the enterprise or
because they were still exploring the business opportunities that the service may offer One
exception was the SME active in the information and communication sector which had
concluded long-term fixed fees contracts This company purchased cloud computing services
in order to use them widely in the activity of the enterprise or to include them in the service
packages that they offer
Out of the total number of service providers that were interviewed half of them (five out of
ten providers) and one cloud broker only offered contracts with paid subscription and the
other 50 of service providers (five out of ten respondents) sometime offered free trials to
SMEs in the cases where they see potential for signing a more significant contract with paid
subscription afterwards
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
159
Legal framework of contracts
In-depth interviews have revealed that stakeholders believe that the current legal framework
both at national and EU levels needs some improvement in order to make it more suitable to
the needs of SMEs and technological advancement
National authorities the Chamber of Commerce and the national SME Envoy specified that
the currently applicable legal framework is a mix of several legal acts which partially regulated
cloud computing services and mainly focus on general data protection cybersecurity or e-
privacy All of the national authorities interviewed had a positive attitude towards the adoption
of specific legislation targeting SMEs and cloud computing services at national and EU levels
One-fifth of the service providers (two out of ten respondents) and the cloud broker also
believed that the legal framework was not sufficient and argued that guidance through what
could be a code of conduct regarding cloud computing services and how to use it should be
provided at the EU level in order to raise awareness and have a better understanding about
cloud computing services
This opinion was shared by the SMEs as 56 of the participants (five out of nine respondents)
believed that the legal framework could be improved Their suggestions included introducing
a uniform legislation at the EU level and providing a fair contract template that would balance
the powers between service providers and users
Contract-related problems encountered by SMEs
SMEs encountered a moderate amount of issues related to cloud computing contracts Most
frequently they experienced three specific problems unavailability of service low speed and
forced updates Data security although not considered among the leading problems by any
of the SMEs included in the case studies was mentioned as being a constant concern
The most serious problems encountered by SMEs
More than three-quarters (78) of the SMEs (seven out of nine respondents) indicated that
the most serious problem that they encountered was unsatisfactory availability or
discontinuity of the service followed by 11 of SMEs (one out of nine respondents) that
reported low speed of the service and forced updates to the service that eliminated or changed
a necessary function
Other problems encountered by SMEs
The second most important problem indicated by 22 of the SMEs interviewed (two out of
nine respondents) was data security In particular for one SME that operates in the
professional scientific and technical activities sector data security was so important that it
preferred to store its data on its own servers rather than contracting cloud computing
services It maintained that the market didnrsquot offer sufficient information regarding data
protection in order for it to trust the available service providers
However in all but one case the issues either did not affect the day-to-day activities of the
enterprises or only affected the internal processes of the enterprises due to the lack of the
availability of the servers In one case however an SME whose cloud computing problems
affected external business operation chose to move this activity to its own data storage
solutions In this specific case the SME was an IT operating company with storage
infrastructure already in place so its costs were not as high as for any other SME experiencing
this
National authorities and SME Envoys have little information about contract-related problems
encountered by SMEs mentioning the fact that they received few complaints regarding cloud
computing services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
160
When asked about what they considered as the most significant problems encountered by
SMEs service providers provided responses that were similar to those of their customers
Unsatisfactory availability or discontinuity of the service was recognised as the most serious
problem Other problems mentioned include the failure of the provider to identify analyse
and correct hazards and prevent a future re-occurrence high subscription fee and lack of
alignment of the CTampC
Actions taken
In all cases the action that the SMEs first took in order to resolve issues related to cloud
computing service was to formally notify the providers As a result of the complaints in seven
of eight cases the cloud computing service providers resolved the issues The duration of the
action to resolve the problems ranged from a few hours to a few days None of the SMEs
chose to take legal actions when encountering issues with the cloud computing services either
because the issue was resolved quickly it didnrsquot have an impact on the activity of the business
or because they felt intimidated by the reputation and size of the provider
A second action that SMEs took was to involve their staff in resolving the issues Six of the
eight enterprises involved one or two members of the IT or technical departments in the
process of addressing the cloud computing issues The exception was represented by one
enterprise which after the incident decided to renounce the cloud computing contract given
that it took its IT staff 10 days to resolve the problem with its cloud computing service
Another enterprise chose to pay for one member of its IT staff to work during the weekend
to ensure that any issues would be immediately addressed
Nearly one-third (30) of the service providers (three out of ten respondents) and one cloud
broker who participated in the in-depth interviews consider that an important problem arises
from the SMEsrsquo limited technical knowledge that does not allow them to clearly understand
the problems that they encounter
Service providers offered different levels of support through online forums customer care
lines and if the problem was not resolved at the site of the client Exceptionally 10 of the
service providers (one out of ten respondents) offered 247 customer support at no additional
cost
Results of the actions
According to 90 of the service providers (nine out of ten respondents) finding a solution
can vary from a couple of minutes to three days depending on the problem encountered
Usually problems are resolved within a day in the order of arrival
In the cases where service providers required a longer period of time to resolve an issue
80 of service providers (eight out of ten respondents) withheld payment to compensate for
the time spent resolving the issue Moreover in cases when the problems significantly affect
the activity of an SME 50 of the service providers (five out of ten respondents) offered
compensation according to the type of contract and the level of damages or losses caused to
the SME on a case-by-case basis Compensations usually ranged between 5-15 of the
monthly fee for the contract Another 20 of service providers (two out of ten respondents)
did not offer any type of compensation
None of the SMEs interviewed escalated the problem to court for three reasons the issue was
resolved within a few days it did not impact the activity of the business or they felt intimidated
by the reputation and size of the service provider
Future perspectives on the topic
In the opinion of stakeholders cloud computing services will enable SMEs to become more
flexible develop faster compete with the larger enterprises in a complex market and also
generate more revenue
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In particular SMEs associations view the evolution of the cloud computing market toward
more affordable and specialised services More than two-thirds (70) of service providers
(seven out of ten respondents) argued that cloud computing services will evolve by developing
new features According to 20 of the service providers the features that will become
increasingly relevant are artificial intelligence block chain and data analysis
At the same time 66 of national authorities (four out of six respondents) and one national
SME Envoy believe that the right of awareness the right to privacy and data protection as
well as cybersecurity will become more important topics in the future Also the SME Envoy
mentioned possible issues emerging in the future such as non-standard functionalities of some
operational processes or defining a new model of operation of ICT services
The two associations within the EEN considered that the legal framework on how cloud
computing is regulated should be adapted to the emerging technologies Moreover the
associations consider that SMEs still have a long way to evolve in order to assimilate the
complexity of cloud computing services but a better regulated system might help them in
this direction The cloud broker further recognised the need for the authorities to work more
on this and he recommended applying European legislation rather than national legislation
to promote uniformity of the system
Case study interviews conclusions
The results of the case study interviews offered useful insights and complemented the results
already obtained through the CATI The various stakeholders involved confirmed the fact that
the usage of cloud computing across SMEs in the EU is growing and there is a need for
improvement of the current legal framework in order to follow the technological advancement
The interviews further explain the CATI results as the trend is that SMEs do to not try to
negotiate CTampC even if the cloud providers are offering this possibility Moreover the most
serious problems the actions taken to resolve them and the results of the actions are
confirmed by the information gained through the interviews and are comparable with the
earlier results of the study
Overall stakeholders who participated in the case study interviews believed that cloud
computing services will play more important role in the development of SMEs as they could
even help them compete with larger enterprises in a complex market achieve higher profits
and become more efficient
Validation Webinars
The webinars were organised with the objective of validating and triangulating the results of
the study Intended to be complementary to the tasks that were performed so far ie the
desk research CATI online survey and interviews with key stakeholders the webinars
focused on the most important topics of discussion that had emerged ensuring a higher level
of detail Therefore webinars have been used to validate the results obtained and to produce
further useful insights on the problems that were identified during the study in order to gain
a better understanding of the overall situation across the EU
In preparation of the webinars all 33 participants in the case study interviews were invited
to attend The invitation applied to four events in which the stakeholders could participate
Six stakeholders replied that they were available to participate in the webinars three SMEs
(two from Germany and one from Poland) two national authorities (one from Italy and one
from Poland) and one SME association representing the interests of European SMEs
businesses in the different sectors of the economy within the EU
In the end three webinars were held as a result of the preference of the stakeholders for the
time and date of the events
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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162
The events were held using Zoomcopy128 a software tool that facilitates the organisation of
interactive conference calls The advantages considered when choosing the software included
the high quality of video audio and simultaneous screen sharing ease of use and features
that include screen sharing on iPhone and iPad and Zoom Rooms Other notable
characteristics include the software features specially designed for webinars that allow the
participants in the event to perform actions such as raising their hands to announce their
intention to take part in the conversation pooling and a questionanswer dialogue with live
or text answers and close captioning
The participants made contributions regarding
cloud computing services contracted by SMEs during the last two years
the negotiability and customisation of CTampC
the most important problems encountered by SMEs while using cloud computing and
the difficulties encountered when taking action
security problems as factors limiting cloud computing usage
the economic detriment
final conclusions of the study
Regarding the topic of cloud computing services contracted by SMEs during the last two years
the stakeholders involved agreed on the results obtained on the extent of usage at the EU
level
Regarding the negotiability of CTampC the SME association agreed with the information
presented and found it to be in line with its expectations based on the information that the
SME association had Furthermore in the view of the German SMEs and one Polish SME SMEs
donrsquot consider the negotiation of CTampT and the customisation of the cloud services when
acquiring cloud computing services confirming the CATI results that show that the largest
proportion of 46 of SMEs did not try to negotiate CTampC In particular the representatives
of SMEs added that the SME could only negotiate different IT infrastructures but not the
limitation of responsibility that would cover service shortages In their opinion this could be
a general issue for SMEs
Overall the SMEs representatives agreed with the results of the project and commented that
their enterprises can relate to the issues presented In particular concerning the incidence of
contract-related problems the participants discussed the link between the methodology of
sampling of the SMEs that participated in the survey and the data that was presented
concluding that the data was considered to be relevant at the EU level
Regarding the problems encountered by SMEs while using cloud computing services the
national authority representative mentioned receiving few complaints from SMEs on issues
related to cloud computing contracts Additionally the stakeholder mentioned that the
General Data Protection Regulation (GDPR) is already proving to be very useful since it
facilitates the attribution of responsibility for problems that may arise in the provision of cloud
computing services Additionally related to the issues that SMEs encounter when trying to
resolve difficulties with cloud computing services the SMEs representatives added that the
most important issue was finding the contact information of the employee of the service
provider who would be assigned to resolve the problem after a formal complaint to the service
provider was made These statements confirm the results of the CATI as 52 of the SMEs
interviewed stated that they had made a complaint to the provider and that the second
difficulty encountered when trying to solve the problem was trying to reach the appropriate
contact point (35)
The participants in the discussion on security problems mentioned the effects of the GDPR on
cloud computing contracts a topic raised mainly by the representatives of the national
128 Zoom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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163
authorities The representatives added that the lack of SME capacity in negotiating cloud
computing contracts could be helped by the GDPR as it would give SMEs more control over
their data after the service providers apply the regulation The GDPR is considered to place
new obligations on cloud providers that will affect how they implement cloud services The
GDPR will strengthen user privacy as it increases the obligations on providers to protect SMEsrsquo
data and secondly it grants users new powers over how their information is collected used
and stored129
Additionally the representative of the Italian national authority and the German SME
intervened regarding the topic of economic detriment asking if the indirect costs have been
considered It was mentioned that the study looked at the client losses and reputational
damages where the case and furthermore it addressed the overall costs involved in ensuring
an alternative service and costs related to fixing the cloud service problem with external
support The stakeholders commented that they agreed with the issues that were presented
during the webinar which they also experienced They also added that in their opinion there
is a need for more transparency and better regulated services that will eventually lead to
fewer economic losses
During the concluding remarks the participants had several comments and suggestions The
Italian national authority representative added that he would be interested in an updated
version of the study conducted a year after the webinar in order to see the effects of the
enforcement of the GDPR regulation Furthermore the SME from Germany agreed with the
observation of the national authority regarding the effects of the GDPR on cloud computing
contracts and considered that its evolution should be observed together with the issues
concerning internet services as a whole
The SME representatives suggested that a platform should be created that could facilitate a
comparison between cloud computing services in order to better present the types of services
and prices available on the market The SMEs complained about the fact that they all had
difficulties when choosing between cloud computing providers In this case the availability of
only standard services on the market would allow the SME to make a direct comparison
The stakeholders involved in the webinars found the study findings to be in accordance with
the developments in the cloud computing market They provided significant comments and
recommendations especially concerning the future influence that the GDPR could have on the
sector This could mean a better distribution of responsibility especially regarding data
privacy and data protection Moreover the study was seen as being representative at the EU
level and as cloud computing is rapidly evolving the stakeholders expressed the desire to
observe the progress made in SME usage of cloud computing services by supporting the idea
of performing a second study at a later date
129 Analysis performed by Insight Company which is a leading provider of computer hardware software cloud solutions and IT services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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164
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165
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doi 102838962608
ISBN 978-92-79-96750-4
[Cata
logue n
um
ber]
DS-0
3-1
8-4
21-E
N-N
EUROPEAN COMMISSION
Directorate-General for Justice and Consumers Directorate A Civil and commercial justice
Study on the economic detriment to small and
medium-sized enterprises arising from unfair and
unbalanced cloud computing
contracts
Final Report
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
This document has been prepared for the European Commission however it reflects the views
only of the authors and the Commission cannot be held responsible for any use which may
be made of the information contained therein
More information on the European Union is available on the Internet (httpeuropaeu)
Print ISBN 978-92-79-45908-5 doi102838397707 DS-AU-15-001-EN-C
PDF ISBN 978-92-79-96750-4 doi 102838962608 DS-03-18-421-EN-N
copy European Union 2019
Printed by Imprimerie Central
The European Commission is not liable for any consequence stemming from the reuse of this publication
Luxembourg Publications Office of the European Union 2019
copy European Union 2019 Reuse is authorised provided the source is acknowledged The reuse policy of European Commission documents is regulated by Decision 2011833EU (OJ L 330 14122011 p 39) For any use or reproduction of photos or other material that is not under the copyright of the European
Union permission must be sought directly from the copyright holders
Europe Direct is a service to help you find answers
to your questions about the European Union
Freephone number ()
00 800 6 7 8 9 10 11
() The information given is free as are most calls (though some operators phone boxes or hotels may charge you)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
1
CONTENTS
List of abbreviations 2
Glossary 4
1 Introduction 7
11 The importance of contract-related problems 7
12 Objectives and scope of the study 10
13 Structure of this report 12
2 Research methodology 14
21 Overview of the approach 14
22 Main limitations encountered 35
3 Usage of cloud computing across EU SMEs the state of play 37
31 Cloud computing usage rate 37
32 Types of cloud computing services contracted 38
33 Types of contracts and relative costs 41
4 Contract-related problems encountered by SMEs 46
41 Types and frequency of encountered problems 46
42 The most serious problems encountered 49
43 Causes of the most serious problems encountered 51
44 Actions taken by SMEs 53
5 Consequences of the encountered problems 57
51 Qualitative assessment 57
52 Quantitative assessment 59
6 Impacts of the economic detriment 72
61 Direct impacts 73
62 Indirect impacts 74
63 Other qualitative impacts of contract-related problems 75
7 Conclusions 77
Annex 1 Methodology for the Survey of SMEs 82
Annex 2 Stakeholders list 84
Annex 3 Bibliography 86
Annex 4 Survey questionnaire 90
Annex 5 SME Survey results 101
Annex 6 Economic detriment ndash further results 114
Annex 7 Impacts on jobs and growth detailed results 136
Annex 8 Case study questionnaires by stakeholder type 146
Annex 9 Case study analysis 154
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
2
List of abbreviations
Acronym Description
CATI Computer Assisted Telephone Interviews
CTampC Contract terms and conditions
DG JUST Directorate-General Justice and Consumers
EC European Commission
EEN Enterprise Europe Network
EU European Union
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat Statistical Office of the European Communities
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GE250 Large enterprises of more than 250 employees
GFD Gross Financial Detriment
GVA Gross Value Added
IaaS Infrastructure as a Service
IOS International Organization for Standardization
MS Member State
NFD Net Financial Detriment
PaaS Platform as a Service
PC Personal computer
PPP Purchasing power parity
R Value of any redress
SaaS Software as a Service
SLA Service level agreement
SLALOM Service Level Agreement ‐ Legal and Open Model
SMEs Micro small and medium-sized enterprise
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
3
EU Member States
AT Austria
BE Belgium
BG Bulgaria
CY Cyprus
CZ The Czech Republic
DE Germany
DK Denmark
EE Estonia
EL Greece
ES Spain
FI Finland
FR France
HR Croatia
HU Hungary
IE Ireland
IT Italy
LV Latvia
LT Lithuania
LU Luxembourg
MT Malta
NL The Netherlands
PL Poland
PT Portugal
RO Romania
SE Sweden
SI Slovenia
SK Slovakia
UK The United Kingdom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
4
Glossary
Term Definition Source
Active enterprise
An enterprise that had either turnover or employment at any time during the reference
period
Eurostat
Cloud computing
A model for enabling ubiquitous convenient on-demand network access to a shared pool of configurable computing resources (such as networks servers storage applications and
services) that can be rapidly provisioned and released with minimal management effort and
service provider intervention
National Institute of Standards and Technology The NIST Definition of Cloud Computing 2011
Cloud Service
One or more capabilities offered via cloud computing invoked by using a defined interface
European Commission Cloud service level agreement standardisation guidelines
2014
Cloud service provider
A party which makes cloud services available European Commission Cloud service level agreement standardisation guidelines 2014
Cloud service agreement
The Cloud Service Agreement or CSA is the main document which sets out the terms and conditions of the contractual relationship between
the provider and the user in relation to the provision of cloud services
Slalom Project Model contract for Cloud Computing 2016
Data portability
Ability to easily transfer data from one system to another without being required to re-enter data
It is the ease of moving the data that is the essence here This might be achieved by the source system supplying the data in exactly the format that is accepted by the target system But even if the formats do not match the
transformation between them may be simple and straightforward to achieve with commonly available tools On the other hand a process of printing out the data and rekeying it for the
target system could not be described as lsquoeasyrsquo
International Organisation for Standardization Information technology mdash Cloud computing mdash Overview and vocabulary 2014
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat
EU15 Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg the Netherlands Portugal Spain Sweden and the
United Kingdom
Eurostat
EU28 Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands
Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom
Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
5
Term Definition Source
Frequency
(F)
The frequency shows how often the mentioned problem appeared and it is measured on a scale from 1 to 4 1 meaning lsquorarelyrsquo (at least once in the last 12 months)2 meaning lsquooccasionallyrsquo (at least once every 3 months) 3 meaning lsquofrequentlyrsquo (at least once a month) and 4 meaning lsquovery frequentlyrsquo (at least once a week)
EY Survey of SMEs 2018
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017Number of SMEs that contracted at least one cloud computing service during 2016-2017
EY Survey of SMEs 2018
Infrastructure as a Service (IaaS)
The capabilities provided to the cloud-service customer include processing storage networks and other fundamental computing resources where the cloud-service customer is able to deploy and run arbitrary software which may
include operating systems and applications The cloud-service customer does not manage or control the underlying cloud infrastructure but does have control over operating systems storage and deployed applications and possibly limited control of select networking components
(such as host firewalls)
European Commission Cloud service level agreement standardisation guidelines 2014
NACE Statistical Classification of Economic Activities in
the European Community
Eurostat
Purchasing power parity
(PPP)
The rate of currency conversion that equalises the purchasing power of different currencies by
eliminating the differences in price levels between countries In its simplest form PPP shows the ratio of prices in the national currency of the same good or service in different countries
Eurostat
Platform as a
Service (PaaS)
The capability provided to the cloud-service
customer is to deploy onto the cloud infrastructure customer-created or acquired applications created using programming languages libraries services and tools
supported by the cloud-service provider The cloud-service customer does not manage or control the underlying cloud infrastructure
including network servers operating systems or storage but does have control over the deployed applications and possibly configuration settings for the application-hosting environment
European Commission Cloud
service level agreement standardisation guidelines 2014
Service level agreement
A Service Level Agreement (SLA) is the service contract component between a service provider
and customer An SLA provides specific and measurable aspects related to service offerings
European Commission Cloud service level agreement
standardisation guidelines 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
6
Term Definition Source
Software as a Service (SaaS)
The capability provided to the cloud-service customer to use the providerrsquos applications running on a cloud infrastructure The applications are accessible from various client devices through either a thin client interface such as a web browser (for example web-based e-mail) or a programme interface The user does
not manage or control the underlying cloud infrastructure including network servers operating systems storage or even individual application capabilities with the possible exception of limited user-specific application
configuration settings
European Commission Cloud service level agreement standardisation guidelines 2014
Service availability
The property of being accessible and usable on demand by an authorised entity
European Commission Cloud service level agreement standardisation guidelines
2014
Service performance
The problem faced by SMEs characterised by the difficulty in understanding the level of performance or the quality of services that has been promised in the contract
European Commission Cloud service level agreement standardisation guidelines 2014
SMEs The category of small and medium-sized enterprises (SMEs) includes enterprises which employ fewer than 250 persons and which have
an annual turnover not exceeding euro50 million andor an annual balance sheet total not exceeding euro43 million
Within the SME category a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover andor annual balance sheet total does not exceed euro10 million
Within the SME category a microenterprise is defined as an enterprise which employs fewer
than 10 persons and whose annual turnover andor annual balance sheet total does not exceed euro2 million
Commission Recommendation of 6 May 2003 concerning the definition of micro small and
medium-sized enterprises (notified under document number C(2003) 1422)
Virtual Data Centre
A pool or collection of cloud infrastructure resources specifically designed for enterprise business needs The basic resources are the
processor (CPU) memory (RAM) storage (disk space) and networking (bandwidth) It is a virtual representation of a physical data centre complete with servers storage clusters and many networking components all of which reside in a virtual space being hosted by one or more actual
data centres
Altman amp Alt A Digital Library for the Dissemination and Replication of Quantitative
Social Science Research The Virtual Data Centre 2001
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
7
1 Introduction
This report represents the final deliverable responding to the request for services
JUST2016RCONFWCIVI0176 (201703) concerning a Study on the economic
detriment to small and medium-sized enterprises arising from unfair and
unbalanced cloud computing contracts The Request for service was issued by the
European Commission Directorate-General Justice and Consumers (DG JUST) Unit A2 -
Contract Law
11 The importance of contract-related problems
Cloud computing has been credited with increasing competitiveness through cost reduction
greater flexibility and optimal resource utilisation1 By using cloud computing services
enterprises are only paying for the amount of storage they are actually consuming and are
not responsible for the daily maintenance of the storage infrastructure
Demonstrable tangible economic benefits have been estimated in 2011 A report published
by the European Commission lsquoQuantitative Estimates of the Demand for Cloud Computing in
Europe and the Likely Barriers to Up-takersquo2 identified as main benefits the lower IT costs
more effective mobile working higher productivity standardisation of processes better ability
to enter new business areas and the ability to open up in new locations
All in all increasing the usage of cloud computing can have a relevant impact in terms of
increasing EU Gross Domestic Product (GDP) by up to euro250 billion and creating 38 million
jobs by 2020 compared to 20123
While the list of the above benefits is not exhaustive it certainly provides a perspective on
the potential economic advantages of the usage of cloud computing compared to more
traditional alternatives such as on-premises information technology infrastructure4
1 Rittinghouse J Ransome J (2009) Cloud Computing Boca Raton CRC Press USA 2 Based on a 2011 survey conducted on 479 enterprises already using cloud computing for their businesses 81 reported lower IT costs with a 10 to 20 reduction being typical but 12 reported
savings of 30 or more Business benefits included more effective mobile working (46) higher
productivity (41) more use of standard processes (35) better ability to enter new business areas (33) and the ability to open up in new locations (32) European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels 3 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe
and the Likely Barriers to Up-take SMART 20110045 Brussels 4 Traditional on-premises infrastructures consist of various pieces of hardware such as desktop computers which are connected to a network via a remote server This server is typically installed on the premises of an enterprise and provides all employees using the hardware with access to the companyrsquos stored data and applications Enterprises with this type of information technology model must purchase additional hardware and upgrades in order to scale up their data storage and services to support more users Mandatory software upgrades are also required with traditional information
technology infrastructure to ensure that failsafe systems are in place to in case a hardware failure occurs For many enterprises with information technology data centres an in-house information
technology department is needed to install and maintain the hardware
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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8
However Eurostat data indicate that in 2016 only 21 of EU small and medium-sized
enterprises (SMEs ie 10 ndash 250 employees) bought cloud computing services used over the
internet5 mostly for hosting their e-mail systems and electronically storing files
If micro enterprises (ie 1 ndash 9 employees) are considered Eurostat data are available only
for few countries (the United Kingdom Slovakia Sweden Portugal and Spain) For these
countries the percentage of micro enterprises that were buying cloud computing services used
over the internet in 2016 was around 11
With regard to the main factors affecting the adoption of cloud computing in most
sectors enterprises reported6 that insufficient knowledge of cloud computing prevented them
from using it (Figure 1) Expertise and sufficient knowledge of contractual and legal aspects
and the details of technical implementation are necessary prerequisites for an enterprise in
deciding to purchase cloud computing services In addition the risk of a security breach was
a key consideration for enterprises the concern over the risk of a security breach scored
highest for both large enterprises and small and medium-sized enterprises (SMEs) (57
and 38 respectively)7
Figure 1 Factors that limit cloud use
Source Eurostat (2016)
Clearly enterprises attach importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
A study commissioned by the Commission8 looked at the main contractual issues that are
of particular interest in a cloud context description of the service and Service Level
Agreement (SLA) acceptable-use policy data protection and disclosure of personal data
intellectual property and other proprietary rights and duties over content warranties direct
and indirect liability indemnification for third party claims the effect on data preservation of
contract termination modification of the contract terms and conditions (CTampC) and security
protection of data and loss of data
5 Eurostat data consider all enterprises with the exception of those in the financial sector consulted in April 2018 6 Eurostat Cloud computing - statistics on the use by enterprises Brussels 7 Ibidem 8 European Commission (2015) Comparative Study on Cloud Computing Contracts Publications Office
of the European Union Luxembourg
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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The Commission acknowledged the role of cloud contracts notably in relation to data
portability9 as lsquocontracts often exclude or severely limit the contractual liability of the cloud
provider if the data is no longer available or is unusable or they make it difficult to terminate
the contractrsquo10
Contract-related problems have been addressed by the Commission through various
initiatives
Firstly in 2013 the Commission set up an Expert Working Group on Cloud Computing
Contracts11 to work on identifying safe and fair contract terms for cloud computing services
with a view to addressing concerns of consumers and enterprises
Secondly specific actions have been taken forward on business-to-business cloud computing
contracts beyond the legislative field including
the work of the European Cloud Partnership and the ISO (International Organization
for Standardization) towards the standardisation of cloud SLAs
the SLA standardisation guidelines prepared in June 2014 by the Cloud Select Industry
Group on Service Level Agreements Subgroup (C-SIG SLA)12
the lsquoService Level Agreement Legal and Open Modelrsquo (SLALOM) project13 funded under
the Horizon 2020 Framework Programme which delivered a set of common legal
clauses to cover cloud SLAs and contracts and a standard technical SLA specification
Finally in April 2016 the Commission gave a new impetus to its work on cloud computing by
adopting the Communication on the European Cloud Initiative - Building a competitive
data and knowledge economy in Europe14 where further complementary actions under the
Digital Single Market strategy covering cloud contracts for business users and switching of
cloud services providers have been announced
Thus over recent years the Commission has adopted a true European Cloud Computing
Strategy aimed at removing barriers to cloud computing Additionally work is under way
towards a Code of conduct on switching and porting cloud data and services
A further development of this topic is represented by the lsquoProposal for a Regulation of the
European Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo launched in 201715
The objective of this proposal is to unlock the potential of the EU data market In order to do
so the proposal aims to address the following issues
9 Please see the Glossary for further information 10 European Commission (2012) Unleashing the Potential of Cloud Computing in Europe COM(2012)529 final Brussels 11 The Group has been set up within the framework of the Commission Communication (2015) lsquoA Digital
Single Market Strategy for Europersquo which aims at enhancing trust in cloud computing services and unlocking its potential for boosting economic productivity in Europe 12 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2018 13 The SLALOM project accessed 1 May 2018 14 European Commission (2016) European Cloud Initiative - Building a competitive data and knowledge economy in Europe COM(2016) 178 final Brussels 15 European Commission (2017) Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union COM(2017) 495 final
Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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10
improving the mobility of non-personal data across borders in the Single Market
which is limited today in many Member States by localisation restrictions or legal
uncertainty in the market
ensuring that the powers of competent authorities to request and receive access to
data for regulatory control purposes such as for inspection and audit remain
unaffected and
making it easier for professional users of data storage or other processing services to
switch service providers and to port data while not creating an excessive burden on
service providers or distorting the market
The impact assessment study16 that accompanies the legislative proposal addresses barriers
such as the legislative and administrative localisation restrictions data localisation driven by
legal uncertainty and the lack of trust in the market which is considered to inhibit data
mobility The impact assessment identifies as a preferred option a policy that would enhance
legal certainty maintain the current levels of security of data storage and processing and that
would rely on self-regulation by industry through the development of codes of conduct for
facilitating switching between providers and finally that would positive economic effects
resulting in lower compliance costs for cloud service providers The study took into
consideration that actions at the Member State level would not be able to achieve the legal
certainty necessary for conducting this type of business across the EU or to remedy the lack
of trust that is slowing the development of a thriving data storage andor processing sector
It is presumed that an EU intervention would contribute to further development of secure data
storage capacity for the entire EU
12 Objectives and scope of the study
Objectives
The studyrsquos main objective is to deliver the necessary evidence to support the Commission
in its assessment of the need for and extent of any further EU efforts to increase SMEsrsquo trust
in cloud services and allow them to bring in the full potential benefits of these types of
services
The main specific objectives of the study are
to identify the prevalence nature scope and scale of the contract-related problems
that SMEs encounter in relation to cloud computing services
to analyse whether and to what extent enterprises are able to protect themselves
against problems for example by means of enforcement of rules on business-to-
business unfair contract terms (where they exist)
to quantify the financial detriment as well as the detriment arising from time loss and
consequential damages (such as business interruption) suffered by SMEs in relation
to the contract-related problems encountered
to complement the quantitative measurement with a qualitative assessment of the
detriment suffered by SMEs
to model (in quantitative terms) the impact on growth and jobs of the quantified SME
detriment identified and provide a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and
competitiveness
16 European Parliament (2017) Commission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union SWD(2017) 304 final Brussels
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11
Scope
Cloud computing services covered
The study covers the cloud computing services most commonly used by SMEs taking into
account i) the general delivery models used by the provider ie Infrastructure as a Service
(IaaS) Platform as a Service (PaaS) and Software as a Service (SaaS)17 ii) the core
categories of cloud services available in the market
The study covers cloud computing services provided both in exchange for money and provided
free of charge (ie not provided in exchange for a monetary counter-performance)
Contract-related problems encountered by SMEs
The study investigates the prevalence nature scope and scale of
problems in relation to the conformity of the service with the contract
problems with unfair CTampC
problems in exercising the users rights to remedies for non-conformity of the
service with the contract
Territorial scope
The study assesses the contract-related problems faced by SMEs in all EU28 Member States
Timeline
The study covers the usage of cloud computing services by EU SMEs over the period 2016 ndash
2017
Stakeholders
The following categories of stakeholders are covered
EU SMEs that contracted cloud computing services over the period 2016 ndash 2017
cloud computing providers
cloud computing brokers
National authorities competent in fields related to cloud computing (such as data
privacy protection personal data processing and data security)
the National SMEs Envoys Network18
Chambers of Commerce
the Enterprise Europe Network (EEN)19
SMEs associations
Please refer to Annex 2 for the full list of stakeholders
For the purpose of this study and in order to make the present report more intelligible
whenever the term SMEs is used in the text it refers to
medium-sized enterprises defined as enterprises which employ fewer than 250
persons (50-249) and whose annual turnover andor annual balance sheet total does
not exceed euro50 million
17 See the Glossary for the definition of these terms 18 The network of national SME Envoys was set up in 2011 as part of the review of the Small Business Act (SEC(2008) 2101) Each EU country has nominated a national SME Envoy to complement the role of the EU national SME Envoy who chairs the network The group of national SME Envoys makes up an SBA advisory group that promotes SME friendly regulation and policy making in all EU countries More
information is available at httpeceuropaeugrowthsmesbusiness-friendly-environmentsmall-
business-actsme-envoys_en 19 The Enterprise Europe Network helps businesses innovate and grow on an international scale It is the worldrsquos largest support network for SMEs with international ambitions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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12
small enterprises defined as enterprises which employ fewer than 50 persons (10-
49) and whose annual turnover andor annual balance sheet total does not exceed
euro10 million
micro enterprises defined as enterprises which employ fewer than 10 persons and
whose annual turnover andor annual balance sheet total does not exceed euro2 million
13 Structure of this report
The report is structured as follow
Chapter 1 recaps the objectives and the scope of the study and provides information
about the background of the study that justified the request for service
Chapter 2 presents the methodological framework and the main limitations
encountered Chapter 3 covers the findings related to
- the usage of cloud computing among EU SMEs over the period 2016-2017 and
the reasons for the limitations of the use of cloud computing
- types of cloud computing services that were contracted by SMEs
(complexity of the subscribed cloud computing packages the frequency of the
number of contracted services and the services contracted by SMEs size)
- types of cloud computing contracts and relative costs including the
negotiability of contract terms and conditions (CTampT)
Chapter 4 is dedicated to the analysis of contract-related problems encountered
by SMEs specifically types and frequency of encountered problems and actions taken
by SMEs to address these problems
Chapter 5 presents a qualitative assessment of the consequences faced by SMEs due
to contract-related problems These refer to
- negative effects on the business activity (ie loss of turnover or profit loss of
clients andor reputation damages)
- extra work done with internal or external resources while trying to resolve the
encountered problems
- legal actions taken to exercise the users rights to remedies for non-conformity
of service
Where possible these consequences have been quantified and monetised in order to
assess the economic detriment suffered by SMEs
Chapter 6 is dedicated to the impacts of the economic detriment The analysis
concerns
- direct impacts meaning the Gross Value Added (GVA) and employment
contents of the turnover lost by SMEs that are affected directly by the contract-
related problems
- indirect impacts in the supplier sectors
This chapter also discusses (in qualitative manner) impacts on market functioning and
competitiveness
Chapter 7 presents the conclusions of the overall analysis
Annexes including the following
- methodology for the survey of SMEs
- the list of stakeholders that have been involved in the case studies
- bibliography of consulted and relevant documents
- survey questionnaire used for conducting the survey of SMEs
- results of the survey of SMEs
- further results of the economic analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
13
- detailed results of the impacts on jobs and growth
- case study questionnaires by stakeholder type
- case study interviews and webinars analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
14
2 Research methodology
21 Overview of the approach
The study envisaged three main Tasks
Task 0 ndash Preparatory task Defining the methodological framework and the topics
to be investigated during the research as well as defining the standards and tools to
be used
Task 1 - Survey of SMEs Conducting an online survey on a representative sample
of SMEs and start-ups which are using cloud computing for the purposes of
conducting their business
Task 2 - Economic detriment Quantification of the overall economic detriment
sustained by SMEs in relation to the problems identified under Task 1 Based on these
results the impact on growth and jobs and on the economy as a whole has been
measured
Figure 2 provides an overview of the approach followed synthesising the main activities
objectives and methodstools
Figure 2 Overview of the project Tasks
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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15
Task 0 ndash Preparatory Task
This Task envisaged undertaking desk research that allowed the team to clearly define the
methodological framework of the study in terms of
cloud computing services commonly used by micro small and medium-sized
enterprises
potential contract-related problems that may be encountered while using cloud
computing
problem definition which provides an overview of the main causes and effects of the
identified problems It was used to
- better understand the context in which the problems occurred
- identify the intermediate effects and the main drivers
- structure the data collection tools (ie questionnaires for Computer Assisted
Telephone Interviews [CATI] and the online survey)
selecting a sample of countries and sectors to be analysed in depth in order to achieve
the project objectives The sampling strategy included
- the identification of a sample of Member States (MS) and economic sectors to
be analysed in depth
- the definition of a target for a representative sample of micro small and
medium-sized enterprises to be addressed through the survey under Task 1
- ensuring representativeness of the sample size
Table 1 provides the list of cloud computing services identified under Task 0
Table 1 Cloud computing services commonly used
Cloud computing
model
Cloud computing services
Details
SaaS Business applications
Applications used for accounting invoicing planning payments payroll human resources management
Collaboration and communication services
Video conference system business visualisation technology
instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring
Service and support tools
Project and portfolio management solutions services operations management
Big data Business intelligence and data analytics applications
Networking services Creation of an internal private cloud and virtual local networks utilising a pooled server for storing enterprise data and running applications needed each day
Security services Secure content management end point protection malware
protection
PaaS Sales and marketing services
Web configuration forms for marketing and sales purposes
Cloud enablement and information
technology operations
Application integration and monitoring business process management information technology operationrisk
management
Data management Datacontent management
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16
Cloud
computing
model
Cloud computing services
Details
Mobile Usage of managed mobility to serve a multitude of mobile devices anywhere anytime
Platform to create
software applications
Conception and creation of applications through testing and
deployment
Internet of things Asset tracking deployable components intelligent spaces
IaaS Storage and hosting services
Server platform for online storage sharing hosting web-sites files images and similar content
Virtual data centre Usage of a pool of virtualised infrastructure as processor
memory storage space and networking components
High performance computing
Usage of high performance computing clusters workloads and applications
Source EY desk research20
The following potential contract-related problems have been identified
lack of timely updates of the cloud service
forced updates to the service that eliminated or changed a necessary function
unsatisfactory amount of data that could be processed
failure of the cloud provider to identify analyse and correct hazards and to prevent
future re-occurrences (incidence management)
low speed of the service
unsatisfactory availability or discontinuity of the service (due to a crash unannounced
maintenance or other interruptions of service)
unsatisfactory number of users that could access the service
lack of compatibility of the service with user hardware or software
limited data portability
limited data retrievability
extra costs imposed for data portability
data deletion upon contract termination
destruction or loss of data
loss or alteration of data transmitted stored or processed via the cloud service
unauthorised disclosure of or access to data
lack of protection of the data stored in the cloud against theft or viruses
lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
unilateral modification of the servicecontract by the cloud provider
limited liability of the cloud provider
termination of the contract and interruption of the service by the service provider with
no or little prior notice to the user
lack of clarity and transparency of CTampC
Based on the results of desk research the team finalised the methodological approach that
included the definition of the problem tree to clearly understand the links between problems
encountered by enterprises and possible consequences the preparation of the data collection
tools including the questionnaires for the survey of SMEs and the case study template
20 The bibliography serving as basis for the desk research can be found in Annex 3
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
17
Additionally desk research revealed that cloud computing users may encounter the following
problems in exercising their rights to remedy the non-conformity of service with the
contract
absence of a contact point to make a complaint or attempt to resolve issues
length and high cost of the procedure
applicability of foreign jurisdiction
language difficulties
impossibility to enforce the decision after the resolution
The problem definition was structured around the above-mentioned key contract-related
problems and their short- and long-term effects Essentially the problem definition allowed
the team to
identify the main-core problems and the underlying causes
identify who and what is affected and to what extent
foresee the possible evolution of the problems identified
Following the problem definition a problem tree (Box 1) was structured in order to summarise
the identified problems and related causes as well as the links between them
Box 1 Definition of the problem tree
A problem tree or ldquohierarchy of problemsrdquo is useful in providing an overview of the main causes and effects of the identified problems It is used to better understand the context in which the problems occur what the intermediate effects and the main drivers are
The analysis performed during the creation of a problem tree aims at identifying the real bottlenecks
to which stakeholders attach a high priority and which they wish to overcome A clear problem analysis thus provides a sound foundation on which to develop a set of relevant and focused project objectives
A problem tree analysis begins with the establishment of the core problem Using desk research the problem can be formulated in a more specific way Once the core problem has been identified we consider the direct causes and effects of the problem Each cause statement is written in negative terms These items should respect the MECE principle in that they should be Mutually Exclusive and Collectively Exhaustive In many respects the problem analysis is the most critical stage of project
planning as it then guides all subsequent analysis and decision-making on priorities
Once complete the problem tree represents a summary picture of the existing negative situation that can be further used by the decision makers in order to analyse the objectives by reversing the negative statements into possible solutions and then choose the most appropriate solution to be implemented
Source European Commission - Aid Delivery Methods (Vol 1 Project Cycle Management Guideline)
Among the most important sources of information that helped in refining the problem tree
especially with regard to the contract-related problems were21
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in
Europersquo COM(2012)529 final Brussels
Cloud Computing Experts Groups meetings 2013-2014
Cloud Service Level Agreement Standardisation Guidelines from 24 June 2014
European Commission (2015) lsquoComparative Study on cloud computing contractsrsquo
European Commission (2016) lsquoStudy on measuring the economic impact of cloud
computing in Europersquo
European Commission consultations about Cloud Computing (2016)
IDC (2016) lsquoSwitching of Cloud Services Providersrsquo
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprises and Business
Structure Statisticsrsquo
21 The results of the survey of SMEs as well as the case study results have been used in order to update the problem tree
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
18
European Commission (2017) lsquoFinal results of the European Market study measuring
the size and trends of the EU data economyrsquo
European Commission (2017) lsquoProposal for a Regulation of the European Parliament
and of the Council on a framework for the free flow of non-personal data in the
European Unionrsquo
European Parliament (2017) Commission Staff Working Document Impact
Assessment Accompanying the document lsquoProposal for a Regulation of the European
Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo
Figure 3 illustrates the problem tree that was created based on the studyrsquos desk research
The drivers of cloud computing problems are acknowledged in the different sources of
information consulted such as the Digital Single Market strategy This strategy identifies
concerns related to lsquosecurity compliance with fundamental rights and data
protectionrsquo22 as a result of technical and legislative barriers
Moreover the fragmentation of regulation across the EU could be a factor that limits the
usage of cloud computing due to the need for large providers to adapt their services to each
countryrsquos laws that regulate cloud computing23
A lack of fairness and balance in CTampC is considered a driver as lsquocontracts often exclude
or severely limit the contractual liability of the cloud providerrsquo24 By the same token
the unilateral modifications of the contract and the difficulties in exercising the userrsquos
rights are problems arising from the unfairness of CTampC Moreover when targeting SMEs
lsquothe contract is likely to be a take it or leave it contractrsquo25
The limited technical knowledge among SMEs is also a factor affecting the emergence of
the different problems shown in Figure 3 The limited technical knowledge of the users has
been considered when creating a Cloud Select Industry Group in Service Level Agreements
Subgroup26 This subgroup worked towards the development of standardisation guidelines
between cloud providers and cloud customers and these efforts coincide with complementary
action under the Digital Single Market strategy
The mentioned contract-related problems lead to a loss of business opportunities Within one
of the Expert Group Meetings it was concluded that an uninformed choice of terms and
conditions may lead to damages27 Other experts28 have stated that lsquocertain losses are
potentially huge and cannot be compensatedrsquo29 The present study tested the hypothesis that
contract-related problems may lead to losses of profit turnover clients and reputation
damage for SMEs over the short term Over the long term such problems can have a
negative impact on growth and jobs
Over time the lack of awareness of the benefits of cloud computing limits its usage and can
deter businesses from tapping into the full potential of the cloud Over the long term this
could also have a negative effect on GDP and jobs creation Although this scenario was
22 European Commission (2015) A digital Single Market Strategy for Europe COM(2015) 192 final
Brussels 23 Ibidem 24 Ibidem 25 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2017 26 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 2930 January 2014 27 Ibidem 28 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014 29 For example due to the unavailability of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
19
included in the problem tree it is not the purpose of this study to examine these larger
macroeconomic impacts30
The problem tree allowed the team to gain an understanding of the main issues to be
investigated within the study and for which evidence from stakeholders was needed
This understanding was reflected in the data collection tools These included
The Survey questionnaire The structure of the survey questionnaire31 reflected the
different layers of the problem tree It first focused on the usage of cloud computing
and the types of contracts SMEs tend to sign corresponding to the drivers section
Furthermore it addresses the problems that SMEs encounter the actions taken in
order to resolve them and the associated economic detriment32 in order to provide
information for the problems and short-term effects sections of the tree
Interview guidelines for case studies and webinars Findings from the interviews and
the webinars were used to complement the quantitative analysis with detailed
information on the contract-related problems and the costs sustained by SMEs while
trying to resolve the encountered problems
All collected information supported the estimations on the loss of GDP and the loss of jobs at
the EU level
30 The European Commission estimated that cloud computing can increase EU GDP up to euro250 billion and create 38 million jobs More information available in European Commission (2011) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-Take SMART 20110045 Brussels 31 Annex 4 presents the structure of the CATI and online questionnaire 32 The sections B C D and E cover use of cloud computing problems encountered with cloud computing services actions taken by the enterprise in order to address the most serious problem and the economic detriment related to the most serious problem encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
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20
Figure 3 Problem tree33
Source EY desk research34
33 LT stands for lsquolong-term effectsrsquo and ST for lsquoshort-term effectsrsquo 34 Annex 3 contains the bibliography serving as basis for the desk research
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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21
Under Task 0 the team also defined the sampling strategy to select 12 MS five economic
sectors to be investigated in depth as well as the sample size of SMEs to be involved in the
survey
For the selection of the MS three criteria were considered (Table 2) In particular the
percentage of enterprises buying cloud computing services as per 2016 Eurostat
statistics was considered to be the best proxy variable35 available for the usage of cloud
computing and it has been used as one of the criteria for defining the sample of countries to
be analysed in greater depth
Table 2 Criteria used for MS selection
Criteria for MS selection Details (Table 3) Source
Percentage of enterprises
buying cloud computing
services
Number of SMEs that
declared they bought at
least one cloud computing service in 2016 out of the total number of SMEs active in the MS
Data on cloud computing service
usage among SMEs Eurostat 2017
[isoc_cicce_use]
Relevance of the country to the
study objectives
Number of SMEs that
declared they bought at least one cloud computing service in 2016 out of the total number of SMEs active in the EU28
Data on cloud computing service
usage among SMEs Eurostat 2017 [isoc_cicce_use]
Structural Business Statistics Eurostat 2017 [sbs_sc_sca_r2]
Geographical balance Balanced number of EU15
and EU13 MS in the sample
NA
Based on the above-mentioned criteria the following 12 MS were selected the Czech
Republic Estonia France Germany Ireland Italy Poland Portugal Romania Sweden
Spain and the Netherlands (Table 3)
A high level of representativeness of the EU is ensured because the selected sample
involves eight MS from the EU15 and four MS from the EU13
refers to countries where more than 70 of the EU SMEs that bought at least one of
the cloud computing services in 2016 (Figure 4) were established
35 A proxy variable is a variable that is used instead of the variable of interest when that variable of interest cannot be measured directly
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22
Table 3 SMEs buying cloud computing services 2016
EU MS
A B C D E=B+D F=E(A+C) ETotal EU28
EU15 EU13
of active enterprises with 10-250 employees
of enterprises (10-250 empl) buying CC services
of enterprises with 1-9 employees
of enter (1-9 empl) buying CC services 36
Total active SMEs
(Country level)
(EU28 level)
AT 40393 646288 280850 31959 38422 1196 137 EU15
BE 31302 8139 569950 64858 72996 1214 261 EU15
BG 26991 1619 298559 33975 35594 1093 127 EU13
CY na na na na na na na EU13
CZ 38203 6877 961287 109390 116267 1163 416 EU13
DE 411527 61729 1985471 225938 287667 1200 1029 EU15
DK 22681 9072 187367 21322 30394 1447 109 EU15
EE 6439 1417 61513 7000 8416 1239 030 EU13
EL 15368 1383 764471 86993 88376 1133 316 EU15
ES 125000 21250 2337621 116881 138131 561 494 EU15
FI 19187 10361 209328 23821 34182 1496 122 EU15
FR 139335 22294 2765282 314677 336970 1160 1205 EU15
HR 12249 2695 134007 15249 17944 1227 064 EU13
HU 30852 3394 504904 57456 60850 1136 218 EU13
IE 5514 1930 224742 25575 27505 1195 098 EU15
IT 182182 38258 3497783 398032 436290 1186 1560 EU15
LT 13604 2177 172527 19633 21809 1172 078 EU13
LU 3939 670 27841 3168 3838 1208 014 EU15
LV 9226 738 100216 11404 12142 1109 043 EU13
MT 1885 509 24123 2745 3254 1251 012 EU13
NL 48115 15397 1042588 118642 134039 1229 479 EU15
PL 69282 4850 1534086 174572 179422 1119 642 EU13
PT 37353 6350 769043 53833 60183 746 215 EU15
RO 50987 3569 405493 46143 49712 1089 178 EU13
SE 36047 16221 649412 155859 172080 2510 615 EU15
SI 6912 1382 127603 14521 15903 1182 057 EU13
SK 14363 2442 414630 33170 35612 830 127 EU13
UK 199528 65844 1734989 312298 378142 1955 1352 EU15
Tot EU28
1598464 317028 21785686 2479112 2796141 12 100
Selected Countries
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics [sbs_sc_sca_r2])
36 The percentage of micro enterprises (ie enterprises with fewer than 10 employees) that bought at least one CC service is only available for the United Kingdom Slovakia Sweden Portugal and Spain For the other EU countries the average from those countries (1138) has been used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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23
Figure 4 The percentage of enterprises which bought cloud computing services in the
selected EU countries as compared to the total EU28 (2016)
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics
[sbs_sc_sca_r2])
For the selection of the economic sectors to be analysed in depth Eurostat statistics on the
percentage of enterprises buying cloud computing services were used in order to
identify those sectors with the highest usage of cloud computing
Eurostat statistics are available only for some sectors (Table 4) and only for the category 10
persons employed or more which also includes enterprises with more than 250 employees (ie
large enterprises GE250)
However Eurostat statistics have been considered to be relevant in selecting the sectors to be
analysed in depth as the number of enterprises with more than 250 employees represents a
negligible percentage of the overall number of active enterprises at the EU28 level (ie around
45000 out of 23 million enterprises corresponding to 02 of the total)
The sampling strategy envisaged the use of the same criteria used for the selection of MS (ie
percentage of enterprises buying cloud computing services relevance of the sector to the
study objectives)
As a result the five sectors selected included (grey rows in Table 4)
manufacturing (NACE37 code C)
wholesale and retail trade repair of motor vehicles and motorcycles (NACE code G)
professional scientific and technical activities (NACE code M69-M74 hereinafter
referred to as M)
administrative and support service activities (NACE code N)
information and communication (NACE code J)
37 Eurostat Nomenclature des Activiteacutes Eacuteconomiques dans la Communauteacute Europeacuteenne Brussels
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24
Table 4 Economic sectors and usage of cloud computing services (2016)
NACE Code
Sectors
A B C = B100 x
A CD
of active enter (with
more than 10 empl) at
EU28 level
of enter (with more
than 10 empl)
buying CC services
of enter (with more
than 10 empl)
buying CC services
out of the total
C Manufacturing 364432 17 61953 23
D+E Electricity gas steam air conditioning and water supply
18732 19 3559 1
F Construction 200369 15 30055 11
G Wholesale and retail trade repair of motor vehicles and
motorcycles
351278 18 63230 24
H Transportation and storage 90718 16 14514 5
I55 Accommodation 15969 23 3672 1
J Information and communication
55905 52 29070 11
L Real estate activities 10661 24 2558 1
M Professional scientific and technical activities
97073 34 33004 12
N Administrative and support
service activities 121657 22 26764 10
Total 1326794 21 268384 (D) 100
Selected Sectors
Source Cloud computing services for 2016 (Eurostat [isoc_cicce_use]) Business Structure Statistics for 2015 (Eurostat [sbs_sc_sca_r2])
Although the financial and insurance activities sector (K under its respective NACE code) is
considered as one of the economic sectors with the highest usage of cloud computing38 it has
been excluded because of its limited relative weight at the EU28 level39
With the purpose of achieving statistically significant results a target of 500 SMEs that
use cloud computing has been defined This sample size has been chosen in order to ensure a
95 confidence interval and a maximum margin of error of 5 for all the estimates The
sample target size together with the random selection of the respondents ensure that - with
a probability of 95 - the true values of a phenomenon (eg average incidence of cloud
computing problems) in the entire population (ie all EU SMEs) is equal to the average values
observed in the studied sample plusminus the margin error
The box below presents the methodology behind the definition of the sample size
38 76 based on European Commission (2016) Measuring the economic impact of cloud computing in
Europe 39 Based on the lsquoAnnual detailed enterprise statistics for servicesrsquo [sbs_na_1a_se_r2] it was observed that in 2015 for the respective financial and insurance activities a total of approximately 14000 enterprises were active in the EU28 that is 01 of the total active enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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25
Box 2 Definition of the size of the sample
The formula for computing the representative sample size is
Sample size = [z2 p(1-p)e2][1 +( z2 p(1-p)e2N]
Where
N= population size e = margin of error (as a decimal) z = Z-score constant value eg 1645 for a 90 confidence interval 196 for a 95 confidence interval 258 for a 99 confidence interval
and p = average value of a specific indicator as observed in the population (as a decimal)
Our case
From Table 3 we have
N= 2796141 is the estimated number of SMEs that are using CC services
e = 5
Z = 196
P = when this value is not known conventionally is used the value 05
We can conclude that a target of 500 enterprise using CC services is appropriate to ensure a 95 confidence interval with a margin of error of 438 When we put the confidence level and the confidence interval together we can say that we are 95 sure that the true percentage of a phenomenon in the population is between +438 and -438 of the value observed in the studied sample For example if we ask a sample of 500 SMEs using CC if they encountered a certain problem
and 70 say lsquoYesrsquo we can be 95 certain that between 6562 and 7438 of all EU SMEs using CC encountered the same problem
Task 1 ndash Survey of SMEs
Task one was aimed at identifying
the types of cloud services most frequently contracted
the types of CTampC used to regulate the business relationships between users and
providers (for example determining whether enterprises are able to negotiate CTampC
andor to customise them to their needs)
the types the incidence and the frequency of contract-related problems
the types of actions taken by the enterprises in order to resolve the encountered
problems and the results of these actions
The collection of data was based on a questionnaire (see Annex 8) submitted through two
complementary channels
an online questionnaire (online Survey)
CATI
The online questionnaire was translated into the official languages of the MS covered by the
study Likewise the CATI was conducted by native speakers in order to avoid language
barriers
The online survey and the CATI have been developed tested and conducted on a
representative sample of EU SMEs which use the cloud for the purpose of conducting their
business
In order to achieve the above presented target (ie 500 SMEs using CC services)
the contacts of 13000 SMEs were identified during the design of the sampling strategy
3173 SMEs were reached within the 12 MS and the five sectors selected Table 5
presents the distribution of the reached SMEs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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26
1009 SMEs were willing to participate in the survey
Table 5 Distribution of SMEs reached per country and sector ( of respondents 3173)
Sector
Country
Admin and support service
activities
Inform and comm
Manufact
Profess scientific
and technical activities
Wholesale
and retail trade
Total
CZ 13 17 62 30 52 174
EE 5 22 8 12 15 62
FR 184 129 262 126 308 1009
DE 99 123 185 226 249 882
IE 4 18 6 6 13 47
IT 8 9 100 7 15 139
NL 36 49
24 37 146
PL 24 69 16 78 92 279
PT 7 2 9 2 24 44
RO 8 20 2 27 15 72
ES 7 11
26 21 65
SE 41 33 59 30 91 254
Total 436 502 709 594 932 3173
Source Survey of SMEs (2018)
Table 6 presents the participation rate per MS of the 1009 SMEs that agreed to provide
information about their use of cloud computing
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
27
Table 6 Participation rate by MS ( of respondents 3173)
Country
Number of
enterprises that expressed refusal
Number of enterprises
that were willing to participate in the survey
Total Participation
rate ()
A B C = A + B BC
CZ 131 43 174 25
DE 33 158 191 83
EE 715 29 744 4
ES 724 54 778 7
FR 16 294 310 95
IE 24 31 55 56
IT 97 115 212 54
NL 152 49 201 24
PL 11 127 138 92
PT 48 33 81 41
RO 11 24 35 69
SE 202 52 254 20
Total 2164 1009 3173 32
Source Survey of SMEs (2018)
The study targeted all different size categories the largest share of respondent being
represented by medium sized-enterprises (60 Figure 5) Contrary to the SMEs distribution
at the EU level the micro enterprises represented the smallest share of participants in the
survey The smaller the size of the enterprise the lower was its willingness to participate in
the survey
Figure 5 Distribution of participants in the survey by SME size ( of respondents 1009)
Source Survey of SMEs (2018)
The same applies to SME age enterprises active for more than 10 years are better represented
in our sample as compared to younger enterprises (Figure 6) This reflects their willingness to
participate as well as the greater difficulties encountered in reaching younger enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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28
Figure 6 Distribution of enterprises involved in the survey of SMEs by age ( of respondents
1009)
Source Survey of SMEs (2018)
Task 2 ndash Economic detriment and impacts on jobs and growth
Consequences of encountered problems at the micro level
The economic detriment was quantified along the lines recommended in the Guidelines on
impact assessment of the Better Regulation toolbox40 based on data collected from Task 1 and
on data from Eurostat Business Structure Statistics
The measurement of economic detriment41 considered a monetary assessment of the effects
of the problems faced by each SME in the survey and includes the following main dimensions
the gross financial detriment (GFD) associated with the problems encountered
the net financial detriment (NFD) associated with the problems encountered which
corresponds to the GFD associated with the problem encountered minus any remedies
offered by the cloud provider
The GFD incorporated the following components
119866119865119863 = 119871 + 119867119877 + 119874119862
Where
L is alternatively the loss of turnover or profits as perceived by each SME
HR is the costs of the human resources invested by each SME while taking action to
resolve or remedy the most serious encountered problem
OC other costs declared by each SME These include costs such as the costs related to
ensuring an alternative service the costs related to fixing the cloud service problem
using external support any legal costs costs related to reputation damage and costs
related to loss of client(s) and other residual costs
To allow for the measurement of the NFD the value of any redress (R) offered by the service
provider for the damages caused to each SME as reported in the survey questions was
computed
40 The Better Regulation Toolbox is a set of general guidelines that set out the principles that the European Commission follows when preparing new initiatives and proposals and when managing and evaluating existing legislation In this study those principles were considered generally as they were central in
defining the survey the sample and also the methodologies to measure economic detriment and estimate
the impact on growth and jobs 41 Measured using the principles put forward in European Commission (2017) Operational guidance document on measuring personal consumer detriment Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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29
The detailed procedure used to estimate the economic detriment at the EU28 level included
three main steps
The first step was the computation of the following parameters from the survey with the 95
confidence interval level and 5 margin of error
the loss of turnover or profits perceived by each SME
the costs of the human resources invested by each SME while taking action to resolve
or remedy the most serious problem
the other costs covered by each SME while taking action to resolve or remedy the most
serious problem
the value of any redress offered by the service provider for the damages caused to
each SME
The second step required the definition of the number of enterprises affected by contract-
related problems (119873119901)
119873119901 = 119890119906 times 119890119901 times 119864
Where
119890119906 is the proportion (ie the percentage) of enterprises that use cloud computing
services
119890119901 is the incidence (ie the percentage) of contract-related problems
E is the total number of active enterprises
The incidence rates of contract-related problems (119890119901) by country and sector or country and
size class and the proportion of enterprises that use cloud-computing services (119890119906) by country
and sector or country and size cannot be estimated from the sample with the 95 confidence
interval level and 5 margin of error given that the sample is only representative at the EU
level overall
In order to be able to estimate the total number of enterprises experiencing contract-
related problems by country and sector and by country and size class an RAS-based42
procedure has been applied
Box 3 RAS method for estimating the total number of enterprises experiencing contract-
related problems by country and sector
The RAS method is a well-known method for data reconciliation whose aim is to achieve consistency between the entries of some non-negative matrix and pre-specified row and column totals Mathematically the method is an iterative scaling method that can be applied in this case as we just
have non-negative matrices We redistribute proportionally the differences arising from applying the EU level sectorial or size class incidence rates or from country incidence levels considering in this
case as the binding constraint the country level incidence which has been estimated with confidence from the sample (we ensure that the incidence per country is respected)
The procedure started with a preliminary estimation of the number of enterprises (119873119894119895119901)
experiencing contract-related problems in country i and sector or size class j using the following
formula
119873119894119895119901 = (
119890119894119906 + 119890119895
119906
2) times (
119890119894119901 + 119890119895
119901
2) times 119864119894119895
42 See more information at httpseceuropaeueurostatcroscontentras-method_en
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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30
Where
for countries included in our sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the proportion of enterprises using cloud computing services in country i43
computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j44 for all the countries in the sample
- 119890119894119901 is the incidence of cloud computing problems in country i computed from the
survey
- 119890119895119901 is the incidence of cloud computing problems in sector or size class j
computed from the survey for the whole sample
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
While for countries not included in the sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the average proportion of enterprises using cloud computing services in all
countries of the sample computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j45 for all of the countries in the sample
- 119890119894119901 is the average incidence of cloud computing problems in all countries of the
sample as computed from the survey
- 119890119895119901 is the incidence of cloud computing problems in sectorsize class j computed
from the survey
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
In practice this formula takes the joint incidence by country and sector or by country and size
class to be the average of the two marginal incidences which would be the case if the two
distributions were independent In this way it allows a preliminary estimation of the number
of enterprises experiencing cloud computing problems in country i and sector or size class j
43 We use two alternative measures of incidence allowing us to develop two scenarios From the survey data we compute the incidence by country and sector and country and size class considering the answers given by respondents in two alternative ways In one case we compute the incidence as the ratio of
those enterprises that declared they are using cloud computing to all enterprises contacted that declared they are either using or not using cloud computing or that refused to respond to the survey based on criteria that can be seen as meaning that the survey does not apply to them (around 16) Alternatively also from the survey data we can compute the incidence of cloud computing usage as the ratio of those that declared they are using cloud services to the sum of those that explicitly mentioned that they are either using or not using cloud services (around 50) This second scenario can be considered as a theoretical but most unlikely future scenario where a consistent number of EU SMEs use
cloud computing 44 See the previous footnote 45 See the previous footnote
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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31
After obtaining that preliminary estimation 119873119894119895119901 the RAS method of reconciliation is applied by
considering as the binding constraint the total number of enterprises experiencing problems
as that value was estimated directly from the sample with the required confidence and error
levels
This reconciliation of totals performed by the RAS method dismisses the assumption of
independence as it distributes the error across the margins
Concerning the sectors not covered in the sample46 the total number of enterprises
experiencing contract-related problems by country and sector can also be computed by
following the same procedure as above In that case sector incidence would be replaced by
the European average incidence on the other sectors Given the sampling procedure that was
followed in which the sectors with the highest incidence of cloud computing usage were
selected to be covered by the survey applying those incidences of use of cloud computing as
representative to the other sectors would overestimate the impacts Given this situation only
the results for the selected sectors are presented and this constitutes a lower threshold for the
true detriment47
Once the values of the number of enterprises experiencing cloud computing problems for each
country and sector and country and size class are computed they can be aggregated to the
EU level just by summing up the number of enterprises experiencing cloud computing service
problems per country
Finally the third step was the computation of the total losscostvalue of redress by country
sector and size class by multiplying the number of enterprises that experienced contract-
related problems (as computed using the RAS model) by the 95 trimmed mean values
per enterprise for each variable (from the survey)48
The GFD is then computed considering alternatively lost turnover and lost profits and adding
the human resource costs and the other costs NFD is computed taking the two measures of
GFD and subtracting the value of any redress offered by the service provider for the damages
caused to each SME
Afterwards two measures are obtained covering both GFD and NFD computed at country and
sector country and size class and at EU level
Consequences of encountered problems at the macro level
Following the quantification of the economic detriment the consequent impact on growth
and jobs was estimated using one of the methodologies suggested in the impact assessment
toolbox presented by the Joint Research Centre49 of the European Commission
The goal was to estimate the overall GVA and employment content of the detriment In order
to do that the following methodology was used
The starting point was the declared turnover loss one of the components of total detriment
aggregated by country and sector and by country and SME size We first estimated the financial
detriment suffered by each enterprise by considering the different components of detriment
then we aggregated these effects to the EU28 level by summing up the effects suffered by
46 As previously stated only the following sectors were covered by the study Manufacturing (C) Wholesale and retail trade repair of motor vehicles and motorcycles (G) Professional scientific and technical activities (M) Administrative and support service activities (N) and Information and communication (J) 47 Recall that the selected sectors comprise a total of 797 of SMEs and GE250 using cloud computing
services 48 Given each variable the 95 trimmed version was obtained by discarding the 5 lowest and highest observations it is a statistic in the middle of the data range 49 EU Science Hub (2016) Input-output economics Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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32
each enterprise across all enterprises When estimating the macroeconomic effects of the
contract-related cloud computing problems one must consider the overall turnover loss that
was suffered by all enterprises that experienced those problems as turnover is the variable
that best summarises the overall enterprise-level effects that are transmitted into the
economic system through the supply chains and that can be related to aggregate economic
variables thus avoiding double counting
This allowed the team to estimate the so-called direct impacts (the direct consequences in
the enterprises that face contract-related cloud computing problems associated with the
reduction of their economic activity due to those problems) This was done by estimating the
GVA and employment contents of the turnover losses caused by contract-related cloud
computing problems at country and sector level by considering the GVA and employment
coefficients of total turnover at country and sector and country and size class level computed
from Eurostat Business Structure Statistics for 2015 (Eurostat)50
The results were aggregated at the EU level by summing up country results from calculating
the direct GVA and employment contents
Additionally at the aggregate EU level the so-called indirect impacts were also estimated
Indirect effects are the effects on the enterprises that are not directly affected by contract-
related cloud computing problems but that are indirectly affected in their activity by the losses
of turnover from the enterprises that directly experience the problem To estimate these
indirect effects we start by estimating the turnover losses in supplier industries These indirect
losses of turnover arise when the businesses that experience the direct turnover losses reduce
their demand for products from their suppliers and then those supplier enterprises also
experience turnover losses The input-output methodology is used to estimate the turnover
losses in supplier enterprises Essentially this methodology allows us to estimate the amount
of turnover that is lost in one supplier enterprise when the demand from another enterprise is
reduced given the existing technology A symmetric input-output table at basic prices (sector
by sector) available in Eurostat51 for the EU28 was used to estimate the technological
intersectoral relations in the EU economy The methodology used is described in the following
box
Box 4 The Input-Output Methodology
Input-output analysis is the most commonly used benchmark within the study of intersectoral relations The representation of the underlying economies either as a coherent statistical framework as a structural analysis tool of the productive systems or as an economic model is based on a correlation between production and demand through the proportions of the different branches (supply side) or products (demand side) that support that same economies The correspondence between a certain branch of activity and a certain group of products is thereby a condition for coherence of the
input-output analysis
The input-output tables appear as a synthesis of a large amount of statistical data processed in accordance with the goal of specifying the characteristics of the use of the productive factors and products to satisfy the demand ie the open and disaggregated flows (in sectorial terms) that link in both ways demand production and income
The matrix representation of the basic flows characterises the activities of a given economy in a given period It allows a two-dimensional interpretation of the relationships and balances in the flows to be used ie a horizontal (in line) interpretation ndash articulating production and demand that leads to a
separation between intermediate and final demand ndash and a vertical interpretation (in column) ndash
51 Eurostat Symmetric input-output table at basic prices (product by product) Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
33
articulating production and income that leads to the separation between intermediate inputs and
value added
Input-Output matrices
The general shape of an input-output table encompasses four quadrants that correspond to the intersectoral trade of products associated with intermediate consumption (1st quadrant) to the breakdown of each sectorrsquos production through the diverse final uses (2nd quadrant) to the sectorial
decomposition of the GVA (3rd quadrant) and to the nonmarket transfers between sectors of the economy (4th quadrant)
The first quadrant has a square shape (n x n sectors) while the 2nd and 3rd have a rectangular shape (depending on the number of final uses and the number of the GVA components considered) The
equilibrium conditions reflect sector by sector the usage of the production and the mobilised resources and the income generated in the production ie
119883119894 = sum 119883119894119895 + 119884119894
119895
(use logic to be read in line the gross production of each sector is depleted feeding the intermediate
and final demand)
119883119894 = sum 119883119894119895 + 119884119894
119894
(resources and income logic to be read in column the gross production of each sector integrates
the value of the intermediate consumption and of the income generated)
The sectorial equilibrium ie the equality between uses and resources (119883119894 = 119883119895 for 119894 = 119895) leads on
an aggregated level to a match between the sum of the elements of the 2nd and the 3rd quadrants that sustains the ldquothree approachesrdquo of national accounting expenditure income and production
Matrixes coefficients and multipliers
From the general tables we can obtain the technical coefficient matrix (matrix A) Each element of the matrix A (119886119894119895 = 119883119894119895119883119895) expresses the ldquotechnological demandrdquo from the sector j to the sector i ie
the production of the sector i used as an input for the production of the sector j This vertical proportion representing the technological support of the intersectoral flows and the deepening of the intermediate demand from the productive units into the technical characteristics of their respective productive processes is called the technical coefficient (of production)
The input-output analysis as an economic model uses these proportions or coefficients to represent
the function of the economy requiring the adoption of a set of hypotheses namely on the direction of the economic flows ie the role of the supply and demand dynamics
In formal terms the input-output model is considered to be based on the dynamics of the demand The production is obtained through an endogenous process supported by the technical coefficient matrix responding to a final demand determined exogenously Building up the Leontief model in its
OUTPUT (Demand)
INPUT
(Production)Intermediate inputs to
production
(1st Q)
Final demand
(2nd Q)
Primary inputs to
production
(3rd Q)
Primary inputs to final
demand
(4th Q)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
34
reduced form leads to a system of n simultaneous equations like 119883119894 = sum 119886119894119895119884119895119895 written as 119883 = (119868 minus 119860)minus1119884
in matricial notation
Input-output based modelling brings out a matrix (119868 minus 119860)minus1 whose elements are designated as 119886119894119895
The elements of the (119868 minus 119860)minus1 matrix express as coefficients of the simultaneous equations system
that allows to determinate the production according to the final demand the variation (direct and indirect) of the production of a sector according to the unitary change of the final demand of another sector These are called production multipliers also arising as sectorial interdependence indicators
The production multipliers can be partial when they indicate the variation of the production of a sector i led by a unitary variation of the final demand of a sector j and measured by the corresponding element of the matrix 119886119894119895 or total when they indicate a variation of the production of all sectors led
by a unitary variation of the final demand of a sector and measured by the sum of the corresponding column of the matrix (sum 119886119894119895119895 )
The nature of the measured effects
Taking into account the nature of the used multipliers it is possible to measure direct and indirect effects
Direct impacts Activity effects (value added employment income) associated directly with the value of the lost production due to contract-related problems
Indirect impacts Backward linkage effects meaning the activation of multiple ldquoexternalrdquo effects on demand linked to the loss in production due to contract-related problems They concern the supply
chains that are interrupted due to the production loss associated with contract-related problems
Once the indirect turnover losses were measured their GVA and employment contents were
estimated using the same methodology as for the direct effects
To compute the relative direct and indirect impacts we divided the estimated GVA and
employment content by the total GVA and employment at the EU level
Further qualitative analysis
In addition to the quantitative assessment of the overall impact on growth and jobs taking
into account the results of previous activities (namely the interviews within the case studies
and desk research) other more qualitative effects of the problems encountered namely in
terms of competition competitiveness and market functioning were qualitatively assessed To
this end case studies were used in order to have a more in-depth view of the topic
More generally the case studies allowed the study team to
produce useful insights on the specific problems that were identified in the survey
illustrate in practical terms the economic detriment to SMEs and to understand the
causal links between the signed contracts and the encountered problems
include the perspectives of those stakeholders that were not involved in the previous
study Tasks
This subtask included interviews (33) with eight types of stakeholders namely SMEs cloud
brokers service providers SMEs associations national authorities national SMEs Envoys EEN
associations and chambers of commerce This array of stakeholders contacted was used to
obtain a detailed view of the issue of the economic detriment to SMEs arising from unfair and
unbalanced cloud computing contracts52
nine SMEs
one cloud broker
10 service providers
three SMEs associations
six national authorities
one national SMEs Envoy
52 The questionnaires used detailing the topics covered during the interviews can be found in Annex 8
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
35
two EEN associations
one Chamber of Commerce
Finally three webinars were used to validate and disseminate the results of the study with the
main participating stakeholders
22 Main limitations encountered
This study mainly used data collected from CATI as this tool followed a more direct approach
in contacting SMEs by phone The online questionnaire proved not to be as effective during
the data collection phase as we succeeded in obtaining only three completed questionnaires
from a total of 141 requests to SMEs and European Associations contacted On the other hand
500 completed questionnaires were collected from the SMEs that use cloud computing through
the CATI
In order to maximise the possibility that the SMEs contacted will respond to the survey the
study chose to contact SMEs from the 12 countries that have the most usage of cloud
computing This approach was taken to achieve a twofold purpose to maximise the quality of
the survey results and to ensure that the minimum sample target of 500 questionnaires is
met Even if the sample is randomised the willingness to participate in the survey under these
circumstances might have been positively correlated with cloud computing usage This may
increase the risk of biased results
This limitation was overcome by involving a distinctive group of stakeholders with the aim of
complementing the information gathered The stakeholdersrsquo involvement during the case
studies ensured the accuracy of the results at the EU level
Furthermore it is important to underline that all estimates based on the gathered responses
to the questionnaire should be considered as statistically significant in representing the
average values that might be observed among EU SMEs that are using cloud computing
services Therefore any features presented at the country andor sector andor
company size level were included with the sole aim of documenting gathered
information
In order to be able to estimate results at the country andor sector andor enterprise size level
the RAS model was used to distribute the overall representative results to provide robust
estimates at that level The RAS model even allows estimating the usage rate and the incidence
of problems at enterprise size sectorial and country level
Two scenarios have been developed for the economic analysis that takes into account two
different hypotheses for estimating the usage rate of cloud computing extracted from the
survey
The method of analysis of economic detriment also has some limitations The first one is related
to the fact that only the consequences of the most serious problem are considered Even if the
survey tried to measure also the effects of the second most important problem the fact that
the number of respondents that quantified its effects was very small led to values that did not
seem to be robust enough to use in the analysis This causes the estimates of detriment
that were presented to be the lower thresholds to the actual detriment Yet the
magnitude of the underestimation is limited by the fact that the sectors with the highest cloud
computing usage rates were chosen to be in the sample and they are likely to experience
above average effects A second limitation arises from the fact that many enterprises seem
not to be able to fully assess the financial impacts of problems such as reputational damages
or loss of clients in terms of financial variables and this may also lead to some underestimation
of the true effects that we perceive that might be present but that we are not able to assess
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
36
In terms of measuring the indirect impacts not only does the possible underestimation of the
direct impacts on turnover also affect these impacts but also using the input-output
methodology has limitations While the input-output methodology allows measuring backward
linkages it does not allow considering the downstream effects on clients or final consumers
that are associated with the contract-related cloud computing problems due to relative changes
in the costs borne by enterprises and that are not fully absorbed and thus trickle down to the
consumer level as SMEs pass on the increased costs caused by the problems encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
37
3 Usage of cloud computing across EU SMEs the state of play
First this section presents the analysis of the services contracted by the SMEs the types of
contracts and the negotiability and customisation of CTampC Furthermore it investigates the
incidence and frequency of contract-related cloud computing problems experienced by SMEs
with an emphasis on the most serious problems encountered and their respective causes
Second it presents the types of actions taken by the SMEs in order to address the contract-
related problems as well as the results of the actions taken and possible difficulties encountered
while taking action
And finally it explores the reasons why some SMEs decided not to take action
31 Cloud computing usage rate
In conducting the survey 3173 SMEs replied have been collected out of which
503 from SMEs that declared that they had contracted at least one cloud computing
service during the period 2016ndash201753
509 from SMEs that declared they did not contract any cloud computing service during
the period 2016ndash2017
2164 from SMEs that refused to participate in the survey
The estimation of the rate of usage of cloud computing depends on the hypothesis about the
distribution of the willingness to participate in the survey
For the purpose of the study it was assumed that only SMEs not using cloud computing were
present among those SMEs that were not willing to provide information (2164) Under this
hypothesis the rate of usage of cloud computing services is 159 calculated as the
number of SMEs that declared they are using cloud computing services (503) divided by the
number of SMEs that replied (3173) This can be considered as the central scenario for this
study It provides an indication of the current detriments suffered by SMEs
A theoretical scenario has been constructed by assuming that SMEs using cloud computing
services and SMEs not using cloud computing services are equally distributed among the SMEs
that were not willing to provide information (2164)54 The purpose of this scenario is to provide
an indication of the theoretical evolution of the detriment in case of increasing usage of cloud
computing among EU SMEs
At 159 the rate of usage of cloud computing among SMEs still appears to be low especially
when compared with the 45 that is the most recent estimated usage rate among large
enterprises55
This can be due to a variety of different reasons During the interviews performed it emerged56
that
some SMEs are reluctant to use services that they cannot fully understand (for
example for micro and small enterprises it is difficult to assess how the new services
can improve their everyday work)
53 The distribution by country size and sector of the 503 SMEs that declared they contracted at least one cloud computing service can be found in Annex 5 54 Under this assumption the rate of usage of cloud computing services is 499 calculated as the number of SMEs that declared they are using cloud computing services (503) divided by the total of SMEs
that were willing to provide information (3173 ndash 2164 = 1009) 55 Eurostat Cloud computing - statistics on the use by enterprises Brussels 56 Case study interview with UEAPME European Association of Craft Small and Medium Enterprises representing about 12 million enterprises across Europe
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
38
other SMEs perceive that costs are still high and that it takes too long to recover
the investment (break-even point)
the division of responsibilities between SMEs and providers can sometimes be
a major source of problems as it is poorly documentedexplicated leading to overlaps
and gaps especially with respect to security aspects it is not uncommon for SMEs to
be confused about their responsibilities concerning security such as who makes
backups of data or software which type of failoverredundancy is offered by the
provider and what still needs to be done by the customer All of these issues can
persuade SMEs to not outsource cloud services
asymmetric information when it comes to negotiating and customising CTampC might
limit the capacity of SMEs to find solutions that fit their needs
in contrast to the traditional provision of on-site information technology resources the
multi-tenant nature of cloud computing usually raises questions with respect to
privacy confidentiality and data integrity Cloud computing presents its own set
of security issues coupled with the risks and threats inherent in traditional information
technology computing
32 Types of cloud computing services contracted
Figure 7 presents the most commonly contracted cloud computing services as resulted from
the survey
Two services are more frequently contracted because of their applicability and prevalence
in a wide range of sectors
collaboration and communication services (71) that might include among
others applications used for instant communication video conferencing business
visualisation e-mail antivirus for desktop or PC customer relationship management
or social media monitoring
storage and hosting services (65) that comprises services such as server
platforms for online storage sharing hosting websites files images and similar
content
The third most commonly contracted service (43) is associated to security support (this is
related to the need for protecting the corporate network when accessed via remote devices
such as laptops or other wireless and mobile devices)
The next eight significant types of cloud computing services contracted do not range far from
each other with their usage varying between 43 and 26
No significant differences emerged from the analysis at countrysector level (see section B
within Annex 5 for further details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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39
Figure 7 The cloud computing services most commonly contracted by SMEs during 2016-
2017 ( of respondents 503 of answers 2522)57
Source Survey of SMEs (2018)
A more detailed analysis of the numbers behind Figure 7 reveals the complexity of the
subscribed cloud computing packages
the answers from the (503) SMEs that declared that are using CC services also
revealed that 2522 services have been contracted over the period 2016 ndash 2017 (Table
7) that implies each SME contracted on average five different services
micro enterprises are the size class contracting the highest number of services (ie
55 on average Table 7) this might be related to the fact that the medium-sized
enterprises might have the financial and technical capacity to develop more
effectiveefficient solutions internally58
Table 7 The cloud computing services most commonly contracted by SMEs during 2016-2017 by SMEs size class ( of respondents 503)
SME size class
of respondents
of contracted services
Average of contracted
services Micro 91 503 55
Small 140 723 52
Medium 272 1296 48
Total 503 2522 50
Source Survey of SMEs (2018)
57 Multiple choice question 58 Eight out of the 10 service providers interviewed under Task 2 stated that the usage depends on the enterprisesrsquo size as medium-sized enterprises are better able to internalise most of the needed IT
services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
40
Even the analysis of the frequency of the answers provided allowed the research team to better
understand how the usage of CC is evolving among SMEs (Figure 8) around 40 of SMEs
contracted a limited number of cloud services (one two or three)59
Figure 8 Frequency of the number of contracted services ( of respondents 503 of answers 2522)
Source Survey of SMEs (2018)
Furthermore the analysis of the mix of contracted services revealed that there are two
services lsquoPlatform to create software applicationsrsquo and lsquoStorage and hostingrsquo that are most
commonly contracted either alone (12) or together (6)
The number the types and the mix of contracted services showed that EU SMEs are having a
lsquobasicrsquo usage of cloud computing
This is also confirmed by the results reported in Table 8 services falling under the SaaS model
are the most contracted ones (47) This cloud computing model was the first one introduced
to the market (1999) and the easiest to use (as it includes applications that can be run directly
from a web browser without any downloads or installations required although some require
plug-ins)
The medium-sized enterprises present a different trend from the small and micro firms as
they probably need a more advanced package of services For the medium-sized enterprises
the IaaS model (47) is the most contracted followed by PaaS (30) and finally by SaaS
(21)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
41
Table 8 Services contracted by SMEs size ( of respondents 503 of answers 2522)
SMEs size Total
respondents of services contracted
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 252 149 97 5
50 30 19 1
Small 140 723 332 224 157 10
46 31 22 1
Medium 272 1296 609 393 276 18
21 30 47 1
Total 503 2522 1193 766 530 33
47 30 21 1
Source Survey of SMEs (2018)
33 Types of contracts and relative costs
In this section we analyse if SMEs have the possibility to negotiate CTampC the degree of
customisation of contracted services and the types of subscriptions chosen by SMEs
Negotiability of CTampC
In the survey SMEs that are using CC services were asked if they were able to negotiate CTampC
(Figure 9) The majority of the SMEs declared they signed standard terms and
conditions offered by the provider (ie 64 of SMEs either did not try to negotiate or were
not able to negotiate CTampC see Figure 9)
Figure 9 Negotiability of the CTampC among SMEs that contracted cloud computing services ( of respondents 503)
Source Survey of SMEs (2018)
Only 19 of the SMEs using cloud computing (97 out of 503) were able to negotiate
the CTampC in relation to all cloud computing contracted services while 17 were able
to negotiate contract terms and conditions for a limited number of services
This trend is maintained at the country and sectorial levels as well (see Annex 5 for further
details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
42
Together with the negotiability of CTampC also the reasons for not negotiating have been
investigated (Figure 10) The decision to adopt the standard CTampC is made either because
these meet the usersrsquo expectations (41) or because it is assumedknown that a negotiation
would have no chance to succeed (28)
Figure 10 Reasons provided by SMEs for not trying to negotiate ( of respondents 229)
Source Survey of SMEs (2018)
The possibility of the SMEs negotiating the services contracted correlates with the size class
As seen in Table 9 only 106 of the services contracted have been negotiated by the SMEs
It can be stated that on average SMEs negotiate CTampC related to less than one service out of
the average of five used
Table 9 Number of services for which SMEs were able to negotiate CTampC
SMEs
size
Total of
respond
of services
contracted
of customised
services
of services
SMEs were able to
negotiate
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 48 24 11 10 3 0
Small 140 723 123 89 36 31 20 2
Medium 272 1296 120 155 78 44 31 2
Total 503 2522 106 268 125 85 54 4
Source Survey of SMEs (2018)
After the negotiability of CTampC the research team explored the types of services for which
SMEs negotiated signed contracts (Figure 11) Surprisingly the most commonly contracted
services (ie collaboration and communication storage and hosting and security services)60
do not appear among the ones for which negotiating CTampC is possible Rather negotiability is
higher for those services that due to their nature are more lsquobusiness drivenrsquo (such as business
applications mobile services and data management) Figure 11 presents for each contracted
service the number of SMEs that were able to negotiate CTampC (in blue) and the number of
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
43
SMEs that signed standard CTampC for the specific service contracted (in grey) The total of the
numbers in each row represents the number of SMEs that declared contracting a specific
service61 Detailed information related to all services can be found in Annex 5
Figure 11 Services in relation to which SMEs were able to negotiate the CTampC ( of respondents 179 of answers 264)
Source Survey of SMEs (2018)
Customisation of contracted services
SMEs that didnrsquot sign standard CTampC were asked if the negotiation allowed the customisation
of the contracted services
Figure 12 shows that out of the 179 SMEs (36 of the SMEs that are using CC services) that
were able to negotiate the CTampC only 101 (representing 20 of all surveyed SMEs that
are using cloud services) pointed out that besides simply negotiating the CTampC they
were able to fully customise the service package according to their needs
61 For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service (cf Figure 7) only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
44
Figure 12 Share of SMEs that declared they were able to customise the service package
according to their specific needs ( of respondents 503)
Source Survey of SMEs (2018)
The ability of SMEs to customise the purchased service package correlates with the size class
(as illustrated in Figure 12)
Table 10 SMEs that declared they were able to customise the service package according to their specific needs by enterprise size ( of respondents 503)
Size category
Total
Respondents
SMEs that did
not negotiate
CTampC
SME negotiated CTampC
Full customisation
Partial customisation
No Customisation
Micro 91 69 16 6 0
100 76 17 7 0
Small 140 86 27 15 12
100 61 19 11 9
Medium 272 169 58 26 19
100 62 21 10 7
Total 503 324 101 47 31
100 64 56 26 17
Source Survey of SMEs (2018)
Types of contract subscription
The majority of respondents have signed a paid subscription with fixed or variable fees
(79 of the total users Figure 13) It should to be noted that 73 SMEs did not provide any
response as most of them did not know the type of subscription contracted
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
45
Figure 13 Type of cloud computing subscription ( of respondents 503 of answers 489)62
Source Survey of SMEs (2018)
This trend is maintained across both countries and sectors without any significant differences
62 Multiple choice question
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46
4 Contract-related problems encountered by SMEs
The current section presents an overview of the types and most frequent contract related
problems encountered by SMEs while using cloud computing services
Moreover the most serious problems (that is the problems that created the highest impact
on SMEsrsquo everyday activities andor in terms of costs faced to resolve them) have been
identified together with their causes
Finally actions taken by SMEs to remedy the encountered problems are analysed together
with results of the actions and the main difficulties encountered
41 Types and frequency of encountered problems
Nearly one-quarter (24) of the SMEs using cloud computing (ie 122 out of 503)
encountered contract-related problems during the period 2016ndash2017 (Figure 11)
The incidence seems to be higher for micro and medium-sized enterprises
Table 11 Share of respondents that indicated encounteringnot encountering problems by size
of SMEs Micro Small Medium Total
Did not encounter problems
66 116 199 381
Encountered problems
25 24 73 122
27 17 27 24
Source Survey of SMEs (2018)
Problems encountered by the SMEs have been further analysed by taking into account the
following two dimensions frequency and incidence
Table 12 Frequency and incidence of contract-related problems
Dimension of analysis Details
Frequency
(F)
The frequency shows how often did the mentioned problem appeared and it is measured on a scale from 1 to 4
1 - rarely (at least once in the last 12
months)
2 - occasionally (at least once every 3 months)
3 - frequently (at least once a month)
4 - very frequently (at least once a week)
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017number of SMEs that contracted at least one cloud computing service during 2016-2017
Source Survey of SMEs (2018)
Four problems have been faced by more than 25 of the cloud computing users (Figure 14)
low speed of service (55)
unsatisfactory availability or discontinuity of the service (49)
forced updates to the service (32)
lack of clarity of the instructions on how to use cloud computing services (26)
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
47
Figure 14 Incidence and frequency of contract-related problems among SMEs that declared they encountered problems during 2016-2017 ( of respondents 122 of answers 505)63
Source Survey of SMEs (2018)
63 Multiple choice question
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and unbalanced cloud computing contracts
48
No significant differences emerged from the analysis at the sectorial and country levels
(please see Annex 5 for further details)
The cases studies64 included in-depth interviews with the SMEs that already contributed in
the survey In particular problems encountered by them were discussed with a special focus
on the following lack of clarity and transparency of contract terms and conditions unilateral
modification of the servicecontracts and limited liability of cloud providers
Five out of the eight SMEs that were interviewed recognised the fact that the lack of clarity
of the instructions on how to use cloud computing services is a problem that they are facing
This was explained by the fact that there is no common understanding of what cloud
computing is and how it operates The SME users expressed the need for better information
when contracting such services
The findings from the consultation of cloud providers (ten providers have been interviewed
during the case studied) indicated that business users for different reasons very often
encounter difficulties in understanding the CTampC This problem is particularly relevant
due to
lack of knowledge on how to use cloud computing services of the SME users
lack of attention of the SME users when signing the contracts
Two additional problems even if faced by less than 20 of the users are among the ones
that appeared most frequently65
lack of clarity and transparency of CTampCs (frequency = 215)
limited liability of the provider (frequency = 179)
During the consultations with national authorities and SMEs the participants indicated that
the limited liability of cloud providers commonly manifested when the following undesired
anomalies occurred
information access was interrupted or there was a problem of information
portability this group of anomalies encompasses technical aspects of the
information delivery including risks caused for example by denial-of-service attacks
These kinds of technical problems are most likely to cause liability Especially regular
updates can despite being administered properly result in downtime and thus in a
potential economic loss
data privacy and data protection were affected making information available to
the public can infringe on privacy and data protection provisions since cloud
computing services are of a cross-border nature privacy law conflicts between
national legislations are likely to occur Furthermore cloud computing services need
to comply with the principles of authenticity and integrity of information However the
entry into force of the General Data Protection Regulation (GDPR) (EU) 201667966
on 25 May 2018 is perceived as a factor that will effectively limit this issue in the
future
Even if affecting only a limited number of SMEs67 (less than 10 of the users participating in
the SMEs survey) problems related to security68 are quite frequent especially in regard to
64 See Annex 5 for further information 65 The incidence and frequency of the full list of SMEsrsquo problems can be found in Annex 5 66 Regulation (EU) 2016679 of the European Parliament and of the Council of 27 April 2016 on the
protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 9546EC (General Data Protection Regulation) OJ L 119
452016 67 More frequently among the micro and small enterprises 68 For further analysis see Annex 5
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
49
the lack of protection of the data stored in the cloud against theft or viruses and
unauthorised disclosure of or access to data
The analysis of the number of answers provided allows a deeper understanding of the
problems faced by SMEs
on average amongst the SMEs that experienced problems each SME encountered
four different problems over the period 2016 ndash 2017 (Table 13)
micro enterprises are the ones facing the highest number of problems (Table 13)
more than 23 of SMEs faced a high number of problems (between five and eight
Figure 15)69
Table 13 Number of problems faced by SMEs during 2016-2017 by SME size class ( of respondents 122)
SME size class
of SMEs that encountered problems
of encountered problems
Average of encountered problems
Micro 25 116 464
Small 24 92 383
Medium 73 290 397
Total 122 498 408
Source Survey of SMEs (2018)
Figure 15 Frequency of the number of encountered problems ( of respondents 122 of answers 494)
Source Survey of SMEs (2018)
42 The most serious problems encountered
Types of problems
After listing all problems encountered respondents were asked to mention the most serious
one among them survey results shows a correlation between the incidence of the declared
problems and the most serious problems experienced by the SMEs (Figure 16)
69 82 of SMEs that encountered problems declared 5 different problems 33 of SMEs faced 6 problems 66 of SMEs faced 7 problems and 49 of SMEs faced 8 different problems
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and unbalanced cloud computing contracts
50
Figure 16 The most serious problems experienced by the SMEs during 2016-2017 ( of
respondents 122)70
Source Survey of SMEs (2018)
Additionally the survey investigated the potential existence of a second most serious
problem Nearly half of the respondents (46) declared that they encountered only one
serious problem (Figure 17) However lsquolow speed of the servicersquo and lsquounsatisfactory
availability or discontinuity of the servicersquo remained the most prominent problems as
previously presented in Figure 16
Figure 17 The second most serious problem experienced by the SMEs during 2016-2017 ( of respondents 122)71
Source Survey of SMEs (2018)
Besides indicating the most serious problem SMEs were asked to assess the relevance of the
resulting cost (ie what percentage of costs deriving from all encountered problems was due
to the most serious problem only)
As presented in Table 14 more than 50 of the SMEs declared that the costs related to the
most serious problem represented a cost that counted for more than 80 of the overall
sustained costs The remaining 48 who declared that they had other problems did not
declare relevant costs related to the second most serious problem (either they provided values
that were not relevant72 or were not able to quantify the costs)
70 Incidence management is understood as the failure of the cloud provider to identify analyse and
correct hazards and prevent a future re-occurrence 71 Incidence management is understood as the failure of the cloud provider to identify analyse and correct hazards and prevent a future re-occurrence 72 Respondents declared values equal to zero
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Table 14 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by size class ( of respondents 122)
Size
Incidence of the costs related to the most serious problem compared with the total costs occurred
Below 50 Between 50 -
80 Above 80 10073 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Most affected service
All mentioned serious problems (both the first and second) were mainly related to the usage
of lsquocollaboration and communication servicesrsquo (Figure 18)74 which are indeed the most widely
used ones The next two types of cloud computing services linked to the most serious problem
are lsquobusiness applicationsrsquo and lsquostorage and hosting servicesrsquo Even though security services
are among the most widely used services (Figure 7) it seems they do not generate many
problems As also confirmed during the case studies75 (interviews with SMEs) security is often
perceived as the key risk when outsourcing information technology services because these
services may affect critical data However once cloud services are used problems related to
security appear only rarely
Figure 18 The type of cloud computing services linked with the most serious problems declared by the SMEs ( of respondents 122)76
Source Survey of SMEs (2018)
43 Causes of the most serious problems encountered
As previously illustrated the survey investigated also the causes of the most serious problems
encountered The main cause of the most serious problems is non-conformity of the
service provided with what was established in the contract (Figure 19)
73 Enterprises that declared they encountered only one problem 74 For the analysis of the second most serious problems and its link with used services please refer to
Annex 5 75 See Case study analysis for further information 76 Multiple choice question
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and unbalanced cloud computing contracts
52
Figure 19 The main causes of the most serious problems ( of respondents 122 of
responses provided 124)77
Source Survey of SMEs (2018)
The unfairness of CTampC78 is also perceived as a possible cause of the most serious problems
declared This was mentioned by 12 of the SMEs that encountered problems (ie 15
respondents out of 122)
However in 13 of the cases the problems encountered were not within the service
providerrsquos responsibility but resulted from technical issues with SME and internal factors
When providing further details the SMEs acknowledged that the problems may have been
caused by the enterprisersquos own mistake due to miscommunication limited training of the
employees or lack of capacityknowledge
The relevance of lsquonon conformity of the servicesrsquo lsquotechnical problemsrsquo and lsquounfairness of CTampCrsquo
is confirmed also when the analysis of the causes is restricted to most serious problems only79
(Table 15)
77 Multiple choice question 78 CTampC were considered unfair by the respondents because of the impossibility of negotiating its
content because the contract might have included limited liability of the providers andor the possibility for the provider to modify unilaterally one or more clauses 79 Unsatisfactory availability Low speed of the service and Forced updates to the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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53
Table 15 The causes of the three most serious problems ( of respondents 122 of
responses provided 59)80
The 3 most serious
problems
of SMEs declaring
this as the most
serious problem
of SMEs that consider
lsquonon-conformity of the servicersquo as the cause
of SMEs that consider
lsquotechnical problemsrsquo as
the cause
of SMEs that consider lsquounfairness of CTampCrsquo as the cause
of SMEs that declared other causes for the most
serious problem
encountered
Unsatisfactory availability
32 23 3 3 3
100 73 9 9 9
Low speed of
the service
27 13 5 2 7
100 48 19 7 26
Forced updates to the service
16 6 2 4 4
100 38 13 25 25
Source Survey of SMEs (2018)
Even the second most serious problems are frequently due to similar causes (ie non-
conformity of the service provided with what was established in the contract Figure
20)
Figure 20 The main causes of the second most serious problems ( of respondents 66 of responses provided 70)81
Source Survey of SMEs (2018)
44 Actions taken by SMEs
As anticipated in the introduction of Section 4 actions taken by SMEs in order to remedy the
encountered problems have been investigated
Nearly three-quarters (74) of the SMEs that encountered contract-related problems
(90 out of the 122 respondents) chose to take action to resolve or to remedy the most
serious problem
The 32 respondents who declared that no action had been taken provided usually more than
one justification for their answer The results that stood out were given by the fact that the
80 Multiple choice question 81 Multiple choice question
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54
provider fixed the problem (16) that the problem was assessed as not that
important (8) and that the procedure was too complicated (5)
The overall trend regarding actions taken to resolve the problem is maintained for each
type of sector included in the study where between 60 and 90 of the SMEs chose to
take action (see Annex 5 for further details)
Two main actions have been taken by SMEs to resolve the encountered problems using the
direct support of the provider andor making a complaint to the customer support
service (Figure 21)
Figure 21 The actions taken by the SMEs to resolve or remedy the most serious problems
( of respondents 90 of answers 165)82
Source Survey of SMEs (2018)
Also interestingly there are two types of actions to address the problem which have not been
declared at all both concerning legal measures going to mediationarbitration and
filing an action with a court
The replies received from the service providers during the case studies83 reveal that there
were cases where SMEs went to court to obtain compensation for the time and money lost
However providers remark that from their experience the probability that SMEs will win
these legal disputes is limited since it is difficult to demonstrate objective responsibilities
Additional insights were gained by investigating the replies within the category lsquoothersrsquo
chosen by more than 20 of the SMEs that took actions This reveals that about half of them
(21) SMEs took some type of internal measure such as changing an internal procedure or
moving the cloud computing services internally
The results revealed also that on average SMEs take more than one action to resolve or
remedy the most serious problems
At the same time among the 90 SMEs that took action 78 affirmed that they did not
encounter any difficulties in resolving the most serious problem (see question D121
from Annex 5 for further details)84
82 Multiple choice question 83 See Case study analysis (Annex 9) 84 All respondents (ie 90) that declared they took action were requested to say if they encountered
any difficulties while trying to resolve or remedy the encountered problem
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55
Moreover the survey revealed that the most likely challenge for SMEs when trying to resolve
the most serious problem is the length of the procedure (Figure 22)85
Figure 22 Difficulties encountered when trying to resolve the most serious contract-related problem ( of respondents 20 of answers 34)86
Source Survey of SMEs (2018)
The findings from the case studies revealed (through interviews with providers) that different
forms of assistance are offered when needed and that the support did not depend on the
enterprisersquos size but rather on the severity of the issue Providers also mentioned that the
length of the remedy procedure varies from a minimum of a few hours to a maximum of three
or four days
Results of the actions
Following the actions taken the majority of the SMEs signalled that their problem was
either entirely resolved (70) or partially resolved (18) as shown in Figure 23
Figure 23 The results of the actions taken to resolve or remedy the most serious problem
( of respondents 90)
Source Survey of SMEs (2018)
85 The two responses regarding the lsquootherrsquo option were first related to the lack of a timely response from
the provider and secondly to the fact that the provider offered only partial help to resolve the problem 86 Multiple choice question The question was addressed to the 20 respondents that declared encountering problems when taking action to resolve or remedy the problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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56
The extent to which the problem was fully resolved varies across sectors ranging from 41
for administrative and support service activities to 89 for wholesale and retail trade (Figure
24)
Figure 24 Number of SMEs for which the problem was fully resolved as a result of the action(s) taken by sector ( of respondents 63)
Source Survey of SMEs (2018)
From the service providersrsquo viewpoint if the problem falls under the providersrsquo responsibility
they try to partially compensate for the cost of the service One specific provider declared
that the approach commonly used in the market is to compensate for administrative costs
but only in exceptional cases87 to also reimburse the entire costs of the subscribed package
The reimbursed amount varies between 5 and 15 of the monthly fees Moreover within
one Expert Group Meeting there was mention of lsquoa practice in Spain on a regulated market
where money is returned to customers for downtime within 60 daysrsquo88
87 These rare cases might vary according to the specific problem The provider might consider the
reimbursement of the entire cost if the unavailability of the services exceeds the scheduled period needed in order to fix the problem 88 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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57
5 Consequences of the encountered problems
This section investigates the nature of the financial detriment suffered by the SMEs as
consequence of the encountered problems as identified in Section 4
This might be related to
negative consequences for business activities such as
- potential loss of turnover or profits as a consequence of the encountered
problem
- loss of clients
- reputation damages
extra work that is done with internal human resources while taking action to
resolve the encountered problems
extra effort or costs to ensure an alternative service andor to fix the cloud
service problem
legal actions taken to exercise the users rights to remedies for non-conformity of
service
The prevalence of these consequences has been verified during the implementation of the
survey and their economic assessment where possible has been discussed and validated
during the case studies and webinars
This section also discusses some more qualitative aspects of how the encountered problems
may affect individual companies
51 Qualitative assessment
SMEs declared several negative consequences for business activities arising from contract-
related problems (Figure 25)
Figure 25 Perceived consequences for business activities ( of respondents 122)
Source Survey of SMEs (2018)
The limited availability of a service or its limited speed might reduce the capacity of SMEs to
respond to customersrsquo needs in a timely manner causing loss of clients or having a negative
impact on reputation Around one out of five SMEs that encountered problems declared that
those problems generated loss of clients or reputational damages
Reputation is a strategic intangible asset and it may play a very important role not only in
improving SMEsrsquo financial results but also (or even more importantly) in overcoming barriers
that significantly hinder their development The most important factor which builds a
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
58
companyrsquos reputation is the opinion and trust shared by stakeholders (especially customers
and third parties)
Interestingly Figure 25 also shows that the proportion of SMEs that perceive some financial
impacts arising from contract-related cloud computing problems in terms of lost profits or
turnover is slightly lower (16 and 14 respectively out of the 122 that faced contract-
related cloud computing problems) which suggests that at least some of those SMEs that
declared to have experienced negative consequences considered that they somehow managed
to counteract the impacts in terms of lost clients and reputational damages and that these
consequences did not translate into financial losses It is true that some of the effects of those
losses of clients or reputational damages that were reported may take some time to translate
into turnover losses and this helps in explaining why the proportion of enterprises that
declared to have experienced losses of turnover and profits is lower than that the one that
declared to have suffered from losses of clients or reputational damages Moreover this can
also be explained by the fact that it is not inherently an easy task to ask an SME to quantify
such costs as this might also depend on the person who answers and how knowledgeable he
is on the firmsrsquo accounts
Besides the consequences mentioned above the results of the survey and the findings of the
case studies confirmed that the most important consequence for cloud computing business
users is the extra work that had to be performed with internal human resources
overall 93 of the enterprises that encountered problems have had to mobilise some internal
human resources to sort out the problems (Table 16)
In particular while acting to resolve the encountered problems
76 of the enterprises have had to use technical staff to resolve the encountered
problems
administrative and senior officers and managers were used by nearly half of the
enterprises (48)
the complexity of the encountered problems forced 60 of the SMEs (73 out of 122
that encountered problems) to use at least two skill levels
Table 16 Number of enterprises in which human resources were invested while taking action to resolve or remedy the most serious problem by skill level of employee
( of respondents 122)
Skill level of
enterprises
Administrative 59 48
Technical 93 76
Senior officer(s)manager(s) 59 48
At least one of the above 113 93
Source Survey of SMEs (2018)
The importance and the prevalence of the extra work are also confirmed by the fact that about
one-third (31) of the SMEs that encountered problems reported no other consequences
besides human resources costs while taking action to resolve the most serious problem (Table
17)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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59
Table 17 Number of enterprises that have incurred costs (besides human resources) while
taking action to resolve or remedy the most serious problem by type of costs ( of respondents 122)89
Other costs encountered (different from costs related to internal HR)
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Other residual Costs 9 7
None 38 31
Source Survey of SMEs (2018)
It is interesting to note that when the problems were not resolved SMEs faced additional
costs related to ensuring an alternative service (34) and costs related to fixing the
cloud service problem with external support (32 Table 17)
Other hidden costs may also appear when SMEs face contract-related problems Even if legal
measures (ie going to mediationarbitration and filing an action with a court) were not
chosen as the action to resolve the problems (see Section 42 for further details) 18 of the
SMEs incurred some legal costs when exercising user rights to receiving remedies for non-
conformity of the contracted service
Whilst the perception of the nine SMEs that took part in the in-depth interviews is that the
encountered problems do not always have direct and important consequences for the financial
performance of the enterprises (ie loss of profit or turnover) it should also be noted that in
the survey not all SMEs were able to provide an estimate of the detriment encountered Such
estimation is indeed challenging and the unwillingnessincapability of the SMEs to provide an
estimate may also be due to the fact that effects on the balance sheet may only materialise
over a longer time horizon
However cloud services can be critical for SMEs This was reflected in some very high
estimates of detriment reported by individual SMEs For example this could be the case for
where the data lies at the core of the SMErsquos activity (eg an accounting firm) In extreme
cases the problem may cause the market exit of efficient companies The larger the costs
generated by the encountered problems the larger the risk of market inefficiencies
The next section is aimed at quantifying the monetary value of the consequences analysed so
far
52 Quantitative assessment
The quantification of the consequences suffered by SMEs (economic detriment) relied on the
computation of the following parameters90
proportion of enterprises that use cloud computing services (cloud computing usage
rate)91
the incidence of contract-related problems by sector--size classes (namely the
percentage of enterprises that encountered problems)
the 95 trimmed mean values by enterprise for
89 Multiple choice question 90 Please refer to Section 21 for further details on the methodology used to quantify the economic detriment 91 Please refer to Section 31 for further details
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60
- losses of turnover or alternatively losses of profits
- number of working days involved in resolving the problems
- the level of other costs incurred
- the value of any redress offered by the service provider as a compensation
All of these parameters have been quantified by using the results of the survey To compute
the average and 95 trimmed mean values for each dimension of detriment only the answers
of SMEs that quantified the detriment associated with that dimension were considered
For some dimensions SMEs were asked first whether they suffered some cost and then to
quantify it SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems but that were not able to provide an estimate of the detriment suffered
due to that cost cannot be considered in this quantification exercise This quantification
exercise must thus be regarded as an estimate of the financial consequences of contract-
related cloud computing problems
Table 18 presents in the first column the number of enterprises that declared that they
suffered each cost92 then in the second column it presents the number of SMEs that were
able to quantify the cost and in the third column the number of SMEs that declared some
positive value for each cost As it can be seen the difference between the number of
enterprises that declared that they suffered a cost and that were able to quantify its effect is
quite diverse across the different dimensions of detriment
Table 18 Enterprises that declared that they suffered some costs and that were able to
quantify these costs
Component
Number of
enterprises that declared
they suffered the cost
Number of
enterprises that
quantified the cost
Number of enterprises
that
quantified
with positive values
of enterprises
that
quantified
with positive values
Loss of turnover na 122 17 14
Loss of profits na 122 19 16
Internal human resource costs 113 113 105 93
Other costs (at least one) 90 78 31 40
Costs related to ensuring an alternative service
42 41 15 37
Costs related to fixing the cloud service problem
39 39 15 38
Legal costs 22 22 1 5
Costs related to reputation
damage 23 23 3 13
Costs related to loss of client(s)
25 24 2 8
Other residual costs 47 34 5 15
Redress 15 15 7 47
Source Survey of SMEs (2018)
92 For lost turnover and lost profits as it was not asked separately whether the SME experienced some loss there is no information (see Annex 4 section E for further details on how the data collection was structured)
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Regarding turnover and profit losses all companies had to answer the question in the survey
and in that sense had to quantify those dimensions of detriment Despite this fact and as
already discussed only 14 and 16 respectively provided numbers for their estimates of
losses of turnover and profits These low figures may be due to the fact that at least some of
those SMEs that declared to having experienced other negative consequences might have
managed to counteract the impacts related to lost clients and reputational damages and other
costs and that those costs did not translate into financial losses Yet it is also true that some
of the effects of those losses of clients or reputational damages that were reported may take
some time to translate into turnover losses and this may help to explain why the proportion
of enterprises that declared to have experienced losses of turnover and profits is lower than
that which declared to have suffered losses of clients or reputational damages
For internal human resources costs 93 of the enterprises that mobilised internal human
resources declared losses of some working days that were considered in the analysis of
detriment thus most enterprises were considered in the analysis
For other costs 78 (80) of the enterprises that declared to have borne some costs were
able to quantify at least one of these costs
It is important to point out that some of the SMEs that declared to have borne costs arising
from contract-related cloud computing problems were not able to provide an estimate of the
cost of the detriment suffered This means that while there is some under-reporting of the
percentage of enterprises that faced relevant costs it does not necessarily imply a bias in the
overall estimate of detriment given that calculating average values for the impact can correct
the under-reporting problem if the true values of those that are not able to quantify have the
same distribution as those that were able to do so In practice by taking into consideration
only those that SMEs that quantified the detriment may lead to underestimation
overestimation or no bias at all
The fact that enterprises only assess the current financial losses and are not able to foresee
the future financial losses associated with problems such as the loss of clients or reputation
damages can imply an underestimation of the true detriment
Computed values have been discussed and validated during the webinars realised under Task
3 (see Annex 9 for further details)
Cloud computing usage rate
Two possible scenarios for the estimate of the usage rate of cloud computing were considered
based on the survey of SMEs
the first which is the central scenario in this study considers all enterprises that
did not respond to the survey as not using cloud computing services arriving at a
universe of 3173 SMEs In this case the usage rate corresponds to a value of 159
in the second only those enterprises that explicitly declared that they are not using
cloud computing services are added to those that declare its use corresponding to a
universe of 1009 The usage rate in this case is higher reaching a value of 499
which can be regarded as an upper estimate representing a possible future situation
in which the usage rate of cloud computing increases significantly
Incidence of contract-related problems
The sample available from the survey also allows the calculation with a 95 confidence
interval level and 5 margin of error of the incidence of contract-related problems
Losses of turnover
For all cost categories (ie loss of turnoverprofit costs of human resources other costs) and
for the value of redress the research team considered the 95 trimmed mean of the values
from the survey
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Trimmed means are robust estimators of a general trend To compute the 95 trimmed
mean the research team i) removed 25 of observations on each side of the distribution
of survey answers ii) computed the average of the remaining observations
Using trimmed means confers one main advantage the standard error of the trimmed mean
is less affected by outliers and asymmetry than the mean93
The following tables present both trimmed mean and average values for all costs the latter
being included for illustrative purpose only
Table 19 Loss of turnover by enterprises
Value of
Losses (euro)
Number of
Enterprises
Relative frequency Cumulative
frequency
000 105 861 861
700 1 08 869
30000 1 08 877
104690 2 16 893
157035 1 08 902
200000 1 08 910
209380 1 08 918
500000 2 16 934
1000000 1 08 943
2000000 1 08 951
5000000 1 08 959
10469012 1 08 967
15000000 2 16 984
20000000 1 08 992
50000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Based on these values the value of the 95 trimmed mean is euro42094 Losses by sector
size class and country are presented in Annex 5
Loss of profit
Looking at profits (Table 20) we can see that also only 156 (19) of the enterprises out of
the 122 that suffered contract-related cloud computing problems declared a loss of profits
corresponding to a 95 trimmed mean of euro177 (Annex 5)95
Table 20 Loss of profits by enterprise
Value of Losses (euro)
Number of Enterprises
Relative frequency Cumulative frequency
000 103 844 844
1200 1 08 852
93 It must be emphasised that all very high value answers (outliers) have been double-checked and they do not seem to include errors in any case we take the more robust scenario (when the 95 trimmed
mean is used) to measure the impact and present the results considering the average values only as a
sensitivity in the appendix 94 The average value is euro985869 95 The average loss of profits per enterprise is about euro1913
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63
Value of
Losses (euro)
Number of
Enterprises Relative frequency
Cumulative
frequency
20938 1 08 861
51500 1 08 869
52345 1 08 877
60000 1 08 885
90000 1 08 893
150000 1 08 902
157035 1 08 910
200000 2 16 926
209380 1 08 934
300000 1 08 943
500000 2 16 959
523451 1 08 967
2093802 1 08 975
3000000 1 08 984
5234506 1 08 992
10000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Internal human resources costs
When one considers the number of working days involved in resolving the problems96 there
is a significant level of dispersion and only 17 out of the 122 enterprises that suffered contract-
related cloud computing problems did not invest working days in resolving the problem97 The
95 trimmed mean was about 32 days98
To compute the human resources costs incurred when resolving the problems as the actual
values of wages of those involved in resolving the problems were not provided the number
of working days was multiplied by the average cost of labour per working day per country and
industry which was computed from Eurostat data as INDIC_SB - Personnel costs - million
euroINDIC_SB - Persons employed - number)260
Eurostat data are not differentiated by skill level but by using the average wage level by
sector and country during that period we have a robust estimate of the average cost of labour
on the affected enterprises and so the estimate is likely to be close to actual conditions
96 For the measurement of the detriment only the overall number of working days was used as the responses to the survey regarding wages were not robust and so the average wage for each country was used to estimate the human resources costs and accordingly only the overall number of working
days had to be used from the survey 97 This means that 93 of the enterprises that mobilised internal human resources to sort out the problems declared some losses of working days 98 The average number of working days involved in resolving the problem was about 72
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
64
Figure 26 Total number of working days involved in resolving the problem by enterprise
Source Survey of SMEs (2018)99
Other costs and value of redress
With regard to the other costs100 incurred by the SMEs to resolve the problem a qualitative
assessment has been presented in Section 51 above
With respect to these other costs Table 21 shows the number of SMEs that declared relevant
values as well as the trimmed mean and the average of the declared values for each of the
individual costs
The incidence of each of the individual other costs is quite different with the costs related to
ensuring an alternative service and costs related to fixing the cloud service problem as those
that are perceived as having greater impact Overall only seven enterprises experienced more
than one type of other costs
Table 21 Values for other costs
Component
Number of enterprises
that quantified
costs
Number of enterprises
that declared positive values
of total 122
95 trimmed
mean of the values
declared by enterprises
experiencing
each cost euro
Average of
the values declared by enterprises
experiencing each cost
euro
Costs related to ensuring an alternative service
41 15 123 1187 5892
Costs related to fixing the cloud service problem
39 15 123 1311 13657
99 See Annex 5 for further details 100 ie costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
65
Component
Number of enterprises
that quantified
costs
Number of enterprises
that
declared positive values
of total
122
95
trimmed
mean of the values
declared by enterprises
experiencing each cost
euro
Average of
the values declared by enterprises
experiencing each cost
euro
Legal costs 22 1 08 00 19
Costs related to reputation damage
23 3 25 00 2701
Costs related to loss of
client(s) 24 2 16 00 8663
Other residual costs 34 5 41 23 6255
Source Survey of SMEs (2018)
As discussed above not in all cases were consulted stakeholders able to associate an
economic value with the consequence that was faced or they simply considered the costs that
were borne as not relevant
Since for some of the individual other costs there were very few answers provided we chose
to consider an aggregate value of other costs in the assessment of the detriment suffered by
SMEs given that the use of an aggregate value increases the robustness of the estimate101
To arrive at the aggregate value we first computed the total value of other costs borne by
each enterprise (by adding up each of the individual other costs) and then computed the
trimmed mean of the aggregate declared other costs The 95 trimmed mean per
enterprise that suffered problems102 of the overall other costs borne was euro341 (Table
22)103
Table 22 Parameters used in detriment assessment
Component
Number of enterprises that
declared
relevant values ()
of the 122 enterprises that
faced problems
95 trimmed mean of the
values declared by enterprises
that quantified the component
euro
Average of the values declared by enterprises that quantified the component
euro
Turnover losses 17 139 41954 985869
Profit losses 19 156 17690 191346
Costs of human resources
105 861 36006 80621
Other costs 30 246 34124 371871
Redress 7 57 095 6042
Source Survey of SMEs (2018)
101 For this reason the trimmed mean based on total other costs has been used instead of the trimmed
means for each individual other cost 102 The trimmed mean has been computed over 122 SMEs 103 An average of euro3718 per enterprise
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66
Finally also the value of any redress offered by the service providers to compensate for
the problem has been computed Only seven enterprises out of the 122 that suffered contract-
related cloud computing problems (6) declared to having received a positive amount as
redress corresponding to a 95 trimmed mean of about euro1 per enterprise that
suffered problems104 which shows that SMEs are not able to be compensated for the costs
suffered
Table 22 summarises the parameters discussed above for each component of detriment that
is used in the quantitative analysis
Measuring the economic detriment
Having those parameters and the total number of enterprises that experienced contract-
related cloud computing problems it is possible to compute the value of the economic
detriment they suffered by using the formulas presented in Section 21 of this report
Gross financial detriment is measured by taking into account alternatively the loss of turnover
or profits as perceived by each SME and then adding the costs of the human resources
invested by each SME while taking action to resolve or remedy the most serious encountered
problem and the other costs declared by each SME including costs such as the costs related
to ensuring an alternative service the costs related to fixing the cloud service problem any
legal costs costs related to reputation damage and costs related to loss of client(s) and other
residual costs
The measures of gross financial detriment per enterprise computed from the previous
parameters are presented in Table 23 and those for net financial detriment are shown in Table
24
Table 23 Measures of gross and net financial detriment per enterprise considering lost turnover (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Turnover losses 4195 374 98587 685
Costs of human resources 3601 321 8062 56
Other costs 3412 304 37187 259
Gross detriment 11208 1000 143836 1000
Redress 10 604
Net detriment 11199 143232
Source Survey of SMEs (2018) and Eurostat Business Statistics
104 An average of euro6042
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and unbalanced cloud computing contracts
67
Table 24 Measures of gross and net financial detriment per enterprise considering lost
profits (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Profit losses 1769 201 19135 297
Costs of human resources
3601 410 8062 125
Other costs 3412 389 37187 578
Gross detriment 8782 1000
64384 1000
Redress 10 604
Net detriment 8773 63780
Source Survey of SMEs (2018) and Eurostat Business Statistics
As mentioned above considering these values two scenarios have been developed that take
into account the two measures of cloud computing usage rate
The estimates presented are lower thresholds of the actual detriment as they only consider
the most serious problem which represents less than 80 of the total losses for 48 of the
companies105 The size of underestimation is limited by the fact that sectors with the highest
usage rates of cloud computing are considered in the analysis and they are likely to bear more
costs than the average sector
Table 25 to Table 30 below present the results for economic detriment at the EU level
The interpretation of the results on the economic detriment caused by contract-related
cloud computing problems shows that in the central scenario (when 159 of the total
number of enterprises use cloud computing) the number of enterprises that suffered contract-
related problems across the EU28 is around 583000 (Table 25) In the alternative
scenario (when about 50 of the enterprises use cloud computing) this value increases to
about 18 million
105 The risk of underestimation is less pronounced as the sectors selected for the sample are those for which the usage rate of cloud computing is higher
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Table 25 Number of enterprises at the EU28 level suffering economic detriment
Scenario 1
(average incidence of CC use
159)
Scenario 2
(average incidence of CC use
499)
(number)
Secto
r
Manufacturing 82256 245581
Wholesale and retail trade repair of motor vehicles and motorcycles
198877 628761
Information and communication 49890 156187
Professional scientific and technical activities
195098 599588
Administrative and support service activities
56803 203001
Total 582924 1833118
Siz
e
cla
ss Micro 548001 1722427
Small 22827 70148
Medium 12096 40543
Total 582924 1833118
Source Computations based on Survey of SMEs (2018) and Eurostat
When considering lost turnover and all other costs incurred (Table 24) contract-
related problems generated a gross economic detriment that ranges from approximately
euro650 million in the scenario of 159 cloud computing usage to about euro21 billion in the
scenario of 499 cloud computing usage When considering the lost profits and all other
costs incurred (Table 27) the value of gross detriment goes from just over euro500 million
in the scenario of 159 cloud computing usage to about euro16 billion in the scenario of
499 cloud computing usage
Table 26 Gross economic detriment at the EU28 level - considering lost turnover and all other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2947
Wholesale and retail trade repair of motor vehicles and motorcycles
1673 5235
Information and communication 369 1145
Professional scientific and technical
activities 1557 4723
Administrative and support service activities
1918 6495
Total 6534 20546
Siz
e
cla
ss Micro 4816 15124
Small 1144 3562
Medium 574 1861
Total 6534 20546
Source Computations based on Survey of SMEs (2018) and Eurostat
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69
Table 27 Gross economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 649 1906
Wholesale and retail trade repair
of motor vehicles and motorcycles 1548 4852
Information and communication 345 1074
Professional scientific and technical activities
1421 4323
Administrative and support service
activities 1157 3943
Total 5119 16098
Siz
e
cla
ss Micro 4013 12609
Small 801 2488
Medium 306 1002
Total 5119 16098
Source Computations based on Survey of SMEs (2018) and Eurostat
The value of the gross detriment per enterprise that faces problems when considering
lost turnover and all other costs incurred is about euro1100 When considering lost profits
and all the other costs incurred the value of the detriment per enterprise is around euro880
Table 28 Average gross economic detriment per SME
Average gross economic detriment per SME suffering economic
detriment euro
Considering lost turnover and all
other costs incurred
Considering lost profit and all other
costs incurred
Micro 8788 7323
Small 50116 35090
Medium 47454 25298
Total 11209 8782
The net economic detriment associated with contract-related cloud computing problems
ranges from around euro650 million to euro21 billion when considering lost turnover and
all other costs incurred (Table 29) and from euro501 million to euro16 billion when considering
the lost profits and all other costs incurred (Table 30)
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70
Table 29 Net economic detriment at the EU 28 level - considering lost turnover and all
other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2946
Wholesale and retail trade repair of
motor vehicles and motorcycles 1673 5234
Information and communication 369 1145
Professional scientific and technical activities
1556 4722
Administrative and support service
activities 1913 6481
Total 6528 20529
Siz
e
cla
ss Micro 4815 15118
Small 1143 3562
Medium 570 1850
Total 6528 20529
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 30 Net economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 648 1906
Wholesale and retail trade repair of motor vehicles and motorcycles
1548 4851
Information and communication 345 1074
Professional scientific and technical activities
1420 4322
Administrative and support service activities
1152 3928
Total 5114 16081
Siz
e
cla
ss Micro 4011 12603
Small 800 2488
Medium 302 990
Total 5114 16081
Source Computations based on Survey of SMEs (2018) and Eurostat
Moving to the analysis of the different components of detriment considering the more detailed
results presented in Annex 5 one can see that the overall turnover loss (Table 77) arising
from contract-related cloud computing problems across the EU28 ranges from euro245 million
to euro770 million when the 95 trimmed mean loss per enterprise is considered depending on
the cloud computing usage rate
In the measures of detriment that consider the lost turnover and all other costs incurred this
component is the most significant component of detriment in both scenarios with values
around 37 (Figure 27) When measuring detriment considering the lost profits and all other
costs incurred the most important component of detriment varies across the different
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
71
scenarios being either the other costs covered106 or the costs of human resources invested
in resolving the problem
The costs of human resources involved in resolving the problem represent around 32 of
the total detriment when considering lost turnover (Table 23)
Even if figures by industry should be looked at carefully in all scenarios in which detriment is
measured considering the lost turnover and all other costs incurred the sectors lsquoWholesale
and retail trade repair of motor vehicles and motorcyclesrsquo lsquoProfessional scientific and
technical activitiesrsquo and lsquoAdministrative and support service activitiesrsquo together account for
about 90 of the overall gross detriment In the scenarios in which detriment is measured
considering lost profits and all other costs incurred lsquoWholesale and retail trade repair of
motor vehicles and motorcyclesrsquo and lsquoProfessional scientific and technical activitiesrsquo together
account for about 60 of the total detriment
In all scenarios micro enterprises account for close to 70 of the global economic detriment
106 These costs include costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
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72
6 Impacts of the economic detriment
This section assesses (in quantitative terms) the impact on growth and jobs of the quantified
SMEs detriment identified and provides a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and competitiveness
In order to quantify the effects on growth and jobs the research team estimated
the direct impact meaning the GVA and employment contents of the turnover lost
by SMEs that are affected directly by the contract-related problems This is done by
taking from Eurostat data for each countrysector
- the output per employee
- the output per unit of GVA107
Dividing the turnover losses estimated by these coefficients allows to estimate the GVA
associated with the turnover losses as follow
119863119868(119866119881119860)119894 = sum119871(119879)119894119895
119884119894119895 119866119881119860119894119895frasl
5
119895=1
Where
119863119868(119866119881119860)119894 is the direct impact in terms of GVA for the country i considering the five
sectors under the scope of the study
119871(119879)119894119895 is the loss turnover for the country i in the sector j
119884119894119895 is the average total output produced in the country i and in the sector j during the
period 2014-2016 computed from Eurostat National accounts aggregates by industry
(up to NACE A64) [nama_10_a64]
119866119881119860119894119895 is the average total GVA produced in the country i and in the sector j during
the period 2014-2016 computed from Eurostat National accounts aggregates by
industry (up to NACE A64) [nama_10_a64]
The same approach has been used for the estimate of the loss of jobs associated with the
turnover losses
119863119868(119864)119894 = sum119871(119879)119894119895
119884119894119895 119864119894119895frasl
5
119895=1
Where
- 119863119868(E)119894 is the direct impact in terms of employment for the country i considering
the five sectors under the scope of the study
- 119871(119879)119894119895 is the loss turnover for the country i in the sector j
- 119884119894119895 is the average total output produced in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64]
- 119864119894119895 is the average number of employees in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64_e]
107 Average values for 2014-2016 were considered to increase robustness and to cover almost the same period as we are considering in the assessment
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73
For instance in the first scenario the total turnover losses arising from contract-related cloud
computing problems in manufacturing in Belgium is euro448 million (Table 81) Since each
person in manufacturing in Belgium produces euro4293 thousand of output (Table 84) that
turnover is associated with 104 jobs And given that for each euro of GVA in manufacturing in
Belgium there are euro41 of turnover (Table 83) that turnover is associated euro 108 million of
GVA
indirect impacts also measured as GVA and employment losses but in the supplier
industries were also assessed by using the input-output methodology presented in
Box 4
The basic requirement is to estimate the amount of turnover that is lost in supplier industries
given the existing supply chains The input-output methodology allows estimating those losses
based on the interlinkages between sectors existing in a given economy We then use the
input-output tables for the EU28 to estimate how much turnover would be lost in the supplier
industries due to the turnover losses associated with contract-related cloud computing
problems in the industries directly affected by those problems After estimating the turnover
losses in the supplier industries it is possible to measure the GVA and employment contents
of the production lost in those industries by using the same procedure described above that
was used for direct effects The input-output analysis is only used to estimate the turnover
losses in supplier industries when the methodology described above is applied
61 Direct impacts
At the enterprise level we estimated the financial detriment suffered by each enterprise by
considering different components and then aggregated those measures to the EU28 level by
adding up the effects suffered by each enterprise across all enterprises
When estimating the macroeconomic effects of the contract-related problems as discussed in
the methodology one must consider the overall turnover losses that were sustained by all
enterprises that experienced those problems This is due to the fact that turnover is the
variable that summarises the overall effects at the enterprise level and that is transmitted to
the economic system through the supply chains and can be related to aggregate economic
variables At the same time by considering turnover as an overall effect helps to avoid double
counting
Estimated turnover losses are presented in section 52 by considering the average loss of
turnover experienced by each enterprise and the total number of enterprises that suffered
problems related to cloud computing As discussed in that section there may be some
underestimation of the loss of turnover as we are only considering the consequences of the
most serious problem and also because enterprises many times are not able to assess108 how
some costs such as loss of clients or reputational damages translate into turnover losses or
other financial losses
Keeping the previous considerations in mind the overall results show that depending on the
scenario of cloud computing usage the direct loss of jobs associated with the loss of turnover
caused by contract-related cloud computing problems ranges from 3672 to 11816 jobs At
maximum this represents 001 of the total employment in the EU28 showing that the
overall direct effects of contract-related problems in terms of jobs is quite limited
With respect to gross value added the direct impact of the losses of turnover caused by
contract-related cloud computing problems ranges from euro119 million to euro379 million which
is again negligible when considering the overall EU28 level
108 Namely because there is a time lag and no linear proportion between the costs and damage (eg reputational damage) and the turnover losses
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74
Table 31 Direct impact on growth and jobs of the losses of turnover caused by contract-
related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 1191 3788
EU GVA 000 000
Impact on jobs
Persons 3672 11816
EU
employment 000 001
Source Computations based on Survey of SMEs (2018) and Eurostat
Annex 7 presents tables that provide details by sector and country The tables that provide
details by country and sector show that effects are more significant in the sectors
lsquoProfessional scientific and technical activitiesrsquo and lsquoAdministrative and support service
activitiesrsquo One can also find some differences across countries
62 Indirect impacts
Turning to the indirect effects as mentioned we measured the consequences of the turnover
losses on supplier industries by using the input-output model to identify the supply chains
It is important to take into account that not only the described limitations related to the direct
effects do not fully translate into the indirect effects but the methodology used is also not
able to capture some opportunity costs that are particularly relevant for instance for human
resources or downstream effects namely on final consumers Thus the current
measurement of indirect effects must be seen as a lower threshold to the true indirect effects
Despite these limitations the input-output methodology is the best available methodology to
explore the interlinkages that exist between sectors and to estimate the indirect impacts
arising from contract-related problems
The measured indirect impacts on supplier industries are similar in magnitude to the direct
effects
Depending on the scenario of cloud computing usage the loss of jobs in supplier industries
associated with the loss of turnover caused by cloud computing contract-related problems
ranges from 1733 to 5402 Losses of GVA range from euro99 million to euro308 million
Overall adding direct and indirect effects we may refer to maximum impacts of about 5400
jobs (000 of EU28 employment) in scenario 1 and 17818 jobs in scenario 2 (001 of
total employment Regarding the loss of GVA the sum of direct and indirect effects adds up
to euro220 million in scenario 1 and to euro687 million in scenario 2 (both 000 of EU28 GVA)
which shows that the impact is not very significant at the EU28 level
Table 32 Indirect impact on growth and jobs of the losses of turnover caused by contract-related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 987 3079
EU GVA 000 000
Impact on jobs Persons 1733 5402
EU employment 000 000
Source Computations based on Survey of SMEs (2018) and Eurostat
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75
63 Other qualitative impacts of contract-related problems
The previous sections show that even with some possible underestimation the overall direct
and indirect impacts are not very significant for the time being but as was pointed out in the
analysis some companies have already experienced problems that had very significant effects
(demonstrated by the size of the average of all detriment components compared with the
95 trimmed mean presented in Table 22) and in a scenario of increasing usage rates these
effects are likely to become more relevant and more likely to affect the market
The analysis also revealed that some SMEs had difficulties in quantifying the costs relating to
cloud computing problems
However it is important to keep in mind that besides those quantitative impacts there might
be some other more qualitative effects arising from contract-related cloud computing
problems that create distortions affecting the allocative efficiency in the EU economy
eventually diminishing the overall welfare
The efficiency with which goods and services are produced or distributed is fundamental to
ensuring the competitiveness of the various business entities Using the best available
technologies and taking full advantage of them to reduce costs or improve the quality of the
goods and services provided are relevant factors in ensuring SMEsrsquo competitiveness
In the ongoing debate on macroeconomic imbalances and external competitiveness there has
been an increasing interest in competitiveness indicators regarding both cost competitiveness
and quality and non-cost competitiveness
General industrial economics theories show that contract-related problems as they increase
transaction costs may affect that competitiveness as they are a type of context cost which
are costs that affect the activity of enterprises and are not imputable to the investor to his
business or to his organisation These context costs gain increasing relevance with the
increasing integration of various enterprises into the global economy given that in a scenario
in which enterprises located in different territories face different contextual costs those costs
may significantly distort competition favouring the enterprises located in jurisdictions with
lower context costs
Contract-related problems are therefore a type of problem that may impact competitiveness
of enterprises and hinder their development in several different ways They may represent an
additional cost that reduces the price competitiveness of enterprises But they can also
constitute a non-cost barrier to competitiveness if they affect the presence of enterprises in
the market and their ability to efficiently supply their products namely if those problems
significantly reduce the possibility of accessing the best available technologies
Taking into account the previous considerations it is then important to analyse whether the
contract-related problems encountered and described above may have generated other
significant effects through both cost and non-cost competitiveness109
The analysis so far has already shown that contract-related problems have an impact in terms
of reputation and loss of clients besides the financial impacts on enterprise performance Even
if SMEs are not able to translate those effects into financial costs they are likely to have an
impact over the long run
During the interviews and case studies questions were also raised about whether the contract-
related problems might have caused other problems such as reputation damages or losses of
109 The outliers in the sample showed that in a few extreme cases the effects of contract related problems had very high effects and although these values have been excluded using the Trimmed Mean they should not be disregarded when trying to understand the whole context
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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76
competitiveness that may have impacted significantly on the economic performance of the
companies affected
For the time being it seems that given the fact that at the micro level (ie enterprise level)
most of the detriment is associated with extra work required to sort out the problems
enterprises are able to accommodate this effect at least to some extent
The relatively low value of detriment per enterprise perceived by SMEs as being caused by
contract-related problems suggests that enterprises consider they are able to absorb some of
those costs110 If those effects were greater they would have to transmit them more heavily
to their clients namely through increases in prices
Yet in considering all of the factors our general assessment is that even if enterprises are
able to partially absorb the costs they have incurred some of those costs will show up sooner
or later in financial variables and will translate into larger distortions that are likely to affect
allocative efficiency market functioning and competitiveness
110 Again the difficulties evidenced by some SMEs to quantify the costs arising from contract related problems suggests they might not be able to sufficiently account for the opportunity costs associated with solving those problems
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7 Conclusions
Demonstrable tangible economic benefits of cloud computing have been estimated and
confirmed for some years now The main benefits realised are lower information technology
costs more effective mobile working higher productivity standardisation of processes better
ability to enter new business areas and the ability to open up in new locations
While the above list of the benefits is not exhaustive it certainly provides an impression of
the high potential economic advantages that can be gained from the usage of cloud computing
compared to more traditional alternatives such as on-premises information technology
infrastructure
All in all the growing usage of cloud computing is expected to have a relevant impact on
increasing EU GDP and creating additional jobs111
The present study investigated the cloud computing services that are most commonly used
by micro small and medium-sized enterprises in the EU In particular a survey was
conducted on 3173 EU SMEs
The survey results allowed the estimation of the usage rate of cloud computing across SMEs
as 159 calculated from the number of SMEs that declared they are using cloud computing
services (503) divided by the number of SMEs reached (3173)
However EU SMEs are still only making basic use of cloud computing services in terms of the
number and types of contracted services
on average SMEs that declared that they used cloud services contracted five
different cloud computing services but one-third of the SMEs that used cloud
computing contracted only a limited number of services (up to three)
furthermore the use of cloud computing is mainly related to more mature applications
(such as collaboration and communication tools storage and hosting support)
Although the usage of cloud computing services is growing the following potential factors
limiting cloud computing usage were investigated during the interviews with different
stakeholders (including cloud services providersbrokers SMEs business associations ndash
including EEN associations Chamber of Commerce national authorities national SMEs
Envoy)
some SMEs have difficulties in assessing how the new services can improve their
everyday work
other SMEs perceive that costs of cloud services are still high and that it takes too
long to recover the investment
the division of responsibilities between SMEs and cloud providers can
sometimes become a major source of problems as it is not always clearly
documentedexplicated leading to overlaps and gaps especially with respect to
security aspects It is not uncommon for SMEs to be confused about their
responsibilities concerning security such as who makes backups of data or software
which type of failoverredundancy is offered by the provider and what still needs to
be done by the customer All of these issues can have an impact on the willingness of
SMEs to outsource cloud services
security matters generally influence SMEsrsquo decisions about what types of services to
be used One of the aspects that has been mentioned during the interviews as a factor
influencing the SMEsrsquo choices is the reputation of the provider more precisely
whether the cloud provider has had incidents of data breaches in the past
111 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels
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78
Another important factor discussed during the interviews is the asymmetry of information
when it comes to negotiating and customising the services covered by the CTampC and that
might limit the capacity of SMEs to find solutions that fit their needs
As a consequence the survey results showed that the SMEs tended to sign the standard
terms and conditions offered by the cloud provider (this is true for 64 out of 503 SMEs
that are using cloud computing services) either because they did not try at all to negotiate
(46) or were not able to do so (18) The decision to adopt the standard terms and
conditions was made either because these met the usersrsquo expectations (18) or because it
was assumedknown that a negotiation would have no chance to succeed (13)
In contrast to the traditional provision of on-premises IT resources the multi-tenant nature
of cloud computing usually raises concerns with respect to privacy confidentiality and
data integrity Cloud computing presents its own set of security issues which coupled with
the risks and threats inherent in traditional IT computing are also limiting its usage
However the stakeholders involved in the study indicated that the shortcomings in the SMEsrsquo
capacity for negotiating cloud computing contracts could be helped somewhat by the entry
into force of the GDPR as the new legislative framework gives SMEs more control over data
once the service providers apply the regulation
While the main objective of the study was to deliver the necessary evidence to support the
European Commission in its assessment of the need for and extent of any further EU efforts
to increase SMEsrsquo trust in cloud services it investigated
the prevalence nature scope and scale of the contract-related problems that SMEs
encounter in relation to cloud computing services
whether and to what extent enterprises are able to protect themselves against
contract-related problems when deciding to use cloud services
Based on the results of the survey it was estimated that around one SME cloud computing
user out of four (24) encountered contract-related problems during the period 2016-
2017 The main problems were related to the non-conformity of the service provided with
what was established in the contract concerning
the speed of service (55 of those SMEs who experienced problems)
the availability or continuity of the service (49)
updates to the service (32)
clarity of the instructions on how to use cloud computing services (26)
Problems related to security even if having impact on only a limited number of SMEs (less
than 10 of the cloud computing users that experienced problems) were quite frequent
especially with regard to the lack of protection of the data stored in the cloud against theft or
viruses and unauthorised disclosure of or access to data (both showing frequencies of almost
once every three months)
This was an important element arising from the study as security is often perceived as the
key risk when outsourcing information technology services because it may affect critical data
Clearly enterprises attach high importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
Cloud computing users who experienced problems in relation to cloud computing services
were asked to select the most serious among them (ie the problem that created the highest
impact on the everyday activities andor in terms of costs faced in order to resolve it) The
analysis of the results showed a correlation between the most frequent problems and the
problems with the highest impacts on enterprises Indeed unsatisfactory availability or
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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79
discontinuity of the service low speed of the service and forced updates were
considered as the most serious problems
The main cause of the most serious problems was the non-conformity of the service
provided with what was established in the contract (51 of the 122 SMEs declaring
that they encountered problems) The unfairness of contract terms was also perceived as a
possible cause for the most serious problems declared this being mentioned by 15
respondents out of 122 (12) Some practical examples were provided in the Surveyrsquos open
questions and the contract terms were considered to be unfair by the respondents when there
was no possibility of negotiating their content or when they included limited liability of the
providers or the possibility for them to unilaterally amend the contract
However in 19 of the cases the problems encountered were not under the service providerrsquos
responsibility but arose from technical issues and enterprisesrsquo internal factors112
In order to protect themselves the majority of the SMEs (74 of those that encountered
problems) chose to take action to resolve or to remedy the problems encountered
Conversely for those SMEs that decided not to take any action this was justified by the fact
that the cloud provider fixed the problem or that the problem was assessed as not important
or the procedure was considered to be too complicated Interestingly there are two types of
actions which SMEs showed reluctance to use both concerning legal measures going to
mediationarbitration and filing an action with a court This is because the costs associated
with these proceedings did not appear to be worth it
Following the actions taken to address the problem the majority of the SMEs indicated that
their problem was either entirely resolved (70) or partially resolved (18) but the vast
majority of the surveyed SMEs that experienced problems (88) were not offered any redress
by the cloud service providers for the damage caused
The research team estimated that 582924 micro small and medium-sized enterprises
have encountered contract-related problems while using cloud computing and have
faced an economic detriment that is related to different components
losses of turnover and profits
costs of human resources
other costs incurred113
Regarding the human resources invested by the SMEs to address problems members of the
technical staff were by far the most used (76 of the enterprises that faced problems
invested in such resources) Furthermore about one-third (31) of the SMEs reported no
other costs besides human resources when taking action to resolve the cloud computing
problems The ones that did indicate other actions mostly sustained costs related to ensuring
an alternative service (34) and costs related to fixing the cloud service problem (32)
Contract-related problems generated a gross economic detriment measured by
considering lost turnover and all other costs equal to euro6534 million
The loss of turnover was the most significant component of the detriment representing
37 of the total detriment while costs of human resources involved in resolving the
problem represent around 32 of the total detriment
Micro enterprises accounted for around 74 of the global economic detriment (compared to
175 for small and 88 for the medium) but it is in small enterprises that the average
112 When providing further details the cloud computing users acknowledged the fact that there were
cases where the enterprisersquos own mistake such as a miscommunication or lack of capacityknowledge
was admitted to be the cause of the cloud computing problem 113 These costs include overall costs in ensuring an alternative service and costs related to fixing the cloud service problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
80
gross detriment per enterprise was highest (ie euro 5012 compared to euro 4745 for medium
and euro878 for micro enterprises)
It is important to note that this estimate is a lower threshold of actual detriment as
not all SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems were able to provide an estimate of the detriment suffered
it only considers the costs associated with the most serious problem During the
survey 48 of the enterprises that encountered contract-related problems declared
that costs related to the most serious problem represented less than 80 of the total
losses However they were not able to provide relevant estimations regarding the
other encountered problems
However the magnitude of the underestimation is limited by the fact that the Member States
and the sectors chosen to be in the sample are those with highest cloud computing usage
rates and so are likely to bear costs above the average
Having computed the economic detriment suffered by micro small and medium-sized
enterprises the following have also been considered
direct impacts of a reduction in economic activity of the enterprises suffering from
contract-related cloud computing problems on their overall gross value added and
employment
effects on the gross value added and employment of supplier industries arising from
the turnover losses they suffer (indirect impacts)114
Direct impacts were estimated by considering the gross value added and employment
contents of the turnover losses at country and sector levels and the coefficients of total
turnover at country and sector levels computed from Eurostat data115
The overall results show that the 3672 direct jobs were lost in the sectors where contract-
related problems were encountered With respect to gross value added the direct impact of
the losses of turnover was a reduction of euro119 million within the same sectors
The indirect effects measured as gross value added and employment lost in the supplier
industries were still quite considerable The indirect impact associated with the loss of
turnover caused by contract-related cloud computing problems led to losses of 1733 jobs
and around euro987 million of Gross Value Added
Again it should be emphasised that the measured indirect effects must be seen as lower
thresholds to the actual indirect effects not only because of the above-mentioned limitations
but also because the input-output methodology while very good at estimating backward
linkages along the supply chain has some limitations in capturing opportunity costs and
intangibles or downstream effects of the problems in client industries or final consumers
Besides measuring the detriment caused by contract-related cloud computing service
problems the analysis addressed the issue of whether those problems might have generated
other effects
114 These indirect losses arise from the fact that the industries that suffered from the direct turnover losses reduced their demand for products from their suppliers 115 National accounts aggregated by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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81
Results show that contract-related cloud computing problems had an impact on enterprises
in dimensions such as reputational damages or loss of clients but that these effects did not
translate116 into very significant effects on financial variables during the period considered
The study covered the problems faced by SMEs during 2016ndash2017 The survey has been
implemented during 2018 The fact that some enterprises were not able to provide an
estimate of the detriment encountered may also be due to the fact that effects on the balance
sheet may only materialise over a longer time horizon
The analysis also has shown that most enterprises incurred internal human resources costs
or other external costs in order to resolve those problems The allocation of resources to
resolve those problems is likely to create some inefficiencies and to affect the competitiveness
of the companies
Given the size of the effects estimated and even if it is likely that there is some
underestimation enterprises are probably still able to at least partially absorb some of the
costs caused by cloud computing problems
But as we have seen there have already been some cases of contract-related cloud computing
problems that had very large impacts
Over time as increasing usage rates lead to rising incidence of contract-related cloud
computing problems and the longer term consequences of reputational damages and losses
of clients on financial variables become evident it will make it more likely that enterprises
will stop being able to absorb the effects of the encountered problems and this will increase
the impact of those problems on allocative efficiency market functioning and
competitiveness eventually affecting clients and final consumers and reducing the aggregate
welfare
116 The study covered the problems faced during 2016 ndash 2017 The survey has been implemented during
2018 The fact that some enterprises were not able to provide an estimate of the detriment encountered may also be due to the fact that effects on the balance sheet may only materialise over a longer time horizon
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
82
Annex 1 Methodology for the Survey of SMEs
In order to maximise the response to the survey of SMEs a detailed introduction to the online
survey and CATI was prepared and discussed with the EC for approval The introduction
presented the purpose of the study the sponsor and last but not least the reason it is
beneficial for the SME to cooperate with the study
During the interview phase it was of utmost importance to speak with the person in each
enterprise who has the most knowledge about the topic of cloud computing So we
recommended adding a so-called ldquoscreenerrdquo question in order to verify if the interviewer is
speaking with the most suitable interlocutor within the enterprise
The screener question can be found below
S1 Would you describe yourself as the person familiar with the services that your enterprise is using over the internet (cloud computing services) and have general knowledge about the enterprise
1 Yes that is me
2 No that is someone else
ltIf 1 go to Section Bgt
ltIf 2gt
lsquoI am sorry but I would like to speak to the person familiar with the services that the enterprise is using over the internet (cloud computing) and has general knowledge about the enterprise Can you give me hisher name or connect mersquo
ltIf connected to new person re-ask question S1gt
ltIf given name note down new name and make call back appointmentgt
In the CATI quotas were set at country level size classes and sectors in such a way that
when the target per country andor size class was achieved the remaining sample records of
this countrysize class were disabled automatically
The CATI was handled by the Global Data Collection Company (GDCC) The assigned project
manager of GDCC was responsible for drafting detailed briefing instructions for the
interviewers This assigned project manager was responsible for giving the initial briefing to
the interviewers in cooperation with the team leaders and senior interviewers depending on
the language of the questionnaire The initial briefing was held via web conference since the
project was implemented in various locations The team leaders were briefed using the English
version of the questionnaire and they went through the test link by clicking on all the available
options After this initial briefing the team leaders briefed the interviewers in all locations If
any changes were necessary during the process the team leaders held the briefings again
Whenever a new interviewer was added to the project heshe was additionally briefed
All briefings were held in one of the GDCC briefing rooms In these rooms up to 15
interviewers were instructed simultaneously on this project The questionnaire was projected
on the big screen during the briefings All relevant notesremarks from the briefings were
incorporated into the project briefing document and made electronically available to the
interviewers in the interview application
After the briefing the interviewers conducted dummy interviews in the so-called ldquotest moderdquo
of the data collection application in order to familiarise with the questionnaire
Relevant issues which arose during the fieldwork were promptly communicated to ALL
interviewers working on the project via a bulletin board in the CATI platform andor a revision
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
83
of the briefing form which was also available to the interviewer via the questionnaire in
electronically format
During the fieldwork a maximum of 10 phone calls were made to each SME in order to obtain
an interview If no interview was conducted after those 10 attempts the addressee was
considered as a non-response
Call-back appointments were not terminated after 10 attempts as experience has shown that
once a potential respondent has given permission to schedule a call to do the interview often
more attempts are needed to conduct the interview
The interviews for the survey were conducted as much as possible during the usual opening
hours of businesses in the respective countries
The team engaged in the fieldwork was comprised not only of a significant number of
experienced (native speaker) interviewers but for almost every EU country at least two native
speaker evaluators were available The evaluators aside from being very experienced
interviewers were selected for this ask because of their background (education) and
knowledge of the specific country Evaluators were responsible for the final check of the
translations and where necessary suggesting country-specific changes The final translation
checks however were performed by the GDCC translation department The research team
double-checked all the translations This methodology of centralising data collection
benefiting from the native speaker interviewersrsquo knowledge of the local markets has a proven
track record over many projects
All interviews were 100 recorded Aside from live listening-in particular parts of the
interviews were recorded in order to be listened to by a native speaker team leader or
evaluator Besides listening to the interviews the team leaders andor evaluators also called
back respondents who participated in an interview during this call-back a short interview
with verification questions about the recent interview was held The only reason for conducting
a call-back was to recollect information that was first collected incorrectly and further
questions needed to be asked All of the respondents who had completed interviews were
called back in order to record the name of the enterprise and to match the data from the
sample with the enterprise that had completed the survey The quality checking procedure
was generally random but there was also a focus on outliners where applicable117
Overall at least 10 of all interviews per country were covered by the quality control
procedures as mentioned above In the dataset the monitored interviews were labelled
accordingly
Besides this quality procedure the conducted CATI interviews were continuously checked for
outliers The data from interviews with (for example) a deviation in the average interview
time (too short or too long) were checked and when necessary corrective action was taken
This action either involved a telephone call in order to verify the data or the data were
removed from the dataset
After finalising the fieldwork a short fieldwork report was prepared
117 An outlier means something outside of the average therefore GDCC looked at interviewers who
conduct interviews much longershorter than the average or who had more or fewer refusals than the
average or who had a lower or higher incidence rate than the average Focusing on these main (outlier) points helped to determine if the interviewer was doing things correctly and if not the interviewer was retrained in order to help normalise the performance
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
84
Annex 2 Stakeholders list
No Category Member State InstitutionCompany Contribution
1 Cloud broker The
Netherlands BPdelivery Interview
2 EEN The Netherlands
The Dutch Chamber of Commerce Interview
3 EEN Romania ARIES T - Romanian Association for Electronic Industry and
Software - Transylvania Branch
Interview
4 EEN France CCI Paris IDF Interview
5 National authority
Italy The Italian Data Protection Authority
Interview and Webinar
6 National authority
Romania
Romanian National Computer
Security Incident Response Team (CERT)
Interview
7 National authority
Romania The National Supervisory Authority for Personal Data Processing of Romania
Interview
8 National authority
France
Commission Nationale de
lInformatique et des Liberteacutes (CNIL)
Interview
9 National authority
Poland Inspector General for the Protection of Personal Data
Interview and Webinar
10 National authority
Estonia Estonian Data Protection Inspectorate
Interview
11 Service provider
Sweden Glesys Interview
12 Service provider
Spain Ibermaacutetica Interview
13 Service provider
Spain Gigas Interview
14 Service provider
Sweden Hetzner Interview
15 Service provider
Ireland Blueface Interview
16 Service provider
Romania Star Storage Interview
17 Service provider
Romania GTS Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
85
No Category Member State InstitutionCompany Contribution
18 Service provider
Portugal PT Empresas Interview
19 Service
provider Romania Telekom Interview
20 Service provider
Ireland Salesforce Interview
21 SME Poland Biuro Rozwoju Gdanska Interview
22 SME Germany Quality Services International
GmbH Interview and Webinar
23 SME Germany Thieme Compliance GmbH Interview and Webinar
24 SME Germany Leibniz-Institut Fuumlr Astrophysik Potsdam (AIP)
Interview
25 SME Poland Konsorcjum Biuro Klub Sp Interview
26 SME France Qosmos Tech Interview
27 SME Poland Vsoft S A Interview
28 SME Spain Timbrados Elche Sl Interview
29 SME Spain Sistemas de Datos Interview and Webinar
30 SME Association
Belgium EUAPME Interview and Webinar
31 SME
Association Portugal
Associaccedilatildeo Industrial do Distrito de
Aveiro Interview
32 SME Association
The Netherlands
VNO-NCW Interview
33 SME Envoys Network
The Czech Republic
Ministry of Industry and Trade Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
86
Annex 3 Bibliography
Relevant legislation and policy documents
Committee of the Regions (2016) lsquoEuropean Cloud Initiative and ICT Standardisation
Priorities for the Digital Single Market 2016rsquo Opinion of the Committee of the Regions (SEDEC-
VI-012)
European Commission (2003) lsquoRecommendation of 6 May 2003 concerning the definition of
micro small and medium-sized enterprisesrsquo (notified under document number C(2003) 1422)
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in Europersquo
COM(2012)529 final Brussels
European Commission (2013a) lsquoCommission Decision of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404) OJ 1746
European Council (2013b) lsquoCouncil resolution of 10 December 2013 on unleashing the
potential of cloud computing in Europersquo
European Commission (2014 June) lsquoCloud Service Level Agreement Standardisation
Guidelinesrsquo httpseceuropaeudigital-single-marketennewscloud-service-level-
agreement-standardisation-guidelines
European Commission (2015a) lsquoA Digital Single Market Strategy for Europersquo (COM
(2015)0192) and the accompanying Commission staff working document (SWD(2015)0100)
European Commission (2015b) lsquoCommunication on cloud select industry group service level
agreementsrsquo httpseceuropaeudigital-single-marketencloud-select-industry-group-
service-level-agreements COM (2015) 634 final
European Commission (2015c) lsquoProposal for a Directive on certain aspects concerning
contracts for the supply of digital contentrsquo (COM(2015) 634 final)
European Commission (2015d) lsquoTowards a modern more European copyright frameworkrsquo
COM20150626 final
European Commission (2016a) lsquoEuropean Cloud Initiative ndash Building a competitive data and
knowledge economy in Europersquo (COM (2016)0178) and the accompanying Commission staff
working document (SWD (2016) 0106)
European Commission (2016b) lsquoICT Standardisation Priorities for the Digital Single Marketrsquo
(COM (2016)0176)
European Commission Directorate-General for Research amp Innovation (RTD) (2016c) lsquoOpen
Innovation Open Science Open to the World ndash A vision for Europersquo
European Commission (2017a) lsquoProposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Unionrsquo
COM(2017) 495 final Brussels
European Commission (2018a) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
European Commission (2018b) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo Annexes and Impact
Assessment
European Commission (2018c) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
87
European Parliament (2017) lsquoCommission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Union
SWD(2017) 304 final Brussels
European Council (2016) lsquoCouncil resolution of 19 January 2016 on Towards a Digital Single
Market Actrsquo
European Parliament and European Council (2001) lsquoRegulation (EC) 452001 of the European
Parliament and of the Council of 18 December 2000 on the protection of individuals with
regard to the processing of personal data by the Community institutions and bodies and on
the free movement of such datarsquo
European Parliament and European Council (2011) lsquoDirective 201183EU of the European
Parliament and of the Council of 25 October 2011 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council
and repealing Council Directive 85577EEC and Directive 977EC of the European Parliament
and of the Council Text with EEA relevancersquo
European Parliament and European Council (2015) lsquoProposal for a DIRECTIVE OF THE
EUROPEAN PARLIAMENT AND OF THE COUNCIL on certain aspects concerning contracts for
the supply of digital contentrsquo (Text with EEA relevance) SWD(2015) 274 final SWD(2015)
275 final
Reports studies and other documents
Alberto M Bento A K (2012) Cloud Computing Service and Deployment Models Layers
and Management IGI Global
Altman M Andreev L Diggory M King G Kolster E Sone A Verba S Kiskis DL
Krot (2001) lsquoOverview of The Virtual Data Center Project and Software Harvard Universityrsquo
JCDL rsquo01 First Joint Conference on Digital Libraries pp 203-204
Buyya R Broberg J and Goscinski A M (eds) (2010) Cloud computing Principles and
paradigms Vol 87 John Wiley amp Sons
Cave J Robinson N Kobzar S and Rebecca H (2015) lsquoUnderstanding Regulatory and
Consumer Interest in the Cloudrsquo Regulating the Cloud Policy for Computing Infrastructure
Cloud Security Alliance (2017) Custom Applications and IaaS Trends 2017
Department of Justice United States (2015) HERFINDAHL-HIRSCHMAN INDEX
El-Gazzar R F (2014) lsquoA literature review on cloud computing adoption issues in enterprisesrsquo
presented at the International Working Conference on Transfer and Diffusion of IT pp 214ndash
242
ESRC Centre for Competition Policy (2014 January) lsquoSmall Business as Consumers Are They
Sufficiently Well Protectedrsquo A report for the Federation of Small Businesses
European Commission (2013a) lsquoCOMMISSION DECISION of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404)
European Commission (2013b) Final Report of the study SMART 20130043- Uptake of Cloud
in Europe
European Commission (2013 2014) Cloud computing Experts groups meetings
European Commission (2015) Comparative Study on cloud computing contracts Publications
Office of the European Union Luxembourg
European Commission (2014b) European Commission - Strategy - Digital Single Market -
News Retrieved from European Commission - Digital Single Market
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
88
European Commission (2014c) Study regarding the Uptake of Cloud in Europe Follow-up of
IDC Study on Quantitative estimates of the demand for Cloud Computing in Europe and the
likely barriers to take-up
European Commission (2004d) Project Cycle Management Guidelines
European Commission (2016a) Consultation on Cloud Computing Research Innovation
Challenges for WP 2018-2020
European Commission (2016b) Measuring the economic impact of cloud computing in Europe
European Commission (2016c) Platform-to-business trading practices
European Commission (2017a) Collaboration in Research and Methodology for Official
Statistics RAS (Method)
European Commission (2017b) The Economic and Social Impact of Software and Services in
Competitiveness and Innovation
European Commission (2017c) Final results of the European Market study measuring the size
and trends of the EU data economy European Commission (2018) Consultations about Cloud
Computing
European Commission (2018a) 2018 reform of EU data protection rules
European Commission (2018b) Press release lsquoOnline platforms Commission sets new
standards on transparency and fairnessrsquo
European Commission (2018c) Operational guidance document on measuring personal
consumer detriment
Etro F (2009) lsquoThe economic impact of cloud computing on business creation employment
and output in Europersquo Review of Business and Economics vol 54 no 2 pp 179ndash208
Expert Group on Cloud Computing Contracts (2013-2014) Cloud Computing Expert Group
Gartner (2017) Predicts 2017 Cloud Computing Enters its Second Decade
Hon K Millar C and Walde I (2012) rsquoNegotiating Cloud Contract Looking at Clouds from
Both Sides Nowlsquo in Stanford Technology Law Review Vol 16 No 1
IDC Arthurrsquos Legal (2016) Switching Cloud Providers (SMART 20160032)
International Organization for Standardization (2014) lsquoInformation technology mdash Cloud
computing mdash Overview and vocabularyrsquo ISOIEC Retrieved from International Organization
for Standardization
Mahmood Z (2011) lsquoData Location and Security Issues in Cloud Computingrsquo Proceedings of
the 2nd International Conference on Emerging Intelligent Data and Web Technologies (EIDWT
rsquo11) (pp 49ndash54)
National Institute of Standards and Technology (2011) lsquoThe NIST Definition of Cloud
Computingrsquo Retrieved from National Institute of Standards and Technology
OECD (2014) Cloud computing The Concept Impacts and the Role of Government Policy
Opara-Martins J Sahandi R and Tian F (2015) lsquoA Business Analysis of Cloud Computing
Data Security and Contract Lock-in Issuesrsquo presented at P2P Parallel Grid Cloud and
Internet Computing (3PGCIC)
Pearson S (2013) lsquoPrivacy security and trust in cloud computingrsquo in Privacy and Security
for Cloud Computing Springer pp 3ndash42
Rabinobich M Rabinovich I (nd) A Dynamic Object Replication and Migration Protocol for
an
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
89
Rittinghouse J Ransome J (2009) Cloud Computing CRC Press Boca Raton
Rohrmann CA amp Cunha JFSR (2015) Some Legal Aspects of Cloud Computing Contracts
Journal of International Commercial Law and Technology Vol10 No1 May
SLALOM Project httpslalom-projecteu(2018)
Synergy Research Group (2017) httpswwwsrgresearchcomarticlesmicrosoft-google-
and-ibm-charge-public-cloud-expense-smaller-providers
Technopedia (2018) httpswwwtechopediacomdefinition30463virtual-data-center
Retrieved from Virtual Data Centre
Databases
Amadeus Database httpsamadeusbvdinfocomversion-
2016720homeservproduct=amadeusneo
Eurostat (2015) sbs_sc_sca_r2 Retrieved from Structural Business Statistics
httpappssoeurostateceuropaeunuishowdodataset=sbs_sc_sca_r2amplang=en
Eurostat (2016) Cloud Computing Services Retrieved from EUROSTAT - Digital Economy and
Society httpeceuropaeueurostatwebdigital-economy-and-societydatadatabase
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprisesrsquo
httpeceuropaeueurostatstatistics-explainedindexphpCloud_computing_-
_statistics_on_the_use_by_enterprises
Eurostat (2017) Cloud computing services [isoc_cicce_use]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
90
Annex 4 Survey questionnaire
A Background information
(Everyone answers section A)
A1 What is the name of your company
[open question]
A2 Where is your company located
(People who answer A2 m) are taken straight to the end of the survey)
[single choice question]
a) Czech Republic
b) Estonia c) France d) Germany e) Ireland f) Italy g) Poland h) Portugal
i) Romania
j) Sweden k) Spain l) Netherlands m) Other (please specify)
A3 In which sector is your company mainly active
(People who answer A3 f) are taken straight to the end of the survey)
[multiple choice question]
a) Manufacturing b) Wholesale and retail trade repair of motor vehicles and motorcycles c) Information and communication d) Professional scientific and technical activities e) Administrative and support service activities
f) Other (please specify)
A4 Since how long does your company exist
[single choice question]
a) Less than 1 year b) Between 1 and 5 years
c) Between 5 and 10 years d) Over 10 years
A5 What is the number of employees in your company
(People who answer A5 d) are taken straight to the end of the survey)
= Compulsory question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
91
(Everyone answers section A)
[single choice question]
Nordm of employees in FTE (full-time equivalent)
a) Less than 10 employees b) 10 to 49 employees c) 50 to 250 employees d) More than 250 employees
B Use of Cloud Computing Services
(Everyone answers Section B)
B1 In the last two years has your company used any of the following cloud computing services for
the purpose of conducting business
(People who answer B1 q) are taken straight to the end of the survey)
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business
visualisation technology instant communications applications e-mail account virtual
desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
websites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
n) Security services (eg secure content management endpoint protection malware protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
q) None of the above my company is not using cloud computing services
B11 For the cloud computing services that you have used in the last two years were you able to
negotiate contract terms and conditions
(People who answer B11 b) are taken to Question B111)
(People who answer B11 d) are taken to Question B113)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
92
(People who answer B11 a) or b) are taken to Question B112)
[single choice question]
a) Yes we were able to negotiate contract terms and conditions for all the cloud computing services used
b) Yes we were able to negotiate contract terms and conditions but only in relation to some
services c) No we were not able to negotiate any contract terms and conditions d) We didnrsquot try to negotiate
B111 Please specify in relation to which services were you able to negotiate the contract terms and
conditions
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components) j) High Performance Computing (eg usage of high performance computing clusters
workloads and applications) k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each
day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces)
p) Other (please specify)
B112 For the cloud computing services for which you negotiated the contract terms and conditions
were you able to customise the service package according to your specific needs
[single choice question]
a) Yes (please specify what you were able to customise) b) Partially (please specify what you werewere not able to customise) c) No (please specify)
B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
[single choice question]
a) We were pleased with the offered contract terms and conditions
b) We knew it would be pointless c) We assumed it would be pointless d) Could not find a contact
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
93
e) Other (please specify)
B2 What type of contract(s) did you have for cloud computing services during the last two years
(People who answer B3 d) are taken straight to section C)
[multiple choice question]
a) Paid subscription ndash Fixed Fees b) Paid subscription ndash Variable Fees c) Partly with and partly without payment d) Without payment (eg advertising financed) e) I donrsquot know (please specify)
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the average
amount you paid per month for the cloud computing services
(NB the amount declared should not include over-extra charges or hidden fees)
[open question]
Amount in local currency please specify the currency applied
C Problems encountered with cloud computing services
(Everyone answers Section C)
C1 What type of problems and how often did you encounter them in relation to cloud computing
services in the last two years
Problems
Very
frequently
(at least once a week)
Frequentl
y (at least once a month)
Occasiona
lly (at least
once every 3 months)
Rarely (at
least once in the last
12 months)
Never
a) Lack of timely updates of the cloud service
b) Forced updates to the service that eliminated or changed a necessary function
c) Unsatisfactory amount of data that could be processed
d) Failure of the cloud provider to identify analyse and correct
hazards and prevent a future re-occurrence (incidence management)
e) Low speed of the service
f) The lack of clarity and
completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or
discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions
of service)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
94
(Everyone answers Section C)
h) Unsatisfactory number of users that could have access to the
service
i) The lack of compatibility of the service with user hardware or software
j) Data could not be exported at all
k) Data could not be retrieved in
easily usable format
l) Extra costs were imposed for data portability
m) The provider deleted the data
upon contract termination
n) Destruction or loss of data
o) Loss or alteration of data transmitted stored or processed via the cloud service
p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses
r) Lack of clarity and transparency of contract terms and conditions
s) Termination of the contract and interruption of the service by the service provider with no or little prior notice to the user
t) Unilateral modification of the servicecontract by the cloud provider
u) Limited liability of the cloud provider
C2 Did you encounter any other problems in relation to cloud computing services in the last two
years
[single choice question]
a) Yes (please specify) b) No
C3 Which was the most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
[single choice question]
a) Lack of timely updates of the cloud service b) Forced updates to the service that eliminated or changed a necessary function c) Unsatisfactory amount of data that could be processed d) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) e) Low speed of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
95
(Everyone answers Section C)
f) The lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced
maintenance or other interruptions of service) h) Unsatisfactory number of users that could have access to the service i) The lack of compatibility of the service with user hardware or software j) Data could not be exported at all k) Data could not be retrieved in easily usable format l) Extra costs were imposed for data portability
m) The provider deleted the data upon contract termination n) Destruction or loss of data o) Loss or alteration of data transmitted stored or processed via the cloud service p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses r) Lack of clarity and transparency of contract terms and conditions s) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user t) Unilateral modification of the servicecontract by the cloud provider u) Limited liability of the cloud provider v) Other (please specify)
C31 What caused the most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the
contract b) The contract terms and conditions of the cloud provider were unfair
c) Other (please specify)
C32 To which type of cloud computing services was the most serious problem linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business
process management IT operationrisk management) e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
96
n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
C4 Which was the second most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
People who select C4 a) are taken straight to Section D)
[single choice question]
a) I only encountered one serious problem in the last 2 years
b) Lack of timely updates of the cloud service c) Forced updates to the service that eliminated or changed a necessary function
d) Unsatisfactory amount of data that could be processed e) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) f) Low speed of the service g) The lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
h) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions of service)
i) Unsatisfactory number of users that could have access to the service j) The lack of compatibility of the service with user hardware or software k) Data could not be exported at all l) Data could not be retrieved in easily usable format
m) Extra costs were imposed for data portability
n) The provider deleted the data upon contract termination o) Destruction or loss of data p) Loss or alteration of data transmitted stored or processed via the cloud service q) Unauthorised disclosure of or access to data r) Lack of protection of the data stored in the cloud against theft or viruses s) Lack of clarity and transparency of contract terms and conditions t) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user u) Unilateral modification of the servicecontract by the cloud provider v) Limited liability of the cloud provider w) Other (please specify)
C41 What caused the second most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the contract
b) The contract terms and conditions of the cloud provider were unfair c) Other (please specify)
C42 To which type of cloud computing services was the second most serious problem
linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual
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desktop antivirus for server or PC applications for customer relationship management
social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications)
h) Storage and hosting services (eg server platform for online storage sharing hosting web-sites files images and similar content)
i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
D Actions taken by your company in order to address the most serious
problem
(Everyone who encountered problems answers Section D)
D1 Did your company take action to resolve or remedy the most serious problem experienced
(People who select D1 b) are taken straight to question D2)
a) Yes
b) No
D11 What actions has your company taken to resolve or remedy this problem
[multiple choice question]
a) Used the support services of the provider b) Made a complaint to the provider c) Withheld payment for the service
d) Asked the provider for a refund e) Asked the provider for compensation for damages or losses f) Changed provider g) Went to mediationarbitration (the dispute was taken to a third party mediatorarbitrator) h) Filed an action with a court i) Hired a third party expert to resolve the problem
j) Other (please specify)
D12 What was the result of the actions taken to resolve or remedy this problem
[single choice question]
a) The problem was fully resolved
b) The problem was partially resolved c) The problem was not yet resolved but I was informed that the investigation was ongoing
d) The problem was not resolved and I have not received any reply e) Not resolved and I decided not to do anything about it
D121 Did you encounter any difficulties when taking action to resolve or remedy this problem
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(Everyone who encountered problems answers Section D)
[multiple choice question]
a) No I did not encounter any difficulties b) Yes there was no contact point to make a complaint or attempt to resolve issues c) Yes the procedure took too long d) Yes the procedure was too expensive e) Yes foreign law applied
f) Yes the procedure was only possible abroad g) Yes language difficulties (eg the procedure was in a foreign language) h) Yes the action taken was not suited to resolve the problem i) Yes it was not possible to enforce the decision after the resolution j) Other (please specify)
D2 Why did your company decide not to take any action to resolve or remedy this problem
[multiple choice question]
a) Provider fixed the problem on its own
b) The cloud provider was unlikely to find a solution to the problem
c) The cloud provider excluded its liability for the problem
d) The cloud provider restricted its liability for damages (eg to a certain type of damage or
to a monetary threshold (a franchise or a maximum amount)
e) Limited access to dispute resolution (eg contract terms restrict how and where your
company can take legal action)
f) We tried to complain about other problems in the past but it was not successful
g) High cost of proceedings
h) It would take too long
i) The procedure was too complicated
j) We didnt know where to complain
k) Lack of knowledge how to start the proceeding
l) The applicable procedure is in a foreign country or in foreign language (specify which
foreign country)
m) The company did not want to damage business relationship with the cloud provider
n) The problem was not that important
o) Other (please specify)
E Economic detriment related to the most serious problems encountered
(Everyone who encountered problems answers Section E)
E1 What were the human resources invested by your company while taking action to resolve or
remedy the most serious problem
[open question]
Nordm of employees
involved in solving the problem separately per skill level of employee(s)
Nordm of work days
involved for solving the problem separately per skill level employee(s)
Average monthly
compensation of employee(s) involved in solving the problem (amount in local
currency)118
118 Total labour cost that includes gross wages and employer social security contributions
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(Everyone who encountered problems answers Section E)
Administrative
Technical
Senior
official(s)manager(s)
E2 Select what costs has your company covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
Please provide the costs without considering any reimbursement or compensation you may have
received from the provider(s) who rendered the service(s)
[multiple choice question]
a) Costs related to ensuring an alternative service (please specify the amount in local currency)
b) Costs related to fixing the cloud service problem (please specify the amount in local currency)
c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency) e) Costs related to loss of client(s) (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E3 What is the loss of turnover and profit caused by the most serious problem encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E4 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in
local currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
E5 Considering the costs human resources involved and loss of turnoverprofit related to the most
serious problem what share they represented of the total costs suffered by your company from
problems faced while using cloud computing services
(People who select E5 a) or b) are taken straight to section F)
(People who select C4 a) are taken straight to section F after answering E5)
[single choice question]
a) Above 80 b) 50 to 80 c) Below 50
E6 What were the human resources invested by your company while trying to resolve or remedy
the second most serious problem
[open question]
Nordm of employees
involved in solving the problem separately
Nordm of work days
involved for solving the problem separately
Average monthly
compensation of employee(s) involved
in solving the problem
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per skill level of
employee(s)
per skill level
employee(s)
(amount in local
currency)119
Administrative
Technical
Senior
official(s)manager(s)
E7 Select which costs has your company covered (besides the human resources mentioned before)
while taking action to resolve or remedy the second most serious problem
[multiple choice question] Please provide the costs without considering any reimbursement or
compensation you may have received from the provider(s) who rendered the service(s)
a) Costs related to ensuring an alternative service (please specify the amount in local
currency) b) Costs related to fixing the cloud service problem (please specify the amount in local
currency) c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency)
e) Costs related to loss of client (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E9 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in local
currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
F Background information on turnover and profit
G (Everyone answers Section F)
F1 Please complete the following table specifying the amount in local currency
[open question]
The annual turnover in
2016
The annual turnover in
2017
The annual profit before
tax in 2016
The annual profit before
tax in 2017
119 Total labour cost that includes gross wages and employer social security contributions
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Annex 5 SME Survey results
A Background information
A3 In which sector is your company mainly active
Type of sector Total
Manufacturing 137
Wholesale and retail trade 131
Information and communication 83
Professional scientific and technical activities 92
Administrative and support services 92
A4 Since how long does your company exist
A5 What is the number of employees in your company
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B Use of Cloud Computing Services
B1 In the last two years has your company used any of the following cloud computing services
for the purpose of conducting business
Services
Sectors
Collaboration and
communication services
Storage and hosting
services
Security
services
Networking
services
Administrative and support service activities
61 60 49 40
Information and communication 79 78 41 52
Manufacturing 70 54 48 42
Professional scientific and technical activities
71 70 40 39
Wholesale and retail trade 72 62 38 38
B11 For the cloud computing services that you have used in the last two years were you
able to negotiate contract terms and conditions
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B111 Please specify in relation to which services you were able to negotiate the contract
terms and conditions120
120 The first figure presents for each contracted service the number of SMEs that were able to negotiate
CTampC (in blue) and the number of SMEs that signed standard CTampC for the specific service contracted
(in grey) The total of the numbers in each row represents the number of SMEs that declared contracting a specific service For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
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B112 For the cloud computing services for which you negotiated the contract terms and
conditions were you able to customise the service package according to your specific needs
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B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
B2 What type of contract(s) did you have for cloud computing services during the last two
years
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the
average amount you paid per month for the cloud computing services
Country of answers Average in euros
CZ 18 850
EE 18 112
FR 34 4675
DE 33 861
IE 19 1127
IT 58 716
NL 21 6672
PL 20 411
PT 7 433
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Country of answers Average in euros
RO 7 278
ES 13 127
SE 19 2866
Total 267 1787
C Problems encountered with cloud computing services
C1 What types of problems and how often did you encounter them in relation to cloud
computing services in the last two years
C3 Which was the most serious problem you experienced in the last two years
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C31 What caused the most serious problem
C32 To which type of cloud computing services was the most serious problem linked
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C4 Which was the second most serious problem you experienced in the last two years
C41 What caused the second most serious problem
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C42 To which type of cloud computing services was the second most serious problem linked
D Actions taken by your company in order to address the most serious problem
D1 Did your company take action to resolve or remedy the most serious problem
experienced
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D11 What actions has your company taken to resolve or remedy this problem
D12 What was the result of the actions taken to resolve or remedy this problem
D121 Did you encounter any difficulties when taking action to resolve or remedy this
problem
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D2 Why did your company decide not to take any action to resolve or remedy this problem
E Economic detriment related to the most serious problems encountered
E1 What were the human resources invested by your company while taking action to resolve
or remedy the most serious problem
Human resources invested - working days involved in resolving the problem by sector
Sector Number of
enterprises
95 Trimmed
mean Average
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Human resources invested - working days involved in resolving the problem by size class
Size class Number of enterprises
95 Trimmed mean
Average
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Human resources invested - working days involved in solving the problem by country
Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
EE 5 222 220
FR 22 282 395
DE 19 471 1074
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
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Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
RO 1 200 200
ES 11 631 718
SE 18 251 361
Total 122 322 721
E2 Select what costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E3 What is the loss of turnover and profit caused by the most serious problem encountered
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E4 Did the cloud provider offer any redress for the damages caused to your company
of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
E5 Considering the costs human resources involved and loss of turnoverprofit related to the
most serious problem what share did they represent of the total costs suffered by your
company from problems faced while using cloud computing services of enterprises
Below 50 105 87
50 to 80 8 7
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of enterprises
Above 80 9 7
Total 122 100
E6 What were the human resources invested by your company while trying to resolve or
remedy the second most serious problem
Skill level of enterprises
Administrative 59 48
Technical 93 76
Senior officersmanager(s) 59 48
E7 Select which costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the second most serious problem of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered121
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E9 Did the cloud provider offer any redress for the damages caused to your company of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
121 Please see section 52 for a better understanding of why in the detriment equation it was considered only the most serious problem
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Annex 6 Economic detriment ndash further results
This annex presents more detailed results of the analyses that were performed to carry out
the economic detriment assessment allowing for more in-depth analysis of impact
Incidence cloud computing usage by sector size or country level
For the scenarios presented it is possible to compute the incidence of cloud computing usage
The sample answering the questionnaire is representative of the overall population of EU
SMEs We present in Table 33 to Table 35 some features at the country and enterprise
size or sector level with the sole aim of documenting the gathered information
The data show evidence of significant differences across those dimensions
Table 33 Incidence of cloud computing usage by sector
Sector Scenario 1 Scenario 2
Manufacturing 179 496
Wholesale and retail trade 111 364
Information and communication 199 613
Professional scientific and technical activities 195 574
Administrative and support service activities 131 543
Total 159 499
Source Survey of SMEs (2018)
Table 34 Incidence of cloud computing usage by enterprise size class
Size class Scenario 1 Scenario 2
Micro 178 535
Small 226 606
Medium 133 447
Total 159 499
Source Survey of SMEs (2018)
Table 35 Incidence of cloud computing usage by country
Country Scenario 1 Scenario 2
CZ 172 698
EE 323 690
FR 79 272
DE 80 449
IE 468 710
IT 719 870
NL 205 612
PL 143 315
PT 455 606
RO 278 833
ES 538 648
SE 138 673
Total 159 499
Source Survey of SMEs (2018)
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Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 36 to Table 46
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while resolving the most serious contract-
related cloud computing problem
Table 36 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the most serious problem by
country and skill level of employee ( of respondents 122)
Country Administrative Technical
Senior
officersmanager(s)
CZ 2 29 3 43 4 57
DE 9 47 15 79 8 42
EE 4 80 4 80 3 60
ES 4 36 6 55 5 45
FR 8 36 19 86 11 50
IE 1 25 2 50 3 75
IT 7 54 10 77 4 31
NL 4 67 6 100 4 67
PL 5 38 12 92 5 38
PT 1 33 2 67 0 0
RO 1 100 1 100 0 0
SE 13 72 13 72 12 67
Total 59 93 59
Source Survey of SMEs (2018)
Table 37 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by sector and skill level of employee ( of respondents 122)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 6 46 9 69 10 77
Information and commun 18 75 21 88 12 50
Manufacturing 13 42 22 71 11 35
Profess scientific and
technical activities 10 34 27 93 14 48
Wholesale and retail trade repair of motor vehicles and motorcycles
12 48 14 56 12 48
Total 59 93 59
Source Survey of SMEs (2018)
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Table 38 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by size class and skill level of employee ( of respondents 122)
Size class Administrative Technical
Senior officers
manager(s)
Micro 11 52 12 57 11 52
Small 24 75 22 69 16 50
Medium 24 35 59 86 32 46
Total 59 93 59
Source Survey of SMEs (2018)
Table 39 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious
problem by country and type of costs ( of respondents 122)
Co
un
try
Costs related to
ensuring an
alternative service
Costs related to
fixing the cloud
service problem
Legal costs
Costs
related to reputation
damage
Costs
related to loss of
client(s)
Other
costsNone
CZ 3 43 0 0 0 0 0 0 1 14 3 43
DE 4 21 6 32 2 11 2 11 3 16 5 26
EE 0 0 2 40 0 0 0 0 0 0 3 60
ES 7 64 1 9 0 0 0 0 0 0 3 27
FR 13 59 13 59 12
55 11 50 11 50 18 82
IE 1 25 3 75 0 0 0 0 1 25 0 0
IT 4 31 2 15 1 8 1 8 2 15 2 15
NL 1 17 1 17 1 17 2 33 1 17 5 83
PL 1 8 1 8 2 15 1 8 1 8 2 15
PT 1 33 1 33 0 0 1 33 1 33 0 0
RO 1 100 0 0 1 100 1 100 1 100 1 100
SE 6 33 9 50 3 17 4 22 3 17 5 28
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 40 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious problem by sector and type of costs ( of respondents 122)
Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related to loss of client(s)
Other
costsNone
Admin and support service
activities
5 38 1 8 2 15 1 8 1 8 6 46
Information and
commun 12 50 11 46 7 29 7 29 7 29 8 33
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Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related
to loss of client(s)
Other costsNone
Manufacturing 8 26 6 19 3 10 4 13 5 16 8 26
Profess
scientific and technical activities
13 45 12 41 10 34 10 34 11 38 16 55
Wholesale and
retail trade
repair of motor vehicles and motorcycles
4 16 9 36 0 0 1 4 1 4 9 36
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 41 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the most serious
problem by enterprise size class and type of costs ( of respondents 122)
Size class
Costs related to ensuring
an
alternative service
Costs related to fixing the
cloud
service problem
Legal costs
Costs related to
reputation
damage
Costs related to
loss of
client(s)
Other
costs
None
Micro 6 29 11 52 4 19 6 29 5 24 8 38
Small 13 41 12 38 9 28 7 22 8 25 13 41
Medium 23 33 16 23 9 13 10 14 12 17 26 38
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 42 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the most serious problem encountered by sector ( of
respondents 122)
Sector Loss of turnover Loss of profit
Administrative and support
service activities 2 15 2 15
Information and communication 4 17 4 17
Manufacturing 6 19 5 16
Professional scientific and
technical activities 1 3 3 10
Wholesale and retail trade repair
of motor vehicles and motorcycles 4 16 5 20
Total 17 19
Source Survey of SMEs (2018)
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Table 43 Number and of total enterprises that faced problems that reported loss of
turnover or profit caused by the most serious problem encountered by size class ( of respondents 122)
Size class Loss of turnover Loss of profit
Micro 2 10 4 19
Small 8 25 8 25
Medium 7 10 7 10
Total 17 19
Source Survey of SMEs (2018)
Table 44 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by country and type of redress ( of respondents
122)
Country
Financial
compensation
Reduction in the
cost of subscription
Other
The company did
not offer any redress
CZ 1 14 0 0 1 14 5 71
DE 0 0 0 0 1 5 18 95
EE 0 0 0 0 0 0 5 100
ES 0 0 0 0 0 0 11 100
FR 2 9 1 5 1 5 19 86
IE 0 0 0 0 0 0 4 100
IT 1 8 0 0 0 0 12 92
NL 0 0 2 33 1 17 4 67
PL 0 0 3 23 0 0 10 77
PT 0 0 1 33 0 0 2 67
RO 0 0 0 0 0 0 1 100
SE 0 0 1 6 1 6 16 89
Total 4 8 5 107
Source Survey of SMEs (2018)
Table 45 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress ( of respondents
122)
Sector
Financial compensation
Reduction in
the cost of subscription
Other
The company
did not offer any redress
Administrative and
support service activities 2 15 1 8 0 0 10 77
Information and communication
1 4 1 4 3 13 20 83
Manufacturing 0 0 2 6 1 3 29 94
Professional scientific and technical activities
1 3 2 7 1 3 25 86
Wholesale and retail trade repair of motor
vehicles and motorcycles 0 0 2 8 0 0 23 92
Total 4 8 5 107
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Table 46 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by size class and type of redress ( of respondents 122)
Size class
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 1 5 1 5 0 0 19 90
Small 0 0 2 6 2 6 28 88
Medium 3 4 5 7 3 4 60 87
Total 4 8 5 107
Source Survey of SMEs (2018)
Distribution of enterprises by the weight of the most serious problem by sector enterprise
size or country level
Again with the sole aim of documenting the gathered information Table 47 to Table 49
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while solving the most serious contract-related
cloud computing problem
Table 47 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by country ( of respondents 122)
Country Below 50 50 to 80 Above 80 100122 Total
CZ 3 43 0 0 0 0 4 57 7
DE 3 60 0 0 0 0 2 40 5
EE 11 50 1 5 0 0 10 45 22
ES 11 58 1 5 1 5 6 32 19
FR 3 75 0 0 0 0 1 25 4
IE 5 38 0 0 0 0 8 62 13
IT 1 17 0 0 1 17 4 67 6
NL 5 38 0 0 1 8 7 54 13
PL 2 67 0 0 0 0 1 33 3
PT 1 11 0 0 0 0 8 89 9
RO 3 38 0 0 0 0 5 63 8
SE 7 10 2 3 4 6 56 81 69
Total 55 31 4 2 7 4 112 63 178
Source Survey of SMEs (2018)
122 Enterprises that declared they encountered only one problem
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Table 48 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by sector ( of respondents 122)
Sector Below 50 50 to 80 Above 80 100123 Total
Administrative and support service activities
26 74 0 0 5 14 4 11 35
Information and communication
20 56 0 0 0 0 16 44 36
Manufacturing 30 64 3 6 0 0 14 30 47
Professional scientific and technical activities
39 65 8 13 1 2 12 20 60
Wholesale and retail
trade repair of motor vehicles and motorcycles
29 57 0 0 12 24 10 20 51
Total 144 63 11 5 18 8 56 24 229
Source Survey of SMEs (2018)
Table 49 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by size class ( of respondents 122) Below 50 Between 50 -
80 Above 80 100124 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the second most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 50 to Table 59
present the differences by country size and sector of the distribution of enterprises that
experienced the various costs while resolving the second most serious contract-related cloud
computing problem
Table 50 Number and of enterprises in which human resources were invested while
taking action to resolve or remedy the second most serious problem by country and skill
level of employee ( of respondents 55)
Country Administrative Technical
Senior officersmanager(s)
CZ 0 0 1 33 2 67
DE 5 45 9 82 3 27
EE 3 100 3 100 1 33
ES 1 33 2 67 1 33
FR 4 36 7 64 4 36
IE 1 33 2 67 1 33
IT 2 40 3 60 1 20
123 Enterprises that declared they encountered only one problem 124 Enterprises that declared they encountered only one problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
121
Country Administrative Technical
Senior
officersmanager(s)
NL 1 100 1 100 1 100
PL 2 40 5 100 0 0
PT 1 50 1 50 2 100
RO 0 0 0 0 0 0
SE 3 43 5 71 2 29
Total 23 39 18
Source Survey of SMEs (2018)
Table 51 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the second most serious problem
by sector and skill level of employee ( of respondents 55)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 3 50 4 67 2 33
Information and commun 7 70 9 90 4 40
Manufacturing 5 31 11 69 4 25
Profess scientific and
technical activities 3 27 8 73 3 27
Wholesale and retail trade
repair of motor vehicles and motorcycles
5 42 7 58 5 42
Total 23 39 18
Source Survey of SMEs (2018)
Table 52 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the second most serious problem
by size class and skill level of employee ( of respondents 55)
Size class Administrative Technical
Senior officers
manager(s)
Micro 3 38 5 63 2 25
Small 10 63 13 81 6 38
Medium 10 32 21 68 10 32
Total 23 39 18
Source Survey of SMEs (2018)
Table 53 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by country and type of costs ( of respondents 55)
Co
un
try Costs
related to
ensuring an
alternative service
Costs
related to
fixing the cloud
service problem
Legal costs
Costs related
to reputation damage
Costs
related to loss of
client(s)
Other
costsnone
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
122
CZ 0 0 0 0 0 0 0 0 0 0 3 100
DE 5 45 4 36 3 27 3 27 3 27 9 82
EE 0 0 2 67 0 0 0 0 0 0 1 33
ES 1 33 0 0 0 0 0 0 0 0 2 67
FR 6 55 5 45 5 45 5 45 5 45 10 91
IE 1 33 0 0 0 0 0 0 0 0 2 67
IT 2 40 1 20 1 20 1 20 2 40 3 60
NL 0 0 0 0 0 0 0 0 0 0 1 100
PL 0 0 1 20 1 20 1 20 1 20 2 40
PT 1 50 0 0 0 0 1 50 1 50 0 0
RO 1 100 1 100 1 100
1 100 1 100 1 100
SE 1 14 2 29 1 14 2 29 2 29 5 71
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 54 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the second most
serious problem by sector and type of costs ( of respondents 55)
Sector
Costs
related to ensuring
an alternative service
Costs
related to fixing the
cloud service problem
Legal costs
Costs related to reputation
damage
Costs related to
loss of client(s)
Other costs
none
Admin and support service
activities 1 17 1 17 2 33 1 17 1 17 5 83
Information and commun
3 30 3 30 1 10 2 20 2 20 6 60
manufacturing 4 25 5 31 4 25 4 25 4 25 15 94
Profess scientific and technical
activities
7 64 6 55 5 45 6 55 6 55 7 64
Wholesale and retail trade
repair of motor vehicles and motorcycles
3 25 1 8 0 0 1 8 2 17 6 50
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
123
Table 55 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by enterprise size class and type of costs ( of respondents 55)
Size class
Costs related to ensuring
an alternative
service
Costs related to fixing the
cloud service problem
Legal
costs
Costs related to
reputation damage
Costs related to
loss of client(s)
Other
costsnone
Micro 3 19 4 25 2 13 0 0 2 13 2 13
Small 12 39 8 26 7 23 0 0 9 29 10 32
Medium 3 38 4 50 3 38 5 63 3 38 3 38
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 56 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by size class (
of respondents 55)
Size class Loss of turnover Loss of profit
Micro 0 0 1 13
Small 5 31 5 31
Medium 2 6 2 6
Total 7 8
Source Survey of SMEs (2018)
Table 57 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by sector ( of
respondents 55)
Sector Loss of turnover Loss of profit
Administrative and support service activities
1 17 1 17
Information and communication 1 10 1 10
Manufacturing 2 13 2 13
Professional scientific and
technical activities 1 9 2 18
Wholesale and retail trade repair
of motor vehicles and motorcycles Total
2 17 2 17
Total 7 8
Source Survey of SMEs (2018)
Distribution of enterprises that have been provided any kind of redress for the damage caused
by the contract-related cloud computing problems by sector size or country level
Again with the sole aim of documenting the gathered information Table 58 to Table 60
present the differences by country size and sector of the distribution of enterprises that have
been provided any kind of redress for the damage caused by the contract-related cloud
computing problems
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
124
Table 58 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by country and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any
redress
CZ 1 33 0 0 0 0 2 67
DE 0 0 0 0 0 0 11 100
EE 0 0 0 0 0 0 3 100
ES 0 0 0 0 0 0 3 100
FR 1 9 0 0 0 0 10 91
IE 0 0 0 0 0 0 3 100
IT 0 0 0 0 0 0 5 100
NL 0 0 0 0 0 0 1 100
PL 0 0 1 20 0 0 4 80
PT 0 0 1 50 0 0 1 50
RO 0 0 0 0 0 0 1 100
SE 0 0 1 14 0 0 6 86
Total 2 3 0 50
Source Survey of SMEs (2018)
Table 59 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress
( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Administrative and support service activities
2 33 0 0 0 0 4 67
Information and
communication 0 0 0 0 0 0 10 100
Manufacturing 0 0 0 0 0 0 16 100
Professional
scientific and
technical activities
0 0 1 9 0 0 10 91
Wholesale and retail trade repair of motor vehicles and motorcycles
0 0 1 8 0 0 10 83
Total 2 3 0 50
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
125
Table 60 Number of enterprises that have been provided any kind of redress for the
damage caused by size class and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 0 0 2 13 0 0 14 88
Small 2 6 0 0 0 0 29 94
Medium 0 0 1 13 0 0 7 88
Total 2 3 0 50
Source Survey of SMEs (2018)
Distribution of loss of turnover by sector size or country level
Having estimated the different components of turnover Table 61 to Table 63 present the loss
of turnover in enterprises by country size and sector caused by the contract-related cloud
computing problems documenting significant differences
Table 61 Loss of turnover per enterprise by sector
Sectors
Number of
enterprises ()
95 Trimmed mean125
(euro)
Average
(euro)
Manufacturing 28 348469 1177465
Wholesale and retail trade 22 4759 232031
Information and communication 25 6599 27509
Professional scientific and technical activities 31 3226 490323
Administrative and support service activities 16 1827366 4144629
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 62 Loss of turnover per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 023 4217
Small 24 271159 1119043
Medium 73 99060 1278261
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 63 Loss of turnover per enterprise by country
Country Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 160819 894737
EE 5 117 140
125 A trimmed mean is a method of averaging that removes a small designated percentage of the largest and smallest values before calculating the mean
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
126
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
ES 11 000 000
FR 22 742424 3009091
IE 4 4583333 5125000
IT 13 192308 423077
NL 6 3889 5000
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 100166 613600
Total 122 41954 985869
Source Survey of SMEs (2018)
Distribution of loss of profits by sector size or country level
Table 64 to Table 66 present the loss of profits by country enterprise size and sector caused
by the contract-related cloud computing problems once again documenting significant
differences
Table 64 Loss of profits per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 43651 121207
Wholesale and retail trade 22 4980 242652
Information and communication 25 7720 14729
Professional scientific and technical activities 31 1452 9355
Administrative and support service activities 16 413456 872111
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 65 Loss of profits per enterprise by size class
Size class
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Micro 25 063 5742
Small 24 38235 50293
Medium 73 18681 301282
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 66 Loss of profits per enterprise by country
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 877 15789
EE 5 200 240
ES 11 000 000
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
127
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
FR 22 161111 613182
IE 4 152778 162500
IT 13 14957 38462
NL 6 17315 18583
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 221012 460637
Total 122 17690 191346
Source Survey of SMEs (2018)
Distribution of working days per enterprise involved in resolving the problem by sector size
or country level
Table 67 to Table 69 present the distribution of working days per enterprise involved in
resolving the problem caused by the contract-related cloud computing problems by country
size and sector again documenting significant differences
Table 67 Human resources invested - working days per enterprise involved in resolving the problem by sector
Sector
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Source Survey of SMEs (2018)
Table 68 Human resources invested - working days per enterprise involved in resolving the problem by size class
Size class
Number of
enterprises
()
95
Trimmed mean
( days)
Average
( days)
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
128
Table 69 Human resources Invested - working days per enterprise involved in resolving the
problem by country
Country
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
CZ 7 226 229
DE 19 471 1074
EE 5 222 220
ES 11 631 718
FR 22 282 395
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
RO 1 200 200
SE 18 251 361
Total 122 322 721
Source Survey of SMEs (2018)
Distribution of other costs covered per enterprise by sector size or country level
Table 70 to Table 72 present the other costs covered per enterprise to resolve the contract-
related cloud computing problems by country size and sector documenting again significant
differences
Table 70 Other costs covered per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 28919 706177
Wholesale and retail trade 22 141217 366265
Information and communication 25 11556 112400
Professional scientific and technical activities 31 50573 147290
Administrative and support service activities 16 150107 635096
Total 122 34124 371871
Source Survey of SMEs (2018)
Table 71 Other costs covered per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 2278 10725
Small 24 178472 389792
Medium 73 39973 489660
Total 122 34124 371871
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
129
Table 72 Other costs covered per enterprise by country
Country
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 387 535
DE 19 183333 665000
EE 5 6111 7000
ES 11 115657 229091
FR 22 682 50659
IE 4 166667 175000
IT 13 184615 416154
NL 6 15935 16917
PL 13 14575 37479
PT 3 3333 3333
RO 1 000 000
SE 18 332811 1241741
Total 122 34124 371871
Source Survey of SMEs (2018)
Distribution of the total value of redress received per enterprise by sector size or country
level
Table 73 to Table 75 present the total value of redress received per enterprise for contract-
related cloud computing problems by country size and sector
Table 73 Total value of redress received per enterprise by sector
Sector
Number of
enterprises
()
95 Trimmed
mean
(euro)
Average
(euro)
Manufacturing 28 000 1607
Wholesale and retail trade 22 000 1704
Information and communication 25 000 696
Professional scientific and technical activities 31 187 748
Administrative and support service activities 16 25195 38379
Total 122 095 6042
Source Survey of SMEs (2018)
Table 74 Total value of redress received per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 0 000 00
Small 0 000 00
Medium 7 17120 57096
Total 122 095 6042
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
130
Table 75 Total value of redress received per enterprise by country
Country Number of enterprises
(euro)
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 1867 5354
DE 19 000 000
EE 5 000 000
ES 11 000 000
FR 22 000 13636
IE 4 000 000
IT 13 1346 3462
NL 6 000 000
PL 13 2504 3123
PT 3 000 000
RO 1 000 000
SE 18 1939 17448
Total 122 095 6042
Source Survey of SMEs (2018)
Costs or labour per working day by sector and country level
Table 76 Cost of labour per working day (euro per day per worker)
Country Manufacturing
Wholesale and retail
trade repair of
motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
Total
economy
AT 2089 1323 2194 1331 1201 1616
BE 2285 1512 2294 1363 1190 1670
BG 705 691 1435 471 622 665
CY 705 691 1435 471 622 665
CZ 544 408 930 469 352 500
DE 2069 1080 2070 1568 821 1503
DK 1978 1601 2248 2281 1580 1871
EE 616 522 861 538 458 577
EL 721 434 945 307 407 505
ES 1352 827 1912 1072 725 1028
FI 1929 1366 2186 1764 1083 1639
FR 2055 1526 2487 2163 276 1791
HR 452 405 692 275 327 410
HU 506 336 662 368 309 424
IE 1967 1281 2605 2163 1189 1493
IT 1407 772 1702 659 840 1052
LT 383 305 627 317 317 351
LU 2204 1754 2862 2942 1192 2097
LV 969 315 590 333 276 347
MT 405 475 1017 333 571 477
NL 2083 1087 1970 1499 688 1286
PL 456 303 626 332 385 391
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
131
Country Manufacturing
Wholesale
and retail trade
repair of motor
vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Administrative and support
service activities
Total
economy
PT 640 524 1106 385 330 547
RO 290 236 576 333 230 287
SE 2197 1675 2618 2088 1259 1922
SI 871 731 980 523 546 762
SK 551 368 810 404 314 470
UK 1745 1047 2230 1989 1146 1455
EU 28 1491 1774 3687 1695 511 1118
Note Costs were computed as (INDIC_SB - Personnel costs - million euroINDIC_SB - Persons employed - number)260
Source Eurostat
Distribution of the overall components of financial detriment by sector and size class in the
different scenarios
The following tables present the distribution of the estimated components of financial
detriment by sector and enterprise size class for the different scenarios showing relevant
differences across those dimensions
Table 77 Lost turnover at the EU-28 level in SMEs experiencing cloud computing service problems
Scenario 1
(average incidence126 of CC
use 159)
Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 515 1450
Wholesale and retail trade repair of motor vehicles
and motorcycles 240 728
Information and communication 59 175
Professional scientific and technical activities 237 694
Administrative and support service activities 1395 4645
Total 2446 7691
Siz
e
cla
ss Micro 1405 4402
Small 598 1866
Medium 442 1423
Total 2446 7691
Source Computations based on Survey of SMEs (2018) and Eurostat
126 Average percentage of cloud computing services used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
132
Table 78 Lost profits at the EU28 level in SMEs experiencing cloud computing service
problems
Scenario 1 (average incidence of CC use 159)
(Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 146 409
Wholesale and retail trade repair of motor vehicles and motorcycles
114 345
Information and communication 35 103
Professional scientific and technical activities 101 293
Administrative and support service activities 634 2092
Total 1031 3243
Siz
e
cla
ss Micro 602 1887
Small 255 792
Medium 174 564
Total 1031 3243
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 79 Costs of human resources invested in resolving the problem in SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 341 1019
Wholesale and retail trade repair of motor vehicles and motorcycles
474 1511
Information and communication 236 741
Professional scientific and technical activities 816 2503
Administrative and support service activities 232 826
Total 2099 6600
Siz
e
cla
ss Micro 1961 6167
Small 97 295
Medium 41 138
Total 2099 6600
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 80 Other costs covered by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 162 479
Wholesale and retail trade repair of motor vehicles and motorcycles
959 2996
Information and communication 74 229
Professional scientific and technical activities 503 1527
Administrative and support service activities 291 1024
Total 1989 6255
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
133
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Siz
e
cla
ss Micro 1450 4555
Small 449 1401
Medium 90 300
Total 1989 6255
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 81 Total value of redress received by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 2
(average incidence of CC use 159)
Scenario 1
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 00 00
Wholesale and retail trade repair of motor vehicles
and motorcycles 00 01
Information and communication 00 00
Professional scientific and technical activities 00 01
Administrative and support service activities 05 15
Total 06 17
Siz
e
cla
ss Micro 02 06
Small 00 00
Medium 04 11
Total 06 17
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 27 Distribution by component of gross detriment considering lost turnover and all the other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 1 (average incidence of cloud computing use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
134
Figure 28 Distribution by sector of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 29 Distribution by enterprise size class of gross detriment considering lost turnover
and all other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 2 (average incidence of CC use 499)
Scenario 1 (average incidence of CC use 159)
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
135
Figure 30 Distribution by country of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
136
Annex 7 Impacts on jobs and growth detailed results
Inputs for the assessment of macroeconomic impacts
The following two tables present the results of the estimation of turnover losses by industry
and country in the two scenarios that are used as inputs on assessment of impacts on jobs
and growth
Table 82 Turnover losses arising from contract-related cloud computing service problems - Scenario 1 considering average incidence of CC use 159 (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor
vehicles and
motorcycles
Information
and communication
Professional
scientific
and technical activities
Administrative and support
service
activities
Total
AT 06 02 00 01 10 19
BE 54 01 00 01 50 106
BG 02 00 00 00 05 07
CY 08 03 01 05 44 61
CZ 40 68 19 69 80 275
DE 02 06 02 06 03 21
DK 41 29 09 36 138 254
EE 92 86 09 69 136 392
EL 62 02 01 01 108 173
ES 07 00 00 00 85 92
FI 13 02 01 02 29 47
FR 15 01 00 00 35 51
HR 39 02 00 01 189 231
HU 05 01 00 01 08 15
IE 18 01 01 02 105 128
IT 14 06 04 12 38 73
LT 03 01 00 01 15 19
LU 23 09 01 08 39 81
LV 12 05 01 02 18 37
MT 01 00 00 00 03 05
NL 02 01 00 01 08 11
PL 00 00 00 00 03 03
PT 12 03 01 04 41 61
RO 01 00 00 00 02 03
SE 04 01 00 01 13 20
SI 07 02 01 02 20 32
SK 05 01 00 01 08 15
UK 25 07 06 11 162 211
EU28 515 240 59 237 1395 2446
Note values refer to the turnover losses estimated by country and sector that are used in the assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
137
Table 83 Turnover losses arising from contract-related cloud computing service problems -
Scenario 2 considering average incidence of CC use 499 - (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor vehicles
and motorcycle
s
Information and
communication
Profession
al scientific
and technical activities
Administrative and
support service
activities
Total
AT 17 05 01 03 35 61
BE 156 03 01 02 172 333
BG 05 00 00 00 17 22
CY 22 09 03 13 144 191
CZ 112 211 57 198 288 866
DE 07 18 07 20 12 65
DK 110 91 26 98 474 800
EE 278 256 30 218 452 1234
EL 168 05 02 02 366 544
ES 18 01 00 00 271 290
FI 37 07 02 05 96 147
FR 42 02 00 01 115 160
HR 113 06 01 02 605 728
HU 15 03 01 02 27 48
IR 50 04 02 06 340 402
IT 38 19 11 32 129 230
LT 07 02 01 02 48 61
LU 66 29 03 23 135 256
LV 33 15 02 06 62 117
MT 04 01 00 01 10 16
NL 07 02 01 02 25 36
PL 01 01 00 01 08 11
PT 32 09 04 10 136 191
RO 02 01 00 01 07 10
SE 12 03 01 03 45 62
SI 19 06 02 07 67 101
SK 13 02 01 03 27 46
UK 67 19 16 31 530 663
EU28 1450 728 175 694 4645 769
1
Note values refer to the turnover losses estimated by country and sector that are used in the
assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
138
Parameters for the assessment of macroeconomic impacts
Table 84 Output per unit of GVA by sector
(euro value of turnover by euro of GVA ndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail trade
repair of motor vehicles
and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
AT 31 18 22 20 15
BE 41 20 22 21 20
BG 44 20 19 22 24
CY 33 17 30 15 16
CZ 38 21 19 25 29
DE 29 17 19 17 16
DK 27 18 21 19 21
EE 40 19 19 19 18
EL 36 19 20 18 22
ES 40 18 20 18 18
FI 35 19 20 18 17
FR 33 20 19 22 17
HR 29 19 19 18 20
HU 40 21 17 16 18
IE 24 18 39 19 19
IT 38 19 22 17 21
LT 30 14 16 16 17
LU 37 30 49 20 80
LV 32 18 19 17 21
MT 33 16 26 23 19
NL 41 17 20 19 15
PL 36 16 20 17 20
PT 38 16 22 21 16
RO 28 26 18 22 21
SE 30 16 20 18 18
SI 31 19 21 19 17
SK 46 20 20 24 26
UK 29 18 17 16 18
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat National accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
139
Table 85 Output per unit of employment by sector
(euro million of turnover by thousand persons employedndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail
trade repair of motor
vehicles and motorcycles
Information
and communication
Professional
scientific and
technical activities
Administrati
ve and support service
activities
AT 2789 1006 2094 1227 864
BE 4293 1566 2999 1533 788
BG 453 197 499 306 160
CY 871 468 2187 814 414
CZ 1106 466 1047 625 485
DE 2414 780 2031 1060 721
DK 3251 1214 2246 1564 1118
EE 967 497 740 712 626
ES 2754 616 1770 858 474
FI 3160 1078 2014 1100 748
FR 2862 1077 2263 1650 898
GR 1643 392 1263 416 476
HR 603 364 702 652 432
HU 1137 320 658 384 255
IR 8130 1091 11774 1822 2848
IT 2329 899 2006 977 754
LT 944 378 711 406 303
LU 2988 3000 8840 1977 4646
LV 689 378 648 389 387
MT 1084 513 1866 1264 617
NL 3923 1047 2190 1314 556
PL 862 467 824 646 378
PT 1151 537 1397 648 275
RO 584 323 917 958 337
SE 3272 1189 2874 1706 955
SI 1236 647 1072 609 354
SK 1452 456 962 760 485
UK 2550 910 1750 1080 708
Note These values express the value of output that is produced by one employee in each industry For instance each worker in manufacturing in Belgium produces and output of euro4293 thousand Source Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
140
Detailed results of the assessment of macroeconomic impacts
Table 86 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems ndash Scenario 1 considering average incidence of CC use 159
Co
un
try
Sectors
Manufact
Wholesale
and retail trade repair
of motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Admin and
support service
activities
Total
(
of ctry
GVA)
(euro million)
AT 02 01 00 01 13 18 000
BE 02 02 00 02 22 29 000
BG 03 02 00 01 08 14 000
CY 00 00 00 00 02 03 000
CZ 14 00 00 00 18 33 000
DE 14 17 05 21 85 143 000
DK 01 00 00 00 07 09 000
EE 00 00 00 00 03 03 000
EL 07 05 01 05 18 34 000
ES 10 01 00 00 107 118 000
FI 01 00 00 01 08 10 000
FR 12 33 10 31 47 133 000
HR 02 00 00 00 04 07 000
HU 03 01 01 02 23 31 000
IE 01 03 01 03 02 10 000
IT 24 44 04 41 64 178 000
LT 02 01 00 01 06 10 000
LU 00 00 00 00 00 01 000
LV 01 00 00 00 04 05 000
MT 00 00 00 00 01 02 000
NL 04 01 00 01 69 76 000
PL 17 01 00 00 55 74 000
PT 02 00 00 00 54 55 000
RO 05 00 00 00 17 23 000
SE 05 04 02 06 21 38 000
SI 02 00 00 01 05 07 000
SK 03 01 00 01 11 16 000
UK 09 04 03 07 89 112 000
To
tal
EUR
million 146 126 30 128 761 1191
of
total 000 000 000 na 001 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
141
Table 87 Direct employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 1 considering average incidence of CC use 159
Co
un
try
Sector
Manufact
Wholesale and retail
trade repair
of motor vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total ( of
ctry GVA)
(euro million)
BE 2 2 0 3 56 63 000
BG 26 25 1 7 112 171 001
CZ 49 2 0 1 103 155 000
DK 1 1 0 1 13 15 000
DE 17 38 5 34 191 285 000
EE 2 0 0 0 9 10 000
EL 14 24 1 19 83 141 000
IE 0 6 0 4 1 11 013
ES 14 3 0 1 398 417 000
HR 9 3 0 1 18 31 000
IT 39 96 5 71 180 391 002
CY 2 1 0 0 7 10 000
LV 4 2 0 2 19 27 001
LT 6 5 0 3 34 48 001
LU 0 0 0 0 1 1 000
HU 10 9 2 10 161 192 001
MT 1 0 0 0 3 5 000
NL 5 1 0 2 189 197 000
AT 3 2 0 2 23 30 000
PL 72 4 1 1 286 363 000
PT 6 0 0 0 311 317 000
RO 25 2 0 0 104 132 000
SI 4 1 0 2 23 29 001
SK 9 5 1 2 59 76 001
FI 1 1 0 1 18 21 000
SE 4 5 1 7 40 57 001
UK 10 7 3 10 229 260 000
To
tal Persons 348 306 31 225 2761 3672
of
total 000 000 000 000 002 000
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
142
Table 88 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems Scenario 2 considering average incidence of CC use 499 - euro million
Co
un
try
Sector
Manufact
Wholesale and retail trade
repair of
motor vehicles and
motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total
(
of ctry
GVA)
AT 06 04 01 03 43 57 000
BE 05 05 01 06 74 91 000
BG 07 08 01 03 26 45 001
CY 01 01 00 00 06 09 001
CZ 41 01 00 01 60 104 001
DE 38 53 13 57 293 455 000
DK 03 01 01 01 23 29 000
EE 01 00 00 00 10 11 001
EL 18 15 02 13 60 108 001
ES 28 03 00 01 342 376 000
FI 03 01 00 02 26 33 000
FR 33 104 30 90 169 427 000
HR 05 02 00 01 13 22 001
HU 08 04 02 06 77 98 001
IE 03 10 02 11 06 32 000
IT 73 132 14 129 211 560 000
LT 06 04 00 02 21 33 001
LU 00 00 00 00 01 02 000
LV 02 01 00 01 12 16 001
MT 01 00 00 00 03 05 001
NL 12 02 01 03 224 242 000
PL 46 03 01 01 186 237 001
PT 05 00 00 00 170 175 001
RO 15 01 00 00 56 72 001
SE 13 12 06 18 73 121 000
SI 04 01 00 02 16 23 001
SK 08 03 01 02 37 52 001
UK 23 10 09 19 292 354 000
To
tal
EUR
million 411 382 88 375 2532 3788
of
total 000 000 000 na 004 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
143
Table 89 Direct Employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 2 considering average incidence of CC use 499
Co
un
try
Sector
Manufac
t
Wholesale and retail
trade repair of
motor vehicles
and motorcy
cles
Informati
on and communi
cation
Professio
nal scientific
and technical activities
Admin and
support service
activities
Total ( of ctry
employment)
(Persons)
AT 7 6 1 6 77 97 000
BE 5 6 1 8 183 203 000
BG 72 76 4 19 384 555 002
CY 4 3 0 1 24 31 001
CZ 141 6 1 3 356 506 001
DE 46 117 13 93 657 925 000
DK 2 2 1 1 43 49 000
EE 5 0 0 0 28 33 001
EL 40 73 3 56 284 455 001
ES 41 10 0 3 1277 1331 001
FI 4 2 0 2 60 69 000
FR 39 196 25 120 321 701 000
HR 24 8 1 4 63 99 001
HU 28 28 5 27 535 623 001
IE 1 17 1 11 4 33 000
IT 119 284 15 223 599 1242 001
LT 18 14 1 8 116 157 001
LU 0 0 0 0 2 3 000
LV 10 5 1 4 65 85 001
MT 2 1 0 1 11 15 001
NL 13 4 1 5 612 634 001
PL 195 11 2 4 970 1182 001
PT 16 1 0 1 986 1004 002
RO 72 6 0 1 342 420 000
SE 12 16 4 19 136 186 000
SI 11 3 1 5 78 97 001
SK 25 14 2 7 199 247 001
UK 26 21 9 29 749 834 000
To
tal
Persons 977 930 92 660 9157 11816
of total 000 000 000 000 006 001
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
144
Table 90 Indirect loss of gross value added at EU28 level by sector
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(euro million)
Agriculture forestry and fishing 20 59
Mining and quarrying 09 27
Manufacturing 151 454
Electricity gas steam and air conditioning supply 22 68
Water supply sewerage waste management and remediation activities 13 39
Construction 20 64
Wholesale and retail trade repair of motor vehicles and motorcycles 98 301
Transportation and storage 76 237
Accommodation and food service activities 18 59
Information and communication 71 223
Financial and insurance activities 66 207
Real estate activities 72 226
Professional scientific and technical activities 157 493
Administrative and support service activities 155 498
Public administration and defence compulsory social security 11 33
Education 10 33
Human health and social work activities 02 07
Arts entertainment and recreation 05 17
Other service activities 10 33
Activities of households as employers undiff goods- and services-
producing activities of households for own use 00 00
Total euro million 987 3079
of EU28 total 000 000
Note Values refer to the GVA content of the indirect turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses
by the coefficients of GVA at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Table 91 Indirect loss of Employment at EU28 level by sector
Scenario 1 (average
incidence of CC use 159)
Scenario 2 (average
incidence of CC use 499)
(Persons)
Agriculture forestry and fishing 119 353
Mining and quarrying 8 24
Manufacturing 252 759
Electricity gas steam and air conditioning supply 13 39
Water supply sewerage waste management and remediation activities 16 50
Construction 43 135
Wholesale and retail trade repair of motor vehicles and motorcycles 241 739
Transportation and storage 137 428
Accommodation and food service activities 55 176
Information and communication 75 235
Financial and insurance activities 60 190
Real estate activities 12 39
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
145
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(Persons)
Professional scientific and technical activities 234 734
Administrative and support service activities 374 1203
Public administration and defence compulsory social security 20 63
Education 26 82
Human health and social work activities 6 18
Arts entertainment and recreation 13 40
Other service activities 29 93
Activities of households as employers undiff goods- and services-producing activities of households for own use
1 2
Total Persons 1733 5402
of EU28 total 000 000
Note Values refer to the employment content of the indirect turnover losses caused by contract-
related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses by the coefficients of employment at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
146
Annex 8 Case study questionnaires by stakeholder type
EY Interview Guide ndash Cloud computing contracts (service providers and cloud
brokers)
Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into to what extent SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
As part of the study an SME survey was conducted to get a better understanding of the
incidence and the scope of problems encountered with this type of service In order to
complement and to get a better understanding of the results we obtained from the survey
we also want to get a better understanding of the services offered to SMEs by providers and
what types of problems are notified to providers
Timing 2 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and
check whether this is the best representative to interview from the national authority
Can you tell a bit more about yourself and what position do you hold
Can you reply to our questionnaire and if not can you put us in contact with somebody who can
Can you tell us a little more about the cloud computing provider you work for What type of services do you offer
What can you tell us about the contracts being offered by the cloud computing provider to SMEs
Elements to be evaluated
Understanding of the function Understanding if the person is competent enough to give relevant answers to the topic in
question Understanding of the extent of knowledge that the person has of cloud computing contracts
and company
Timing 05 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
147
Services offered to SMEs and differences compared to services offered to larger enterprises
Cloud computing services offered to SMEs
The objective of this section is to get full understanding of whether and how the provider considers
SMEs as a specific type of customer
What kind of cloud computing contracts do you offer To what extent do SMEs rely on this service What is the size of the SMEs to which you provide this service Do you offer services for micro enterprises and what is the difference between the service
offered to micro and larger enterprises
Do you offer this service based on a fee or for free
How flexible are you on the contracts that you offer in terms of negotiating Do you have standard terms amp conditions for SMEs or are they negotiable Do companies tend to negotiate the terms of the contract or are they satisfied with the service
offered in the contract To what extent can SMEs monitor the performance of the contract
Elements to be discussed
Understanding of the company and type of services offered Understanding if and how SMEs are considered as a specific category of customer Knowledge and understanding on the type of the service used paid or not by SME customers
Knowledge and understanding of the whether the contracts are negotiated or not
Timing 10 min
Complaints received and actions taken by the provider to address the issues encountered
Complaints received from SMEs concerning the services provided
Objective is to get an understanding of the number and scope of complaints that providers receive and to what extent SME complaints are different from other complaints received
How often do you receive complaints from SME customers Compared to other customers is this higher or lower
What types of complaints do you receive from SMEs (different from other groups) Which was the most serious problem encountered that you received a complaint about and to
which type of cloud computing service was it related What caused these problems What is the internal procedure to handle these problems In the past 12 months did you receive complaints not directly from customers but through
3rd party complaints-handling bodies
To what extent was this complaint different from other complaints you received directly from customers
Elements to be discussed
Understanding of the types of complaints received from SMEs Understanding of severity and frequency of complaints received from SMEs
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
Low speed of services Unsatisfactory availability or discontinuity of the service
Forced updates to the service that eliminated or changed a necessary function
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and unbalanced cloud computing contracts
148
Lack of clarity and transparency of contract terms and conditions
Timing 10 min
Specific actions taken by provider in order to address the problems
What is the standard procedure to handle complaints To what extent do you as cloud computing provider provide assistance to the SMEs when they
encounter a problem
How much time does it in general take to solve issues encountered by SMEs (in line with other complaints handled for other customers)
When encountering a problem in general what type of action do SMEs expect you as provider to take
Have you experienced that consumers easily switch provider or terminate the contract Does
this happen more often after they have filed a complaint
What types of costs do you compensate to SME customers when they encounter a problem Do customers in general accept the offered remedies Have you encountered cases where the
SME customer was not happy with the solution offered What other solutions were offered in place
Did the complaint escalate Any court proceedings arbitrationhellip
Elements to be evaluated
Understanding of the actions taken by the cloud computing provider Were these remedies enough to solve the problem The resources involved and used in the resolving of the problem
Where there any extra costs covered by the company
Timing 10 min
Future perspectives on the topic
How will Cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made due
to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services
Legalpolicy consequences of potential future evolutions
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 2 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
149
EY Interview Guide ndash Cloud computing contracts (Associations of SMEs)
D Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Timing 2 min
General introduction questions
Generate understanding of the position and knowledge of the interviewee on the specific subject
Can you tell a bit more about the types of activities that the companies in your association
are performing
Timing 05 min
Cloud computing services used (IT)
The objective of this section is to get full understanding of what cloud computing services are used for by the members of the SME associations
Are you aware of any of the following Cloud Computing services being used by SMEs
Collaboration and communication services Storage and hosting services Security services
Networking services
Data management Business applications
Are you aware of any other cloud computing services being used by SMEs
Timing 5 min
Type of contracts (legal)
The objective of this section is to get full understanding of what kind of contract the SMEs which are part of the association have
What type of cloud computing contract do the companies in your association have (with or
without remuneration if with remuneration- how much do they pay per month) What is the average duration of the contracts
Do the companies in your association have a preferred provider or type of package of services Do the companies in your association negotiate their cloud computing contracts What parts
are they able to negotiate if any Are the companies in your association satisfied with the degree of customisation of the
contracts What specific needs do the companies in your association have regarding cloud computing
Do they succeed in covering them in the process of negotiating cloud computing contracts with the providers of cloud computing services
Timing 10 min
Problems encountered (legalIT)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
150
Objective is to get a better understanding of the problems encountered by the members of SME associations while contracting cloud computing services
Are you aware of any of the following problems existing with cloud computing services used by SMEs
low speed of the service unsatisfactory availability or discontinuity of the service forced updates to the service that eliminated or changed a necessary function
lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
lack of clarity and transparency of contract terms and conditions
Are you aware of any other problems existing with cloud computing services used by SMEs
What was the action taken by companies inside your association in order to resolve the issues
Do the companies in your association usually decide to take legal action
Do you believe that unfair contract terms and conditions of the cloud provider could be considered as
a cause of the problems of the companies that are members in your association
Why you diddid not consider security matters as one of the problems declared
Timing 15 min
Costs of the cloud computing services contract (legalIT)
Objective is to get an understanding of the costs sustained by the members of the SME associations while contracting cloud computing services
Would you consider that there have been any negative effects on the everyday business
activities of the companies in your association after facing the mentioned problem If yes please explain what the negative effects were
What types of costs have the companies sustained while resolving the problems Were they offered any compensation from the cloud provider
Timing 5 min
Future perspectives on the topic
How will the SMEs use the cloud computing services in the future
To what extend do you think cloud computing services will become moreless important for companies in the future
Do you see any other evolutionstrends that could be relevant with regard to cloud computing
services for SMEs
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 5 min
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
151
EY Interview Guide ndash Cloud computing contracts (National authorities and national
SMEs envoys)
E Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into the extent to which SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
More concretely the following services are included collaboration and communication
services storage and hosting services security service networking services data
management business applications service and support tools cloud enablement and IT
operations virtual data centre mobile data centre
As part of the study an SME survey was conducted Results of the survey show that the
incidence of problems is relatively high in ltyour countrygt The objective of this interview is
to get a better understanding of the national context with regard to this subject
Timing 5 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and check whether this is the best person to interview within the national authority
Can you tell a bit more about yourself and what position do you hold To what extent are you familiar with the subject of cloud computing services
Elements to be discussed
Understanding of the function Understanding if the person is competent to give relevant answers to the problematic in
question Understanding of the extent that the person has of cloud computing contracts
Timing 05 min
Legal framework of cloud computing contracts
Cloud computing contracts in ltyour countrygt
Generate understanding of the overall situation in the country policy attention given to the subject and the specific legal framework applicable
Cloud computing services are a relative new service To what extent are national authorities working on this issue
Any data available
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
152
Knowledgeawareness of the availability of these services in ltyour countrygt
Specific attention for this topic at policy level
Under what applicable legal framework do these services fall Are there specific national initiatives developed with regard to this type of services
Our study focuses specifically on the situation of cloud computing services used within SMEs Do you have any knowledge of the existence of specific rules applicable only to SMEs in your country
Do you think the legal framework is sufficiently protecting cloud computing users and more
specifically SMEs Do you think that Terms amp Conditions are clear for SMEs Should they have specific rules for
this group of customers What is (or should be) the possibility of SMEs to monitor performance of contract Terms and
Conditions
What remedies are at SMEsrsquo disposal Is switching providers a remedy
Elements to be discussed
Knowledge and understanding of the specific sector Knowledge and understanding of the extent that these services are used
Knowledge and understanding of the legal framework applicable in the country
Timing 10 min
Problems with regard to cloud computing services
Notifications received on problems encountered by SMEs
Are you aware of any problems existing with cloud computing services used by SMEs
Have you received any complaints with regard to this type of services
Have there been any complaints on the terms amp conditions of the contracts How are these complaints handled What is the intended procedure to follow
What follow up is given to complaints regarding cloud computing services
Do you as a national authority have sufficient competences to enforce regulations in your country
Elements to be discussed
Knowledge and understanding of the problems encountered by SMEs Understanding of the types of problems encountered
Understanding of how complaints are handled and if complaints did lead to further actions taken by public authorities
Relevant information
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
low speed of services unsatisfactory availability or discontinuity of the service
forced updates to the service that eliminated or changed a necessary function
lack of clarity and transparency of contract terms and conditions
Timing 10 min
Future perspectives on the topic
How will cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
153
Do you consider it likely that more problems will arise with regard to cloud computing
services
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made
due to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services Legalpolicy consequences of potential future evolutions
To what extent national authorities are working on the topic or will address more attention to it in the future
Timing 10 min
Closing of Interview
Thank you for your interest and for your time
Any further questions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
154
Annex 9 Case study analysis
Case study interviews
Objectives
The objective of the case studies was to produce useful insights on the specific problems that
were identified by the survey and complement the results obtained by using CATI and the
online survey Additional information was gained through interviews that also involved
stakeholders that had not previously participated in the Online Survey and CATI thus these
inputs were used to further enrich the results that have been obtained so far
Scope
The case studies targeted the following categories of stakeholders
Cloud service providers
National authorities
SMEs that already provided information either in the online survey or during the CATI
and that declared their availability for an in-depth interview
National SMEs Envoy
European SMEs associations (including Enterprise Europe Network associations)
Cloud brokers
Chambers of Commerce
The topics discussed with each type of stakeholder involved in the case study interviews are
presented in Figure 31
Figure 31 Topics discussed with each type of stakeholder
Stakeholder category
Topics discussed
SMEs that declared their availability for
an in-depth interview127
- type of contract (services included duration service providers what has been negotiated - if any and what degree of customisation)
- possibility to monitor performance of contract if SMEs can or cannot monitor
service performance and if they only detect the most obvious and impactful service performance defects and what types of modifications occur in practice
- costs of the cloud computing services contract(s)
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint if the details regarding the internal procedure
of the provider (if any) were investigated how much time it took and how the
problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- actions taken (HR and financial costs of actions taken)
- results of the actions taken
- disruptionreduction of activity
127 The in-depth interviews with the SMEs already included in CATI involved discussing the problems encountered by them and with a special focus on the following contract-related problems lack of clarity
and transparency of contract terms and conditions unilateral modification of the servicecontracts and
limited liability of cloud providers The special emphasis on these problems is given with the aim of complementing the information already obtained by the CATI The interviews targeted three different departments where possible legal IT and managementfinance departments
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
155
Stakeholder
category Topics discussed
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME affected by the problem encountered
- potential loss of competitiveness (business opportunities lost) in terms of profitturnover lost customers market shares
- additional costs (eg costs related to ensuring an alternative service)
Cloud service providers and cloud brokers
- types of cloud computing contracts offered to SMEs
- services offered to SMEs and differences from services offered to larger enterprises
- the level of negotiability and customisation of the services offered to SMEs
- flexibility regarding the negotiation of cloud computing contracts
- contract-related problems encountered by SMEs
- causes of the contract-related problems encountered by SMEs
- actions taken by service providers and cloud brokers to address contract-related problems encountered by SMEs
- costs compensations for contract-related problems encountered by SMEs
- escalation of contract-related issues to court proceedings
Competent national authorities
- familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs Envoy - familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs associations
- awareness of specific cloud computing services used by SMEs
- type of contract (services included duration service providers what has been negotiated - if any and what was the degree of customisation) concluded by the SMEs in the associations
- average duration of cloud computing contracts concluded by SMEs
- satisfaction of SMEs regarding the degree of customisation of cloud computing contracts
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint were the details regarding the internal procedure of the provider (if any) further investigated how much time it took and how the problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME
affected by the problem encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
156
Findings
During the CATI and the online survey 20 SMEs mentioned their availability to be contacted
for in-depth interviews Out of these 20 companies nine SMEs managed to take part in the
case study interviews They represented five sectors wholesale and retail trade repair of
motor vehicles and motorcycles professional scientific and technical activities information
and communication and manufacturing
Additionally in the process of conducting the interviews another 104 stakeholders from 12
Member States (see Figure 32) have been contacted Of these 24 agreed to participate in
the case study interviews
Figure 32 Stakeholders contacted for in-depth interviews
Finally in total 33 interviews were conducted with SMEs (see Figure 33 for SMEs involved by
country sector and size) and SMEs associations a Chamber of Commerce EEN National
Authorities an SME Envoy and service providers (see Figure 34 for the stakeholders list by
category country and name)
Figure 33 The list of SMEs involved
No Country Sector Size
1 Poland Manufacturing Medium-sized
2 Germany Manufacturing Small
3 Germany Information and communication Medium-sized
4 Germany Professional scientific and technical activities Medium-sized
5 Poland Information and communication Small
6 France Information and communication Medium-sized
7 Poland Professional scientific and technical activities Medium-sized
8 Spain Professional scientific and technical activities Small
9 Spain Information and communication Small
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
157
Figure 34 Details of stakeholders who participated in the in-depth interviews
Category Country
Chamber of Commerce The Netherlands
Cloud broker The Netherlands
EEN Romania
France
National authority
Italy
Romania
Romania
France
Poland
Estonia
Service provider
Sweden
Spain
Spain
Sweden
Ireland
Romania
Romania
Portugal
Romania
Germany
SME Association
EU
Portugal
The Netherlands
SME Envoys Network The Czech Republic
Services contracted
Use and types of cloud computing services contracted by EU SMEs
The use of cloud computing services by SMEs is increasing Each type of stakeholder was
aware of the spread of the use of the service
More precisely the interviews revealed that 50 of the national authorities (three out of six
respondents) the national SME Envoy the members of EEN and one cloud broker shared the
opinion that SMEs are using more cloud computing services compared to previous years
A quarter of the cloud providers observed that the usage of a specific cloud computing model
depends on the enterprise size with smaller enterprises relying more on the SaaS model
especially in contracting communication and collaboration services This confirmed the CATI
results as it showed that 50 of the micro enterprises chose a service from the SaaS model
Security
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
158
Security issues are generally an important matter for SMEs leading them to be concerned at
least about the general aspects of the security thresholds of the service provider Another
aspect that is taken into account is the reputation of the provider more precisely whether the
cloud provider has had incidents of data breaches in the past This was the case for 66 of
the respondents (six out of nine participants) One out of nine SME participants (11)
interviewed preferred to store its data on its own servers as a result of its complexity and of
privacy concerns Generally it can be observed from the in-depth interviews that if the
companyrsquos sector of activity is connected with IT services the more inclined it is to pay
attention to data security aspects
Types of contracts and relative costs
Duration and costs
Half of the service providers (five out of ten respondents) stated that they preferred to offer
flexibility regarding the duration of the contracts ranging from hourly contracts to yearly
subscriptions On average from the responses obtained from the providers during the case
study interviews it could be estimated that contracts had a duration of 12 months The Dutch
Chamber of Commerce also confirmed this information
Negotiability and customisation of CTampC
Most (90) of the service providers (nine out of ten respondents) and one cloud broker
affirmed that they offer SMEs the possibility of negotiating the CTampC to respond to the need
for customisation of service packages However the providers consider that SMEs might not
yet have formed a habit of negotiating cloud computing contracts The in-depth interviews
have shown that in most cases all representatives of SME associations and EEN members
said that their members do not try to negotiate cloud computing contracts Moreover 60
of service providers (six out of ten respondents) believe that SMEs are generally satisfied with
the degree of customisation of cloud computing services offered in standard contracts with
the only negotiation point being the price
Cloud providers indicated that the size of the enterprise was a factor in the initiation of the
negotiation and in the success in negotiating a cloud computing contract Hence 40 of cloud
computing providers (four out of ten respondents) and one cloud broker mentioned that
medium-sized enterprises have an increased tendency to negotiate their service contracts
Types of subscriptions
All of the SMEs interviewed stated that they had contracts with paid subscription Seven out
of the nine SMEs included in the case study interviews had contracts with fixed fees the rest
mentioning variable fees At the same time SMEs with variable fees prefer flexibility of
duration and costs either because of the limited need for the service inside the enterprise or
because they were still exploring the business opportunities that the service may offer One
exception was the SME active in the information and communication sector which had
concluded long-term fixed fees contracts This company purchased cloud computing services
in order to use them widely in the activity of the enterprise or to include them in the service
packages that they offer
Out of the total number of service providers that were interviewed half of them (five out of
ten providers) and one cloud broker only offered contracts with paid subscription and the
other 50 of service providers (five out of ten respondents) sometime offered free trials to
SMEs in the cases where they see potential for signing a more significant contract with paid
subscription afterwards
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
159
Legal framework of contracts
In-depth interviews have revealed that stakeholders believe that the current legal framework
both at national and EU levels needs some improvement in order to make it more suitable to
the needs of SMEs and technological advancement
National authorities the Chamber of Commerce and the national SME Envoy specified that
the currently applicable legal framework is a mix of several legal acts which partially regulated
cloud computing services and mainly focus on general data protection cybersecurity or e-
privacy All of the national authorities interviewed had a positive attitude towards the adoption
of specific legislation targeting SMEs and cloud computing services at national and EU levels
One-fifth of the service providers (two out of ten respondents) and the cloud broker also
believed that the legal framework was not sufficient and argued that guidance through what
could be a code of conduct regarding cloud computing services and how to use it should be
provided at the EU level in order to raise awareness and have a better understanding about
cloud computing services
This opinion was shared by the SMEs as 56 of the participants (five out of nine respondents)
believed that the legal framework could be improved Their suggestions included introducing
a uniform legislation at the EU level and providing a fair contract template that would balance
the powers between service providers and users
Contract-related problems encountered by SMEs
SMEs encountered a moderate amount of issues related to cloud computing contracts Most
frequently they experienced three specific problems unavailability of service low speed and
forced updates Data security although not considered among the leading problems by any
of the SMEs included in the case studies was mentioned as being a constant concern
The most serious problems encountered by SMEs
More than three-quarters (78) of the SMEs (seven out of nine respondents) indicated that
the most serious problem that they encountered was unsatisfactory availability or
discontinuity of the service followed by 11 of SMEs (one out of nine respondents) that
reported low speed of the service and forced updates to the service that eliminated or changed
a necessary function
Other problems encountered by SMEs
The second most important problem indicated by 22 of the SMEs interviewed (two out of
nine respondents) was data security In particular for one SME that operates in the
professional scientific and technical activities sector data security was so important that it
preferred to store its data on its own servers rather than contracting cloud computing
services It maintained that the market didnrsquot offer sufficient information regarding data
protection in order for it to trust the available service providers
However in all but one case the issues either did not affect the day-to-day activities of the
enterprises or only affected the internal processes of the enterprises due to the lack of the
availability of the servers In one case however an SME whose cloud computing problems
affected external business operation chose to move this activity to its own data storage
solutions In this specific case the SME was an IT operating company with storage
infrastructure already in place so its costs were not as high as for any other SME experiencing
this
National authorities and SME Envoys have little information about contract-related problems
encountered by SMEs mentioning the fact that they received few complaints regarding cloud
computing services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
160
When asked about what they considered as the most significant problems encountered by
SMEs service providers provided responses that were similar to those of their customers
Unsatisfactory availability or discontinuity of the service was recognised as the most serious
problem Other problems mentioned include the failure of the provider to identify analyse
and correct hazards and prevent a future re-occurrence high subscription fee and lack of
alignment of the CTampC
Actions taken
In all cases the action that the SMEs first took in order to resolve issues related to cloud
computing service was to formally notify the providers As a result of the complaints in seven
of eight cases the cloud computing service providers resolved the issues The duration of the
action to resolve the problems ranged from a few hours to a few days None of the SMEs
chose to take legal actions when encountering issues with the cloud computing services either
because the issue was resolved quickly it didnrsquot have an impact on the activity of the business
or because they felt intimidated by the reputation and size of the provider
A second action that SMEs took was to involve their staff in resolving the issues Six of the
eight enterprises involved one or two members of the IT or technical departments in the
process of addressing the cloud computing issues The exception was represented by one
enterprise which after the incident decided to renounce the cloud computing contract given
that it took its IT staff 10 days to resolve the problem with its cloud computing service
Another enterprise chose to pay for one member of its IT staff to work during the weekend
to ensure that any issues would be immediately addressed
Nearly one-third (30) of the service providers (three out of ten respondents) and one cloud
broker who participated in the in-depth interviews consider that an important problem arises
from the SMEsrsquo limited technical knowledge that does not allow them to clearly understand
the problems that they encounter
Service providers offered different levels of support through online forums customer care
lines and if the problem was not resolved at the site of the client Exceptionally 10 of the
service providers (one out of ten respondents) offered 247 customer support at no additional
cost
Results of the actions
According to 90 of the service providers (nine out of ten respondents) finding a solution
can vary from a couple of minutes to three days depending on the problem encountered
Usually problems are resolved within a day in the order of arrival
In the cases where service providers required a longer period of time to resolve an issue
80 of service providers (eight out of ten respondents) withheld payment to compensate for
the time spent resolving the issue Moreover in cases when the problems significantly affect
the activity of an SME 50 of the service providers (five out of ten respondents) offered
compensation according to the type of contract and the level of damages or losses caused to
the SME on a case-by-case basis Compensations usually ranged between 5-15 of the
monthly fee for the contract Another 20 of service providers (two out of ten respondents)
did not offer any type of compensation
None of the SMEs interviewed escalated the problem to court for three reasons the issue was
resolved within a few days it did not impact the activity of the business or they felt intimidated
by the reputation and size of the service provider
Future perspectives on the topic
In the opinion of stakeholders cloud computing services will enable SMEs to become more
flexible develop faster compete with the larger enterprises in a complex market and also
generate more revenue
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
161
In particular SMEs associations view the evolution of the cloud computing market toward
more affordable and specialised services More than two-thirds (70) of service providers
(seven out of ten respondents) argued that cloud computing services will evolve by developing
new features According to 20 of the service providers the features that will become
increasingly relevant are artificial intelligence block chain and data analysis
At the same time 66 of national authorities (four out of six respondents) and one national
SME Envoy believe that the right of awareness the right to privacy and data protection as
well as cybersecurity will become more important topics in the future Also the SME Envoy
mentioned possible issues emerging in the future such as non-standard functionalities of some
operational processes or defining a new model of operation of ICT services
The two associations within the EEN considered that the legal framework on how cloud
computing is regulated should be adapted to the emerging technologies Moreover the
associations consider that SMEs still have a long way to evolve in order to assimilate the
complexity of cloud computing services but a better regulated system might help them in
this direction The cloud broker further recognised the need for the authorities to work more
on this and he recommended applying European legislation rather than national legislation
to promote uniformity of the system
Case study interviews conclusions
The results of the case study interviews offered useful insights and complemented the results
already obtained through the CATI The various stakeholders involved confirmed the fact that
the usage of cloud computing across SMEs in the EU is growing and there is a need for
improvement of the current legal framework in order to follow the technological advancement
The interviews further explain the CATI results as the trend is that SMEs do to not try to
negotiate CTampC even if the cloud providers are offering this possibility Moreover the most
serious problems the actions taken to resolve them and the results of the actions are
confirmed by the information gained through the interviews and are comparable with the
earlier results of the study
Overall stakeholders who participated in the case study interviews believed that cloud
computing services will play more important role in the development of SMEs as they could
even help them compete with larger enterprises in a complex market achieve higher profits
and become more efficient
Validation Webinars
The webinars were organised with the objective of validating and triangulating the results of
the study Intended to be complementary to the tasks that were performed so far ie the
desk research CATI online survey and interviews with key stakeholders the webinars
focused on the most important topics of discussion that had emerged ensuring a higher level
of detail Therefore webinars have been used to validate the results obtained and to produce
further useful insights on the problems that were identified during the study in order to gain
a better understanding of the overall situation across the EU
In preparation of the webinars all 33 participants in the case study interviews were invited
to attend The invitation applied to four events in which the stakeholders could participate
Six stakeholders replied that they were available to participate in the webinars three SMEs
(two from Germany and one from Poland) two national authorities (one from Italy and one
from Poland) and one SME association representing the interests of European SMEs
businesses in the different sectors of the economy within the EU
In the end three webinars were held as a result of the preference of the stakeholders for the
time and date of the events
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
162
The events were held using Zoomcopy128 a software tool that facilitates the organisation of
interactive conference calls The advantages considered when choosing the software included
the high quality of video audio and simultaneous screen sharing ease of use and features
that include screen sharing on iPhone and iPad and Zoom Rooms Other notable
characteristics include the software features specially designed for webinars that allow the
participants in the event to perform actions such as raising their hands to announce their
intention to take part in the conversation pooling and a questionanswer dialogue with live
or text answers and close captioning
The participants made contributions regarding
cloud computing services contracted by SMEs during the last two years
the negotiability and customisation of CTampC
the most important problems encountered by SMEs while using cloud computing and
the difficulties encountered when taking action
security problems as factors limiting cloud computing usage
the economic detriment
final conclusions of the study
Regarding the topic of cloud computing services contracted by SMEs during the last two years
the stakeholders involved agreed on the results obtained on the extent of usage at the EU
level
Regarding the negotiability of CTampC the SME association agreed with the information
presented and found it to be in line with its expectations based on the information that the
SME association had Furthermore in the view of the German SMEs and one Polish SME SMEs
donrsquot consider the negotiation of CTampT and the customisation of the cloud services when
acquiring cloud computing services confirming the CATI results that show that the largest
proportion of 46 of SMEs did not try to negotiate CTampC In particular the representatives
of SMEs added that the SME could only negotiate different IT infrastructures but not the
limitation of responsibility that would cover service shortages In their opinion this could be
a general issue for SMEs
Overall the SMEs representatives agreed with the results of the project and commented that
their enterprises can relate to the issues presented In particular concerning the incidence of
contract-related problems the participants discussed the link between the methodology of
sampling of the SMEs that participated in the survey and the data that was presented
concluding that the data was considered to be relevant at the EU level
Regarding the problems encountered by SMEs while using cloud computing services the
national authority representative mentioned receiving few complaints from SMEs on issues
related to cloud computing contracts Additionally the stakeholder mentioned that the
General Data Protection Regulation (GDPR) is already proving to be very useful since it
facilitates the attribution of responsibility for problems that may arise in the provision of cloud
computing services Additionally related to the issues that SMEs encounter when trying to
resolve difficulties with cloud computing services the SMEs representatives added that the
most important issue was finding the contact information of the employee of the service
provider who would be assigned to resolve the problem after a formal complaint to the service
provider was made These statements confirm the results of the CATI as 52 of the SMEs
interviewed stated that they had made a complaint to the provider and that the second
difficulty encountered when trying to solve the problem was trying to reach the appropriate
contact point (35)
The participants in the discussion on security problems mentioned the effects of the GDPR on
cloud computing contracts a topic raised mainly by the representatives of the national
128 Zoom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
163
authorities The representatives added that the lack of SME capacity in negotiating cloud
computing contracts could be helped by the GDPR as it would give SMEs more control over
their data after the service providers apply the regulation The GDPR is considered to place
new obligations on cloud providers that will affect how they implement cloud services The
GDPR will strengthen user privacy as it increases the obligations on providers to protect SMEsrsquo
data and secondly it grants users new powers over how their information is collected used
and stored129
Additionally the representative of the Italian national authority and the German SME
intervened regarding the topic of economic detriment asking if the indirect costs have been
considered It was mentioned that the study looked at the client losses and reputational
damages where the case and furthermore it addressed the overall costs involved in ensuring
an alternative service and costs related to fixing the cloud service problem with external
support The stakeholders commented that they agreed with the issues that were presented
during the webinar which they also experienced They also added that in their opinion there
is a need for more transparency and better regulated services that will eventually lead to
fewer economic losses
During the concluding remarks the participants had several comments and suggestions The
Italian national authority representative added that he would be interested in an updated
version of the study conducted a year after the webinar in order to see the effects of the
enforcement of the GDPR regulation Furthermore the SME from Germany agreed with the
observation of the national authority regarding the effects of the GDPR on cloud computing
contracts and considered that its evolution should be observed together with the issues
concerning internet services as a whole
The SME representatives suggested that a platform should be created that could facilitate a
comparison between cloud computing services in order to better present the types of services
and prices available on the market The SMEs complained about the fact that they all had
difficulties when choosing between cloud computing providers In this case the availability of
only standard services on the market would allow the SME to make a direct comparison
The stakeholders involved in the webinars found the study findings to be in accordance with
the developments in the cloud computing market They provided significant comments and
recommendations especially concerning the future influence that the GDPR could have on the
sector This could mean a better distribution of responsibility especially regarding data
privacy and data protection Moreover the study was seen as being representative at the EU
level and as cloud computing is rapidly evolving the stakeholders expressed the desire to
observe the progress made in SME usage of cloud computing services by supporting the idea
of performing a second study at a later date
129 Analysis performed by Insight Company which is a leading provider of computer hardware software cloud solutions and IT services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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164
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by contacting the Europe Direct service (httpeuropaeueuropedirectindex_enhtm) or
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Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
165
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doi 102838962608
ISBN 978-92-79-96750-4
[Cata
logue n
um
ber]
DS-0
3-1
8-4
21-E
N-N
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
This document has been prepared for the European Commission however it reflects the views
only of the authors and the Commission cannot be held responsible for any use which may
be made of the information contained therein
More information on the European Union is available on the Internet (httpeuropaeu)
Print ISBN 978-92-79-45908-5 doi102838397707 DS-AU-15-001-EN-C
PDF ISBN 978-92-79-96750-4 doi 102838962608 DS-03-18-421-EN-N
copy European Union 2019
Printed by Imprimerie Central
The European Commission is not liable for any consequence stemming from the reuse of this publication
Luxembourg Publications Office of the European Union 2019
copy European Union 2019 Reuse is authorised provided the source is acknowledged The reuse policy of European Commission documents is regulated by Decision 2011833EU (OJ L 330 14122011 p 39) For any use or reproduction of photos or other material that is not under the copyright of the European
Union permission must be sought directly from the copyright holders
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Freephone number ()
00 800 6 7 8 9 10 11
() The information given is free as are most calls (though some operators phone boxes or hotels may charge you)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
1
CONTENTS
List of abbreviations 2
Glossary 4
1 Introduction 7
11 The importance of contract-related problems 7
12 Objectives and scope of the study 10
13 Structure of this report 12
2 Research methodology 14
21 Overview of the approach 14
22 Main limitations encountered 35
3 Usage of cloud computing across EU SMEs the state of play 37
31 Cloud computing usage rate 37
32 Types of cloud computing services contracted 38
33 Types of contracts and relative costs 41
4 Contract-related problems encountered by SMEs 46
41 Types and frequency of encountered problems 46
42 The most serious problems encountered 49
43 Causes of the most serious problems encountered 51
44 Actions taken by SMEs 53
5 Consequences of the encountered problems 57
51 Qualitative assessment 57
52 Quantitative assessment 59
6 Impacts of the economic detriment 72
61 Direct impacts 73
62 Indirect impacts 74
63 Other qualitative impacts of contract-related problems 75
7 Conclusions 77
Annex 1 Methodology for the Survey of SMEs 82
Annex 2 Stakeholders list 84
Annex 3 Bibliography 86
Annex 4 Survey questionnaire 90
Annex 5 SME Survey results 101
Annex 6 Economic detriment ndash further results 114
Annex 7 Impacts on jobs and growth detailed results 136
Annex 8 Case study questionnaires by stakeholder type 146
Annex 9 Case study analysis 154
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
2
List of abbreviations
Acronym Description
CATI Computer Assisted Telephone Interviews
CTampC Contract terms and conditions
DG JUST Directorate-General Justice and Consumers
EC European Commission
EEN Enterprise Europe Network
EU European Union
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat Statistical Office of the European Communities
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GE250 Large enterprises of more than 250 employees
GFD Gross Financial Detriment
GVA Gross Value Added
IaaS Infrastructure as a Service
IOS International Organization for Standardization
MS Member State
NFD Net Financial Detriment
PaaS Platform as a Service
PC Personal computer
PPP Purchasing power parity
R Value of any redress
SaaS Software as a Service
SLA Service level agreement
SLALOM Service Level Agreement ‐ Legal and Open Model
SMEs Micro small and medium-sized enterprise
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
3
EU Member States
AT Austria
BE Belgium
BG Bulgaria
CY Cyprus
CZ The Czech Republic
DE Germany
DK Denmark
EE Estonia
EL Greece
ES Spain
FI Finland
FR France
HR Croatia
HU Hungary
IE Ireland
IT Italy
LV Latvia
LT Lithuania
LU Luxembourg
MT Malta
NL The Netherlands
PL Poland
PT Portugal
RO Romania
SE Sweden
SI Slovenia
SK Slovakia
UK The United Kingdom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
4
Glossary
Term Definition Source
Active enterprise
An enterprise that had either turnover or employment at any time during the reference
period
Eurostat
Cloud computing
A model for enabling ubiquitous convenient on-demand network access to a shared pool of configurable computing resources (such as networks servers storage applications and
services) that can be rapidly provisioned and released with minimal management effort and
service provider intervention
National Institute of Standards and Technology The NIST Definition of Cloud Computing 2011
Cloud Service
One or more capabilities offered via cloud computing invoked by using a defined interface
European Commission Cloud service level agreement standardisation guidelines
2014
Cloud service provider
A party which makes cloud services available European Commission Cloud service level agreement standardisation guidelines 2014
Cloud service agreement
The Cloud Service Agreement or CSA is the main document which sets out the terms and conditions of the contractual relationship between
the provider and the user in relation to the provision of cloud services
Slalom Project Model contract for Cloud Computing 2016
Data portability
Ability to easily transfer data from one system to another without being required to re-enter data
It is the ease of moving the data that is the essence here This might be achieved by the source system supplying the data in exactly the format that is accepted by the target system But even if the formats do not match the
transformation between them may be simple and straightforward to achieve with commonly available tools On the other hand a process of printing out the data and rekeying it for the
target system could not be described as lsquoeasyrsquo
International Organisation for Standardization Information technology mdash Cloud computing mdash Overview and vocabulary 2014
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat
EU15 Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg the Netherlands Portugal Spain Sweden and the
United Kingdom
Eurostat
EU28 Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands
Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom
Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
5
Term Definition Source
Frequency
(F)
The frequency shows how often the mentioned problem appeared and it is measured on a scale from 1 to 4 1 meaning lsquorarelyrsquo (at least once in the last 12 months)2 meaning lsquooccasionallyrsquo (at least once every 3 months) 3 meaning lsquofrequentlyrsquo (at least once a month) and 4 meaning lsquovery frequentlyrsquo (at least once a week)
EY Survey of SMEs 2018
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017Number of SMEs that contracted at least one cloud computing service during 2016-2017
EY Survey of SMEs 2018
Infrastructure as a Service (IaaS)
The capabilities provided to the cloud-service customer include processing storage networks and other fundamental computing resources where the cloud-service customer is able to deploy and run arbitrary software which may
include operating systems and applications The cloud-service customer does not manage or control the underlying cloud infrastructure but does have control over operating systems storage and deployed applications and possibly limited control of select networking components
(such as host firewalls)
European Commission Cloud service level agreement standardisation guidelines 2014
NACE Statistical Classification of Economic Activities in
the European Community
Eurostat
Purchasing power parity
(PPP)
The rate of currency conversion that equalises the purchasing power of different currencies by
eliminating the differences in price levels between countries In its simplest form PPP shows the ratio of prices in the national currency of the same good or service in different countries
Eurostat
Platform as a
Service (PaaS)
The capability provided to the cloud-service
customer is to deploy onto the cloud infrastructure customer-created or acquired applications created using programming languages libraries services and tools
supported by the cloud-service provider The cloud-service customer does not manage or control the underlying cloud infrastructure
including network servers operating systems or storage but does have control over the deployed applications and possibly configuration settings for the application-hosting environment
European Commission Cloud
service level agreement standardisation guidelines 2014
Service level agreement
A Service Level Agreement (SLA) is the service contract component between a service provider
and customer An SLA provides specific and measurable aspects related to service offerings
European Commission Cloud service level agreement
standardisation guidelines 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
6
Term Definition Source
Software as a Service (SaaS)
The capability provided to the cloud-service customer to use the providerrsquos applications running on a cloud infrastructure The applications are accessible from various client devices through either a thin client interface such as a web browser (for example web-based e-mail) or a programme interface The user does
not manage or control the underlying cloud infrastructure including network servers operating systems storage or even individual application capabilities with the possible exception of limited user-specific application
configuration settings
European Commission Cloud service level agreement standardisation guidelines 2014
Service availability
The property of being accessible and usable on demand by an authorised entity
European Commission Cloud service level agreement standardisation guidelines
2014
Service performance
The problem faced by SMEs characterised by the difficulty in understanding the level of performance or the quality of services that has been promised in the contract
European Commission Cloud service level agreement standardisation guidelines 2014
SMEs The category of small and medium-sized enterprises (SMEs) includes enterprises which employ fewer than 250 persons and which have
an annual turnover not exceeding euro50 million andor an annual balance sheet total not exceeding euro43 million
Within the SME category a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover andor annual balance sheet total does not exceed euro10 million
Within the SME category a microenterprise is defined as an enterprise which employs fewer
than 10 persons and whose annual turnover andor annual balance sheet total does not exceed euro2 million
Commission Recommendation of 6 May 2003 concerning the definition of micro small and
medium-sized enterprises (notified under document number C(2003) 1422)
Virtual Data Centre
A pool or collection of cloud infrastructure resources specifically designed for enterprise business needs The basic resources are the
processor (CPU) memory (RAM) storage (disk space) and networking (bandwidth) It is a virtual representation of a physical data centre complete with servers storage clusters and many networking components all of which reside in a virtual space being hosted by one or more actual
data centres
Altman amp Alt A Digital Library for the Dissemination and Replication of Quantitative
Social Science Research The Virtual Data Centre 2001
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
7
1 Introduction
This report represents the final deliverable responding to the request for services
JUST2016RCONFWCIVI0176 (201703) concerning a Study on the economic
detriment to small and medium-sized enterprises arising from unfair and
unbalanced cloud computing contracts The Request for service was issued by the
European Commission Directorate-General Justice and Consumers (DG JUST) Unit A2 -
Contract Law
11 The importance of contract-related problems
Cloud computing has been credited with increasing competitiveness through cost reduction
greater flexibility and optimal resource utilisation1 By using cloud computing services
enterprises are only paying for the amount of storage they are actually consuming and are
not responsible for the daily maintenance of the storage infrastructure
Demonstrable tangible economic benefits have been estimated in 2011 A report published
by the European Commission lsquoQuantitative Estimates of the Demand for Cloud Computing in
Europe and the Likely Barriers to Up-takersquo2 identified as main benefits the lower IT costs
more effective mobile working higher productivity standardisation of processes better ability
to enter new business areas and the ability to open up in new locations
All in all increasing the usage of cloud computing can have a relevant impact in terms of
increasing EU Gross Domestic Product (GDP) by up to euro250 billion and creating 38 million
jobs by 2020 compared to 20123
While the list of the above benefits is not exhaustive it certainly provides a perspective on
the potential economic advantages of the usage of cloud computing compared to more
traditional alternatives such as on-premises information technology infrastructure4
1 Rittinghouse J Ransome J (2009) Cloud Computing Boca Raton CRC Press USA 2 Based on a 2011 survey conducted on 479 enterprises already using cloud computing for their businesses 81 reported lower IT costs with a 10 to 20 reduction being typical but 12 reported
savings of 30 or more Business benefits included more effective mobile working (46) higher
productivity (41) more use of standard processes (35) better ability to enter new business areas (33) and the ability to open up in new locations (32) European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels 3 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe
and the Likely Barriers to Up-take SMART 20110045 Brussels 4 Traditional on-premises infrastructures consist of various pieces of hardware such as desktop computers which are connected to a network via a remote server This server is typically installed on the premises of an enterprise and provides all employees using the hardware with access to the companyrsquos stored data and applications Enterprises with this type of information technology model must purchase additional hardware and upgrades in order to scale up their data storage and services to support more users Mandatory software upgrades are also required with traditional information
technology infrastructure to ensure that failsafe systems are in place to in case a hardware failure occurs For many enterprises with information technology data centres an in-house information
technology department is needed to install and maintain the hardware
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
8
However Eurostat data indicate that in 2016 only 21 of EU small and medium-sized
enterprises (SMEs ie 10 ndash 250 employees) bought cloud computing services used over the
internet5 mostly for hosting their e-mail systems and electronically storing files
If micro enterprises (ie 1 ndash 9 employees) are considered Eurostat data are available only
for few countries (the United Kingdom Slovakia Sweden Portugal and Spain) For these
countries the percentage of micro enterprises that were buying cloud computing services used
over the internet in 2016 was around 11
With regard to the main factors affecting the adoption of cloud computing in most
sectors enterprises reported6 that insufficient knowledge of cloud computing prevented them
from using it (Figure 1) Expertise and sufficient knowledge of contractual and legal aspects
and the details of technical implementation are necessary prerequisites for an enterprise in
deciding to purchase cloud computing services In addition the risk of a security breach was
a key consideration for enterprises the concern over the risk of a security breach scored
highest for both large enterprises and small and medium-sized enterprises (SMEs) (57
and 38 respectively)7
Figure 1 Factors that limit cloud use
Source Eurostat (2016)
Clearly enterprises attach importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
A study commissioned by the Commission8 looked at the main contractual issues that are
of particular interest in a cloud context description of the service and Service Level
Agreement (SLA) acceptable-use policy data protection and disclosure of personal data
intellectual property and other proprietary rights and duties over content warranties direct
and indirect liability indemnification for third party claims the effect on data preservation of
contract termination modification of the contract terms and conditions (CTampC) and security
protection of data and loss of data
5 Eurostat data consider all enterprises with the exception of those in the financial sector consulted in April 2018 6 Eurostat Cloud computing - statistics on the use by enterprises Brussels 7 Ibidem 8 European Commission (2015) Comparative Study on Cloud Computing Contracts Publications Office
of the European Union Luxembourg
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
9
The Commission acknowledged the role of cloud contracts notably in relation to data
portability9 as lsquocontracts often exclude or severely limit the contractual liability of the cloud
provider if the data is no longer available or is unusable or they make it difficult to terminate
the contractrsquo10
Contract-related problems have been addressed by the Commission through various
initiatives
Firstly in 2013 the Commission set up an Expert Working Group on Cloud Computing
Contracts11 to work on identifying safe and fair contract terms for cloud computing services
with a view to addressing concerns of consumers and enterprises
Secondly specific actions have been taken forward on business-to-business cloud computing
contracts beyond the legislative field including
the work of the European Cloud Partnership and the ISO (International Organization
for Standardization) towards the standardisation of cloud SLAs
the SLA standardisation guidelines prepared in June 2014 by the Cloud Select Industry
Group on Service Level Agreements Subgroup (C-SIG SLA)12
the lsquoService Level Agreement Legal and Open Modelrsquo (SLALOM) project13 funded under
the Horizon 2020 Framework Programme which delivered a set of common legal
clauses to cover cloud SLAs and contracts and a standard technical SLA specification
Finally in April 2016 the Commission gave a new impetus to its work on cloud computing by
adopting the Communication on the European Cloud Initiative - Building a competitive
data and knowledge economy in Europe14 where further complementary actions under the
Digital Single Market strategy covering cloud contracts for business users and switching of
cloud services providers have been announced
Thus over recent years the Commission has adopted a true European Cloud Computing
Strategy aimed at removing barriers to cloud computing Additionally work is under way
towards a Code of conduct on switching and porting cloud data and services
A further development of this topic is represented by the lsquoProposal for a Regulation of the
European Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo launched in 201715
The objective of this proposal is to unlock the potential of the EU data market In order to do
so the proposal aims to address the following issues
9 Please see the Glossary for further information 10 European Commission (2012) Unleashing the Potential of Cloud Computing in Europe COM(2012)529 final Brussels 11 The Group has been set up within the framework of the Commission Communication (2015) lsquoA Digital
Single Market Strategy for Europersquo which aims at enhancing trust in cloud computing services and unlocking its potential for boosting economic productivity in Europe 12 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2018 13 The SLALOM project accessed 1 May 2018 14 European Commission (2016) European Cloud Initiative - Building a competitive data and knowledge economy in Europe COM(2016) 178 final Brussels 15 European Commission (2017) Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union COM(2017) 495 final
Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
10
improving the mobility of non-personal data across borders in the Single Market
which is limited today in many Member States by localisation restrictions or legal
uncertainty in the market
ensuring that the powers of competent authorities to request and receive access to
data for regulatory control purposes such as for inspection and audit remain
unaffected and
making it easier for professional users of data storage or other processing services to
switch service providers and to port data while not creating an excessive burden on
service providers or distorting the market
The impact assessment study16 that accompanies the legislative proposal addresses barriers
such as the legislative and administrative localisation restrictions data localisation driven by
legal uncertainty and the lack of trust in the market which is considered to inhibit data
mobility The impact assessment identifies as a preferred option a policy that would enhance
legal certainty maintain the current levels of security of data storage and processing and that
would rely on self-regulation by industry through the development of codes of conduct for
facilitating switching between providers and finally that would positive economic effects
resulting in lower compliance costs for cloud service providers The study took into
consideration that actions at the Member State level would not be able to achieve the legal
certainty necessary for conducting this type of business across the EU or to remedy the lack
of trust that is slowing the development of a thriving data storage andor processing sector
It is presumed that an EU intervention would contribute to further development of secure data
storage capacity for the entire EU
12 Objectives and scope of the study
Objectives
The studyrsquos main objective is to deliver the necessary evidence to support the Commission
in its assessment of the need for and extent of any further EU efforts to increase SMEsrsquo trust
in cloud services and allow them to bring in the full potential benefits of these types of
services
The main specific objectives of the study are
to identify the prevalence nature scope and scale of the contract-related problems
that SMEs encounter in relation to cloud computing services
to analyse whether and to what extent enterprises are able to protect themselves
against problems for example by means of enforcement of rules on business-to-
business unfair contract terms (where they exist)
to quantify the financial detriment as well as the detriment arising from time loss and
consequential damages (such as business interruption) suffered by SMEs in relation
to the contract-related problems encountered
to complement the quantitative measurement with a qualitative assessment of the
detriment suffered by SMEs
to model (in quantitative terms) the impact on growth and jobs of the quantified SME
detriment identified and provide a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and
competitiveness
16 European Parliament (2017) Commission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union SWD(2017) 304 final Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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11
Scope
Cloud computing services covered
The study covers the cloud computing services most commonly used by SMEs taking into
account i) the general delivery models used by the provider ie Infrastructure as a Service
(IaaS) Platform as a Service (PaaS) and Software as a Service (SaaS)17 ii) the core
categories of cloud services available in the market
The study covers cloud computing services provided both in exchange for money and provided
free of charge (ie not provided in exchange for a monetary counter-performance)
Contract-related problems encountered by SMEs
The study investigates the prevalence nature scope and scale of
problems in relation to the conformity of the service with the contract
problems with unfair CTampC
problems in exercising the users rights to remedies for non-conformity of the
service with the contract
Territorial scope
The study assesses the contract-related problems faced by SMEs in all EU28 Member States
Timeline
The study covers the usage of cloud computing services by EU SMEs over the period 2016 ndash
2017
Stakeholders
The following categories of stakeholders are covered
EU SMEs that contracted cloud computing services over the period 2016 ndash 2017
cloud computing providers
cloud computing brokers
National authorities competent in fields related to cloud computing (such as data
privacy protection personal data processing and data security)
the National SMEs Envoys Network18
Chambers of Commerce
the Enterprise Europe Network (EEN)19
SMEs associations
Please refer to Annex 2 for the full list of stakeholders
For the purpose of this study and in order to make the present report more intelligible
whenever the term SMEs is used in the text it refers to
medium-sized enterprises defined as enterprises which employ fewer than 250
persons (50-249) and whose annual turnover andor annual balance sheet total does
not exceed euro50 million
17 See the Glossary for the definition of these terms 18 The network of national SME Envoys was set up in 2011 as part of the review of the Small Business Act (SEC(2008) 2101) Each EU country has nominated a national SME Envoy to complement the role of the EU national SME Envoy who chairs the network The group of national SME Envoys makes up an SBA advisory group that promotes SME friendly regulation and policy making in all EU countries More
information is available at httpeceuropaeugrowthsmesbusiness-friendly-environmentsmall-
business-actsme-envoys_en 19 The Enterprise Europe Network helps businesses innovate and grow on an international scale It is the worldrsquos largest support network for SMEs with international ambitions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
12
small enterprises defined as enterprises which employ fewer than 50 persons (10-
49) and whose annual turnover andor annual balance sheet total does not exceed
euro10 million
micro enterprises defined as enterprises which employ fewer than 10 persons and
whose annual turnover andor annual balance sheet total does not exceed euro2 million
13 Structure of this report
The report is structured as follow
Chapter 1 recaps the objectives and the scope of the study and provides information
about the background of the study that justified the request for service
Chapter 2 presents the methodological framework and the main limitations
encountered Chapter 3 covers the findings related to
- the usage of cloud computing among EU SMEs over the period 2016-2017 and
the reasons for the limitations of the use of cloud computing
- types of cloud computing services that were contracted by SMEs
(complexity of the subscribed cloud computing packages the frequency of the
number of contracted services and the services contracted by SMEs size)
- types of cloud computing contracts and relative costs including the
negotiability of contract terms and conditions (CTampT)
Chapter 4 is dedicated to the analysis of contract-related problems encountered
by SMEs specifically types and frequency of encountered problems and actions taken
by SMEs to address these problems
Chapter 5 presents a qualitative assessment of the consequences faced by SMEs due
to contract-related problems These refer to
- negative effects on the business activity (ie loss of turnover or profit loss of
clients andor reputation damages)
- extra work done with internal or external resources while trying to resolve the
encountered problems
- legal actions taken to exercise the users rights to remedies for non-conformity
of service
Where possible these consequences have been quantified and monetised in order to
assess the economic detriment suffered by SMEs
Chapter 6 is dedicated to the impacts of the economic detriment The analysis
concerns
- direct impacts meaning the Gross Value Added (GVA) and employment
contents of the turnover lost by SMEs that are affected directly by the contract-
related problems
- indirect impacts in the supplier sectors
This chapter also discusses (in qualitative manner) impacts on market functioning and
competitiveness
Chapter 7 presents the conclusions of the overall analysis
Annexes including the following
- methodology for the survey of SMEs
- the list of stakeholders that have been involved in the case studies
- bibliography of consulted and relevant documents
- survey questionnaire used for conducting the survey of SMEs
- results of the survey of SMEs
- further results of the economic analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
13
- detailed results of the impacts on jobs and growth
- case study questionnaires by stakeholder type
- case study interviews and webinars analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
14
2 Research methodology
21 Overview of the approach
The study envisaged three main Tasks
Task 0 ndash Preparatory task Defining the methodological framework and the topics
to be investigated during the research as well as defining the standards and tools to
be used
Task 1 - Survey of SMEs Conducting an online survey on a representative sample
of SMEs and start-ups which are using cloud computing for the purposes of
conducting their business
Task 2 - Economic detriment Quantification of the overall economic detriment
sustained by SMEs in relation to the problems identified under Task 1 Based on these
results the impact on growth and jobs and on the economy as a whole has been
measured
Figure 2 provides an overview of the approach followed synthesising the main activities
objectives and methodstools
Figure 2 Overview of the project Tasks
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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15
Task 0 ndash Preparatory Task
This Task envisaged undertaking desk research that allowed the team to clearly define the
methodological framework of the study in terms of
cloud computing services commonly used by micro small and medium-sized
enterprises
potential contract-related problems that may be encountered while using cloud
computing
problem definition which provides an overview of the main causes and effects of the
identified problems It was used to
- better understand the context in which the problems occurred
- identify the intermediate effects and the main drivers
- structure the data collection tools (ie questionnaires for Computer Assisted
Telephone Interviews [CATI] and the online survey)
selecting a sample of countries and sectors to be analysed in depth in order to achieve
the project objectives The sampling strategy included
- the identification of a sample of Member States (MS) and economic sectors to
be analysed in depth
- the definition of a target for a representative sample of micro small and
medium-sized enterprises to be addressed through the survey under Task 1
- ensuring representativeness of the sample size
Table 1 provides the list of cloud computing services identified under Task 0
Table 1 Cloud computing services commonly used
Cloud computing
model
Cloud computing services
Details
SaaS Business applications
Applications used for accounting invoicing planning payments payroll human resources management
Collaboration and communication services
Video conference system business visualisation technology
instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring
Service and support tools
Project and portfolio management solutions services operations management
Big data Business intelligence and data analytics applications
Networking services Creation of an internal private cloud and virtual local networks utilising a pooled server for storing enterprise data and running applications needed each day
Security services Secure content management end point protection malware
protection
PaaS Sales and marketing services
Web configuration forms for marketing and sales purposes
Cloud enablement and information
technology operations
Application integration and monitoring business process management information technology operationrisk
management
Data management Datacontent management
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16
Cloud
computing
model
Cloud computing services
Details
Mobile Usage of managed mobility to serve a multitude of mobile devices anywhere anytime
Platform to create
software applications
Conception and creation of applications through testing and
deployment
Internet of things Asset tracking deployable components intelligent spaces
IaaS Storage and hosting services
Server platform for online storage sharing hosting web-sites files images and similar content
Virtual data centre Usage of a pool of virtualised infrastructure as processor
memory storage space and networking components
High performance computing
Usage of high performance computing clusters workloads and applications
Source EY desk research20
The following potential contract-related problems have been identified
lack of timely updates of the cloud service
forced updates to the service that eliminated or changed a necessary function
unsatisfactory amount of data that could be processed
failure of the cloud provider to identify analyse and correct hazards and to prevent
future re-occurrences (incidence management)
low speed of the service
unsatisfactory availability or discontinuity of the service (due to a crash unannounced
maintenance or other interruptions of service)
unsatisfactory number of users that could access the service
lack of compatibility of the service with user hardware or software
limited data portability
limited data retrievability
extra costs imposed for data portability
data deletion upon contract termination
destruction or loss of data
loss or alteration of data transmitted stored or processed via the cloud service
unauthorised disclosure of or access to data
lack of protection of the data stored in the cloud against theft or viruses
lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
unilateral modification of the servicecontract by the cloud provider
limited liability of the cloud provider
termination of the contract and interruption of the service by the service provider with
no or little prior notice to the user
lack of clarity and transparency of CTampC
Based on the results of desk research the team finalised the methodological approach that
included the definition of the problem tree to clearly understand the links between problems
encountered by enterprises and possible consequences the preparation of the data collection
tools including the questionnaires for the survey of SMEs and the case study template
20 The bibliography serving as basis for the desk research can be found in Annex 3
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
17
Additionally desk research revealed that cloud computing users may encounter the following
problems in exercising their rights to remedy the non-conformity of service with the
contract
absence of a contact point to make a complaint or attempt to resolve issues
length and high cost of the procedure
applicability of foreign jurisdiction
language difficulties
impossibility to enforce the decision after the resolution
The problem definition was structured around the above-mentioned key contract-related
problems and their short- and long-term effects Essentially the problem definition allowed
the team to
identify the main-core problems and the underlying causes
identify who and what is affected and to what extent
foresee the possible evolution of the problems identified
Following the problem definition a problem tree (Box 1) was structured in order to summarise
the identified problems and related causes as well as the links between them
Box 1 Definition of the problem tree
A problem tree or ldquohierarchy of problemsrdquo is useful in providing an overview of the main causes and effects of the identified problems It is used to better understand the context in which the problems occur what the intermediate effects and the main drivers are
The analysis performed during the creation of a problem tree aims at identifying the real bottlenecks
to which stakeholders attach a high priority and which they wish to overcome A clear problem analysis thus provides a sound foundation on which to develop a set of relevant and focused project objectives
A problem tree analysis begins with the establishment of the core problem Using desk research the problem can be formulated in a more specific way Once the core problem has been identified we consider the direct causes and effects of the problem Each cause statement is written in negative terms These items should respect the MECE principle in that they should be Mutually Exclusive and Collectively Exhaustive In many respects the problem analysis is the most critical stage of project
planning as it then guides all subsequent analysis and decision-making on priorities
Once complete the problem tree represents a summary picture of the existing negative situation that can be further used by the decision makers in order to analyse the objectives by reversing the negative statements into possible solutions and then choose the most appropriate solution to be implemented
Source European Commission - Aid Delivery Methods (Vol 1 Project Cycle Management Guideline)
Among the most important sources of information that helped in refining the problem tree
especially with regard to the contract-related problems were21
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in
Europersquo COM(2012)529 final Brussels
Cloud Computing Experts Groups meetings 2013-2014
Cloud Service Level Agreement Standardisation Guidelines from 24 June 2014
European Commission (2015) lsquoComparative Study on cloud computing contractsrsquo
European Commission (2016) lsquoStudy on measuring the economic impact of cloud
computing in Europersquo
European Commission consultations about Cloud Computing (2016)
IDC (2016) lsquoSwitching of Cloud Services Providersrsquo
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprises and Business
Structure Statisticsrsquo
21 The results of the survey of SMEs as well as the case study results have been used in order to update the problem tree
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
18
European Commission (2017) lsquoFinal results of the European Market study measuring
the size and trends of the EU data economyrsquo
European Commission (2017) lsquoProposal for a Regulation of the European Parliament
and of the Council on a framework for the free flow of non-personal data in the
European Unionrsquo
European Parliament (2017) Commission Staff Working Document Impact
Assessment Accompanying the document lsquoProposal for a Regulation of the European
Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo
Figure 3 illustrates the problem tree that was created based on the studyrsquos desk research
The drivers of cloud computing problems are acknowledged in the different sources of
information consulted such as the Digital Single Market strategy This strategy identifies
concerns related to lsquosecurity compliance with fundamental rights and data
protectionrsquo22 as a result of technical and legislative barriers
Moreover the fragmentation of regulation across the EU could be a factor that limits the
usage of cloud computing due to the need for large providers to adapt their services to each
countryrsquos laws that regulate cloud computing23
A lack of fairness and balance in CTampC is considered a driver as lsquocontracts often exclude
or severely limit the contractual liability of the cloud providerrsquo24 By the same token
the unilateral modifications of the contract and the difficulties in exercising the userrsquos
rights are problems arising from the unfairness of CTampC Moreover when targeting SMEs
lsquothe contract is likely to be a take it or leave it contractrsquo25
The limited technical knowledge among SMEs is also a factor affecting the emergence of
the different problems shown in Figure 3 The limited technical knowledge of the users has
been considered when creating a Cloud Select Industry Group in Service Level Agreements
Subgroup26 This subgroup worked towards the development of standardisation guidelines
between cloud providers and cloud customers and these efforts coincide with complementary
action under the Digital Single Market strategy
The mentioned contract-related problems lead to a loss of business opportunities Within one
of the Expert Group Meetings it was concluded that an uninformed choice of terms and
conditions may lead to damages27 Other experts28 have stated that lsquocertain losses are
potentially huge and cannot be compensatedrsquo29 The present study tested the hypothesis that
contract-related problems may lead to losses of profit turnover clients and reputation
damage for SMEs over the short term Over the long term such problems can have a
negative impact on growth and jobs
Over time the lack of awareness of the benefits of cloud computing limits its usage and can
deter businesses from tapping into the full potential of the cloud Over the long term this
could also have a negative effect on GDP and jobs creation Although this scenario was
22 European Commission (2015) A digital Single Market Strategy for Europe COM(2015) 192 final
Brussels 23 Ibidem 24 Ibidem 25 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2017 26 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 2930 January 2014 27 Ibidem 28 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014 29 For example due to the unavailability of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
19
included in the problem tree it is not the purpose of this study to examine these larger
macroeconomic impacts30
The problem tree allowed the team to gain an understanding of the main issues to be
investigated within the study and for which evidence from stakeholders was needed
This understanding was reflected in the data collection tools These included
The Survey questionnaire The structure of the survey questionnaire31 reflected the
different layers of the problem tree It first focused on the usage of cloud computing
and the types of contracts SMEs tend to sign corresponding to the drivers section
Furthermore it addresses the problems that SMEs encounter the actions taken in
order to resolve them and the associated economic detriment32 in order to provide
information for the problems and short-term effects sections of the tree
Interview guidelines for case studies and webinars Findings from the interviews and
the webinars were used to complement the quantitative analysis with detailed
information on the contract-related problems and the costs sustained by SMEs while
trying to resolve the encountered problems
All collected information supported the estimations on the loss of GDP and the loss of jobs at
the EU level
30 The European Commission estimated that cloud computing can increase EU GDP up to euro250 billion and create 38 million jobs More information available in European Commission (2011) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-Take SMART 20110045 Brussels 31 Annex 4 presents the structure of the CATI and online questionnaire 32 The sections B C D and E cover use of cloud computing problems encountered with cloud computing services actions taken by the enterprise in order to address the most serious problem and the economic detriment related to the most serious problem encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
20
Figure 3 Problem tree33
Source EY desk research34
33 LT stands for lsquolong-term effectsrsquo and ST for lsquoshort-term effectsrsquo 34 Annex 3 contains the bibliography serving as basis for the desk research
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
21
Under Task 0 the team also defined the sampling strategy to select 12 MS five economic
sectors to be investigated in depth as well as the sample size of SMEs to be involved in the
survey
For the selection of the MS three criteria were considered (Table 2) In particular the
percentage of enterprises buying cloud computing services as per 2016 Eurostat
statistics was considered to be the best proxy variable35 available for the usage of cloud
computing and it has been used as one of the criteria for defining the sample of countries to
be analysed in greater depth
Table 2 Criteria used for MS selection
Criteria for MS selection Details (Table 3) Source
Percentage of enterprises
buying cloud computing
services
Number of SMEs that
declared they bought at
least one cloud computing service in 2016 out of the total number of SMEs active in the MS
Data on cloud computing service
usage among SMEs Eurostat 2017
[isoc_cicce_use]
Relevance of the country to the
study objectives
Number of SMEs that
declared they bought at least one cloud computing service in 2016 out of the total number of SMEs active in the EU28
Data on cloud computing service
usage among SMEs Eurostat 2017 [isoc_cicce_use]
Structural Business Statistics Eurostat 2017 [sbs_sc_sca_r2]
Geographical balance Balanced number of EU15
and EU13 MS in the sample
NA
Based on the above-mentioned criteria the following 12 MS were selected the Czech
Republic Estonia France Germany Ireland Italy Poland Portugal Romania Sweden
Spain and the Netherlands (Table 3)
A high level of representativeness of the EU is ensured because the selected sample
involves eight MS from the EU15 and four MS from the EU13
refers to countries where more than 70 of the EU SMEs that bought at least one of
the cloud computing services in 2016 (Figure 4) were established
35 A proxy variable is a variable that is used instead of the variable of interest when that variable of interest cannot be measured directly
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
22
Table 3 SMEs buying cloud computing services 2016
EU MS
A B C D E=B+D F=E(A+C) ETotal EU28
EU15 EU13
of active enterprises with 10-250 employees
of enterprises (10-250 empl) buying CC services
of enterprises with 1-9 employees
of enter (1-9 empl) buying CC services 36
Total active SMEs
(Country level)
(EU28 level)
AT 40393 646288 280850 31959 38422 1196 137 EU15
BE 31302 8139 569950 64858 72996 1214 261 EU15
BG 26991 1619 298559 33975 35594 1093 127 EU13
CY na na na na na na na EU13
CZ 38203 6877 961287 109390 116267 1163 416 EU13
DE 411527 61729 1985471 225938 287667 1200 1029 EU15
DK 22681 9072 187367 21322 30394 1447 109 EU15
EE 6439 1417 61513 7000 8416 1239 030 EU13
EL 15368 1383 764471 86993 88376 1133 316 EU15
ES 125000 21250 2337621 116881 138131 561 494 EU15
FI 19187 10361 209328 23821 34182 1496 122 EU15
FR 139335 22294 2765282 314677 336970 1160 1205 EU15
HR 12249 2695 134007 15249 17944 1227 064 EU13
HU 30852 3394 504904 57456 60850 1136 218 EU13
IE 5514 1930 224742 25575 27505 1195 098 EU15
IT 182182 38258 3497783 398032 436290 1186 1560 EU15
LT 13604 2177 172527 19633 21809 1172 078 EU13
LU 3939 670 27841 3168 3838 1208 014 EU15
LV 9226 738 100216 11404 12142 1109 043 EU13
MT 1885 509 24123 2745 3254 1251 012 EU13
NL 48115 15397 1042588 118642 134039 1229 479 EU15
PL 69282 4850 1534086 174572 179422 1119 642 EU13
PT 37353 6350 769043 53833 60183 746 215 EU15
RO 50987 3569 405493 46143 49712 1089 178 EU13
SE 36047 16221 649412 155859 172080 2510 615 EU15
SI 6912 1382 127603 14521 15903 1182 057 EU13
SK 14363 2442 414630 33170 35612 830 127 EU13
UK 199528 65844 1734989 312298 378142 1955 1352 EU15
Tot EU28
1598464 317028 21785686 2479112 2796141 12 100
Selected Countries
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics [sbs_sc_sca_r2])
36 The percentage of micro enterprises (ie enterprises with fewer than 10 employees) that bought at least one CC service is only available for the United Kingdom Slovakia Sweden Portugal and Spain For the other EU countries the average from those countries (1138) has been used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
23
Figure 4 The percentage of enterprises which bought cloud computing services in the
selected EU countries as compared to the total EU28 (2016)
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics
[sbs_sc_sca_r2])
For the selection of the economic sectors to be analysed in depth Eurostat statistics on the
percentage of enterprises buying cloud computing services were used in order to
identify those sectors with the highest usage of cloud computing
Eurostat statistics are available only for some sectors (Table 4) and only for the category 10
persons employed or more which also includes enterprises with more than 250 employees (ie
large enterprises GE250)
However Eurostat statistics have been considered to be relevant in selecting the sectors to be
analysed in depth as the number of enterprises with more than 250 employees represents a
negligible percentage of the overall number of active enterprises at the EU28 level (ie around
45000 out of 23 million enterprises corresponding to 02 of the total)
The sampling strategy envisaged the use of the same criteria used for the selection of MS (ie
percentage of enterprises buying cloud computing services relevance of the sector to the
study objectives)
As a result the five sectors selected included (grey rows in Table 4)
manufacturing (NACE37 code C)
wholesale and retail trade repair of motor vehicles and motorcycles (NACE code G)
professional scientific and technical activities (NACE code M69-M74 hereinafter
referred to as M)
administrative and support service activities (NACE code N)
information and communication (NACE code J)
37 Eurostat Nomenclature des Activiteacutes Eacuteconomiques dans la Communauteacute Europeacuteenne Brussels
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24
Table 4 Economic sectors and usage of cloud computing services (2016)
NACE Code
Sectors
A B C = B100 x
A CD
of active enter (with
more than 10 empl) at
EU28 level
of enter (with more
than 10 empl)
buying CC services
of enter (with more
than 10 empl)
buying CC services
out of the total
C Manufacturing 364432 17 61953 23
D+E Electricity gas steam air conditioning and water supply
18732 19 3559 1
F Construction 200369 15 30055 11
G Wholesale and retail trade repair of motor vehicles and
motorcycles
351278 18 63230 24
H Transportation and storage 90718 16 14514 5
I55 Accommodation 15969 23 3672 1
J Information and communication
55905 52 29070 11
L Real estate activities 10661 24 2558 1
M Professional scientific and technical activities
97073 34 33004 12
N Administrative and support
service activities 121657 22 26764 10
Total 1326794 21 268384 (D) 100
Selected Sectors
Source Cloud computing services for 2016 (Eurostat [isoc_cicce_use]) Business Structure Statistics for 2015 (Eurostat [sbs_sc_sca_r2])
Although the financial and insurance activities sector (K under its respective NACE code) is
considered as one of the economic sectors with the highest usage of cloud computing38 it has
been excluded because of its limited relative weight at the EU28 level39
With the purpose of achieving statistically significant results a target of 500 SMEs that
use cloud computing has been defined This sample size has been chosen in order to ensure a
95 confidence interval and a maximum margin of error of 5 for all the estimates The
sample target size together with the random selection of the respondents ensure that - with
a probability of 95 - the true values of a phenomenon (eg average incidence of cloud
computing problems) in the entire population (ie all EU SMEs) is equal to the average values
observed in the studied sample plusminus the margin error
The box below presents the methodology behind the definition of the sample size
38 76 based on European Commission (2016) Measuring the economic impact of cloud computing in
Europe 39 Based on the lsquoAnnual detailed enterprise statistics for servicesrsquo [sbs_na_1a_se_r2] it was observed that in 2015 for the respective financial and insurance activities a total of approximately 14000 enterprises were active in the EU28 that is 01 of the total active enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
25
Box 2 Definition of the size of the sample
The formula for computing the representative sample size is
Sample size = [z2 p(1-p)e2][1 +( z2 p(1-p)e2N]
Where
N= population size e = margin of error (as a decimal) z = Z-score constant value eg 1645 for a 90 confidence interval 196 for a 95 confidence interval 258 for a 99 confidence interval
and p = average value of a specific indicator as observed in the population (as a decimal)
Our case
From Table 3 we have
N= 2796141 is the estimated number of SMEs that are using CC services
e = 5
Z = 196
P = when this value is not known conventionally is used the value 05
We can conclude that a target of 500 enterprise using CC services is appropriate to ensure a 95 confidence interval with a margin of error of 438 When we put the confidence level and the confidence interval together we can say that we are 95 sure that the true percentage of a phenomenon in the population is between +438 and -438 of the value observed in the studied sample For example if we ask a sample of 500 SMEs using CC if they encountered a certain problem
and 70 say lsquoYesrsquo we can be 95 certain that between 6562 and 7438 of all EU SMEs using CC encountered the same problem
Task 1 ndash Survey of SMEs
Task one was aimed at identifying
the types of cloud services most frequently contracted
the types of CTampC used to regulate the business relationships between users and
providers (for example determining whether enterprises are able to negotiate CTampC
andor to customise them to their needs)
the types the incidence and the frequency of contract-related problems
the types of actions taken by the enterprises in order to resolve the encountered
problems and the results of these actions
The collection of data was based on a questionnaire (see Annex 8) submitted through two
complementary channels
an online questionnaire (online Survey)
CATI
The online questionnaire was translated into the official languages of the MS covered by the
study Likewise the CATI was conducted by native speakers in order to avoid language
barriers
The online survey and the CATI have been developed tested and conducted on a
representative sample of EU SMEs which use the cloud for the purpose of conducting their
business
In order to achieve the above presented target (ie 500 SMEs using CC services)
the contacts of 13000 SMEs were identified during the design of the sampling strategy
3173 SMEs were reached within the 12 MS and the five sectors selected Table 5
presents the distribution of the reached SMEs
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and unbalanced cloud computing contracts
26
1009 SMEs were willing to participate in the survey
Table 5 Distribution of SMEs reached per country and sector ( of respondents 3173)
Sector
Country
Admin and support service
activities
Inform and comm
Manufact
Profess scientific
and technical activities
Wholesale
and retail trade
Total
CZ 13 17 62 30 52 174
EE 5 22 8 12 15 62
FR 184 129 262 126 308 1009
DE 99 123 185 226 249 882
IE 4 18 6 6 13 47
IT 8 9 100 7 15 139
NL 36 49
24 37 146
PL 24 69 16 78 92 279
PT 7 2 9 2 24 44
RO 8 20 2 27 15 72
ES 7 11
26 21 65
SE 41 33 59 30 91 254
Total 436 502 709 594 932 3173
Source Survey of SMEs (2018)
Table 6 presents the participation rate per MS of the 1009 SMEs that agreed to provide
information about their use of cloud computing
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
27
Table 6 Participation rate by MS ( of respondents 3173)
Country
Number of
enterprises that expressed refusal
Number of enterprises
that were willing to participate in the survey
Total Participation
rate ()
A B C = A + B BC
CZ 131 43 174 25
DE 33 158 191 83
EE 715 29 744 4
ES 724 54 778 7
FR 16 294 310 95
IE 24 31 55 56
IT 97 115 212 54
NL 152 49 201 24
PL 11 127 138 92
PT 48 33 81 41
RO 11 24 35 69
SE 202 52 254 20
Total 2164 1009 3173 32
Source Survey of SMEs (2018)
The study targeted all different size categories the largest share of respondent being
represented by medium sized-enterprises (60 Figure 5) Contrary to the SMEs distribution
at the EU level the micro enterprises represented the smallest share of participants in the
survey The smaller the size of the enterprise the lower was its willingness to participate in
the survey
Figure 5 Distribution of participants in the survey by SME size ( of respondents 1009)
Source Survey of SMEs (2018)
The same applies to SME age enterprises active for more than 10 years are better represented
in our sample as compared to younger enterprises (Figure 6) This reflects their willingness to
participate as well as the greater difficulties encountered in reaching younger enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
28
Figure 6 Distribution of enterprises involved in the survey of SMEs by age ( of respondents
1009)
Source Survey of SMEs (2018)
Task 2 ndash Economic detriment and impacts on jobs and growth
Consequences of encountered problems at the micro level
The economic detriment was quantified along the lines recommended in the Guidelines on
impact assessment of the Better Regulation toolbox40 based on data collected from Task 1 and
on data from Eurostat Business Structure Statistics
The measurement of economic detriment41 considered a monetary assessment of the effects
of the problems faced by each SME in the survey and includes the following main dimensions
the gross financial detriment (GFD) associated with the problems encountered
the net financial detriment (NFD) associated with the problems encountered which
corresponds to the GFD associated with the problem encountered minus any remedies
offered by the cloud provider
The GFD incorporated the following components
119866119865119863 = 119871 + 119867119877 + 119874119862
Where
L is alternatively the loss of turnover or profits as perceived by each SME
HR is the costs of the human resources invested by each SME while taking action to
resolve or remedy the most serious encountered problem
OC other costs declared by each SME These include costs such as the costs related to
ensuring an alternative service the costs related to fixing the cloud service problem
using external support any legal costs costs related to reputation damage and costs
related to loss of client(s) and other residual costs
To allow for the measurement of the NFD the value of any redress (R) offered by the service
provider for the damages caused to each SME as reported in the survey questions was
computed
40 The Better Regulation Toolbox is a set of general guidelines that set out the principles that the European Commission follows when preparing new initiatives and proposals and when managing and evaluating existing legislation In this study those principles were considered generally as they were central in
defining the survey the sample and also the methodologies to measure economic detriment and estimate
the impact on growth and jobs 41 Measured using the principles put forward in European Commission (2017) Operational guidance document on measuring personal consumer detriment Brussels
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29
The detailed procedure used to estimate the economic detriment at the EU28 level included
three main steps
The first step was the computation of the following parameters from the survey with the 95
confidence interval level and 5 margin of error
the loss of turnover or profits perceived by each SME
the costs of the human resources invested by each SME while taking action to resolve
or remedy the most serious problem
the other costs covered by each SME while taking action to resolve or remedy the most
serious problem
the value of any redress offered by the service provider for the damages caused to
each SME
The second step required the definition of the number of enterprises affected by contract-
related problems (119873119901)
119873119901 = 119890119906 times 119890119901 times 119864
Where
119890119906 is the proportion (ie the percentage) of enterprises that use cloud computing
services
119890119901 is the incidence (ie the percentage) of contract-related problems
E is the total number of active enterprises
The incidence rates of contract-related problems (119890119901) by country and sector or country and
size class and the proportion of enterprises that use cloud-computing services (119890119906) by country
and sector or country and size cannot be estimated from the sample with the 95 confidence
interval level and 5 margin of error given that the sample is only representative at the EU
level overall
In order to be able to estimate the total number of enterprises experiencing contract-
related problems by country and sector and by country and size class an RAS-based42
procedure has been applied
Box 3 RAS method for estimating the total number of enterprises experiencing contract-
related problems by country and sector
The RAS method is a well-known method for data reconciliation whose aim is to achieve consistency between the entries of some non-negative matrix and pre-specified row and column totals Mathematically the method is an iterative scaling method that can be applied in this case as we just
have non-negative matrices We redistribute proportionally the differences arising from applying the EU level sectorial or size class incidence rates or from country incidence levels considering in this
case as the binding constraint the country level incidence which has been estimated with confidence from the sample (we ensure that the incidence per country is respected)
The procedure started with a preliminary estimation of the number of enterprises (119873119894119895119901)
experiencing contract-related problems in country i and sector or size class j using the following
formula
119873119894119895119901 = (
119890119894119906 + 119890119895
119906
2) times (
119890119894119901 + 119890119895
119901
2) times 119864119894119895
42 See more information at httpseceuropaeueurostatcroscontentras-method_en
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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30
Where
for countries included in our sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the proportion of enterprises using cloud computing services in country i43
computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j44 for all the countries in the sample
- 119890119894119901 is the incidence of cloud computing problems in country i computed from the
survey
- 119890119895119901 is the incidence of cloud computing problems in sector or size class j
computed from the survey for the whole sample
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
While for countries not included in the sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the average proportion of enterprises using cloud computing services in all
countries of the sample computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j45 for all of the countries in the sample
- 119890119894119901 is the average incidence of cloud computing problems in all countries of the
sample as computed from the survey
- 119890119895119901 is the incidence of cloud computing problems in sectorsize class j computed
from the survey
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
In practice this formula takes the joint incidence by country and sector or by country and size
class to be the average of the two marginal incidences which would be the case if the two
distributions were independent In this way it allows a preliminary estimation of the number
of enterprises experiencing cloud computing problems in country i and sector or size class j
43 We use two alternative measures of incidence allowing us to develop two scenarios From the survey data we compute the incidence by country and sector and country and size class considering the answers given by respondents in two alternative ways In one case we compute the incidence as the ratio of
those enterprises that declared they are using cloud computing to all enterprises contacted that declared they are either using or not using cloud computing or that refused to respond to the survey based on criteria that can be seen as meaning that the survey does not apply to them (around 16) Alternatively also from the survey data we can compute the incidence of cloud computing usage as the ratio of those that declared they are using cloud services to the sum of those that explicitly mentioned that they are either using or not using cloud services (around 50) This second scenario can be considered as a theoretical but most unlikely future scenario where a consistent number of EU SMEs use
cloud computing 44 See the previous footnote 45 See the previous footnote
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31
After obtaining that preliminary estimation 119873119894119895119901 the RAS method of reconciliation is applied by
considering as the binding constraint the total number of enterprises experiencing problems
as that value was estimated directly from the sample with the required confidence and error
levels
This reconciliation of totals performed by the RAS method dismisses the assumption of
independence as it distributes the error across the margins
Concerning the sectors not covered in the sample46 the total number of enterprises
experiencing contract-related problems by country and sector can also be computed by
following the same procedure as above In that case sector incidence would be replaced by
the European average incidence on the other sectors Given the sampling procedure that was
followed in which the sectors with the highest incidence of cloud computing usage were
selected to be covered by the survey applying those incidences of use of cloud computing as
representative to the other sectors would overestimate the impacts Given this situation only
the results for the selected sectors are presented and this constitutes a lower threshold for the
true detriment47
Once the values of the number of enterprises experiencing cloud computing problems for each
country and sector and country and size class are computed they can be aggregated to the
EU level just by summing up the number of enterprises experiencing cloud computing service
problems per country
Finally the third step was the computation of the total losscostvalue of redress by country
sector and size class by multiplying the number of enterprises that experienced contract-
related problems (as computed using the RAS model) by the 95 trimmed mean values
per enterprise for each variable (from the survey)48
The GFD is then computed considering alternatively lost turnover and lost profits and adding
the human resource costs and the other costs NFD is computed taking the two measures of
GFD and subtracting the value of any redress offered by the service provider for the damages
caused to each SME
Afterwards two measures are obtained covering both GFD and NFD computed at country and
sector country and size class and at EU level
Consequences of encountered problems at the macro level
Following the quantification of the economic detriment the consequent impact on growth
and jobs was estimated using one of the methodologies suggested in the impact assessment
toolbox presented by the Joint Research Centre49 of the European Commission
The goal was to estimate the overall GVA and employment content of the detriment In order
to do that the following methodology was used
The starting point was the declared turnover loss one of the components of total detriment
aggregated by country and sector and by country and SME size We first estimated the financial
detriment suffered by each enterprise by considering the different components of detriment
then we aggregated these effects to the EU28 level by summing up the effects suffered by
46 As previously stated only the following sectors were covered by the study Manufacturing (C) Wholesale and retail trade repair of motor vehicles and motorcycles (G) Professional scientific and technical activities (M) Administrative and support service activities (N) and Information and communication (J) 47 Recall that the selected sectors comprise a total of 797 of SMEs and GE250 using cloud computing
services 48 Given each variable the 95 trimmed version was obtained by discarding the 5 lowest and highest observations it is a statistic in the middle of the data range 49 EU Science Hub (2016) Input-output economics Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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32
each enterprise across all enterprises When estimating the macroeconomic effects of the
contract-related cloud computing problems one must consider the overall turnover loss that
was suffered by all enterprises that experienced those problems as turnover is the variable
that best summarises the overall enterprise-level effects that are transmitted into the
economic system through the supply chains and that can be related to aggregate economic
variables thus avoiding double counting
This allowed the team to estimate the so-called direct impacts (the direct consequences in
the enterprises that face contract-related cloud computing problems associated with the
reduction of their economic activity due to those problems) This was done by estimating the
GVA and employment contents of the turnover losses caused by contract-related cloud
computing problems at country and sector level by considering the GVA and employment
coefficients of total turnover at country and sector and country and size class level computed
from Eurostat Business Structure Statistics for 2015 (Eurostat)50
The results were aggregated at the EU level by summing up country results from calculating
the direct GVA and employment contents
Additionally at the aggregate EU level the so-called indirect impacts were also estimated
Indirect effects are the effects on the enterprises that are not directly affected by contract-
related cloud computing problems but that are indirectly affected in their activity by the losses
of turnover from the enterprises that directly experience the problem To estimate these
indirect effects we start by estimating the turnover losses in supplier industries These indirect
losses of turnover arise when the businesses that experience the direct turnover losses reduce
their demand for products from their suppliers and then those supplier enterprises also
experience turnover losses The input-output methodology is used to estimate the turnover
losses in supplier enterprises Essentially this methodology allows us to estimate the amount
of turnover that is lost in one supplier enterprise when the demand from another enterprise is
reduced given the existing technology A symmetric input-output table at basic prices (sector
by sector) available in Eurostat51 for the EU28 was used to estimate the technological
intersectoral relations in the EU economy The methodology used is described in the following
box
Box 4 The Input-Output Methodology
Input-output analysis is the most commonly used benchmark within the study of intersectoral relations The representation of the underlying economies either as a coherent statistical framework as a structural analysis tool of the productive systems or as an economic model is based on a correlation between production and demand through the proportions of the different branches (supply side) or products (demand side) that support that same economies The correspondence between a certain branch of activity and a certain group of products is thereby a condition for coherence of the
input-output analysis
The input-output tables appear as a synthesis of a large amount of statistical data processed in accordance with the goal of specifying the characteristics of the use of the productive factors and products to satisfy the demand ie the open and disaggregated flows (in sectorial terms) that link in both ways demand production and income
The matrix representation of the basic flows characterises the activities of a given economy in a given period It allows a two-dimensional interpretation of the relationships and balances in the flows to be used ie a horizontal (in line) interpretation ndash articulating production and demand that leads to a
separation between intermediate and final demand ndash and a vertical interpretation (in column) ndash
51 Eurostat Symmetric input-output table at basic prices (product by product) Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
33
articulating production and income that leads to the separation between intermediate inputs and
value added
Input-Output matrices
The general shape of an input-output table encompasses four quadrants that correspond to the intersectoral trade of products associated with intermediate consumption (1st quadrant) to the breakdown of each sectorrsquos production through the diverse final uses (2nd quadrant) to the sectorial
decomposition of the GVA (3rd quadrant) and to the nonmarket transfers between sectors of the economy (4th quadrant)
The first quadrant has a square shape (n x n sectors) while the 2nd and 3rd have a rectangular shape (depending on the number of final uses and the number of the GVA components considered) The
equilibrium conditions reflect sector by sector the usage of the production and the mobilised resources and the income generated in the production ie
119883119894 = sum 119883119894119895 + 119884119894
119895
(use logic to be read in line the gross production of each sector is depleted feeding the intermediate
and final demand)
119883119894 = sum 119883119894119895 + 119884119894
119894
(resources and income logic to be read in column the gross production of each sector integrates
the value of the intermediate consumption and of the income generated)
The sectorial equilibrium ie the equality between uses and resources (119883119894 = 119883119895 for 119894 = 119895) leads on
an aggregated level to a match between the sum of the elements of the 2nd and the 3rd quadrants that sustains the ldquothree approachesrdquo of national accounting expenditure income and production
Matrixes coefficients and multipliers
From the general tables we can obtain the technical coefficient matrix (matrix A) Each element of the matrix A (119886119894119895 = 119883119894119895119883119895) expresses the ldquotechnological demandrdquo from the sector j to the sector i ie
the production of the sector i used as an input for the production of the sector j This vertical proportion representing the technological support of the intersectoral flows and the deepening of the intermediate demand from the productive units into the technical characteristics of their respective productive processes is called the technical coefficient (of production)
The input-output analysis as an economic model uses these proportions or coefficients to represent
the function of the economy requiring the adoption of a set of hypotheses namely on the direction of the economic flows ie the role of the supply and demand dynamics
In formal terms the input-output model is considered to be based on the dynamics of the demand The production is obtained through an endogenous process supported by the technical coefficient matrix responding to a final demand determined exogenously Building up the Leontief model in its
OUTPUT (Demand)
INPUT
(Production)Intermediate inputs to
production
(1st Q)
Final demand
(2nd Q)
Primary inputs to
production
(3rd Q)
Primary inputs to final
demand
(4th Q)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
34
reduced form leads to a system of n simultaneous equations like 119883119894 = sum 119886119894119895119884119895119895 written as 119883 = (119868 minus 119860)minus1119884
in matricial notation
Input-output based modelling brings out a matrix (119868 minus 119860)minus1 whose elements are designated as 119886119894119895
The elements of the (119868 minus 119860)minus1 matrix express as coefficients of the simultaneous equations system
that allows to determinate the production according to the final demand the variation (direct and indirect) of the production of a sector according to the unitary change of the final demand of another sector These are called production multipliers also arising as sectorial interdependence indicators
The production multipliers can be partial when they indicate the variation of the production of a sector i led by a unitary variation of the final demand of a sector j and measured by the corresponding element of the matrix 119886119894119895 or total when they indicate a variation of the production of all sectors led
by a unitary variation of the final demand of a sector and measured by the sum of the corresponding column of the matrix (sum 119886119894119895119895 )
The nature of the measured effects
Taking into account the nature of the used multipliers it is possible to measure direct and indirect effects
Direct impacts Activity effects (value added employment income) associated directly with the value of the lost production due to contract-related problems
Indirect impacts Backward linkage effects meaning the activation of multiple ldquoexternalrdquo effects on demand linked to the loss in production due to contract-related problems They concern the supply
chains that are interrupted due to the production loss associated with contract-related problems
Once the indirect turnover losses were measured their GVA and employment contents were
estimated using the same methodology as for the direct effects
To compute the relative direct and indirect impacts we divided the estimated GVA and
employment content by the total GVA and employment at the EU level
Further qualitative analysis
In addition to the quantitative assessment of the overall impact on growth and jobs taking
into account the results of previous activities (namely the interviews within the case studies
and desk research) other more qualitative effects of the problems encountered namely in
terms of competition competitiveness and market functioning were qualitatively assessed To
this end case studies were used in order to have a more in-depth view of the topic
More generally the case studies allowed the study team to
produce useful insights on the specific problems that were identified in the survey
illustrate in practical terms the economic detriment to SMEs and to understand the
causal links between the signed contracts and the encountered problems
include the perspectives of those stakeholders that were not involved in the previous
study Tasks
This subtask included interviews (33) with eight types of stakeholders namely SMEs cloud
brokers service providers SMEs associations national authorities national SMEs Envoys EEN
associations and chambers of commerce This array of stakeholders contacted was used to
obtain a detailed view of the issue of the economic detriment to SMEs arising from unfair and
unbalanced cloud computing contracts52
nine SMEs
one cloud broker
10 service providers
three SMEs associations
six national authorities
one national SMEs Envoy
52 The questionnaires used detailing the topics covered during the interviews can be found in Annex 8
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
35
two EEN associations
one Chamber of Commerce
Finally three webinars were used to validate and disseminate the results of the study with the
main participating stakeholders
22 Main limitations encountered
This study mainly used data collected from CATI as this tool followed a more direct approach
in contacting SMEs by phone The online questionnaire proved not to be as effective during
the data collection phase as we succeeded in obtaining only three completed questionnaires
from a total of 141 requests to SMEs and European Associations contacted On the other hand
500 completed questionnaires were collected from the SMEs that use cloud computing through
the CATI
In order to maximise the possibility that the SMEs contacted will respond to the survey the
study chose to contact SMEs from the 12 countries that have the most usage of cloud
computing This approach was taken to achieve a twofold purpose to maximise the quality of
the survey results and to ensure that the minimum sample target of 500 questionnaires is
met Even if the sample is randomised the willingness to participate in the survey under these
circumstances might have been positively correlated with cloud computing usage This may
increase the risk of biased results
This limitation was overcome by involving a distinctive group of stakeholders with the aim of
complementing the information gathered The stakeholdersrsquo involvement during the case
studies ensured the accuracy of the results at the EU level
Furthermore it is important to underline that all estimates based on the gathered responses
to the questionnaire should be considered as statistically significant in representing the
average values that might be observed among EU SMEs that are using cloud computing
services Therefore any features presented at the country andor sector andor
company size level were included with the sole aim of documenting gathered
information
In order to be able to estimate results at the country andor sector andor enterprise size level
the RAS model was used to distribute the overall representative results to provide robust
estimates at that level The RAS model even allows estimating the usage rate and the incidence
of problems at enterprise size sectorial and country level
Two scenarios have been developed for the economic analysis that takes into account two
different hypotheses for estimating the usage rate of cloud computing extracted from the
survey
The method of analysis of economic detriment also has some limitations The first one is related
to the fact that only the consequences of the most serious problem are considered Even if the
survey tried to measure also the effects of the second most important problem the fact that
the number of respondents that quantified its effects was very small led to values that did not
seem to be robust enough to use in the analysis This causes the estimates of detriment
that were presented to be the lower thresholds to the actual detriment Yet the
magnitude of the underestimation is limited by the fact that the sectors with the highest cloud
computing usage rates were chosen to be in the sample and they are likely to experience
above average effects A second limitation arises from the fact that many enterprises seem
not to be able to fully assess the financial impacts of problems such as reputational damages
or loss of clients in terms of financial variables and this may also lead to some underestimation
of the true effects that we perceive that might be present but that we are not able to assess
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
36
In terms of measuring the indirect impacts not only does the possible underestimation of the
direct impacts on turnover also affect these impacts but also using the input-output
methodology has limitations While the input-output methodology allows measuring backward
linkages it does not allow considering the downstream effects on clients or final consumers
that are associated with the contract-related cloud computing problems due to relative changes
in the costs borne by enterprises and that are not fully absorbed and thus trickle down to the
consumer level as SMEs pass on the increased costs caused by the problems encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
37
3 Usage of cloud computing across EU SMEs the state of play
First this section presents the analysis of the services contracted by the SMEs the types of
contracts and the negotiability and customisation of CTampC Furthermore it investigates the
incidence and frequency of contract-related cloud computing problems experienced by SMEs
with an emphasis on the most serious problems encountered and their respective causes
Second it presents the types of actions taken by the SMEs in order to address the contract-
related problems as well as the results of the actions taken and possible difficulties encountered
while taking action
And finally it explores the reasons why some SMEs decided not to take action
31 Cloud computing usage rate
In conducting the survey 3173 SMEs replied have been collected out of which
503 from SMEs that declared that they had contracted at least one cloud computing
service during the period 2016ndash201753
509 from SMEs that declared they did not contract any cloud computing service during
the period 2016ndash2017
2164 from SMEs that refused to participate in the survey
The estimation of the rate of usage of cloud computing depends on the hypothesis about the
distribution of the willingness to participate in the survey
For the purpose of the study it was assumed that only SMEs not using cloud computing were
present among those SMEs that were not willing to provide information (2164) Under this
hypothesis the rate of usage of cloud computing services is 159 calculated as the
number of SMEs that declared they are using cloud computing services (503) divided by the
number of SMEs that replied (3173) This can be considered as the central scenario for this
study It provides an indication of the current detriments suffered by SMEs
A theoretical scenario has been constructed by assuming that SMEs using cloud computing
services and SMEs not using cloud computing services are equally distributed among the SMEs
that were not willing to provide information (2164)54 The purpose of this scenario is to provide
an indication of the theoretical evolution of the detriment in case of increasing usage of cloud
computing among EU SMEs
At 159 the rate of usage of cloud computing among SMEs still appears to be low especially
when compared with the 45 that is the most recent estimated usage rate among large
enterprises55
This can be due to a variety of different reasons During the interviews performed it emerged56
that
some SMEs are reluctant to use services that they cannot fully understand (for
example for micro and small enterprises it is difficult to assess how the new services
can improve their everyday work)
53 The distribution by country size and sector of the 503 SMEs that declared they contracted at least one cloud computing service can be found in Annex 5 54 Under this assumption the rate of usage of cloud computing services is 499 calculated as the number of SMEs that declared they are using cloud computing services (503) divided by the total of SMEs
that were willing to provide information (3173 ndash 2164 = 1009) 55 Eurostat Cloud computing - statistics on the use by enterprises Brussels 56 Case study interview with UEAPME European Association of Craft Small and Medium Enterprises representing about 12 million enterprises across Europe
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
38
other SMEs perceive that costs are still high and that it takes too long to recover
the investment (break-even point)
the division of responsibilities between SMEs and providers can sometimes be
a major source of problems as it is poorly documentedexplicated leading to overlaps
and gaps especially with respect to security aspects it is not uncommon for SMEs to
be confused about their responsibilities concerning security such as who makes
backups of data or software which type of failoverredundancy is offered by the
provider and what still needs to be done by the customer All of these issues can
persuade SMEs to not outsource cloud services
asymmetric information when it comes to negotiating and customising CTampC might
limit the capacity of SMEs to find solutions that fit their needs
in contrast to the traditional provision of on-site information technology resources the
multi-tenant nature of cloud computing usually raises questions with respect to
privacy confidentiality and data integrity Cloud computing presents its own set
of security issues coupled with the risks and threats inherent in traditional information
technology computing
32 Types of cloud computing services contracted
Figure 7 presents the most commonly contracted cloud computing services as resulted from
the survey
Two services are more frequently contracted because of their applicability and prevalence
in a wide range of sectors
collaboration and communication services (71) that might include among
others applications used for instant communication video conferencing business
visualisation e-mail antivirus for desktop or PC customer relationship management
or social media monitoring
storage and hosting services (65) that comprises services such as server
platforms for online storage sharing hosting websites files images and similar
content
The third most commonly contracted service (43) is associated to security support (this is
related to the need for protecting the corporate network when accessed via remote devices
such as laptops or other wireless and mobile devices)
The next eight significant types of cloud computing services contracted do not range far from
each other with their usage varying between 43 and 26
No significant differences emerged from the analysis at countrysector level (see section B
within Annex 5 for further details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
39
Figure 7 The cloud computing services most commonly contracted by SMEs during 2016-
2017 ( of respondents 503 of answers 2522)57
Source Survey of SMEs (2018)
A more detailed analysis of the numbers behind Figure 7 reveals the complexity of the
subscribed cloud computing packages
the answers from the (503) SMEs that declared that are using CC services also
revealed that 2522 services have been contracted over the period 2016 ndash 2017 (Table
7) that implies each SME contracted on average five different services
micro enterprises are the size class contracting the highest number of services (ie
55 on average Table 7) this might be related to the fact that the medium-sized
enterprises might have the financial and technical capacity to develop more
effectiveefficient solutions internally58
Table 7 The cloud computing services most commonly contracted by SMEs during 2016-2017 by SMEs size class ( of respondents 503)
SME size class
of respondents
of contracted services
Average of contracted
services Micro 91 503 55
Small 140 723 52
Medium 272 1296 48
Total 503 2522 50
Source Survey of SMEs (2018)
57 Multiple choice question 58 Eight out of the 10 service providers interviewed under Task 2 stated that the usage depends on the enterprisesrsquo size as medium-sized enterprises are better able to internalise most of the needed IT
services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
40
Even the analysis of the frequency of the answers provided allowed the research team to better
understand how the usage of CC is evolving among SMEs (Figure 8) around 40 of SMEs
contracted a limited number of cloud services (one two or three)59
Figure 8 Frequency of the number of contracted services ( of respondents 503 of answers 2522)
Source Survey of SMEs (2018)
Furthermore the analysis of the mix of contracted services revealed that there are two
services lsquoPlatform to create software applicationsrsquo and lsquoStorage and hostingrsquo that are most
commonly contracted either alone (12) or together (6)
The number the types and the mix of contracted services showed that EU SMEs are having a
lsquobasicrsquo usage of cloud computing
This is also confirmed by the results reported in Table 8 services falling under the SaaS model
are the most contracted ones (47) This cloud computing model was the first one introduced
to the market (1999) and the easiest to use (as it includes applications that can be run directly
from a web browser without any downloads or installations required although some require
plug-ins)
The medium-sized enterprises present a different trend from the small and micro firms as
they probably need a more advanced package of services For the medium-sized enterprises
the IaaS model (47) is the most contracted followed by PaaS (30) and finally by SaaS
(21)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
41
Table 8 Services contracted by SMEs size ( of respondents 503 of answers 2522)
SMEs size Total
respondents of services contracted
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 252 149 97 5
50 30 19 1
Small 140 723 332 224 157 10
46 31 22 1
Medium 272 1296 609 393 276 18
21 30 47 1
Total 503 2522 1193 766 530 33
47 30 21 1
Source Survey of SMEs (2018)
33 Types of contracts and relative costs
In this section we analyse if SMEs have the possibility to negotiate CTampC the degree of
customisation of contracted services and the types of subscriptions chosen by SMEs
Negotiability of CTampC
In the survey SMEs that are using CC services were asked if they were able to negotiate CTampC
(Figure 9) The majority of the SMEs declared they signed standard terms and
conditions offered by the provider (ie 64 of SMEs either did not try to negotiate or were
not able to negotiate CTampC see Figure 9)
Figure 9 Negotiability of the CTampC among SMEs that contracted cloud computing services ( of respondents 503)
Source Survey of SMEs (2018)
Only 19 of the SMEs using cloud computing (97 out of 503) were able to negotiate
the CTampC in relation to all cloud computing contracted services while 17 were able
to negotiate contract terms and conditions for a limited number of services
This trend is maintained at the country and sectorial levels as well (see Annex 5 for further
details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
42
Together with the negotiability of CTampC also the reasons for not negotiating have been
investigated (Figure 10) The decision to adopt the standard CTampC is made either because
these meet the usersrsquo expectations (41) or because it is assumedknown that a negotiation
would have no chance to succeed (28)
Figure 10 Reasons provided by SMEs for not trying to negotiate ( of respondents 229)
Source Survey of SMEs (2018)
The possibility of the SMEs negotiating the services contracted correlates with the size class
As seen in Table 9 only 106 of the services contracted have been negotiated by the SMEs
It can be stated that on average SMEs negotiate CTampC related to less than one service out of
the average of five used
Table 9 Number of services for which SMEs were able to negotiate CTampC
SMEs
size
Total of
respond
of services
contracted
of customised
services
of services
SMEs were able to
negotiate
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 48 24 11 10 3 0
Small 140 723 123 89 36 31 20 2
Medium 272 1296 120 155 78 44 31 2
Total 503 2522 106 268 125 85 54 4
Source Survey of SMEs (2018)
After the negotiability of CTampC the research team explored the types of services for which
SMEs negotiated signed contracts (Figure 11) Surprisingly the most commonly contracted
services (ie collaboration and communication storage and hosting and security services)60
do not appear among the ones for which negotiating CTampC is possible Rather negotiability is
higher for those services that due to their nature are more lsquobusiness drivenrsquo (such as business
applications mobile services and data management) Figure 11 presents for each contracted
service the number of SMEs that were able to negotiate CTampC (in blue) and the number of
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
43
SMEs that signed standard CTampC for the specific service contracted (in grey) The total of the
numbers in each row represents the number of SMEs that declared contracting a specific
service61 Detailed information related to all services can be found in Annex 5
Figure 11 Services in relation to which SMEs were able to negotiate the CTampC ( of respondents 179 of answers 264)
Source Survey of SMEs (2018)
Customisation of contracted services
SMEs that didnrsquot sign standard CTampC were asked if the negotiation allowed the customisation
of the contracted services
Figure 12 shows that out of the 179 SMEs (36 of the SMEs that are using CC services) that
were able to negotiate the CTampC only 101 (representing 20 of all surveyed SMEs that
are using cloud services) pointed out that besides simply negotiating the CTampC they
were able to fully customise the service package according to their needs
61 For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service (cf Figure 7) only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
44
Figure 12 Share of SMEs that declared they were able to customise the service package
according to their specific needs ( of respondents 503)
Source Survey of SMEs (2018)
The ability of SMEs to customise the purchased service package correlates with the size class
(as illustrated in Figure 12)
Table 10 SMEs that declared they were able to customise the service package according to their specific needs by enterprise size ( of respondents 503)
Size category
Total
Respondents
SMEs that did
not negotiate
CTampC
SME negotiated CTampC
Full customisation
Partial customisation
No Customisation
Micro 91 69 16 6 0
100 76 17 7 0
Small 140 86 27 15 12
100 61 19 11 9
Medium 272 169 58 26 19
100 62 21 10 7
Total 503 324 101 47 31
100 64 56 26 17
Source Survey of SMEs (2018)
Types of contract subscription
The majority of respondents have signed a paid subscription with fixed or variable fees
(79 of the total users Figure 13) It should to be noted that 73 SMEs did not provide any
response as most of them did not know the type of subscription contracted
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
45
Figure 13 Type of cloud computing subscription ( of respondents 503 of answers 489)62
Source Survey of SMEs (2018)
This trend is maintained across both countries and sectors without any significant differences
62 Multiple choice question
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46
4 Contract-related problems encountered by SMEs
The current section presents an overview of the types and most frequent contract related
problems encountered by SMEs while using cloud computing services
Moreover the most serious problems (that is the problems that created the highest impact
on SMEsrsquo everyday activities andor in terms of costs faced to resolve them) have been
identified together with their causes
Finally actions taken by SMEs to remedy the encountered problems are analysed together
with results of the actions and the main difficulties encountered
41 Types and frequency of encountered problems
Nearly one-quarter (24) of the SMEs using cloud computing (ie 122 out of 503)
encountered contract-related problems during the period 2016ndash2017 (Figure 11)
The incidence seems to be higher for micro and medium-sized enterprises
Table 11 Share of respondents that indicated encounteringnot encountering problems by size
of SMEs Micro Small Medium Total
Did not encounter problems
66 116 199 381
Encountered problems
25 24 73 122
27 17 27 24
Source Survey of SMEs (2018)
Problems encountered by the SMEs have been further analysed by taking into account the
following two dimensions frequency and incidence
Table 12 Frequency and incidence of contract-related problems
Dimension of analysis Details
Frequency
(F)
The frequency shows how often did the mentioned problem appeared and it is measured on a scale from 1 to 4
1 - rarely (at least once in the last 12
months)
2 - occasionally (at least once every 3 months)
3 - frequently (at least once a month)
4 - very frequently (at least once a week)
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017number of SMEs that contracted at least one cloud computing service during 2016-2017
Source Survey of SMEs (2018)
Four problems have been faced by more than 25 of the cloud computing users (Figure 14)
low speed of service (55)
unsatisfactory availability or discontinuity of the service (49)
forced updates to the service (32)
lack of clarity of the instructions on how to use cloud computing services (26)
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
47
Figure 14 Incidence and frequency of contract-related problems among SMEs that declared they encountered problems during 2016-2017 ( of respondents 122 of answers 505)63
Source Survey of SMEs (2018)
63 Multiple choice question
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and unbalanced cloud computing contracts
48
No significant differences emerged from the analysis at the sectorial and country levels
(please see Annex 5 for further details)
The cases studies64 included in-depth interviews with the SMEs that already contributed in
the survey In particular problems encountered by them were discussed with a special focus
on the following lack of clarity and transparency of contract terms and conditions unilateral
modification of the servicecontracts and limited liability of cloud providers
Five out of the eight SMEs that were interviewed recognised the fact that the lack of clarity
of the instructions on how to use cloud computing services is a problem that they are facing
This was explained by the fact that there is no common understanding of what cloud
computing is and how it operates The SME users expressed the need for better information
when contracting such services
The findings from the consultation of cloud providers (ten providers have been interviewed
during the case studied) indicated that business users for different reasons very often
encounter difficulties in understanding the CTampC This problem is particularly relevant
due to
lack of knowledge on how to use cloud computing services of the SME users
lack of attention of the SME users when signing the contracts
Two additional problems even if faced by less than 20 of the users are among the ones
that appeared most frequently65
lack of clarity and transparency of CTampCs (frequency = 215)
limited liability of the provider (frequency = 179)
During the consultations with national authorities and SMEs the participants indicated that
the limited liability of cloud providers commonly manifested when the following undesired
anomalies occurred
information access was interrupted or there was a problem of information
portability this group of anomalies encompasses technical aspects of the
information delivery including risks caused for example by denial-of-service attacks
These kinds of technical problems are most likely to cause liability Especially regular
updates can despite being administered properly result in downtime and thus in a
potential economic loss
data privacy and data protection were affected making information available to
the public can infringe on privacy and data protection provisions since cloud
computing services are of a cross-border nature privacy law conflicts between
national legislations are likely to occur Furthermore cloud computing services need
to comply with the principles of authenticity and integrity of information However the
entry into force of the General Data Protection Regulation (GDPR) (EU) 201667966
on 25 May 2018 is perceived as a factor that will effectively limit this issue in the
future
Even if affecting only a limited number of SMEs67 (less than 10 of the users participating in
the SMEs survey) problems related to security68 are quite frequent especially in regard to
64 See Annex 5 for further information 65 The incidence and frequency of the full list of SMEsrsquo problems can be found in Annex 5 66 Regulation (EU) 2016679 of the European Parliament and of the Council of 27 April 2016 on the
protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 9546EC (General Data Protection Regulation) OJ L 119
452016 67 More frequently among the micro and small enterprises 68 For further analysis see Annex 5
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49
the lack of protection of the data stored in the cloud against theft or viruses and
unauthorised disclosure of or access to data
The analysis of the number of answers provided allows a deeper understanding of the
problems faced by SMEs
on average amongst the SMEs that experienced problems each SME encountered
four different problems over the period 2016 ndash 2017 (Table 13)
micro enterprises are the ones facing the highest number of problems (Table 13)
more than 23 of SMEs faced a high number of problems (between five and eight
Figure 15)69
Table 13 Number of problems faced by SMEs during 2016-2017 by SME size class ( of respondents 122)
SME size class
of SMEs that encountered problems
of encountered problems
Average of encountered problems
Micro 25 116 464
Small 24 92 383
Medium 73 290 397
Total 122 498 408
Source Survey of SMEs (2018)
Figure 15 Frequency of the number of encountered problems ( of respondents 122 of answers 494)
Source Survey of SMEs (2018)
42 The most serious problems encountered
Types of problems
After listing all problems encountered respondents were asked to mention the most serious
one among them survey results shows a correlation between the incidence of the declared
problems and the most serious problems experienced by the SMEs (Figure 16)
69 82 of SMEs that encountered problems declared 5 different problems 33 of SMEs faced 6 problems 66 of SMEs faced 7 problems and 49 of SMEs faced 8 different problems
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50
Figure 16 The most serious problems experienced by the SMEs during 2016-2017 ( of
respondents 122)70
Source Survey of SMEs (2018)
Additionally the survey investigated the potential existence of a second most serious
problem Nearly half of the respondents (46) declared that they encountered only one
serious problem (Figure 17) However lsquolow speed of the servicersquo and lsquounsatisfactory
availability or discontinuity of the servicersquo remained the most prominent problems as
previously presented in Figure 16
Figure 17 The second most serious problem experienced by the SMEs during 2016-2017 ( of respondents 122)71
Source Survey of SMEs (2018)
Besides indicating the most serious problem SMEs were asked to assess the relevance of the
resulting cost (ie what percentage of costs deriving from all encountered problems was due
to the most serious problem only)
As presented in Table 14 more than 50 of the SMEs declared that the costs related to the
most serious problem represented a cost that counted for more than 80 of the overall
sustained costs The remaining 48 who declared that they had other problems did not
declare relevant costs related to the second most serious problem (either they provided values
that were not relevant72 or were not able to quantify the costs)
70 Incidence management is understood as the failure of the cloud provider to identify analyse and
correct hazards and prevent a future re-occurrence 71 Incidence management is understood as the failure of the cloud provider to identify analyse and correct hazards and prevent a future re-occurrence 72 Respondents declared values equal to zero
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Table 14 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by size class ( of respondents 122)
Size
Incidence of the costs related to the most serious problem compared with the total costs occurred
Below 50 Between 50 -
80 Above 80 10073 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Most affected service
All mentioned serious problems (both the first and second) were mainly related to the usage
of lsquocollaboration and communication servicesrsquo (Figure 18)74 which are indeed the most widely
used ones The next two types of cloud computing services linked to the most serious problem
are lsquobusiness applicationsrsquo and lsquostorage and hosting servicesrsquo Even though security services
are among the most widely used services (Figure 7) it seems they do not generate many
problems As also confirmed during the case studies75 (interviews with SMEs) security is often
perceived as the key risk when outsourcing information technology services because these
services may affect critical data However once cloud services are used problems related to
security appear only rarely
Figure 18 The type of cloud computing services linked with the most serious problems declared by the SMEs ( of respondents 122)76
Source Survey of SMEs (2018)
43 Causes of the most serious problems encountered
As previously illustrated the survey investigated also the causes of the most serious problems
encountered The main cause of the most serious problems is non-conformity of the
service provided with what was established in the contract (Figure 19)
73 Enterprises that declared they encountered only one problem 74 For the analysis of the second most serious problems and its link with used services please refer to
Annex 5 75 See Case study analysis for further information 76 Multiple choice question
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and unbalanced cloud computing contracts
52
Figure 19 The main causes of the most serious problems ( of respondents 122 of
responses provided 124)77
Source Survey of SMEs (2018)
The unfairness of CTampC78 is also perceived as a possible cause of the most serious problems
declared This was mentioned by 12 of the SMEs that encountered problems (ie 15
respondents out of 122)
However in 13 of the cases the problems encountered were not within the service
providerrsquos responsibility but resulted from technical issues with SME and internal factors
When providing further details the SMEs acknowledged that the problems may have been
caused by the enterprisersquos own mistake due to miscommunication limited training of the
employees or lack of capacityknowledge
The relevance of lsquonon conformity of the servicesrsquo lsquotechnical problemsrsquo and lsquounfairness of CTampCrsquo
is confirmed also when the analysis of the causes is restricted to most serious problems only79
(Table 15)
77 Multiple choice question 78 CTampC were considered unfair by the respondents because of the impossibility of negotiating its
content because the contract might have included limited liability of the providers andor the possibility for the provider to modify unilaterally one or more clauses 79 Unsatisfactory availability Low speed of the service and Forced updates to the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
53
Table 15 The causes of the three most serious problems ( of respondents 122 of
responses provided 59)80
The 3 most serious
problems
of SMEs declaring
this as the most
serious problem
of SMEs that consider
lsquonon-conformity of the servicersquo as the cause
of SMEs that consider
lsquotechnical problemsrsquo as
the cause
of SMEs that consider lsquounfairness of CTampCrsquo as the cause
of SMEs that declared other causes for the most
serious problem
encountered
Unsatisfactory availability
32 23 3 3 3
100 73 9 9 9
Low speed of
the service
27 13 5 2 7
100 48 19 7 26
Forced updates to the service
16 6 2 4 4
100 38 13 25 25
Source Survey of SMEs (2018)
Even the second most serious problems are frequently due to similar causes (ie non-
conformity of the service provided with what was established in the contract Figure
20)
Figure 20 The main causes of the second most serious problems ( of respondents 66 of responses provided 70)81
Source Survey of SMEs (2018)
44 Actions taken by SMEs
As anticipated in the introduction of Section 4 actions taken by SMEs in order to remedy the
encountered problems have been investigated
Nearly three-quarters (74) of the SMEs that encountered contract-related problems
(90 out of the 122 respondents) chose to take action to resolve or to remedy the most
serious problem
The 32 respondents who declared that no action had been taken provided usually more than
one justification for their answer The results that stood out were given by the fact that the
80 Multiple choice question 81 Multiple choice question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
54
provider fixed the problem (16) that the problem was assessed as not that
important (8) and that the procedure was too complicated (5)
The overall trend regarding actions taken to resolve the problem is maintained for each
type of sector included in the study where between 60 and 90 of the SMEs chose to
take action (see Annex 5 for further details)
Two main actions have been taken by SMEs to resolve the encountered problems using the
direct support of the provider andor making a complaint to the customer support
service (Figure 21)
Figure 21 The actions taken by the SMEs to resolve or remedy the most serious problems
( of respondents 90 of answers 165)82
Source Survey of SMEs (2018)
Also interestingly there are two types of actions to address the problem which have not been
declared at all both concerning legal measures going to mediationarbitration and
filing an action with a court
The replies received from the service providers during the case studies83 reveal that there
were cases where SMEs went to court to obtain compensation for the time and money lost
However providers remark that from their experience the probability that SMEs will win
these legal disputes is limited since it is difficult to demonstrate objective responsibilities
Additional insights were gained by investigating the replies within the category lsquoothersrsquo
chosen by more than 20 of the SMEs that took actions This reveals that about half of them
(21) SMEs took some type of internal measure such as changing an internal procedure or
moving the cloud computing services internally
The results revealed also that on average SMEs take more than one action to resolve or
remedy the most serious problems
At the same time among the 90 SMEs that took action 78 affirmed that they did not
encounter any difficulties in resolving the most serious problem (see question D121
from Annex 5 for further details)84
82 Multiple choice question 83 See Case study analysis (Annex 9) 84 All respondents (ie 90) that declared they took action were requested to say if they encountered
any difficulties while trying to resolve or remedy the encountered problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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55
Moreover the survey revealed that the most likely challenge for SMEs when trying to resolve
the most serious problem is the length of the procedure (Figure 22)85
Figure 22 Difficulties encountered when trying to resolve the most serious contract-related problem ( of respondents 20 of answers 34)86
Source Survey of SMEs (2018)
The findings from the case studies revealed (through interviews with providers) that different
forms of assistance are offered when needed and that the support did not depend on the
enterprisersquos size but rather on the severity of the issue Providers also mentioned that the
length of the remedy procedure varies from a minimum of a few hours to a maximum of three
or four days
Results of the actions
Following the actions taken the majority of the SMEs signalled that their problem was
either entirely resolved (70) or partially resolved (18) as shown in Figure 23
Figure 23 The results of the actions taken to resolve or remedy the most serious problem
( of respondents 90)
Source Survey of SMEs (2018)
85 The two responses regarding the lsquootherrsquo option were first related to the lack of a timely response from
the provider and secondly to the fact that the provider offered only partial help to resolve the problem 86 Multiple choice question The question was addressed to the 20 respondents that declared encountering problems when taking action to resolve or remedy the problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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56
The extent to which the problem was fully resolved varies across sectors ranging from 41
for administrative and support service activities to 89 for wholesale and retail trade (Figure
24)
Figure 24 Number of SMEs for which the problem was fully resolved as a result of the action(s) taken by sector ( of respondents 63)
Source Survey of SMEs (2018)
From the service providersrsquo viewpoint if the problem falls under the providersrsquo responsibility
they try to partially compensate for the cost of the service One specific provider declared
that the approach commonly used in the market is to compensate for administrative costs
but only in exceptional cases87 to also reimburse the entire costs of the subscribed package
The reimbursed amount varies between 5 and 15 of the monthly fees Moreover within
one Expert Group Meeting there was mention of lsquoa practice in Spain on a regulated market
where money is returned to customers for downtime within 60 daysrsquo88
87 These rare cases might vary according to the specific problem The provider might consider the
reimbursement of the entire cost if the unavailability of the services exceeds the scheduled period needed in order to fix the problem 88 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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57
5 Consequences of the encountered problems
This section investigates the nature of the financial detriment suffered by the SMEs as
consequence of the encountered problems as identified in Section 4
This might be related to
negative consequences for business activities such as
- potential loss of turnover or profits as a consequence of the encountered
problem
- loss of clients
- reputation damages
extra work that is done with internal human resources while taking action to
resolve the encountered problems
extra effort or costs to ensure an alternative service andor to fix the cloud
service problem
legal actions taken to exercise the users rights to remedies for non-conformity of
service
The prevalence of these consequences has been verified during the implementation of the
survey and their economic assessment where possible has been discussed and validated
during the case studies and webinars
This section also discusses some more qualitative aspects of how the encountered problems
may affect individual companies
51 Qualitative assessment
SMEs declared several negative consequences for business activities arising from contract-
related problems (Figure 25)
Figure 25 Perceived consequences for business activities ( of respondents 122)
Source Survey of SMEs (2018)
The limited availability of a service or its limited speed might reduce the capacity of SMEs to
respond to customersrsquo needs in a timely manner causing loss of clients or having a negative
impact on reputation Around one out of five SMEs that encountered problems declared that
those problems generated loss of clients or reputational damages
Reputation is a strategic intangible asset and it may play a very important role not only in
improving SMEsrsquo financial results but also (or even more importantly) in overcoming barriers
that significantly hinder their development The most important factor which builds a
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
58
companyrsquos reputation is the opinion and trust shared by stakeholders (especially customers
and third parties)
Interestingly Figure 25 also shows that the proportion of SMEs that perceive some financial
impacts arising from contract-related cloud computing problems in terms of lost profits or
turnover is slightly lower (16 and 14 respectively out of the 122 that faced contract-
related cloud computing problems) which suggests that at least some of those SMEs that
declared to have experienced negative consequences considered that they somehow managed
to counteract the impacts in terms of lost clients and reputational damages and that these
consequences did not translate into financial losses It is true that some of the effects of those
losses of clients or reputational damages that were reported may take some time to translate
into turnover losses and this helps in explaining why the proportion of enterprises that
declared to have experienced losses of turnover and profits is lower than that the one that
declared to have suffered from losses of clients or reputational damages Moreover this can
also be explained by the fact that it is not inherently an easy task to ask an SME to quantify
such costs as this might also depend on the person who answers and how knowledgeable he
is on the firmsrsquo accounts
Besides the consequences mentioned above the results of the survey and the findings of the
case studies confirmed that the most important consequence for cloud computing business
users is the extra work that had to be performed with internal human resources
overall 93 of the enterprises that encountered problems have had to mobilise some internal
human resources to sort out the problems (Table 16)
In particular while acting to resolve the encountered problems
76 of the enterprises have had to use technical staff to resolve the encountered
problems
administrative and senior officers and managers were used by nearly half of the
enterprises (48)
the complexity of the encountered problems forced 60 of the SMEs (73 out of 122
that encountered problems) to use at least two skill levels
Table 16 Number of enterprises in which human resources were invested while taking action to resolve or remedy the most serious problem by skill level of employee
( of respondents 122)
Skill level of
enterprises
Administrative 59 48
Technical 93 76
Senior officer(s)manager(s) 59 48
At least one of the above 113 93
Source Survey of SMEs (2018)
The importance and the prevalence of the extra work are also confirmed by the fact that about
one-third (31) of the SMEs that encountered problems reported no other consequences
besides human resources costs while taking action to resolve the most serious problem (Table
17)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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59
Table 17 Number of enterprises that have incurred costs (besides human resources) while
taking action to resolve or remedy the most serious problem by type of costs ( of respondents 122)89
Other costs encountered (different from costs related to internal HR)
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Other residual Costs 9 7
None 38 31
Source Survey of SMEs (2018)
It is interesting to note that when the problems were not resolved SMEs faced additional
costs related to ensuring an alternative service (34) and costs related to fixing the
cloud service problem with external support (32 Table 17)
Other hidden costs may also appear when SMEs face contract-related problems Even if legal
measures (ie going to mediationarbitration and filing an action with a court) were not
chosen as the action to resolve the problems (see Section 42 for further details) 18 of the
SMEs incurred some legal costs when exercising user rights to receiving remedies for non-
conformity of the contracted service
Whilst the perception of the nine SMEs that took part in the in-depth interviews is that the
encountered problems do not always have direct and important consequences for the financial
performance of the enterprises (ie loss of profit or turnover) it should also be noted that in
the survey not all SMEs were able to provide an estimate of the detriment encountered Such
estimation is indeed challenging and the unwillingnessincapability of the SMEs to provide an
estimate may also be due to the fact that effects on the balance sheet may only materialise
over a longer time horizon
However cloud services can be critical for SMEs This was reflected in some very high
estimates of detriment reported by individual SMEs For example this could be the case for
where the data lies at the core of the SMErsquos activity (eg an accounting firm) In extreme
cases the problem may cause the market exit of efficient companies The larger the costs
generated by the encountered problems the larger the risk of market inefficiencies
The next section is aimed at quantifying the monetary value of the consequences analysed so
far
52 Quantitative assessment
The quantification of the consequences suffered by SMEs (economic detriment) relied on the
computation of the following parameters90
proportion of enterprises that use cloud computing services (cloud computing usage
rate)91
the incidence of contract-related problems by sector--size classes (namely the
percentage of enterprises that encountered problems)
the 95 trimmed mean values by enterprise for
89 Multiple choice question 90 Please refer to Section 21 for further details on the methodology used to quantify the economic detriment 91 Please refer to Section 31 for further details
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60
- losses of turnover or alternatively losses of profits
- number of working days involved in resolving the problems
- the level of other costs incurred
- the value of any redress offered by the service provider as a compensation
All of these parameters have been quantified by using the results of the survey To compute
the average and 95 trimmed mean values for each dimension of detriment only the answers
of SMEs that quantified the detriment associated with that dimension were considered
For some dimensions SMEs were asked first whether they suffered some cost and then to
quantify it SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems but that were not able to provide an estimate of the detriment suffered
due to that cost cannot be considered in this quantification exercise This quantification
exercise must thus be regarded as an estimate of the financial consequences of contract-
related cloud computing problems
Table 18 presents in the first column the number of enterprises that declared that they
suffered each cost92 then in the second column it presents the number of SMEs that were
able to quantify the cost and in the third column the number of SMEs that declared some
positive value for each cost As it can be seen the difference between the number of
enterprises that declared that they suffered a cost and that were able to quantify its effect is
quite diverse across the different dimensions of detriment
Table 18 Enterprises that declared that they suffered some costs and that were able to
quantify these costs
Component
Number of
enterprises that declared
they suffered the cost
Number of
enterprises that
quantified the cost
Number of enterprises
that
quantified
with positive values
of enterprises
that
quantified
with positive values
Loss of turnover na 122 17 14
Loss of profits na 122 19 16
Internal human resource costs 113 113 105 93
Other costs (at least one) 90 78 31 40
Costs related to ensuring an alternative service
42 41 15 37
Costs related to fixing the cloud service problem
39 39 15 38
Legal costs 22 22 1 5
Costs related to reputation
damage 23 23 3 13
Costs related to loss of client(s)
25 24 2 8
Other residual costs 47 34 5 15
Redress 15 15 7 47
Source Survey of SMEs (2018)
92 For lost turnover and lost profits as it was not asked separately whether the SME experienced some loss there is no information (see Annex 4 section E for further details on how the data collection was structured)
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Regarding turnover and profit losses all companies had to answer the question in the survey
and in that sense had to quantify those dimensions of detriment Despite this fact and as
already discussed only 14 and 16 respectively provided numbers for their estimates of
losses of turnover and profits These low figures may be due to the fact that at least some of
those SMEs that declared to having experienced other negative consequences might have
managed to counteract the impacts related to lost clients and reputational damages and other
costs and that those costs did not translate into financial losses Yet it is also true that some
of the effects of those losses of clients or reputational damages that were reported may take
some time to translate into turnover losses and this may help to explain why the proportion
of enterprises that declared to have experienced losses of turnover and profits is lower than
that which declared to have suffered losses of clients or reputational damages
For internal human resources costs 93 of the enterprises that mobilised internal human
resources declared losses of some working days that were considered in the analysis of
detriment thus most enterprises were considered in the analysis
For other costs 78 (80) of the enterprises that declared to have borne some costs were
able to quantify at least one of these costs
It is important to point out that some of the SMEs that declared to have borne costs arising
from contract-related cloud computing problems were not able to provide an estimate of the
cost of the detriment suffered This means that while there is some under-reporting of the
percentage of enterprises that faced relevant costs it does not necessarily imply a bias in the
overall estimate of detriment given that calculating average values for the impact can correct
the under-reporting problem if the true values of those that are not able to quantify have the
same distribution as those that were able to do so In practice by taking into consideration
only those that SMEs that quantified the detriment may lead to underestimation
overestimation or no bias at all
The fact that enterprises only assess the current financial losses and are not able to foresee
the future financial losses associated with problems such as the loss of clients or reputation
damages can imply an underestimation of the true detriment
Computed values have been discussed and validated during the webinars realised under Task
3 (see Annex 9 for further details)
Cloud computing usage rate
Two possible scenarios for the estimate of the usage rate of cloud computing were considered
based on the survey of SMEs
the first which is the central scenario in this study considers all enterprises that
did not respond to the survey as not using cloud computing services arriving at a
universe of 3173 SMEs In this case the usage rate corresponds to a value of 159
in the second only those enterprises that explicitly declared that they are not using
cloud computing services are added to those that declare its use corresponding to a
universe of 1009 The usage rate in this case is higher reaching a value of 499
which can be regarded as an upper estimate representing a possible future situation
in which the usage rate of cloud computing increases significantly
Incidence of contract-related problems
The sample available from the survey also allows the calculation with a 95 confidence
interval level and 5 margin of error of the incidence of contract-related problems
Losses of turnover
For all cost categories (ie loss of turnoverprofit costs of human resources other costs) and
for the value of redress the research team considered the 95 trimmed mean of the values
from the survey
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Trimmed means are robust estimators of a general trend To compute the 95 trimmed
mean the research team i) removed 25 of observations on each side of the distribution
of survey answers ii) computed the average of the remaining observations
Using trimmed means confers one main advantage the standard error of the trimmed mean
is less affected by outliers and asymmetry than the mean93
The following tables present both trimmed mean and average values for all costs the latter
being included for illustrative purpose only
Table 19 Loss of turnover by enterprises
Value of
Losses (euro)
Number of
Enterprises
Relative frequency Cumulative
frequency
000 105 861 861
700 1 08 869
30000 1 08 877
104690 2 16 893
157035 1 08 902
200000 1 08 910
209380 1 08 918
500000 2 16 934
1000000 1 08 943
2000000 1 08 951
5000000 1 08 959
10469012 1 08 967
15000000 2 16 984
20000000 1 08 992
50000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Based on these values the value of the 95 trimmed mean is euro42094 Losses by sector
size class and country are presented in Annex 5
Loss of profit
Looking at profits (Table 20) we can see that also only 156 (19) of the enterprises out of
the 122 that suffered contract-related cloud computing problems declared a loss of profits
corresponding to a 95 trimmed mean of euro177 (Annex 5)95
Table 20 Loss of profits by enterprise
Value of Losses (euro)
Number of Enterprises
Relative frequency Cumulative frequency
000 103 844 844
1200 1 08 852
93 It must be emphasised that all very high value answers (outliers) have been double-checked and they do not seem to include errors in any case we take the more robust scenario (when the 95 trimmed
mean is used) to measure the impact and present the results considering the average values only as a
sensitivity in the appendix 94 The average value is euro985869 95 The average loss of profits per enterprise is about euro1913
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63
Value of
Losses (euro)
Number of
Enterprises Relative frequency
Cumulative
frequency
20938 1 08 861
51500 1 08 869
52345 1 08 877
60000 1 08 885
90000 1 08 893
150000 1 08 902
157035 1 08 910
200000 2 16 926
209380 1 08 934
300000 1 08 943
500000 2 16 959
523451 1 08 967
2093802 1 08 975
3000000 1 08 984
5234506 1 08 992
10000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Internal human resources costs
When one considers the number of working days involved in resolving the problems96 there
is a significant level of dispersion and only 17 out of the 122 enterprises that suffered contract-
related cloud computing problems did not invest working days in resolving the problem97 The
95 trimmed mean was about 32 days98
To compute the human resources costs incurred when resolving the problems as the actual
values of wages of those involved in resolving the problems were not provided the number
of working days was multiplied by the average cost of labour per working day per country and
industry which was computed from Eurostat data as INDIC_SB - Personnel costs - million
euroINDIC_SB - Persons employed - number)260
Eurostat data are not differentiated by skill level but by using the average wage level by
sector and country during that period we have a robust estimate of the average cost of labour
on the affected enterprises and so the estimate is likely to be close to actual conditions
96 For the measurement of the detriment only the overall number of working days was used as the responses to the survey regarding wages were not robust and so the average wage for each country was used to estimate the human resources costs and accordingly only the overall number of working
days had to be used from the survey 97 This means that 93 of the enterprises that mobilised internal human resources to sort out the problems declared some losses of working days 98 The average number of working days involved in resolving the problem was about 72
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
64
Figure 26 Total number of working days involved in resolving the problem by enterprise
Source Survey of SMEs (2018)99
Other costs and value of redress
With regard to the other costs100 incurred by the SMEs to resolve the problem a qualitative
assessment has been presented in Section 51 above
With respect to these other costs Table 21 shows the number of SMEs that declared relevant
values as well as the trimmed mean and the average of the declared values for each of the
individual costs
The incidence of each of the individual other costs is quite different with the costs related to
ensuring an alternative service and costs related to fixing the cloud service problem as those
that are perceived as having greater impact Overall only seven enterprises experienced more
than one type of other costs
Table 21 Values for other costs
Component
Number of enterprises
that quantified
costs
Number of enterprises
that declared positive values
of total 122
95 trimmed
mean of the values
declared by enterprises
experiencing
each cost euro
Average of
the values declared by enterprises
experiencing each cost
euro
Costs related to ensuring an alternative service
41 15 123 1187 5892
Costs related to fixing the cloud service problem
39 15 123 1311 13657
99 See Annex 5 for further details 100 ie costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
65
Component
Number of enterprises
that quantified
costs
Number of enterprises
that
declared positive values
of total
122
95
trimmed
mean of the values
declared by enterprises
experiencing each cost
euro
Average of
the values declared by enterprises
experiencing each cost
euro
Legal costs 22 1 08 00 19
Costs related to reputation damage
23 3 25 00 2701
Costs related to loss of
client(s) 24 2 16 00 8663
Other residual costs 34 5 41 23 6255
Source Survey of SMEs (2018)
As discussed above not in all cases were consulted stakeholders able to associate an
economic value with the consequence that was faced or they simply considered the costs that
were borne as not relevant
Since for some of the individual other costs there were very few answers provided we chose
to consider an aggregate value of other costs in the assessment of the detriment suffered by
SMEs given that the use of an aggregate value increases the robustness of the estimate101
To arrive at the aggregate value we first computed the total value of other costs borne by
each enterprise (by adding up each of the individual other costs) and then computed the
trimmed mean of the aggregate declared other costs The 95 trimmed mean per
enterprise that suffered problems102 of the overall other costs borne was euro341 (Table
22)103
Table 22 Parameters used in detriment assessment
Component
Number of enterprises that
declared
relevant values ()
of the 122 enterprises that
faced problems
95 trimmed mean of the
values declared by enterprises
that quantified the component
euro
Average of the values declared by enterprises that quantified the component
euro
Turnover losses 17 139 41954 985869
Profit losses 19 156 17690 191346
Costs of human resources
105 861 36006 80621
Other costs 30 246 34124 371871
Redress 7 57 095 6042
Source Survey of SMEs (2018)
101 For this reason the trimmed mean based on total other costs has been used instead of the trimmed
means for each individual other cost 102 The trimmed mean has been computed over 122 SMEs 103 An average of euro3718 per enterprise
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66
Finally also the value of any redress offered by the service providers to compensate for
the problem has been computed Only seven enterprises out of the 122 that suffered contract-
related cloud computing problems (6) declared to having received a positive amount as
redress corresponding to a 95 trimmed mean of about euro1 per enterprise that
suffered problems104 which shows that SMEs are not able to be compensated for the costs
suffered
Table 22 summarises the parameters discussed above for each component of detriment that
is used in the quantitative analysis
Measuring the economic detriment
Having those parameters and the total number of enterprises that experienced contract-
related cloud computing problems it is possible to compute the value of the economic
detriment they suffered by using the formulas presented in Section 21 of this report
Gross financial detriment is measured by taking into account alternatively the loss of turnover
or profits as perceived by each SME and then adding the costs of the human resources
invested by each SME while taking action to resolve or remedy the most serious encountered
problem and the other costs declared by each SME including costs such as the costs related
to ensuring an alternative service the costs related to fixing the cloud service problem any
legal costs costs related to reputation damage and costs related to loss of client(s) and other
residual costs
The measures of gross financial detriment per enterprise computed from the previous
parameters are presented in Table 23 and those for net financial detriment are shown in Table
24
Table 23 Measures of gross and net financial detriment per enterprise considering lost turnover (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Turnover losses 4195 374 98587 685
Costs of human resources 3601 321 8062 56
Other costs 3412 304 37187 259
Gross detriment 11208 1000 143836 1000
Redress 10 604
Net detriment 11199 143232
Source Survey of SMEs (2018) and Eurostat Business Statistics
104 An average of euro6042
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67
Table 24 Measures of gross and net financial detriment per enterprise considering lost
profits (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Profit losses 1769 201 19135 297
Costs of human resources
3601 410 8062 125
Other costs 3412 389 37187 578
Gross detriment 8782 1000
64384 1000
Redress 10 604
Net detriment 8773 63780
Source Survey of SMEs (2018) and Eurostat Business Statistics
As mentioned above considering these values two scenarios have been developed that take
into account the two measures of cloud computing usage rate
The estimates presented are lower thresholds of the actual detriment as they only consider
the most serious problem which represents less than 80 of the total losses for 48 of the
companies105 The size of underestimation is limited by the fact that sectors with the highest
usage rates of cloud computing are considered in the analysis and they are likely to bear more
costs than the average sector
Table 25 to Table 30 below present the results for economic detriment at the EU level
The interpretation of the results on the economic detriment caused by contract-related
cloud computing problems shows that in the central scenario (when 159 of the total
number of enterprises use cloud computing) the number of enterprises that suffered contract-
related problems across the EU28 is around 583000 (Table 25) In the alternative
scenario (when about 50 of the enterprises use cloud computing) this value increases to
about 18 million
105 The risk of underestimation is less pronounced as the sectors selected for the sample are those for which the usage rate of cloud computing is higher
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Table 25 Number of enterprises at the EU28 level suffering economic detriment
Scenario 1
(average incidence of CC use
159)
Scenario 2
(average incidence of CC use
499)
(number)
Secto
r
Manufacturing 82256 245581
Wholesale and retail trade repair of motor vehicles and motorcycles
198877 628761
Information and communication 49890 156187
Professional scientific and technical activities
195098 599588
Administrative and support service activities
56803 203001
Total 582924 1833118
Siz
e
cla
ss Micro 548001 1722427
Small 22827 70148
Medium 12096 40543
Total 582924 1833118
Source Computations based on Survey of SMEs (2018) and Eurostat
When considering lost turnover and all other costs incurred (Table 24) contract-
related problems generated a gross economic detriment that ranges from approximately
euro650 million in the scenario of 159 cloud computing usage to about euro21 billion in the
scenario of 499 cloud computing usage When considering the lost profits and all other
costs incurred (Table 27) the value of gross detriment goes from just over euro500 million
in the scenario of 159 cloud computing usage to about euro16 billion in the scenario of
499 cloud computing usage
Table 26 Gross economic detriment at the EU28 level - considering lost turnover and all other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2947
Wholesale and retail trade repair of motor vehicles and motorcycles
1673 5235
Information and communication 369 1145
Professional scientific and technical
activities 1557 4723
Administrative and support service activities
1918 6495
Total 6534 20546
Siz
e
cla
ss Micro 4816 15124
Small 1144 3562
Medium 574 1861
Total 6534 20546
Source Computations based on Survey of SMEs (2018) and Eurostat
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69
Table 27 Gross economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 649 1906
Wholesale and retail trade repair
of motor vehicles and motorcycles 1548 4852
Information and communication 345 1074
Professional scientific and technical activities
1421 4323
Administrative and support service
activities 1157 3943
Total 5119 16098
Siz
e
cla
ss Micro 4013 12609
Small 801 2488
Medium 306 1002
Total 5119 16098
Source Computations based on Survey of SMEs (2018) and Eurostat
The value of the gross detriment per enterprise that faces problems when considering
lost turnover and all other costs incurred is about euro1100 When considering lost profits
and all the other costs incurred the value of the detriment per enterprise is around euro880
Table 28 Average gross economic detriment per SME
Average gross economic detriment per SME suffering economic
detriment euro
Considering lost turnover and all
other costs incurred
Considering lost profit and all other
costs incurred
Micro 8788 7323
Small 50116 35090
Medium 47454 25298
Total 11209 8782
The net economic detriment associated with contract-related cloud computing problems
ranges from around euro650 million to euro21 billion when considering lost turnover and
all other costs incurred (Table 29) and from euro501 million to euro16 billion when considering
the lost profits and all other costs incurred (Table 30)
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70
Table 29 Net economic detriment at the EU 28 level - considering lost turnover and all
other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2946
Wholesale and retail trade repair of
motor vehicles and motorcycles 1673 5234
Information and communication 369 1145
Professional scientific and technical activities
1556 4722
Administrative and support service
activities 1913 6481
Total 6528 20529
Siz
e
cla
ss Micro 4815 15118
Small 1143 3562
Medium 570 1850
Total 6528 20529
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 30 Net economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 648 1906
Wholesale and retail trade repair of motor vehicles and motorcycles
1548 4851
Information and communication 345 1074
Professional scientific and technical activities
1420 4322
Administrative and support service activities
1152 3928
Total 5114 16081
Siz
e
cla
ss Micro 4011 12603
Small 800 2488
Medium 302 990
Total 5114 16081
Source Computations based on Survey of SMEs (2018) and Eurostat
Moving to the analysis of the different components of detriment considering the more detailed
results presented in Annex 5 one can see that the overall turnover loss (Table 77) arising
from contract-related cloud computing problems across the EU28 ranges from euro245 million
to euro770 million when the 95 trimmed mean loss per enterprise is considered depending on
the cloud computing usage rate
In the measures of detriment that consider the lost turnover and all other costs incurred this
component is the most significant component of detriment in both scenarios with values
around 37 (Figure 27) When measuring detriment considering the lost profits and all other
costs incurred the most important component of detriment varies across the different
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
71
scenarios being either the other costs covered106 or the costs of human resources invested
in resolving the problem
The costs of human resources involved in resolving the problem represent around 32 of
the total detriment when considering lost turnover (Table 23)
Even if figures by industry should be looked at carefully in all scenarios in which detriment is
measured considering the lost turnover and all other costs incurred the sectors lsquoWholesale
and retail trade repair of motor vehicles and motorcyclesrsquo lsquoProfessional scientific and
technical activitiesrsquo and lsquoAdministrative and support service activitiesrsquo together account for
about 90 of the overall gross detriment In the scenarios in which detriment is measured
considering lost profits and all other costs incurred lsquoWholesale and retail trade repair of
motor vehicles and motorcyclesrsquo and lsquoProfessional scientific and technical activitiesrsquo together
account for about 60 of the total detriment
In all scenarios micro enterprises account for close to 70 of the global economic detriment
106 These costs include costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
72
6 Impacts of the economic detriment
This section assesses (in quantitative terms) the impact on growth and jobs of the quantified
SMEs detriment identified and provides a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and competitiveness
In order to quantify the effects on growth and jobs the research team estimated
the direct impact meaning the GVA and employment contents of the turnover lost
by SMEs that are affected directly by the contract-related problems This is done by
taking from Eurostat data for each countrysector
- the output per employee
- the output per unit of GVA107
Dividing the turnover losses estimated by these coefficients allows to estimate the GVA
associated with the turnover losses as follow
119863119868(119866119881119860)119894 = sum119871(119879)119894119895
119884119894119895 119866119881119860119894119895frasl
5
119895=1
Where
119863119868(119866119881119860)119894 is the direct impact in terms of GVA for the country i considering the five
sectors under the scope of the study
119871(119879)119894119895 is the loss turnover for the country i in the sector j
119884119894119895 is the average total output produced in the country i and in the sector j during the
period 2014-2016 computed from Eurostat National accounts aggregates by industry
(up to NACE A64) [nama_10_a64]
119866119881119860119894119895 is the average total GVA produced in the country i and in the sector j during
the period 2014-2016 computed from Eurostat National accounts aggregates by
industry (up to NACE A64) [nama_10_a64]
The same approach has been used for the estimate of the loss of jobs associated with the
turnover losses
119863119868(119864)119894 = sum119871(119879)119894119895
119884119894119895 119864119894119895frasl
5
119895=1
Where
- 119863119868(E)119894 is the direct impact in terms of employment for the country i considering
the five sectors under the scope of the study
- 119871(119879)119894119895 is the loss turnover for the country i in the sector j
- 119884119894119895 is the average total output produced in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64]
- 119864119894119895 is the average number of employees in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64_e]
107 Average values for 2014-2016 were considered to increase robustness and to cover almost the same period as we are considering in the assessment
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
73
For instance in the first scenario the total turnover losses arising from contract-related cloud
computing problems in manufacturing in Belgium is euro448 million (Table 81) Since each
person in manufacturing in Belgium produces euro4293 thousand of output (Table 84) that
turnover is associated with 104 jobs And given that for each euro of GVA in manufacturing in
Belgium there are euro41 of turnover (Table 83) that turnover is associated euro 108 million of
GVA
indirect impacts also measured as GVA and employment losses but in the supplier
industries were also assessed by using the input-output methodology presented in
Box 4
The basic requirement is to estimate the amount of turnover that is lost in supplier industries
given the existing supply chains The input-output methodology allows estimating those losses
based on the interlinkages between sectors existing in a given economy We then use the
input-output tables for the EU28 to estimate how much turnover would be lost in the supplier
industries due to the turnover losses associated with contract-related cloud computing
problems in the industries directly affected by those problems After estimating the turnover
losses in the supplier industries it is possible to measure the GVA and employment contents
of the production lost in those industries by using the same procedure described above that
was used for direct effects The input-output analysis is only used to estimate the turnover
losses in supplier industries when the methodology described above is applied
61 Direct impacts
At the enterprise level we estimated the financial detriment suffered by each enterprise by
considering different components and then aggregated those measures to the EU28 level by
adding up the effects suffered by each enterprise across all enterprises
When estimating the macroeconomic effects of the contract-related problems as discussed in
the methodology one must consider the overall turnover losses that were sustained by all
enterprises that experienced those problems This is due to the fact that turnover is the
variable that summarises the overall effects at the enterprise level and that is transmitted to
the economic system through the supply chains and can be related to aggregate economic
variables At the same time by considering turnover as an overall effect helps to avoid double
counting
Estimated turnover losses are presented in section 52 by considering the average loss of
turnover experienced by each enterprise and the total number of enterprises that suffered
problems related to cloud computing As discussed in that section there may be some
underestimation of the loss of turnover as we are only considering the consequences of the
most serious problem and also because enterprises many times are not able to assess108 how
some costs such as loss of clients or reputational damages translate into turnover losses or
other financial losses
Keeping the previous considerations in mind the overall results show that depending on the
scenario of cloud computing usage the direct loss of jobs associated with the loss of turnover
caused by contract-related cloud computing problems ranges from 3672 to 11816 jobs At
maximum this represents 001 of the total employment in the EU28 showing that the
overall direct effects of contract-related problems in terms of jobs is quite limited
With respect to gross value added the direct impact of the losses of turnover caused by
contract-related cloud computing problems ranges from euro119 million to euro379 million which
is again negligible when considering the overall EU28 level
108 Namely because there is a time lag and no linear proportion between the costs and damage (eg reputational damage) and the turnover losses
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
74
Table 31 Direct impact on growth and jobs of the losses of turnover caused by contract-
related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 1191 3788
EU GVA 000 000
Impact on jobs
Persons 3672 11816
EU
employment 000 001
Source Computations based on Survey of SMEs (2018) and Eurostat
Annex 7 presents tables that provide details by sector and country The tables that provide
details by country and sector show that effects are more significant in the sectors
lsquoProfessional scientific and technical activitiesrsquo and lsquoAdministrative and support service
activitiesrsquo One can also find some differences across countries
62 Indirect impacts
Turning to the indirect effects as mentioned we measured the consequences of the turnover
losses on supplier industries by using the input-output model to identify the supply chains
It is important to take into account that not only the described limitations related to the direct
effects do not fully translate into the indirect effects but the methodology used is also not
able to capture some opportunity costs that are particularly relevant for instance for human
resources or downstream effects namely on final consumers Thus the current
measurement of indirect effects must be seen as a lower threshold to the true indirect effects
Despite these limitations the input-output methodology is the best available methodology to
explore the interlinkages that exist between sectors and to estimate the indirect impacts
arising from contract-related problems
The measured indirect impacts on supplier industries are similar in magnitude to the direct
effects
Depending on the scenario of cloud computing usage the loss of jobs in supplier industries
associated with the loss of turnover caused by cloud computing contract-related problems
ranges from 1733 to 5402 Losses of GVA range from euro99 million to euro308 million
Overall adding direct and indirect effects we may refer to maximum impacts of about 5400
jobs (000 of EU28 employment) in scenario 1 and 17818 jobs in scenario 2 (001 of
total employment Regarding the loss of GVA the sum of direct and indirect effects adds up
to euro220 million in scenario 1 and to euro687 million in scenario 2 (both 000 of EU28 GVA)
which shows that the impact is not very significant at the EU28 level
Table 32 Indirect impact on growth and jobs of the losses of turnover caused by contract-related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 987 3079
EU GVA 000 000
Impact on jobs Persons 1733 5402
EU employment 000 000
Source Computations based on Survey of SMEs (2018) and Eurostat
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and unbalanced cloud computing contracts
75
63 Other qualitative impacts of contract-related problems
The previous sections show that even with some possible underestimation the overall direct
and indirect impacts are not very significant for the time being but as was pointed out in the
analysis some companies have already experienced problems that had very significant effects
(demonstrated by the size of the average of all detriment components compared with the
95 trimmed mean presented in Table 22) and in a scenario of increasing usage rates these
effects are likely to become more relevant and more likely to affect the market
The analysis also revealed that some SMEs had difficulties in quantifying the costs relating to
cloud computing problems
However it is important to keep in mind that besides those quantitative impacts there might
be some other more qualitative effects arising from contract-related cloud computing
problems that create distortions affecting the allocative efficiency in the EU economy
eventually diminishing the overall welfare
The efficiency with which goods and services are produced or distributed is fundamental to
ensuring the competitiveness of the various business entities Using the best available
technologies and taking full advantage of them to reduce costs or improve the quality of the
goods and services provided are relevant factors in ensuring SMEsrsquo competitiveness
In the ongoing debate on macroeconomic imbalances and external competitiveness there has
been an increasing interest in competitiveness indicators regarding both cost competitiveness
and quality and non-cost competitiveness
General industrial economics theories show that contract-related problems as they increase
transaction costs may affect that competitiveness as they are a type of context cost which
are costs that affect the activity of enterprises and are not imputable to the investor to his
business or to his organisation These context costs gain increasing relevance with the
increasing integration of various enterprises into the global economy given that in a scenario
in which enterprises located in different territories face different contextual costs those costs
may significantly distort competition favouring the enterprises located in jurisdictions with
lower context costs
Contract-related problems are therefore a type of problem that may impact competitiveness
of enterprises and hinder their development in several different ways They may represent an
additional cost that reduces the price competitiveness of enterprises But they can also
constitute a non-cost barrier to competitiveness if they affect the presence of enterprises in
the market and their ability to efficiently supply their products namely if those problems
significantly reduce the possibility of accessing the best available technologies
Taking into account the previous considerations it is then important to analyse whether the
contract-related problems encountered and described above may have generated other
significant effects through both cost and non-cost competitiveness109
The analysis so far has already shown that contract-related problems have an impact in terms
of reputation and loss of clients besides the financial impacts on enterprise performance Even
if SMEs are not able to translate those effects into financial costs they are likely to have an
impact over the long run
During the interviews and case studies questions were also raised about whether the contract-
related problems might have caused other problems such as reputation damages or losses of
109 The outliers in the sample showed that in a few extreme cases the effects of contract related problems had very high effects and although these values have been excluded using the Trimmed Mean they should not be disregarded when trying to understand the whole context
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
76
competitiveness that may have impacted significantly on the economic performance of the
companies affected
For the time being it seems that given the fact that at the micro level (ie enterprise level)
most of the detriment is associated with extra work required to sort out the problems
enterprises are able to accommodate this effect at least to some extent
The relatively low value of detriment per enterprise perceived by SMEs as being caused by
contract-related problems suggests that enterprises consider they are able to absorb some of
those costs110 If those effects were greater they would have to transmit them more heavily
to their clients namely through increases in prices
Yet in considering all of the factors our general assessment is that even if enterprises are
able to partially absorb the costs they have incurred some of those costs will show up sooner
or later in financial variables and will translate into larger distortions that are likely to affect
allocative efficiency market functioning and competitiveness
110 Again the difficulties evidenced by some SMEs to quantify the costs arising from contract related problems suggests they might not be able to sufficiently account for the opportunity costs associated with solving those problems
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77
7 Conclusions
Demonstrable tangible economic benefits of cloud computing have been estimated and
confirmed for some years now The main benefits realised are lower information technology
costs more effective mobile working higher productivity standardisation of processes better
ability to enter new business areas and the ability to open up in new locations
While the above list of the benefits is not exhaustive it certainly provides an impression of
the high potential economic advantages that can be gained from the usage of cloud computing
compared to more traditional alternatives such as on-premises information technology
infrastructure
All in all the growing usage of cloud computing is expected to have a relevant impact on
increasing EU GDP and creating additional jobs111
The present study investigated the cloud computing services that are most commonly used
by micro small and medium-sized enterprises in the EU In particular a survey was
conducted on 3173 EU SMEs
The survey results allowed the estimation of the usage rate of cloud computing across SMEs
as 159 calculated from the number of SMEs that declared they are using cloud computing
services (503) divided by the number of SMEs reached (3173)
However EU SMEs are still only making basic use of cloud computing services in terms of the
number and types of contracted services
on average SMEs that declared that they used cloud services contracted five
different cloud computing services but one-third of the SMEs that used cloud
computing contracted only a limited number of services (up to three)
furthermore the use of cloud computing is mainly related to more mature applications
(such as collaboration and communication tools storage and hosting support)
Although the usage of cloud computing services is growing the following potential factors
limiting cloud computing usage were investigated during the interviews with different
stakeholders (including cloud services providersbrokers SMEs business associations ndash
including EEN associations Chamber of Commerce national authorities national SMEs
Envoy)
some SMEs have difficulties in assessing how the new services can improve their
everyday work
other SMEs perceive that costs of cloud services are still high and that it takes too
long to recover the investment
the division of responsibilities between SMEs and cloud providers can
sometimes become a major source of problems as it is not always clearly
documentedexplicated leading to overlaps and gaps especially with respect to
security aspects It is not uncommon for SMEs to be confused about their
responsibilities concerning security such as who makes backups of data or software
which type of failoverredundancy is offered by the provider and what still needs to
be done by the customer All of these issues can have an impact on the willingness of
SMEs to outsource cloud services
security matters generally influence SMEsrsquo decisions about what types of services to
be used One of the aspects that has been mentioned during the interviews as a factor
influencing the SMEsrsquo choices is the reputation of the provider more precisely
whether the cloud provider has had incidents of data breaches in the past
111 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels
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78
Another important factor discussed during the interviews is the asymmetry of information
when it comes to negotiating and customising the services covered by the CTampC and that
might limit the capacity of SMEs to find solutions that fit their needs
As a consequence the survey results showed that the SMEs tended to sign the standard
terms and conditions offered by the cloud provider (this is true for 64 out of 503 SMEs
that are using cloud computing services) either because they did not try at all to negotiate
(46) or were not able to do so (18) The decision to adopt the standard terms and
conditions was made either because these met the usersrsquo expectations (18) or because it
was assumedknown that a negotiation would have no chance to succeed (13)
In contrast to the traditional provision of on-premises IT resources the multi-tenant nature
of cloud computing usually raises concerns with respect to privacy confidentiality and
data integrity Cloud computing presents its own set of security issues which coupled with
the risks and threats inherent in traditional IT computing are also limiting its usage
However the stakeholders involved in the study indicated that the shortcomings in the SMEsrsquo
capacity for negotiating cloud computing contracts could be helped somewhat by the entry
into force of the GDPR as the new legislative framework gives SMEs more control over data
once the service providers apply the regulation
While the main objective of the study was to deliver the necessary evidence to support the
European Commission in its assessment of the need for and extent of any further EU efforts
to increase SMEsrsquo trust in cloud services it investigated
the prevalence nature scope and scale of the contract-related problems that SMEs
encounter in relation to cloud computing services
whether and to what extent enterprises are able to protect themselves against
contract-related problems when deciding to use cloud services
Based on the results of the survey it was estimated that around one SME cloud computing
user out of four (24) encountered contract-related problems during the period 2016-
2017 The main problems were related to the non-conformity of the service provided with
what was established in the contract concerning
the speed of service (55 of those SMEs who experienced problems)
the availability or continuity of the service (49)
updates to the service (32)
clarity of the instructions on how to use cloud computing services (26)
Problems related to security even if having impact on only a limited number of SMEs (less
than 10 of the cloud computing users that experienced problems) were quite frequent
especially with regard to the lack of protection of the data stored in the cloud against theft or
viruses and unauthorised disclosure of or access to data (both showing frequencies of almost
once every three months)
This was an important element arising from the study as security is often perceived as the
key risk when outsourcing information technology services because it may affect critical data
Clearly enterprises attach high importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
Cloud computing users who experienced problems in relation to cloud computing services
were asked to select the most serious among them (ie the problem that created the highest
impact on the everyday activities andor in terms of costs faced in order to resolve it) The
analysis of the results showed a correlation between the most frequent problems and the
problems with the highest impacts on enterprises Indeed unsatisfactory availability or
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
79
discontinuity of the service low speed of the service and forced updates were
considered as the most serious problems
The main cause of the most serious problems was the non-conformity of the service
provided with what was established in the contract (51 of the 122 SMEs declaring
that they encountered problems) The unfairness of contract terms was also perceived as a
possible cause for the most serious problems declared this being mentioned by 15
respondents out of 122 (12) Some practical examples were provided in the Surveyrsquos open
questions and the contract terms were considered to be unfair by the respondents when there
was no possibility of negotiating their content or when they included limited liability of the
providers or the possibility for them to unilaterally amend the contract
However in 19 of the cases the problems encountered were not under the service providerrsquos
responsibility but arose from technical issues and enterprisesrsquo internal factors112
In order to protect themselves the majority of the SMEs (74 of those that encountered
problems) chose to take action to resolve or to remedy the problems encountered
Conversely for those SMEs that decided not to take any action this was justified by the fact
that the cloud provider fixed the problem or that the problem was assessed as not important
or the procedure was considered to be too complicated Interestingly there are two types of
actions which SMEs showed reluctance to use both concerning legal measures going to
mediationarbitration and filing an action with a court This is because the costs associated
with these proceedings did not appear to be worth it
Following the actions taken to address the problem the majority of the SMEs indicated that
their problem was either entirely resolved (70) or partially resolved (18) but the vast
majority of the surveyed SMEs that experienced problems (88) were not offered any redress
by the cloud service providers for the damage caused
The research team estimated that 582924 micro small and medium-sized enterprises
have encountered contract-related problems while using cloud computing and have
faced an economic detriment that is related to different components
losses of turnover and profits
costs of human resources
other costs incurred113
Regarding the human resources invested by the SMEs to address problems members of the
technical staff were by far the most used (76 of the enterprises that faced problems
invested in such resources) Furthermore about one-third (31) of the SMEs reported no
other costs besides human resources when taking action to resolve the cloud computing
problems The ones that did indicate other actions mostly sustained costs related to ensuring
an alternative service (34) and costs related to fixing the cloud service problem (32)
Contract-related problems generated a gross economic detriment measured by
considering lost turnover and all other costs equal to euro6534 million
The loss of turnover was the most significant component of the detriment representing
37 of the total detriment while costs of human resources involved in resolving the
problem represent around 32 of the total detriment
Micro enterprises accounted for around 74 of the global economic detriment (compared to
175 for small and 88 for the medium) but it is in small enterprises that the average
112 When providing further details the cloud computing users acknowledged the fact that there were
cases where the enterprisersquos own mistake such as a miscommunication or lack of capacityknowledge
was admitted to be the cause of the cloud computing problem 113 These costs include overall costs in ensuring an alternative service and costs related to fixing the cloud service problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
80
gross detriment per enterprise was highest (ie euro 5012 compared to euro 4745 for medium
and euro878 for micro enterprises)
It is important to note that this estimate is a lower threshold of actual detriment as
not all SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems were able to provide an estimate of the detriment suffered
it only considers the costs associated with the most serious problem During the
survey 48 of the enterprises that encountered contract-related problems declared
that costs related to the most serious problem represented less than 80 of the total
losses However they were not able to provide relevant estimations regarding the
other encountered problems
However the magnitude of the underestimation is limited by the fact that the Member States
and the sectors chosen to be in the sample are those with highest cloud computing usage
rates and so are likely to bear costs above the average
Having computed the economic detriment suffered by micro small and medium-sized
enterprises the following have also been considered
direct impacts of a reduction in economic activity of the enterprises suffering from
contract-related cloud computing problems on their overall gross value added and
employment
effects on the gross value added and employment of supplier industries arising from
the turnover losses they suffer (indirect impacts)114
Direct impacts were estimated by considering the gross value added and employment
contents of the turnover losses at country and sector levels and the coefficients of total
turnover at country and sector levels computed from Eurostat data115
The overall results show that the 3672 direct jobs were lost in the sectors where contract-
related problems were encountered With respect to gross value added the direct impact of
the losses of turnover was a reduction of euro119 million within the same sectors
The indirect effects measured as gross value added and employment lost in the supplier
industries were still quite considerable The indirect impact associated with the loss of
turnover caused by contract-related cloud computing problems led to losses of 1733 jobs
and around euro987 million of Gross Value Added
Again it should be emphasised that the measured indirect effects must be seen as lower
thresholds to the actual indirect effects not only because of the above-mentioned limitations
but also because the input-output methodology while very good at estimating backward
linkages along the supply chain has some limitations in capturing opportunity costs and
intangibles or downstream effects of the problems in client industries or final consumers
Besides measuring the detriment caused by contract-related cloud computing service
problems the analysis addressed the issue of whether those problems might have generated
other effects
114 These indirect losses arise from the fact that the industries that suffered from the direct turnover losses reduced their demand for products from their suppliers 115 National accounts aggregated by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
81
Results show that contract-related cloud computing problems had an impact on enterprises
in dimensions such as reputational damages or loss of clients but that these effects did not
translate116 into very significant effects on financial variables during the period considered
The study covered the problems faced by SMEs during 2016ndash2017 The survey has been
implemented during 2018 The fact that some enterprises were not able to provide an
estimate of the detriment encountered may also be due to the fact that effects on the balance
sheet may only materialise over a longer time horizon
The analysis also has shown that most enterprises incurred internal human resources costs
or other external costs in order to resolve those problems The allocation of resources to
resolve those problems is likely to create some inefficiencies and to affect the competitiveness
of the companies
Given the size of the effects estimated and even if it is likely that there is some
underestimation enterprises are probably still able to at least partially absorb some of the
costs caused by cloud computing problems
But as we have seen there have already been some cases of contract-related cloud computing
problems that had very large impacts
Over time as increasing usage rates lead to rising incidence of contract-related cloud
computing problems and the longer term consequences of reputational damages and losses
of clients on financial variables become evident it will make it more likely that enterprises
will stop being able to absorb the effects of the encountered problems and this will increase
the impact of those problems on allocative efficiency market functioning and
competitiveness eventually affecting clients and final consumers and reducing the aggregate
welfare
116 The study covered the problems faced during 2016 ndash 2017 The survey has been implemented during
2018 The fact that some enterprises were not able to provide an estimate of the detriment encountered may also be due to the fact that effects on the balance sheet may only materialise over a longer time horizon
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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82
Annex 1 Methodology for the Survey of SMEs
In order to maximise the response to the survey of SMEs a detailed introduction to the online
survey and CATI was prepared and discussed with the EC for approval The introduction
presented the purpose of the study the sponsor and last but not least the reason it is
beneficial for the SME to cooperate with the study
During the interview phase it was of utmost importance to speak with the person in each
enterprise who has the most knowledge about the topic of cloud computing So we
recommended adding a so-called ldquoscreenerrdquo question in order to verify if the interviewer is
speaking with the most suitable interlocutor within the enterprise
The screener question can be found below
S1 Would you describe yourself as the person familiar with the services that your enterprise is using over the internet (cloud computing services) and have general knowledge about the enterprise
1 Yes that is me
2 No that is someone else
ltIf 1 go to Section Bgt
ltIf 2gt
lsquoI am sorry but I would like to speak to the person familiar with the services that the enterprise is using over the internet (cloud computing) and has general knowledge about the enterprise Can you give me hisher name or connect mersquo
ltIf connected to new person re-ask question S1gt
ltIf given name note down new name and make call back appointmentgt
In the CATI quotas were set at country level size classes and sectors in such a way that
when the target per country andor size class was achieved the remaining sample records of
this countrysize class were disabled automatically
The CATI was handled by the Global Data Collection Company (GDCC) The assigned project
manager of GDCC was responsible for drafting detailed briefing instructions for the
interviewers This assigned project manager was responsible for giving the initial briefing to
the interviewers in cooperation with the team leaders and senior interviewers depending on
the language of the questionnaire The initial briefing was held via web conference since the
project was implemented in various locations The team leaders were briefed using the English
version of the questionnaire and they went through the test link by clicking on all the available
options After this initial briefing the team leaders briefed the interviewers in all locations If
any changes were necessary during the process the team leaders held the briefings again
Whenever a new interviewer was added to the project heshe was additionally briefed
All briefings were held in one of the GDCC briefing rooms In these rooms up to 15
interviewers were instructed simultaneously on this project The questionnaire was projected
on the big screen during the briefings All relevant notesremarks from the briefings were
incorporated into the project briefing document and made electronically available to the
interviewers in the interview application
After the briefing the interviewers conducted dummy interviews in the so-called ldquotest moderdquo
of the data collection application in order to familiarise with the questionnaire
Relevant issues which arose during the fieldwork were promptly communicated to ALL
interviewers working on the project via a bulletin board in the CATI platform andor a revision
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
83
of the briefing form which was also available to the interviewer via the questionnaire in
electronically format
During the fieldwork a maximum of 10 phone calls were made to each SME in order to obtain
an interview If no interview was conducted after those 10 attempts the addressee was
considered as a non-response
Call-back appointments were not terminated after 10 attempts as experience has shown that
once a potential respondent has given permission to schedule a call to do the interview often
more attempts are needed to conduct the interview
The interviews for the survey were conducted as much as possible during the usual opening
hours of businesses in the respective countries
The team engaged in the fieldwork was comprised not only of a significant number of
experienced (native speaker) interviewers but for almost every EU country at least two native
speaker evaluators were available The evaluators aside from being very experienced
interviewers were selected for this ask because of their background (education) and
knowledge of the specific country Evaluators were responsible for the final check of the
translations and where necessary suggesting country-specific changes The final translation
checks however were performed by the GDCC translation department The research team
double-checked all the translations This methodology of centralising data collection
benefiting from the native speaker interviewersrsquo knowledge of the local markets has a proven
track record over many projects
All interviews were 100 recorded Aside from live listening-in particular parts of the
interviews were recorded in order to be listened to by a native speaker team leader or
evaluator Besides listening to the interviews the team leaders andor evaluators also called
back respondents who participated in an interview during this call-back a short interview
with verification questions about the recent interview was held The only reason for conducting
a call-back was to recollect information that was first collected incorrectly and further
questions needed to be asked All of the respondents who had completed interviews were
called back in order to record the name of the enterprise and to match the data from the
sample with the enterprise that had completed the survey The quality checking procedure
was generally random but there was also a focus on outliners where applicable117
Overall at least 10 of all interviews per country were covered by the quality control
procedures as mentioned above In the dataset the monitored interviews were labelled
accordingly
Besides this quality procedure the conducted CATI interviews were continuously checked for
outliers The data from interviews with (for example) a deviation in the average interview
time (too short or too long) were checked and when necessary corrective action was taken
This action either involved a telephone call in order to verify the data or the data were
removed from the dataset
After finalising the fieldwork a short fieldwork report was prepared
117 An outlier means something outside of the average therefore GDCC looked at interviewers who
conduct interviews much longershorter than the average or who had more or fewer refusals than the
average or who had a lower or higher incidence rate than the average Focusing on these main (outlier) points helped to determine if the interviewer was doing things correctly and if not the interviewer was retrained in order to help normalise the performance
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
84
Annex 2 Stakeholders list
No Category Member State InstitutionCompany Contribution
1 Cloud broker The
Netherlands BPdelivery Interview
2 EEN The Netherlands
The Dutch Chamber of Commerce Interview
3 EEN Romania ARIES T - Romanian Association for Electronic Industry and
Software - Transylvania Branch
Interview
4 EEN France CCI Paris IDF Interview
5 National authority
Italy The Italian Data Protection Authority
Interview and Webinar
6 National authority
Romania
Romanian National Computer
Security Incident Response Team (CERT)
Interview
7 National authority
Romania The National Supervisory Authority for Personal Data Processing of Romania
Interview
8 National authority
France
Commission Nationale de
lInformatique et des Liberteacutes (CNIL)
Interview
9 National authority
Poland Inspector General for the Protection of Personal Data
Interview and Webinar
10 National authority
Estonia Estonian Data Protection Inspectorate
Interview
11 Service provider
Sweden Glesys Interview
12 Service provider
Spain Ibermaacutetica Interview
13 Service provider
Spain Gigas Interview
14 Service provider
Sweden Hetzner Interview
15 Service provider
Ireland Blueface Interview
16 Service provider
Romania Star Storage Interview
17 Service provider
Romania GTS Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
85
No Category Member State InstitutionCompany Contribution
18 Service provider
Portugal PT Empresas Interview
19 Service
provider Romania Telekom Interview
20 Service provider
Ireland Salesforce Interview
21 SME Poland Biuro Rozwoju Gdanska Interview
22 SME Germany Quality Services International
GmbH Interview and Webinar
23 SME Germany Thieme Compliance GmbH Interview and Webinar
24 SME Germany Leibniz-Institut Fuumlr Astrophysik Potsdam (AIP)
Interview
25 SME Poland Konsorcjum Biuro Klub Sp Interview
26 SME France Qosmos Tech Interview
27 SME Poland Vsoft S A Interview
28 SME Spain Timbrados Elche Sl Interview
29 SME Spain Sistemas de Datos Interview and Webinar
30 SME Association
Belgium EUAPME Interview and Webinar
31 SME
Association Portugal
Associaccedilatildeo Industrial do Distrito de
Aveiro Interview
32 SME Association
The Netherlands
VNO-NCW Interview
33 SME Envoys Network
The Czech Republic
Ministry of Industry and Trade Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
86
Annex 3 Bibliography
Relevant legislation and policy documents
Committee of the Regions (2016) lsquoEuropean Cloud Initiative and ICT Standardisation
Priorities for the Digital Single Market 2016rsquo Opinion of the Committee of the Regions (SEDEC-
VI-012)
European Commission (2003) lsquoRecommendation of 6 May 2003 concerning the definition of
micro small and medium-sized enterprisesrsquo (notified under document number C(2003) 1422)
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in Europersquo
COM(2012)529 final Brussels
European Commission (2013a) lsquoCommission Decision of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404) OJ 1746
European Council (2013b) lsquoCouncil resolution of 10 December 2013 on unleashing the
potential of cloud computing in Europersquo
European Commission (2014 June) lsquoCloud Service Level Agreement Standardisation
Guidelinesrsquo httpseceuropaeudigital-single-marketennewscloud-service-level-
agreement-standardisation-guidelines
European Commission (2015a) lsquoA Digital Single Market Strategy for Europersquo (COM
(2015)0192) and the accompanying Commission staff working document (SWD(2015)0100)
European Commission (2015b) lsquoCommunication on cloud select industry group service level
agreementsrsquo httpseceuropaeudigital-single-marketencloud-select-industry-group-
service-level-agreements COM (2015) 634 final
European Commission (2015c) lsquoProposal for a Directive on certain aspects concerning
contracts for the supply of digital contentrsquo (COM(2015) 634 final)
European Commission (2015d) lsquoTowards a modern more European copyright frameworkrsquo
COM20150626 final
European Commission (2016a) lsquoEuropean Cloud Initiative ndash Building a competitive data and
knowledge economy in Europersquo (COM (2016)0178) and the accompanying Commission staff
working document (SWD (2016) 0106)
European Commission (2016b) lsquoICT Standardisation Priorities for the Digital Single Marketrsquo
(COM (2016)0176)
European Commission Directorate-General for Research amp Innovation (RTD) (2016c) lsquoOpen
Innovation Open Science Open to the World ndash A vision for Europersquo
European Commission (2017a) lsquoProposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Unionrsquo
COM(2017) 495 final Brussels
European Commission (2018a) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
European Commission (2018b) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo Annexes and Impact
Assessment
European Commission (2018c) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
87
European Parliament (2017) lsquoCommission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Union
SWD(2017) 304 final Brussels
European Council (2016) lsquoCouncil resolution of 19 January 2016 on Towards a Digital Single
Market Actrsquo
European Parliament and European Council (2001) lsquoRegulation (EC) 452001 of the European
Parliament and of the Council of 18 December 2000 on the protection of individuals with
regard to the processing of personal data by the Community institutions and bodies and on
the free movement of such datarsquo
European Parliament and European Council (2011) lsquoDirective 201183EU of the European
Parliament and of the Council of 25 October 2011 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council
and repealing Council Directive 85577EEC and Directive 977EC of the European Parliament
and of the Council Text with EEA relevancersquo
European Parliament and European Council (2015) lsquoProposal for a DIRECTIVE OF THE
EUROPEAN PARLIAMENT AND OF THE COUNCIL on certain aspects concerning contracts for
the supply of digital contentrsquo (Text with EEA relevance) SWD(2015) 274 final SWD(2015)
275 final
Reports studies and other documents
Alberto M Bento A K (2012) Cloud Computing Service and Deployment Models Layers
and Management IGI Global
Altman M Andreev L Diggory M King G Kolster E Sone A Verba S Kiskis DL
Krot (2001) lsquoOverview of The Virtual Data Center Project and Software Harvard Universityrsquo
JCDL rsquo01 First Joint Conference on Digital Libraries pp 203-204
Buyya R Broberg J and Goscinski A M (eds) (2010) Cloud computing Principles and
paradigms Vol 87 John Wiley amp Sons
Cave J Robinson N Kobzar S and Rebecca H (2015) lsquoUnderstanding Regulatory and
Consumer Interest in the Cloudrsquo Regulating the Cloud Policy for Computing Infrastructure
Cloud Security Alliance (2017) Custom Applications and IaaS Trends 2017
Department of Justice United States (2015) HERFINDAHL-HIRSCHMAN INDEX
El-Gazzar R F (2014) lsquoA literature review on cloud computing adoption issues in enterprisesrsquo
presented at the International Working Conference on Transfer and Diffusion of IT pp 214ndash
242
ESRC Centre for Competition Policy (2014 January) lsquoSmall Business as Consumers Are They
Sufficiently Well Protectedrsquo A report for the Federation of Small Businesses
European Commission (2013a) lsquoCOMMISSION DECISION of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404)
European Commission (2013b) Final Report of the study SMART 20130043- Uptake of Cloud
in Europe
European Commission (2013 2014) Cloud computing Experts groups meetings
European Commission (2015) Comparative Study on cloud computing contracts Publications
Office of the European Union Luxembourg
European Commission (2014b) European Commission - Strategy - Digital Single Market -
News Retrieved from European Commission - Digital Single Market
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
88
European Commission (2014c) Study regarding the Uptake of Cloud in Europe Follow-up of
IDC Study on Quantitative estimates of the demand for Cloud Computing in Europe and the
likely barriers to take-up
European Commission (2004d) Project Cycle Management Guidelines
European Commission (2016a) Consultation on Cloud Computing Research Innovation
Challenges for WP 2018-2020
European Commission (2016b) Measuring the economic impact of cloud computing in Europe
European Commission (2016c) Platform-to-business trading practices
European Commission (2017a) Collaboration in Research and Methodology for Official
Statistics RAS (Method)
European Commission (2017b) The Economic and Social Impact of Software and Services in
Competitiveness and Innovation
European Commission (2017c) Final results of the European Market study measuring the size
and trends of the EU data economy European Commission (2018) Consultations about Cloud
Computing
European Commission (2018a) 2018 reform of EU data protection rules
European Commission (2018b) Press release lsquoOnline platforms Commission sets new
standards on transparency and fairnessrsquo
European Commission (2018c) Operational guidance document on measuring personal
consumer detriment
Etro F (2009) lsquoThe economic impact of cloud computing on business creation employment
and output in Europersquo Review of Business and Economics vol 54 no 2 pp 179ndash208
Expert Group on Cloud Computing Contracts (2013-2014) Cloud Computing Expert Group
Gartner (2017) Predicts 2017 Cloud Computing Enters its Second Decade
Hon K Millar C and Walde I (2012) rsquoNegotiating Cloud Contract Looking at Clouds from
Both Sides Nowlsquo in Stanford Technology Law Review Vol 16 No 1
IDC Arthurrsquos Legal (2016) Switching Cloud Providers (SMART 20160032)
International Organization for Standardization (2014) lsquoInformation technology mdash Cloud
computing mdash Overview and vocabularyrsquo ISOIEC Retrieved from International Organization
for Standardization
Mahmood Z (2011) lsquoData Location and Security Issues in Cloud Computingrsquo Proceedings of
the 2nd International Conference on Emerging Intelligent Data and Web Technologies (EIDWT
rsquo11) (pp 49ndash54)
National Institute of Standards and Technology (2011) lsquoThe NIST Definition of Cloud
Computingrsquo Retrieved from National Institute of Standards and Technology
OECD (2014) Cloud computing The Concept Impacts and the Role of Government Policy
Opara-Martins J Sahandi R and Tian F (2015) lsquoA Business Analysis of Cloud Computing
Data Security and Contract Lock-in Issuesrsquo presented at P2P Parallel Grid Cloud and
Internet Computing (3PGCIC)
Pearson S (2013) lsquoPrivacy security and trust in cloud computingrsquo in Privacy and Security
for Cloud Computing Springer pp 3ndash42
Rabinobich M Rabinovich I (nd) A Dynamic Object Replication and Migration Protocol for
an
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
89
Rittinghouse J Ransome J (2009) Cloud Computing CRC Press Boca Raton
Rohrmann CA amp Cunha JFSR (2015) Some Legal Aspects of Cloud Computing Contracts
Journal of International Commercial Law and Technology Vol10 No1 May
SLALOM Project httpslalom-projecteu(2018)
Synergy Research Group (2017) httpswwwsrgresearchcomarticlesmicrosoft-google-
and-ibm-charge-public-cloud-expense-smaller-providers
Technopedia (2018) httpswwwtechopediacomdefinition30463virtual-data-center
Retrieved from Virtual Data Centre
Databases
Amadeus Database httpsamadeusbvdinfocomversion-
2016720homeservproduct=amadeusneo
Eurostat (2015) sbs_sc_sca_r2 Retrieved from Structural Business Statistics
httpappssoeurostateceuropaeunuishowdodataset=sbs_sc_sca_r2amplang=en
Eurostat (2016) Cloud Computing Services Retrieved from EUROSTAT - Digital Economy and
Society httpeceuropaeueurostatwebdigital-economy-and-societydatadatabase
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprisesrsquo
httpeceuropaeueurostatstatistics-explainedindexphpCloud_computing_-
_statistics_on_the_use_by_enterprises
Eurostat (2017) Cloud computing services [isoc_cicce_use]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
90
Annex 4 Survey questionnaire
A Background information
(Everyone answers section A)
A1 What is the name of your company
[open question]
A2 Where is your company located
(People who answer A2 m) are taken straight to the end of the survey)
[single choice question]
a) Czech Republic
b) Estonia c) France d) Germany e) Ireland f) Italy g) Poland h) Portugal
i) Romania
j) Sweden k) Spain l) Netherlands m) Other (please specify)
A3 In which sector is your company mainly active
(People who answer A3 f) are taken straight to the end of the survey)
[multiple choice question]
a) Manufacturing b) Wholesale and retail trade repair of motor vehicles and motorcycles c) Information and communication d) Professional scientific and technical activities e) Administrative and support service activities
f) Other (please specify)
A4 Since how long does your company exist
[single choice question]
a) Less than 1 year b) Between 1 and 5 years
c) Between 5 and 10 years d) Over 10 years
A5 What is the number of employees in your company
(People who answer A5 d) are taken straight to the end of the survey)
= Compulsory question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
91
(Everyone answers section A)
[single choice question]
Nordm of employees in FTE (full-time equivalent)
a) Less than 10 employees b) 10 to 49 employees c) 50 to 250 employees d) More than 250 employees
B Use of Cloud Computing Services
(Everyone answers Section B)
B1 In the last two years has your company used any of the following cloud computing services for
the purpose of conducting business
(People who answer B1 q) are taken straight to the end of the survey)
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business
visualisation technology instant communications applications e-mail account virtual
desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
websites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
n) Security services (eg secure content management endpoint protection malware protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
q) None of the above my company is not using cloud computing services
B11 For the cloud computing services that you have used in the last two years were you able to
negotiate contract terms and conditions
(People who answer B11 b) are taken to Question B111)
(People who answer B11 d) are taken to Question B113)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
92
(People who answer B11 a) or b) are taken to Question B112)
[single choice question]
a) Yes we were able to negotiate contract terms and conditions for all the cloud computing services used
b) Yes we were able to negotiate contract terms and conditions but only in relation to some
services c) No we were not able to negotiate any contract terms and conditions d) We didnrsquot try to negotiate
B111 Please specify in relation to which services were you able to negotiate the contract terms and
conditions
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components) j) High Performance Computing (eg usage of high performance computing clusters
workloads and applications) k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each
day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces)
p) Other (please specify)
B112 For the cloud computing services for which you negotiated the contract terms and conditions
were you able to customise the service package according to your specific needs
[single choice question]
a) Yes (please specify what you were able to customise) b) Partially (please specify what you werewere not able to customise) c) No (please specify)
B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
[single choice question]
a) We were pleased with the offered contract terms and conditions
b) We knew it would be pointless c) We assumed it would be pointless d) Could not find a contact
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
93
e) Other (please specify)
B2 What type of contract(s) did you have for cloud computing services during the last two years
(People who answer B3 d) are taken straight to section C)
[multiple choice question]
a) Paid subscription ndash Fixed Fees b) Paid subscription ndash Variable Fees c) Partly with and partly without payment d) Without payment (eg advertising financed) e) I donrsquot know (please specify)
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the average
amount you paid per month for the cloud computing services
(NB the amount declared should not include over-extra charges or hidden fees)
[open question]
Amount in local currency please specify the currency applied
C Problems encountered with cloud computing services
(Everyone answers Section C)
C1 What type of problems and how often did you encounter them in relation to cloud computing
services in the last two years
Problems
Very
frequently
(at least once a week)
Frequentl
y (at least once a month)
Occasiona
lly (at least
once every 3 months)
Rarely (at
least once in the last
12 months)
Never
a) Lack of timely updates of the cloud service
b) Forced updates to the service that eliminated or changed a necessary function
c) Unsatisfactory amount of data that could be processed
d) Failure of the cloud provider to identify analyse and correct
hazards and prevent a future re-occurrence (incidence management)
e) Low speed of the service
f) The lack of clarity and
completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or
discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions
of service)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
94
(Everyone answers Section C)
h) Unsatisfactory number of users that could have access to the
service
i) The lack of compatibility of the service with user hardware or software
j) Data could not be exported at all
k) Data could not be retrieved in
easily usable format
l) Extra costs were imposed for data portability
m) The provider deleted the data
upon contract termination
n) Destruction or loss of data
o) Loss or alteration of data transmitted stored or processed via the cloud service
p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses
r) Lack of clarity and transparency of contract terms and conditions
s) Termination of the contract and interruption of the service by the service provider with no or little prior notice to the user
t) Unilateral modification of the servicecontract by the cloud provider
u) Limited liability of the cloud provider
C2 Did you encounter any other problems in relation to cloud computing services in the last two
years
[single choice question]
a) Yes (please specify) b) No
C3 Which was the most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
[single choice question]
a) Lack of timely updates of the cloud service b) Forced updates to the service that eliminated or changed a necessary function c) Unsatisfactory amount of data that could be processed d) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) e) Low speed of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
95
(Everyone answers Section C)
f) The lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced
maintenance or other interruptions of service) h) Unsatisfactory number of users that could have access to the service i) The lack of compatibility of the service with user hardware or software j) Data could not be exported at all k) Data could not be retrieved in easily usable format l) Extra costs were imposed for data portability
m) The provider deleted the data upon contract termination n) Destruction or loss of data o) Loss or alteration of data transmitted stored or processed via the cloud service p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses r) Lack of clarity and transparency of contract terms and conditions s) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user t) Unilateral modification of the servicecontract by the cloud provider u) Limited liability of the cloud provider v) Other (please specify)
C31 What caused the most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the
contract b) The contract terms and conditions of the cloud provider were unfair
c) Other (please specify)
C32 To which type of cloud computing services was the most serious problem linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business
process management IT operationrisk management) e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
96
n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
C4 Which was the second most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
People who select C4 a) are taken straight to Section D)
[single choice question]
a) I only encountered one serious problem in the last 2 years
b) Lack of timely updates of the cloud service c) Forced updates to the service that eliminated or changed a necessary function
d) Unsatisfactory amount of data that could be processed e) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) f) Low speed of the service g) The lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
h) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions of service)
i) Unsatisfactory number of users that could have access to the service j) The lack of compatibility of the service with user hardware or software k) Data could not be exported at all l) Data could not be retrieved in easily usable format
m) Extra costs were imposed for data portability
n) The provider deleted the data upon contract termination o) Destruction or loss of data p) Loss or alteration of data transmitted stored or processed via the cloud service q) Unauthorised disclosure of or access to data r) Lack of protection of the data stored in the cloud against theft or viruses s) Lack of clarity and transparency of contract terms and conditions t) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user u) Unilateral modification of the servicecontract by the cloud provider v) Limited liability of the cloud provider w) Other (please specify)
C41 What caused the second most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the contract
b) The contract terms and conditions of the cloud provider were unfair c) Other (please specify)
C42 To which type of cloud computing services was the second most serious problem
linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
97
desktop antivirus for server or PC applications for customer relationship management
social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications)
h) Storage and hosting services (eg server platform for online storage sharing hosting web-sites files images and similar content)
i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
D Actions taken by your company in order to address the most serious
problem
(Everyone who encountered problems answers Section D)
D1 Did your company take action to resolve or remedy the most serious problem experienced
(People who select D1 b) are taken straight to question D2)
a) Yes
b) No
D11 What actions has your company taken to resolve or remedy this problem
[multiple choice question]
a) Used the support services of the provider b) Made a complaint to the provider c) Withheld payment for the service
d) Asked the provider for a refund e) Asked the provider for compensation for damages or losses f) Changed provider g) Went to mediationarbitration (the dispute was taken to a third party mediatorarbitrator) h) Filed an action with a court i) Hired a third party expert to resolve the problem
j) Other (please specify)
D12 What was the result of the actions taken to resolve or remedy this problem
[single choice question]
a) The problem was fully resolved
b) The problem was partially resolved c) The problem was not yet resolved but I was informed that the investigation was ongoing
d) The problem was not resolved and I have not received any reply e) Not resolved and I decided not to do anything about it
D121 Did you encounter any difficulties when taking action to resolve or remedy this problem
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(Everyone who encountered problems answers Section D)
[multiple choice question]
a) No I did not encounter any difficulties b) Yes there was no contact point to make a complaint or attempt to resolve issues c) Yes the procedure took too long d) Yes the procedure was too expensive e) Yes foreign law applied
f) Yes the procedure was only possible abroad g) Yes language difficulties (eg the procedure was in a foreign language) h) Yes the action taken was not suited to resolve the problem i) Yes it was not possible to enforce the decision after the resolution j) Other (please specify)
D2 Why did your company decide not to take any action to resolve or remedy this problem
[multiple choice question]
a) Provider fixed the problem on its own
b) The cloud provider was unlikely to find a solution to the problem
c) The cloud provider excluded its liability for the problem
d) The cloud provider restricted its liability for damages (eg to a certain type of damage or
to a monetary threshold (a franchise or a maximum amount)
e) Limited access to dispute resolution (eg contract terms restrict how and where your
company can take legal action)
f) We tried to complain about other problems in the past but it was not successful
g) High cost of proceedings
h) It would take too long
i) The procedure was too complicated
j) We didnt know where to complain
k) Lack of knowledge how to start the proceeding
l) The applicable procedure is in a foreign country or in foreign language (specify which
foreign country)
m) The company did not want to damage business relationship with the cloud provider
n) The problem was not that important
o) Other (please specify)
E Economic detriment related to the most serious problems encountered
(Everyone who encountered problems answers Section E)
E1 What were the human resources invested by your company while taking action to resolve or
remedy the most serious problem
[open question]
Nordm of employees
involved in solving the problem separately per skill level of employee(s)
Nordm of work days
involved for solving the problem separately per skill level employee(s)
Average monthly
compensation of employee(s) involved in solving the problem (amount in local
currency)118
118 Total labour cost that includes gross wages and employer social security contributions
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(Everyone who encountered problems answers Section E)
Administrative
Technical
Senior
official(s)manager(s)
E2 Select what costs has your company covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
Please provide the costs without considering any reimbursement or compensation you may have
received from the provider(s) who rendered the service(s)
[multiple choice question]
a) Costs related to ensuring an alternative service (please specify the amount in local currency)
b) Costs related to fixing the cloud service problem (please specify the amount in local currency)
c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency) e) Costs related to loss of client(s) (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E3 What is the loss of turnover and profit caused by the most serious problem encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E4 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in
local currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
E5 Considering the costs human resources involved and loss of turnoverprofit related to the most
serious problem what share they represented of the total costs suffered by your company from
problems faced while using cloud computing services
(People who select E5 a) or b) are taken straight to section F)
(People who select C4 a) are taken straight to section F after answering E5)
[single choice question]
a) Above 80 b) 50 to 80 c) Below 50
E6 What were the human resources invested by your company while trying to resolve or remedy
the second most serious problem
[open question]
Nordm of employees
involved in solving the problem separately
Nordm of work days
involved for solving the problem separately
Average monthly
compensation of employee(s) involved
in solving the problem
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per skill level of
employee(s)
per skill level
employee(s)
(amount in local
currency)119
Administrative
Technical
Senior
official(s)manager(s)
E7 Select which costs has your company covered (besides the human resources mentioned before)
while taking action to resolve or remedy the second most serious problem
[multiple choice question] Please provide the costs without considering any reimbursement or
compensation you may have received from the provider(s) who rendered the service(s)
a) Costs related to ensuring an alternative service (please specify the amount in local
currency) b) Costs related to fixing the cloud service problem (please specify the amount in local
currency) c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency)
e) Costs related to loss of client (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E9 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in local
currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
F Background information on turnover and profit
G (Everyone answers Section F)
F1 Please complete the following table specifying the amount in local currency
[open question]
The annual turnover in
2016
The annual turnover in
2017
The annual profit before
tax in 2016
The annual profit before
tax in 2017
119 Total labour cost that includes gross wages and employer social security contributions
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Annex 5 SME Survey results
A Background information
A3 In which sector is your company mainly active
Type of sector Total
Manufacturing 137
Wholesale and retail trade 131
Information and communication 83
Professional scientific and technical activities 92
Administrative and support services 92
A4 Since how long does your company exist
A5 What is the number of employees in your company
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B Use of Cloud Computing Services
B1 In the last two years has your company used any of the following cloud computing services
for the purpose of conducting business
Services
Sectors
Collaboration and
communication services
Storage and hosting
services
Security
services
Networking
services
Administrative and support service activities
61 60 49 40
Information and communication 79 78 41 52
Manufacturing 70 54 48 42
Professional scientific and technical activities
71 70 40 39
Wholesale and retail trade 72 62 38 38
B11 For the cloud computing services that you have used in the last two years were you
able to negotiate contract terms and conditions
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B111 Please specify in relation to which services you were able to negotiate the contract
terms and conditions120
120 The first figure presents for each contracted service the number of SMEs that were able to negotiate
CTampC (in blue) and the number of SMEs that signed standard CTampC for the specific service contracted
(in grey) The total of the numbers in each row represents the number of SMEs that declared contracting a specific service For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
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and unbalanced cloud computing contracts
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B112 For the cloud computing services for which you negotiated the contract terms and
conditions were you able to customise the service package according to your specific needs
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and unbalanced cloud computing contracts
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B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
B2 What type of contract(s) did you have for cloud computing services during the last two
years
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the
average amount you paid per month for the cloud computing services
Country of answers Average in euros
CZ 18 850
EE 18 112
FR 34 4675
DE 33 861
IE 19 1127
IT 58 716
NL 21 6672
PL 20 411
PT 7 433
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Country of answers Average in euros
RO 7 278
ES 13 127
SE 19 2866
Total 267 1787
C Problems encountered with cloud computing services
C1 What types of problems and how often did you encounter them in relation to cloud
computing services in the last two years
C3 Which was the most serious problem you experienced in the last two years
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C31 What caused the most serious problem
C32 To which type of cloud computing services was the most serious problem linked
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C4 Which was the second most serious problem you experienced in the last two years
C41 What caused the second most serious problem
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C42 To which type of cloud computing services was the second most serious problem linked
D Actions taken by your company in order to address the most serious problem
D1 Did your company take action to resolve or remedy the most serious problem
experienced
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D11 What actions has your company taken to resolve or remedy this problem
D12 What was the result of the actions taken to resolve or remedy this problem
D121 Did you encounter any difficulties when taking action to resolve or remedy this
problem
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D2 Why did your company decide not to take any action to resolve or remedy this problem
E Economic detriment related to the most serious problems encountered
E1 What were the human resources invested by your company while taking action to resolve
or remedy the most serious problem
Human resources invested - working days involved in resolving the problem by sector
Sector Number of
enterprises
95 Trimmed
mean Average
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Human resources invested - working days involved in resolving the problem by size class
Size class Number of enterprises
95 Trimmed mean
Average
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Human resources invested - working days involved in solving the problem by country
Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
EE 5 222 220
FR 22 282 395
DE 19 471 1074
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
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Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
RO 1 200 200
ES 11 631 718
SE 18 251 361
Total 122 322 721
E2 Select what costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E3 What is the loss of turnover and profit caused by the most serious problem encountered
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E4 Did the cloud provider offer any redress for the damages caused to your company
of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
E5 Considering the costs human resources involved and loss of turnoverprofit related to the
most serious problem what share did they represent of the total costs suffered by your
company from problems faced while using cloud computing services of enterprises
Below 50 105 87
50 to 80 8 7
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of enterprises
Above 80 9 7
Total 122 100
E6 What were the human resources invested by your company while trying to resolve or
remedy the second most serious problem
Skill level of enterprises
Administrative 59 48
Technical 93 76
Senior officersmanager(s) 59 48
E7 Select which costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the second most serious problem of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered121
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E9 Did the cloud provider offer any redress for the damages caused to your company of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
121 Please see section 52 for a better understanding of why in the detriment equation it was considered only the most serious problem
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Annex 6 Economic detriment ndash further results
This annex presents more detailed results of the analyses that were performed to carry out
the economic detriment assessment allowing for more in-depth analysis of impact
Incidence cloud computing usage by sector size or country level
For the scenarios presented it is possible to compute the incidence of cloud computing usage
The sample answering the questionnaire is representative of the overall population of EU
SMEs We present in Table 33 to Table 35 some features at the country and enterprise
size or sector level with the sole aim of documenting the gathered information
The data show evidence of significant differences across those dimensions
Table 33 Incidence of cloud computing usage by sector
Sector Scenario 1 Scenario 2
Manufacturing 179 496
Wholesale and retail trade 111 364
Information and communication 199 613
Professional scientific and technical activities 195 574
Administrative and support service activities 131 543
Total 159 499
Source Survey of SMEs (2018)
Table 34 Incidence of cloud computing usage by enterprise size class
Size class Scenario 1 Scenario 2
Micro 178 535
Small 226 606
Medium 133 447
Total 159 499
Source Survey of SMEs (2018)
Table 35 Incidence of cloud computing usage by country
Country Scenario 1 Scenario 2
CZ 172 698
EE 323 690
FR 79 272
DE 80 449
IE 468 710
IT 719 870
NL 205 612
PL 143 315
PT 455 606
RO 278 833
ES 538 648
SE 138 673
Total 159 499
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
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Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 36 to Table 46
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while resolving the most serious contract-
related cloud computing problem
Table 36 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the most serious problem by
country and skill level of employee ( of respondents 122)
Country Administrative Technical
Senior
officersmanager(s)
CZ 2 29 3 43 4 57
DE 9 47 15 79 8 42
EE 4 80 4 80 3 60
ES 4 36 6 55 5 45
FR 8 36 19 86 11 50
IE 1 25 2 50 3 75
IT 7 54 10 77 4 31
NL 4 67 6 100 4 67
PL 5 38 12 92 5 38
PT 1 33 2 67 0 0
RO 1 100 1 100 0 0
SE 13 72 13 72 12 67
Total 59 93 59
Source Survey of SMEs (2018)
Table 37 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by sector and skill level of employee ( of respondents 122)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 6 46 9 69 10 77
Information and commun 18 75 21 88 12 50
Manufacturing 13 42 22 71 11 35
Profess scientific and
technical activities 10 34 27 93 14 48
Wholesale and retail trade repair of motor vehicles and motorcycles
12 48 14 56 12 48
Total 59 93 59
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
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Table 38 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by size class and skill level of employee ( of respondents 122)
Size class Administrative Technical
Senior officers
manager(s)
Micro 11 52 12 57 11 52
Small 24 75 22 69 16 50
Medium 24 35 59 86 32 46
Total 59 93 59
Source Survey of SMEs (2018)
Table 39 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious
problem by country and type of costs ( of respondents 122)
Co
un
try
Costs related to
ensuring an
alternative service
Costs related to
fixing the cloud
service problem
Legal costs
Costs
related to reputation
damage
Costs
related to loss of
client(s)
Other
costsNone
CZ 3 43 0 0 0 0 0 0 1 14 3 43
DE 4 21 6 32 2 11 2 11 3 16 5 26
EE 0 0 2 40 0 0 0 0 0 0 3 60
ES 7 64 1 9 0 0 0 0 0 0 3 27
FR 13 59 13 59 12
55 11 50 11 50 18 82
IE 1 25 3 75 0 0 0 0 1 25 0 0
IT 4 31 2 15 1 8 1 8 2 15 2 15
NL 1 17 1 17 1 17 2 33 1 17 5 83
PL 1 8 1 8 2 15 1 8 1 8 2 15
PT 1 33 1 33 0 0 1 33 1 33 0 0
RO 1 100 0 0 1 100 1 100 1 100 1 100
SE 6 33 9 50 3 17 4 22 3 17 5 28
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 40 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious problem by sector and type of costs ( of respondents 122)
Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related to loss of client(s)
Other
costsNone
Admin and support service
activities
5 38 1 8 2 15 1 8 1 8 6 46
Information and
commun 12 50 11 46 7 29 7 29 7 29 8 33
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Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related
to loss of client(s)
Other costsNone
Manufacturing 8 26 6 19 3 10 4 13 5 16 8 26
Profess
scientific and technical activities
13 45 12 41 10 34 10 34 11 38 16 55
Wholesale and
retail trade
repair of motor vehicles and motorcycles
4 16 9 36 0 0 1 4 1 4 9 36
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 41 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the most serious
problem by enterprise size class and type of costs ( of respondents 122)
Size class
Costs related to ensuring
an
alternative service
Costs related to fixing the
cloud
service problem
Legal costs
Costs related to
reputation
damage
Costs related to
loss of
client(s)
Other
costs
None
Micro 6 29 11 52 4 19 6 29 5 24 8 38
Small 13 41 12 38 9 28 7 22 8 25 13 41
Medium 23 33 16 23 9 13 10 14 12 17 26 38
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 42 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the most serious problem encountered by sector ( of
respondents 122)
Sector Loss of turnover Loss of profit
Administrative and support
service activities 2 15 2 15
Information and communication 4 17 4 17
Manufacturing 6 19 5 16
Professional scientific and
technical activities 1 3 3 10
Wholesale and retail trade repair
of motor vehicles and motorcycles 4 16 5 20
Total 17 19
Source Survey of SMEs (2018)
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Table 43 Number and of total enterprises that faced problems that reported loss of
turnover or profit caused by the most serious problem encountered by size class ( of respondents 122)
Size class Loss of turnover Loss of profit
Micro 2 10 4 19
Small 8 25 8 25
Medium 7 10 7 10
Total 17 19
Source Survey of SMEs (2018)
Table 44 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by country and type of redress ( of respondents
122)
Country
Financial
compensation
Reduction in the
cost of subscription
Other
The company did
not offer any redress
CZ 1 14 0 0 1 14 5 71
DE 0 0 0 0 1 5 18 95
EE 0 0 0 0 0 0 5 100
ES 0 0 0 0 0 0 11 100
FR 2 9 1 5 1 5 19 86
IE 0 0 0 0 0 0 4 100
IT 1 8 0 0 0 0 12 92
NL 0 0 2 33 1 17 4 67
PL 0 0 3 23 0 0 10 77
PT 0 0 1 33 0 0 2 67
RO 0 0 0 0 0 0 1 100
SE 0 0 1 6 1 6 16 89
Total 4 8 5 107
Source Survey of SMEs (2018)
Table 45 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress ( of respondents
122)
Sector
Financial compensation
Reduction in
the cost of subscription
Other
The company
did not offer any redress
Administrative and
support service activities 2 15 1 8 0 0 10 77
Information and communication
1 4 1 4 3 13 20 83
Manufacturing 0 0 2 6 1 3 29 94
Professional scientific and technical activities
1 3 2 7 1 3 25 86
Wholesale and retail trade repair of motor
vehicles and motorcycles 0 0 2 8 0 0 23 92
Total 4 8 5 107
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
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Table 46 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by size class and type of redress ( of respondents 122)
Size class
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 1 5 1 5 0 0 19 90
Small 0 0 2 6 2 6 28 88
Medium 3 4 5 7 3 4 60 87
Total 4 8 5 107
Source Survey of SMEs (2018)
Distribution of enterprises by the weight of the most serious problem by sector enterprise
size or country level
Again with the sole aim of documenting the gathered information Table 47 to Table 49
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while solving the most serious contract-related
cloud computing problem
Table 47 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by country ( of respondents 122)
Country Below 50 50 to 80 Above 80 100122 Total
CZ 3 43 0 0 0 0 4 57 7
DE 3 60 0 0 0 0 2 40 5
EE 11 50 1 5 0 0 10 45 22
ES 11 58 1 5 1 5 6 32 19
FR 3 75 0 0 0 0 1 25 4
IE 5 38 0 0 0 0 8 62 13
IT 1 17 0 0 1 17 4 67 6
NL 5 38 0 0 1 8 7 54 13
PL 2 67 0 0 0 0 1 33 3
PT 1 11 0 0 0 0 8 89 9
RO 3 38 0 0 0 0 5 63 8
SE 7 10 2 3 4 6 56 81 69
Total 55 31 4 2 7 4 112 63 178
Source Survey of SMEs (2018)
122 Enterprises that declared they encountered only one problem
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Table 48 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by sector ( of respondents 122)
Sector Below 50 50 to 80 Above 80 100123 Total
Administrative and support service activities
26 74 0 0 5 14 4 11 35
Information and communication
20 56 0 0 0 0 16 44 36
Manufacturing 30 64 3 6 0 0 14 30 47
Professional scientific and technical activities
39 65 8 13 1 2 12 20 60
Wholesale and retail
trade repair of motor vehicles and motorcycles
29 57 0 0 12 24 10 20 51
Total 144 63 11 5 18 8 56 24 229
Source Survey of SMEs (2018)
Table 49 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by size class ( of respondents 122) Below 50 Between 50 -
80 Above 80 100124 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the second most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 50 to Table 59
present the differences by country size and sector of the distribution of enterprises that
experienced the various costs while resolving the second most serious contract-related cloud
computing problem
Table 50 Number and of enterprises in which human resources were invested while
taking action to resolve or remedy the second most serious problem by country and skill
level of employee ( of respondents 55)
Country Administrative Technical
Senior officersmanager(s)
CZ 0 0 1 33 2 67
DE 5 45 9 82 3 27
EE 3 100 3 100 1 33
ES 1 33 2 67 1 33
FR 4 36 7 64 4 36
IE 1 33 2 67 1 33
IT 2 40 3 60 1 20
123 Enterprises that declared they encountered only one problem 124 Enterprises that declared they encountered only one problem
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Country Administrative Technical
Senior
officersmanager(s)
NL 1 100 1 100 1 100
PL 2 40 5 100 0 0
PT 1 50 1 50 2 100
RO 0 0 0 0 0 0
SE 3 43 5 71 2 29
Total 23 39 18
Source Survey of SMEs (2018)
Table 51 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the second most serious problem
by sector and skill level of employee ( of respondents 55)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 3 50 4 67 2 33
Information and commun 7 70 9 90 4 40
Manufacturing 5 31 11 69 4 25
Profess scientific and
technical activities 3 27 8 73 3 27
Wholesale and retail trade
repair of motor vehicles and motorcycles
5 42 7 58 5 42
Total 23 39 18
Source Survey of SMEs (2018)
Table 52 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the second most serious problem
by size class and skill level of employee ( of respondents 55)
Size class Administrative Technical
Senior officers
manager(s)
Micro 3 38 5 63 2 25
Small 10 63 13 81 6 38
Medium 10 32 21 68 10 32
Total 23 39 18
Source Survey of SMEs (2018)
Table 53 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by country and type of costs ( of respondents 55)
Co
un
try Costs
related to
ensuring an
alternative service
Costs
related to
fixing the cloud
service problem
Legal costs
Costs related
to reputation damage
Costs
related to loss of
client(s)
Other
costsnone
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
122
CZ 0 0 0 0 0 0 0 0 0 0 3 100
DE 5 45 4 36 3 27 3 27 3 27 9 82
EE 0 0 2 67 0 0 0 0 0 0 1 33
ES 1 33 0 0 0 0 0 0 0 0 2 67
FR 6 55 5 45 5 45 5 45 5 45 10 91
IE 1 33 0 0 0 0 0 0 0 0 2 67
IT 2 40 1 20 1 20 1 20 2 40 3 60
NL 0 0 0 0 0 0 0 0 0 0 1 100
PL 0 0 1 20 1 20 1 20 1 20 2 40
PT 1 50 0 0 0 0 1 50 1 50 0 0
RO 1 100 1 100 1 100
1 100 1 100 1 100
SE 1 14 2 29 1 14 2 29 2 29 5 71
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 54 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the second most
serious problem by sector and type of costs ( of respondents 55)
Sector
Costs
related to ensuring
an alternative service
Costs
related to fixing the
cloud service problem
Legal costs
Costs related to reputation
damage
Costs related to
loss of client(s)
Other costs
none
Admin and support service
activities 1 17 1 17 2 33 1 17 1 17 5 83
Information and commun
3 30 3 30 1 10 2 20 2 20 6 60
manufacturing 4 25 5 31 4 25 4 25 4 25 15 94
Profess scientific and technical
activities
7 64 6 55 5 45 6 55 6 55 7 64
Wholesale and retail trade
repair of motor vehicles and motorcycles
3 25 1 8 0 0 1 8 2 17 6 50
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
123
Table 55 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by enterprise size class and type of costs ( of respondents 55)
Size class
Costs related to ensuring
an alternative
service
Costs related to fixing the
cloud service problem
Legal
costs
Costs related to
reputation damage
Costs related to
loss of client(s)
Other
costsnone
Micro 3 19 4 25 2 13 0 0 2 13 2 13
Small 12 39 8 26 7 23 0 0 9 29 10 32
Medium 3 38 4 50 3 38 5 63 3 38 3 38
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 56 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by size class (
of respondents 55)
Size class Loss of turnover Loss of profit
Micro 0 0 1 13
Small 5 31 5 31
Medium 2 6 2 6
Total 7 8
Source Survey of SMEs (2018)
Table 57 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by sector ( of
respondents 55)
Sector Loss of turnover Loss of profit
Administrative and support service activities
1 17 1 17
Information and communication 1 10 1 10
Manufacturing 2 13 2 13
Professional scientific and
technical activities 1 9 2 18
Wholesale and retail trade repair
of motor vehicles and motorcycles Total
2 17 2 17
Total 7 8
Source Survey of SMEs (2018)
Distribution of enterprises that have been provided any kind of redress for the damage caused
by the contract-related cloud computing problems by sector size or country level
Again with the sole aim of documenting the gathered information Table 58 to Table 60
present the differences by country size and sector of the distribution of enterprises that have
been provided any kind of redress for the damage caused by the contract-related cloud
computing problems
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
124
Table 58 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by country and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any
redress
CZ 1 33 0 0 0 0 2 67
DE 0 0 0 0 0 0 11 100
EE 0 0 0 0 0 0 3 100
ES 0 0 0 0 0 0 3 100
FR 1 9 0 0 0 0 10 91
IE 0 0 0 0 0 0 3 100
IT 0 0 0 0 0 0 5 100
NL 0 0 0 0 0 0 1 100
PL 0 0 1 20 0 0 4 80
PT 0 0 1 50 0 0 1 50
RO 0 0 0 0 0 0 1 100
SE 0 0 1 14 0 0 6 86
Total 2 3 0 50
Source Survey of SMEs (2018)
Table 59 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress
( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Administrative and support service activities
2 33 0 0 0 0 4 67
Information and
communication 0 0 0 0 0 0 10 100
Manufacturing 0 0 0 0 0 0 16 100
Professional
scientific and
technical activities
0 0 1 9 0 0 10 91
Wholesale and retail trade repair of motor vehicles and motorcycles
0 0 1 8 0 0 10 83
Total 2 3 0 50
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
125
Table 60 Number of enterprises that have been provided any kind of redress for the
damage caused by size class and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 0 0 2 13 0 0 14 88
Small 2 6 0 0 0 0 29 94
Medium 0 0 1 13 0 0 7 88
Total 2 3 0 50
Source Survey of SMEs (2018)
Distribution of loss of turnover by sector size or country level
Having estimated the different components of turnover Table 61 to Table 63 present the loss
of turnover in enterprises by country size and sector caused by the contract-related cloud
computing problems documenting significant differences
Table 61 Loss of turnover per enterprise by sector
Sectors
Number of
enterprises ()
95 Trimmed mean125
(euro)
Average
(euro)
Manufacturing 28 348469 1177465
Wholesale and retail trade 22 4759 232031
Information and communication 25 6599 27509
Professional scientific and technical activities 31 3226 490323
Administrative and support service activities 16 1827366 4144629
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 62 Loss of turnover per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 023 4217
Small 24 271159 1119043
Medium 73 99060 1278261
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 63 Loss of turnover per enterprise by country
Country Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 160819 894737
EE 5 117 140
125 A trimmed mean is a method of averaging that removes a small designated percentage of the largest and smallest values before calculating the mean
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
126
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
ES 11 000 000
FR 22 742424 3009091
IE 4 4583333 5125000
IT 13 192308 423077
NL 6 3889 5000
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 100166 613600
Total 122 41954 985869
Source Survey of SMEs (2018)
Distribution of loss of profits by sector size or country level
Table 64 to Table 66 present the loss of profits by country enterprise size and sector caused
by the contract-related cloud computing problems once again documenting significant
differences
Table 64 Loss of profits per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 43651 121207
Wholesale and retail trade 22 4980 242652
Information and communication 25 7720 14729
Professional scientific and technical activities 31 1452 9355
Administrative and support service activities 16 413456 872111
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 65 Loss of profits per enterprise by size class
Size class
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Micro 25 063 5742
Small 24 38235 50293
Medium 73 18681 301282
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 66 Loss of profits per enterprise by country
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 877 15789
EE 5 200 240
ES 11 000 000
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
127
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
FR 22 161111 613182
IE 4 152778 162500
IT 13 14957 38462
NL 6 17315 18583
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 221012 460637
Total 122 17690 191346
Source Survey of SMEs (2018)
Distribution of working days per enterprise involved in resolving the problem by sector size
or country level
Table 67 to Table 69 present the distribution of working days per enterprise involved in
resolving the problem caused by the contract-related cloud computing problems by country
size and sector again documenting significant differences
Table 67 Human resources invested - working days per enterprise involved in resolving the problem by sector
Sector
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Source Survey of SMEs (2018)
Table 68 Human resources invested - working days per enterprise involved in resolving the problem by size class
Size class
Number of
enterprises
()
95
Trimmed mean
( days)
Average
( days)
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
128
Table 69 Human resources Invested - working days per enterprise involved in resolving the
problem by country
Country
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
CZ 7 226 229
DE 19 471 1074
EE 5 222 220
ES 11 631 718
FR 22 282 395
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
RO 1 200 200
SE 18 251 361
Total 122 322 721
Source Survey of SMEs (2018)
Distribution of other costs covered per enterprise by sector size or country level
Table 70 to Table 72 present the other costs covered per enterprise to resolve the contract-
related cloud computing problems by country size and sector documenting again significant
differences
Table 70 Other costs covered per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 28919 706177
Wholesale and retail trade 22 141217 366265
Information and communication 25 11556 112400
Professional scientific and technical activities 31 50573 147290
Administrative and support service activities 16 150107 635096
Total 122 34124 371871
Source Survey of SMEs (2018)
Table 71 Other costs covered per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 2278 10725
Small 24 178472 389792
Medium 73 39973 489660
Total 122 34124 371871
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
129
Table 72 Other costs covered per enterprise by country
Country
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 387 535
DE 19 183333 665000
EE 5 6111 7000
ES 11 115657 229091
FR 22 682 50659
IE 4 166667 175000
IT 13 184615 416154
NL 6 15935 16917
PL 13 14575 37479
PT 3 3333 3333
RO 1 000 000
SE 18 332811 1241741
Total 122 34124 371871
Source Survey of SMEs (2018)
Distribution of the total value of redress received per enterprise by sector size or country
level
Table 73 to Table 75 present the total value of redress received per enterprise for contract-
related cloud computing problems by country size and sector
Table 73 Total value of redress received per enterprise by sector
Sector
Number of
enterprises
()
95 Trimmed
mean
(euro)
Average
(euro)
Manufacturing 28 000 1607
Wholesale and retail trade 22 000 1704
Information and communication 25 000 696
Professional scientific and technical activities 31 187 748
Administrative and support service activities 16 25195 38379
Total 122 095 6042
Source Survey of SMEs (2018)
Table 74 Total value of redress received per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 0 000 00
Small 0 000 00
Medium 7 17120 57096
Total 122 095 6042
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
130
Table 75 Total value of redress received per enterprise by country
Country Number of enterprises
(euro)
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 1867 5354
DE 19 000 000
EE 5 000 000
ES 11 000 000
FR 22 000 13636
IE 4 000 000
IT 13 1346 3462
NL 6 000 000
PL 13 2504 3123
PT 3 000 000
RO 1 000 000
SE 18 1939 17448
Total 122 095 6042
Source Survey of SMEs (2018)
Costs or labour per working day by sector and country level
Table 76 Cost of labour per working day (euro per day per worker)
Country Manufacturing
Wholesale and retail
trade repair of
motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
Total
economy
AT 2089 1323 2194 1331 1201 1616
BE 2285 1512 2294 1363 1190 1670
BG 705 691 1435 471 622 665
CY 705 691 1435 471 622 665
CZ 544 408 930 469 352 500
DE 2069 1080 2070 1568 821 1503
DK 1978 1601 2248 2281 1580 1871
EE 616 522 861 538 458 577
EL 721 434 945 307 407 505
ES 1352 827 1912 1072 725 1028
FI 1929 1366 2186 1764 1083 1639
FR 2055 1526 2487 2163 276 1791
HR 452 405 692 275 327 410
HU 506 336 662 368 309 424
IE 1967 1281 2605 2163 1189 1493
IT 1407 772 1702 659 840 1052
LT 383 305 627 317 317 351
LU 2204 1754 2862 2942 1192 2097
LV 969 315 590 333 276 347
MT 405 475 1017 333 571 477
NL 2083 1087 1970 1499 688 1286
PL 456 303 626 332 385 391
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
131
Country Manufacturing
Wholesale
and retail trade
repair of motor
vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Administrative and support
service activities
Total
economy
PT 640 524 1106 385 330 547
RO 290 236 576 333 230 287
SE 2197 1675 2618 2088 1259 1922
SI 871 731 980 523 546 762
SK 551 368 810 404 314 470
UK 1745 1047 2230 1989 1146 1455
EU 28 1491 1774 3687 1695 511 1118
Note Costs were computed as (INDIC_SB - Personnel costs - million euroINDIC_SB - Persons employed - number)260
Source Eurostat
Distribution of the overall components of financial detriment by sector and size class in the
different scenarios
The following tables present the distribution of the estimated components of financial
detriment by sector and enterprise size class for the different scenarios showing relevant
differences across those dimensions
Table 77 Lost turnover at the EU-28 level in SMEs experiencing cloud computing service problems
Scenario 1
(average incidence126 of CC
use 159)
Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 515 1450
Wholesale and retail trade repair of motor vehicles
and motorcycles 240 728
Information and communication 59 175
Professional scientific and technical activities 237 694
Administrative and support service activities 1395 4645
Total 2446 7691
Siz
e
cla
ss Micro 1405 4402
Small 598 1866
Medium 442 1423
Total 2446 7691
Source Computations based on Survey of SMEs (2018) and Eurostat
126 Average percentage of cloud computing services used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
132
Table 78 Lost profits at the EU28 level in SMEs experiencing cloud computing service
problems
Scenario 1 (average incidence of CC use 159)
(Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 146 409
Wholesale and retail trade repair of motor vehicles and motorcycles
114 345
Information and communication 35 103
Professional scientific and technical activities 101 293
Administrative and support service activities 634 2092
Total 1031 3243
Siz
e
cla
ss Micro 602 1887
Small 255 792
Medium 174 564
Total 1031 3243
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 79 Costs of human resources invested in resolving the problem in SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 341 1019
Wholesale and retail trade repair of motor vehicles and motorcycles
474 1511
Information and communication 236 741
Professional scientific and technical activities 816 2503
Administrative and support service activities 232 826
Total 2099 6600
Siz
e
cla
ss Micro 1961 6167
Small 97 295
Medium 41 138
Total 2099 6600
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 80 Other costs covered by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 162 479
Wholesale and retail trade repair of motor vehicles and motorcycles
959 2996
Information and communication 74 229
Professional scientific and technical activities 503 1527
Administrative and support service activities 291 1024
Total 1989 6255
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
133
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Siz
e
cla
ss Micro 1450 4555
Small 449 1401
Medium 90 300
Total 1989 6255
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 81 Total value of redress received by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 2
(average incidence of CC use 159)
Scenario 1
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 00 00
Wholesale and retail trade repair of motor vehicles
and motorcycles 00 01
Information and communication 00 00
Professional scientific and technical activities 00 01
Administrative and support service activities 05 15
Total 06 17
Siz
e
cla
ss Micro 02 06
Small 00 00
Medium 04 11
Total 06 17
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 27 Distribution by component of gross detriment considering lost turnover and all the other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 1 (average incidence of cloud computing use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
134
Figure 28 Distribution by sector of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 29 Distribution by enterprise size class of gross detriment considering lost turnover
and all other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 2 (average incidence of CC use 499)
Scenario 1 (average incidence of CC use 159)
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
135
Figure 30 Distribution by country of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
136
Annex 7 Impacts on jobs and growth detailed results
Inputs for the assessment of macroeconomic impacts
The following two tables present the results of the estimation of turnover losses by industry
and country in the two scenarios that are used as inputs on assessment of impacts on jobs
and growth
Table 82 Turnover losses arising from contract-related cloud computing service problems - Scenario 1 considering average incidence of CC use 159 (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor
vehicles and
motorcycles
Information
and communication
Professional
scientific
and technical activities
Administrative and support
service
activities
Total
AT 06 02 00 01 10 19
BE 54 01 00 01 50 106
BG 02 00 00 00 05 07
CY 08 03 01 05 44 61
CZ 40 68 19 69 80 275
DE 02 06 02 06 03 21
DK 41 29 09 36 138 254
EE 92 86 09 69 136 392
EL 62 02 01 01 108 173
ES 07 00 00 00 85 92
FI 13 02 01 02 29 47
FR 15 01 00 00 35 51
HR 39 02 00 01 189 231
HU 05 01 00 01 08 15
IE 18 01 01 02 105 128
IT 14 06 04 12 38 73
LT 03 01 00 01 15 19
LU 23 09 01 08 39 81
LV 12 05 01 02 18 37
MT 01 00 00 00 03 05
NL 02 01 00 01 08 11
PL 00 00 00 00 03 03
PT 12 03 01 04 41 61
RO 01 00 00 00 02 03
SE 04 01 00 01 13 20
SI 07 02 01 02 20 32
SK 05 01 00 01 08 15
UK 25 07 06 11 162 211
EU28 515 240 59 237 1395 2446
Note values refer to the turnover losses estimated by country and sector that are used in the assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
137
Table 83 Turnover losses arising from contract-related cloud computing service problems -
Scenario 2 considering average incidence of CC use 499 - (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor vehicles
and motorcycle
s
Information and
communication
Profession
al scientific
and technical activities
Administrative and
support service
activities
Total
AT 17 05 01 03 35 61
BE 156 03 01 02 172 333
BG 05 00 00 00 17 22
CY 22 09 03 13 144 191
CZ 112 211 57 198 288 866
DE 07 18 07 20 12 65
DK 110 91 26 98 474 800
EE 278 256 30 218 452 1234
EL 168 05 02 02 366 544
ES 18 01 00 00 271 290
FI 37 07 02 05 96 147
FR 42 02 00 01 115 160
HR 113 06 01 02 605 728
HU 15 03 01 02 27 48
IR 50 04 02 06 340 402
IT 38 19 11 32 129 230
LT 07 02 01 02 48 61
LU 66 29 03 23 135 256
LV 33 15 02 06 62 117
MT 04 01 00 01 10 16
NL 07 02 01 02 25 36
PL 01 01 00 01 08 11
PT 32 09 04 10 136 191
RO 02 01 00 01 07 10
SE 12 03 01 03 45 62
SI 19 06 02 07 67 101
SK 13 02 01 03 27 46
UK 67 19 16 31 530 663
EU28 1450 728 175 694 4645 769
1
Note values refer to the turnover losses estimated by country and sector that are used in the
assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
138
Parameters for the assessment of macroeconomic impacts
Table 84 Output per unit of GVA by sector
(euro value of turnover by euro of GVA ndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail trade
repair of motor vehicles
and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
AT 31 18 22 20 15
BE 41 20 22 21 20
BG 44 20 19 22 24
CY 33 17 30 15 16
CZ 38 21 19 25 29
DE 29 17 19 17 16
DK 27 18 21 19 21
EE 40 19 19 19 18
EL 36 19 20 18 22
ES 40 18 20 18 18
FI 35 19 20 18 17
FR 33 20 19 22 17
HR 29 19 19 18 20
HU 40 21 17 16 18
IE 24 18 39 19 19
IT 38 19 22 17 21
LT 30 14 16 16 17
LU 37 30 49 20 80
LV 32 18 19 17 21
MT 33 16 26 23 19
NL 41 17 20 19 15
PL 36 16 20 17 20
PT 38 16 22 21 16
RO 28 26 18 22 21
SE 30 16 20 18 18
SI 31 19 21 19 17
SK 46 20 20 24 26
UK 29 18 17 16 18
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat National accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
139
Table 85 Output per unit of employment by sector
(euro million of turnover by thousand persons employedndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail
trade repair of motor
vehicles and motorcycles
Information
and communication
Professional
scientific and
technical activities
Administrati
ve and support service
activities
AT 2789 1006 2094 1227 864
BE 4293 1566 2999 1533 788
BG 453 197 499 306 160
CY 871 468 2187 814 414
CZ 1106 466 1047 625 485
DE 2414 780 2031 1060 721
DK 3251 1214 2246 1564 1118
EE 967 497 740 712 626
ES 2754 616 1770 858 474
FI 3160 1078 2014 1100 748
FR 2862 1077 2263 1650 898
GR 1643 392 1263 416 476
HR 603 364 702 652 432
HU 1137 320 658 384 255
IR 8130 1091 11774 1822 2848
IT 2329 899 2006 977 754
LT 944 378 711 406 303
LU 2988 3000 8840 1977 4646
LV 689 378 648 389 387
MT 1084 513 1866 1264 617
NL 3923 1047 2190 1314 556
PL 862 467 824 646 378
PT 1151 537 1397 648 275
RO 584 323 917 958 337
SE 3272 1189 2874 1706 955
SI 1236 647 1072 609 354
SK 1452 456 962 760 485
UK 2550 910 1750 1080 708
Note These values express the value of output that is produced by one employee in each industry For instance each worker in manufacturing in Belgium produces and output of euro4293 thousand Source Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
140
Detailed results of the assessment of macroeconomic impacts
Table 86 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems ndash Scenario 1 considering average incidence of CC use 159
Co
un
try
Sectors
Manufact
Wholesale
and retail trade repair
of motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Admin and
support service
activities
Total
(
of ctry
GVA)
(euro million)
AT 02 01 00 01 13 18 000
BE 02 02 00 02 22 29 000
BG 03 02 00 01 08 14 000
CY 00 00 00 00 02 03 000
CZ 14 00 00 00 18 33 000
DE 14 17 05 21 85 143 000
DK 01 00 00 00 07 09 000
EE 00 00 00 00 03 03 000
EL 07 05 01 05 18 34 000
ES 10 01 00 00 107 118 000
FI 01 00 00 01 08 10 000
FR 12 33 10 31 47 133 000
HR 02 00 00 00 04 07 000
HU 03 01 01 02 23 31 000
IE 01 03 01 03 02 10 000
IT 24 44 04 41 64 178 000
LT 02 01 00 01 06 10 000
LU 00 00 00 00 00 01 000
LV 01 00 00 00 04 05 000
MT 00 00 00 00 01 02 000
NL 04 01 00 01 69 76 000
PL 17 01 00 00 55 74 000
PT 02 00 00 00 54 55 000
RO 05 00 00 00 17 23 000
SE 05 04 02 06 21 38 000
SI 02 00 00 01 05 07 000
SK 03 01 00 01 11 16 000
UK 09 04 03 07 89 112 000
To
tal
EUR
million 146 126 30 128 761 1191
of
total 000 000 000 na 001 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
141
Table 87 Direct employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 1 considering average incidence of CC use 159
Co
un
try
Sector
Manufact
Wholesale and retail
trade repair
of motor vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total ( of
ctry GVA)
(euro million)
BE 2 2 0 3 56 63 000
BG 26 25 1 7 112 171 001
CZ 49 2 0 1 103 155 000
DK 1 1 0 1 13 15 000
DE 17 38 5 34 191 285 000
EE 2 0 0 0 9 10 000
EL 14 24 1 19 83 141 000
IE 0 6 0 4 1 11 013
ES 14 3 0 1 398 417 000
HR 9 3 0 1 18 31 000
IT 39 96 5 71 180 391 002
CY 2 1 0 0 7 10 000
LV 4 2 0 2 19 27 001
LT 6 5 0 3 34 48 001
LU 0 0 0 0 1 1 000
HU 10 9 2 10 161 192 001
MT 1 0 0 0 3 5 000
NL 5 1 0 2 189 197 000
AT 3 2 0 2 23 30 000
PL 72 4 1 1 286 363 000
PT 6 0 0 0 311 317 000
RO 25 2 0 0 104 132 000
SI 4 1 0 2 23 29 001
SK 9 5 1 2 59 76 001
FI 1 1 0 1 18 21 000
SE 4 5 1 7 40 57 001
UK 10 7 3 10 229 260 000
To
tal Persons 348 306 31 225 2761 3672
of
total 000 000 000 000 002 000
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
142
Table 88 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems Scenario 2 considering average incidence of CC use 499 - euro million
Co
un
try
Sector
Manufact
Wholesale and retail trade
repair of
motor vehicles and
motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total
(
of ctry
GVA)
AT 06 04 01 03 43 57 000
BE 05 05 01 06 74 91 000
BG 07 08 01 03 26 45 001
CY 01 01 00 00 06 09 001
CZ 41 01 00 01 60 104 001
DE 38 53 13 57 293 455 000
DK 03 01 01 01 23 29 000
EE 01 00 00 00 10 11 001
EL 18 15 02 13 60 108 001
ES 28 03 00 01 342 376 000
FI 03 01 00 02 26 33 000
FR 33 104 30 90 169 427 000
HR 05 02 00 01 13 22 001
HU 08 04 02 06 77 98 001
IE 03 10 02 11 06 32 000
IT 73 132 14 129 211 560 000
LT 06 04 00 02 21 33 001
LU 00 00 00 00 01 02 000
LV 02 01 00 01 12 16 001
MT 01 00 00 00 03 05 001
NL 12 02 01 03 224 242 000
PL 46 03 01 01 186 237 001
PT 05 00 00 00 170 175 001
RO 15 01 00 00 56 72 001
SE 13 12 06 18 73 121 000
SI 04 01 00 02 16 23 001
SK 08 03 01 02 37 52 001
UK 23 10 09 19 292 354 000
To
tal
EUR
million 411 382 88 375 2532 3788
of
total 000 000 000 na 004 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
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and unbalanced cloud computing contracts
143
Table 89 Direct Employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 2 considering average incidence of CC use 499
Co
un
try
Sector
Manufac
t
Wholesale and retail
trade repair of
motor vehicles
and motorcy
cles
Informati
on and communi
cation
Professio
nal scientific
and technical activities
Admin and
support service
activities
Total ( of ctry
employment)
(Persons)
AT 7 6 1 6 77 97 000
BE 5 6 1 8 183 203 000
BG 72 76 4 19 384 555 002
CY 4 3 0 1 24 31 001
CZ 141 6 1 3 356 506 001
DE 46 117 13 93 657 925 000
DK 2 2 1 1 43 49 000
EE 5 0 0 0 28 33 001
EL 40 73 3 56 284 455 001
ES 41 10 0 3 1277 1331 001
FI 4 2 0 2 60 69 000
FR 39 196 25 120 321 701 000
HR 24 8 1 4 63 99 001
HU 28 28 5 27 535 623 001
IE 1 17 1 11 4 33 000
IT 119 284 15 223 599 1242 001
LT 18 14 1 8 116 157 001
LU 0 0 0 0 2 3 000
LV 10 5 1 4 65 85 001
MT 2 1 0 1 11 15 001
NL 13 4 1 5 612 634 001
PL 195 11 2 4 970 1182 001
PT 16 1 0 1 986 1004 002
RO 72 6 0 1 342 420 000
SE 12 16 4 19 136 186 000
SI 11 3 1 5 78 97 001
SK 25 14 2 7 199 247 001
UK 26 21 9 29 749 834 000
To
tal
Persons 977 930 92 660 9157 11816
of total 000 000 000 000 006 001
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
144
Table 90 Indirect loss of gross value added at EU28 level by sector
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(euro million)
Agriculture forestry and fishing 20 59
Mining and quarrying 09 27
Manufacturing 151 454
Electricity gas steam and air conditioning supply 22 68
Water supply sewerage waste management and remediation activities 13 39
Construction 20 64
Wholesale and retail trade repair of motor vehicles and motorcycles 98 301
Transportation and storage 76 237
Accommodation and food service activities 18 59
Information and communication 71 223
Financial and insurance activities 66 207
Real estate activities 72 226
Professional scientific and technical activities 157 493
Administrative and support service activities 155 498
Public administration and defence compulsory social security 11 33
Education 10 33
Human health and social work activities 02 07
Arts entertainment and recreation 05 17
Other service activities 10 33
Activities of households as employers undiff goods- and services-
producing activities of households for own use 00 00
Total euro million 987 3079
of EU28 total 000 000
Note Values refer to the GVA content of the indirect turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses
by the coefficients of GVA at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Table 91 Indirect loss of Employment at EU28 level by sector
Scenario 1 (average
incidence of CC use 159)
Scenario 2 (average
incidence of CC use 499)
(Persons)
Agriculture forestry and fishing 119 353
Mining and quarrying 8 24
Manufacturing 252 759
Electricity gas steam and air conditioning supply 13 39
Water supply sewerage waste management and remediation activities 16 50
Construction 43 135
Wholesale and retail trade repair of motor vehicles and motorcycles 241 739
Transportation and storage 137 428
Accommodation and food service activities 55 176
Information and communication 75 235
Financial and insurance activities 60 190
Real estate activities 12 39
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and unbalanced cloud computing contracts
145
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(Persons)
Professional scientific and technical activities 234 734
Administrative and support service activities 374 1203
Public administration and defence compulsory social security 20 63
Education 26 82
Human health and social work activities 6 18
Arts entertainment and recreation 13 40
Other service activities 29 93
Activities of households as employers undiff goods- and services-producing activities of households for own use
1 2
Total Persons 1733 5402
of EU28 total 000 000
Note Values refer to the employment content of the indirect turnover losses caused by contract-
related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses by the coefficients of employment at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
146
Annex 8 Case study questionnaires by stakeholder type
EY Interview Guide ndash Cloud computing contracts (service providers and cloud
brokers)
Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into to what extent SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
As part of the study an SME survey was conducted to get a better understanding of the
incidence and the scope of problems encountered with this type of service In order to
complement and to get a better understanding of the results we obtained from the survey
we also want to get a better understanding of the services offered to SMEs by providers and
what types of problems are notified to providers
Timing 2 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and
check whether this is the best representative to interview from the national authority
Can you tell a bit more about yourself and what position do you hold
Can you reply to our questionnaire and if not can you put us in contact with somebody who can
Can you tell us a little more about the cloud computing provider you work for What type of services do you offer
What can you tell us about the contracts being offered by the cloud computing provider to SMEs
Elements to be evaluated
Understanding of the function Understanding if the person is competent enough to give relevant answers to the topic in
question Understanding of the extent of knowledge that the person has of cloud computing contracts
and company
Timing 05 min
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and unbalanced cloud computing contracts
147
Services offered to SMEs and differences compared to services offered to larger enterprises
Cloud computing services offered to SMEs
The objective of this section is to get full understanding of whether and how the provider considers
SMEs as a specific type of customer
What kind of cloud computing contracts do you offer To what extent do SMEs rely on this service What is the size of the SMEs to which you provide this service Do you offer services for micro enterprises and what is the difference between the service
offered to micro and larger enterprises
Do you offer this service based on a fee or for free
How flexible are you on the contracts that you offer in terms of negotiating Do you have standard terms amp conditions for SMEs or are they negotiable Do companies tend to negotiate the terms of the contract or are they satisfied with the service
offered in the contract To what extent can SMEs monitor the performance of the contract
Elements to be discussed
Understanding of the company and type of services offered Understanding if and how SMEs are considered as a specific category of customer Knowledge and understanding on the type of the service used paid or not by SME customers
Knowledge and understanding of the whether the contracts are negotiated or not
Timing 10 min
Complaints received and actions taken by the provider to address the issues encountered
Complaints received from SMEs concerning the services provided
Objective is to get an understanding of the number and scope of complaints that providers receive and to what extent SME complaints are different from other complaints received
How often do you receive complaints from SME customers Compared to other customers is this higher or lower
What types of complaints do you receive from SMEs (different from other groups) Which was the most serious problem encountered that you received a complaint about and to
which type of cloud computing service was it related What caused these problems What is the internal procedure to handle these problems In the past 12 months did you receive complaints not directly from customers but through
3rd party complaints-handling bodies
To what extent was this complaint different from other complaints you received directly from customers
Elements to be discussed
Understanding of the types of complaints received from SMEs Understanding of severity and frequency of complaints received from SMEs
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
Low speed of services Unsatisfactory availability or discontinuity of the service
Forced updates to the service that eliminated or changed a necessary function
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and unbalanced cloud computing contracts
148
Lack of clarity and transparency of contract terms and conditions
Timing 10 min
Specific actions taken by provider in order to address the problems
What is the standard procedure to handle complaints To what extent do you as cloud computing provider provide assistance to the SMEs when they
encounter a problem
How much time does it in general take to solve issues encountered by SMEs (in line with other complaints handled for other customers)
When encountering a problem in general what type of action do SMEs expect you as provider to take
Have you experienced that consumers easily switch provider or terminate the contract Does
this happen more often after they have filed a complaint
What types of costs do you compensate to SME customers when they encounter a problem Do customers in general accept the offered remedies Have you encountered cases where the
SME customer was not happy with the solution offered What other solutions were offered in place
Did the complaint escalate Any court proceedings arbitrationhellip
Elements to be evaluated
Understanding of the actions taken by the cloud computing provider Were these remedies enough to solve the problem The resources involved and used in the resolving of the problem
Where there any extra costs covered by the company
Timing 10 min
Future perspectives on the topic
How will Cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made due
to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services
Legalpolicy consequences of potential future evolutions
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 2 min
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and unbalanced cloud computing contracts
149
EY Interview Guide ndash Cloud computing contracts (Associations of SMEs)
D Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Timing 2 min
General introduction questions
Generate understanding of the position and knowledge of the interviewee on the specific subject
Can you tell a bit more about the types of activities that the companies in your association
are performing
Timing 05 min
Cloud computing services used (IT)
The objective of this section is to get full understanding of what cloud computing services are used for by the members of the SME associations
Are you aware of any of the following Cloud Computing services being used by SMEs
Collaboration and communication services Storage and hosting services Security services
Networking services
Data management Business applications
Are you aware of any other cloud computing services being used by SMEs
Timing 5 min
Type of contracts (legal)
The objective of this section is to get full understanding of what kind of contract the SMEs which are part of the association have
What type of cloud computing contract do the companies in your association have (with or
without remuneration if with remuneration- how much do they pay per month) What is the average duration of the contracts
Do the companies in your association have a preferred provider or type of package of services Do the companies in your association negotiate their cloud computing contracts What parts
are they able to negotiate if any Are the companies in your association satisfied with the degree of customisation of the
contracts What specific needs do the companies in your association have regarding cloud computing
Do they succeed in covering them in the process of negotiating cloud computing contracts with the providers of cloud computing services
Timing 10 min
Problems encountered (legalIT)
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and unbalanced cloud computing contracts
150
Objective is to get a better understanding of the problems encountered by the members of SME associations while contracting cloud computing services
Are you aware of any of the following problems existing with cloud computing services used by SMEs
low speed of the service unsatisfactory availability or discontinuity of the service forced updates to the service that eliminated or changed a necessary function
lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
lack of clarity and transparency of contract terms and conditions
Are you aware of any other problems existing with cloud computing services used by SMEs
What was the action taken by companies inside your association in order to resolve the issues
Do the companies in your association usually decide to take legal action
Do you believe that unfair contract terms and conditions of the cloud provider could be considered as
a cause of the problems of the companies that are members in your association
Why you diddid not consider security matters as one of the problems declared
Timing 15 min
Costs of the cloud computing services contract (legalIT)
Objective is to get an understanding of the costs sustained by the members of the SME associations while contracting cloud computing services
Would you consider that there have been any negative effects on the everyday business
activities of the companies in your association after facing the mentioned problem If yes please explain what the negative effects were
What types of costs have the companies sustained while resolving the problems Were they offered any compensation from the cloud provider
Timing 5 min
Future perspectives on the topic
How will the SMEs use the cloud computing services in the future
To what extend do you think cloud computing services will become moreless important for companies in the future
Do you see any other evolutionstrends that could be relevant with regard to cloud computing
services for SMEs
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 5 min
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151
EY Interview Guide ndash Cloud computing contracts (National authorities and national
SMEs envoys)
E Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into the extent to which SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
More concretely the following services are included collaboration and communication
services storage and hosting services security service networking services data
management business applications service and support tools cloud enablement and IT
operations virtual data centre mobile data centre
As part of the study an SME survey was conducted Results of the survey show that the
incidence of problems is relatively high in ltyour countrygt The objective of this interview is
to get a better understanding of the national context with regard to this subject
Timing 5 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and check whether this is the best person to interview within the national authority
Can you tell a bit more about yourself and what position do you hold To what extent are you familiar with the subject of cloud computing services
Elements to be discussed
Understanding of the function Understanding if the person is competent to give relevant answers to the problematic in
question Understanding of the extent that the person has of cloud computing contracts
Timing 05 min
Legal framework of cloud computing contracts
Cloud computing contracts in ltyour countrygt
Generate understanding of the overall situation in the country policy attention given to the subject and the specific legal framework applicable
Cloud computing services are a relative new service To what extent are national authorities working on this issue
Any data available
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and unbalanced cloud computing contracts
152
Knowledgeawareness of the availability of these services in ltyour countrygt
Specific attention for this topic at policy level
Under what applicable legal framework do these services fall Are there specific national initiatives developed with regard to this type of services
Our study focuses specifically on the situation of cloud computing services used within SMEs Do you have any knowledge of the existence of specific rules applicable only to SMEs in your country
Do you think the legal framework is sufficiently protecting cloud computing users and more
specifically SMEs Do you think that Terms amp Conditions are clear for SMEs Should they have specific rules for
this group of customers What is (or should be) the possibility of SMEs to monitor performance of contract Terms and
Conditions
What remedies are at SMEsrsquo disposal Is switching providers a remedy
Elements to be discussed
Knowledge and understanding of the specific sector Knowledge and understanding of the extent that these services are used
Knowledge and understanding of the legal framework applicable in the country
Timing 10 min
Problems with regard to cloud computing services
Notifications received on problems encountered by SMEs
Are you aware of any problems existing with cloud computing services used by SMEs
Have you received any complaints with regard to this type of services
Have there been any complaints on the terms amp conditions of the contracts How are these complaints handled What is the intended procedure to follow
What follow up is given to complaints regarding cloud computing services
Do you as a national authority have sufficient competences to enforce regulations in your country
Elements to be discussed
Knowledge and understanding of the problems encountered by SMEs Understanding of the types of problems encountered
Understanding of how complaints are handled and if complaints did lead to further actions taken by public authorities
Relevant information
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
low speed of services unsatisfactory availability or discontinuity of the service
forced updates to the service that eliminated or changed a necessary function
lack of clarity and transparency of contract terms and conditions
Timing 10 min
Future perspectives on the topic
How will cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
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and unbalanced cloud computing contracts
153
Do you consider it likely that more problems will arise with regard to cloud computing
services
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made
due to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services Legalpolicy consequences of potential future evolutions
To what extent national authorities are working on the topic or will address more attention to it in the future
Timing 10 min
Closing of Interview
Thank you for your interest and for your time
Any further questions
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and unbalanced cloud computing contracts
154
Annex 9 Case study analysis
Case study interviews
Objectives
The objective of the case studies was to produce useful insights on the specific problems that
were identified by the survey and complement the results obtained by using CATI and the
online survey Additional information was gained through interviews that also involved
stakeholders that had not previously participated in the Online Survey and CATI thus these
inputs were used to further enrich the results that have been obtained so far
Scope
The case studies targeted the following categories of stakeholders
Cloud service providers
National authorities
SMEs that already provided information either in the online survey or during the CATI
and that declared their availability for an in-depth interview
National SMEs Envoy
European SMEs associations (including Enterprise Europe Network associations)
Cloud brokers
Chambers of Commerce
The topics discussed with each type of stakeholder involved in the case study interviews are
presented in Figure 31
Figure 31 Topics discussed with each type of stakeholder
Stakeholder category
Topics discussed
SMEs that declared their availability for
an in-depth interview127
- type of contract (services included duration service providers what has been negotiated - if any and what degree of customisation)
- possibility to monitor performance of contract if SMEs can or cannot monitor
service performance and if they only detect the most obvious and impactful service performance defects and what types of modifications occur in practice
- costs of the cloud computing services contract(s)
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint if the details regarding the internal procedure
of the provider (if any) were investigated how much time it took and how the
problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- actions taken (HR and financial costs of actions taken)
- results of the actions taken
- disruptionreduction of activity
127 The in-depth interviews with the SMEs already included in CATI involved discussing the problems encountered by them and with a special focus on the following contract-related problems lack of clarity
and transparency of contract terms and conditions unilateral modification of the servicecontracts and
limited liability of cloud providers The special emphasis on these problems is given with the aim of complementing the information already obtained by the CATI The interviews targeted three different departments where possible legal IT and managementfinance departments
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155
Stakeholder
category Topics discussed
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME affected by the problem encountered
- potential loss of competitiveness (business opportunities lost) in terms of profitturnover lost customers market shares
- additional costs (eg costs related to ensuring an alternative service)
Cloud service providers and cloud brokers
- types of cloud computing contracts offered to SMEs
- services offered to SMEs and differences from services offered to larger enterprises
- the level of negotiability and customisation of the services offered to SMEs
- flexibility regarding the negotiation of cloud computing contracts
- contract-related problems encountered by SMEs
- causes of the contract-related problems encountered by SMEs
- actions taken by service providers and cloud brokers to address contract-related problems encountered by SMEs
- costs compensations for contract-related problems encountered by SMEs
- escalation of contract-related issues to court proceedings
Competent national authorities
- familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs Envoy - familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs associations
- awareness of specific cloud computing services used by SMEs
- type of contract (services included duration service providers what has been negotiated - if any and what was the degree of customisation) concluded by the SMEs in the associations
- average duration of cloud computing contracts concluded by SMEs
- satisfaction of SMEs regarding the degree of customisation of cloud computing contracts
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint were the details regarding the internal procedure of the provider (if any) further investigated how much time it took and how the problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME
affected by the problem encountered
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and unbalanced cloud computing contracts
156
Findings
During the CATI and the online survey 20 SMEs mentioned their availability to be contacted
for in-depth interviews Out of these 20 companies nine SMEs managed to take part in the
case study interviews They represented five sectors wholesale and retail trade repair of
motor vehicles and motorcycles professional scientific and technical activities information
and communication and manufacturing
Additionally in the process of conducting the interviews another 104 stakeholders from 12
Member States (see Figure 32) have been contacted Of these 24 agreed to participate in
the case study interviews
Figure 32 Stakeholders contacted for in-depth interviews
Finally in total 33 interviews were conducted with SMEs (see Figure 33 for SMEs involved by
country sector and size) and SMEs associations a Chamber of Commerce EEN National
Authorities an SME Envoy and service providers (see Figure 34 for the stakeholders list by
category country and name)
Figure 33 The list of SMEs involved
No Country Sector Size
1 Poland Manufacturing Medium-sized
2 Germany Manufacturing Small
3 Germany Information and communication Medium-sized
4 Germany Professional scientific and technical activities Medium-sized
5 Poland Information and communication Small
6 France Information and communication Medium-sized
7 Poland Professional scientific and technical activities Medium-sized
8 Spain Professional scientific and technical activities Small
9 Spain Information and communication Small
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and unbalanced cloud computing contracts
157
Figure 34 Details of stakeholders who participated in the in-depth interviews
Category Country
Chamber of Commerce The Netherlands
Cloud broker The Netherlands
EEN Romania
France
National authority
Italy
Romania
Romania
France
Poland
Estonia
Service provider
Sweden
Spain
Spain
Sweden
Ireland
Romania
Romania
Portugal
Romania
Germany
SME Association
EU
Portugal
The Netherlands
SME Envoys Network The Czech Republic
Services contracted
Use and types of cloud computing services contracted by EU SMEs
The use of cloud computing services by SMEs is increasing Each type of stakeholder was
aware of the spread of the use of the service
More precisely the interviews revealed that 50 of the national authorities (three out of six
respondents) the national SME Envoy the members of EEN and one cloud broker shared the
opinion that SMEs are using more cloud computing services compared to previous years
A quarter of the cloud providers observed that the usage of a specific cloud computing model
depends on the enterprise size with smaller enterprises relying more on the SaaS model
especially in contracting communication and collaboration services This confirmed the CATI
results as it showed that 50 of the micro enterprises chose a service from the SaaS model
Security
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
158
Security issues are generally an important matter for SMEs leading them to be concerned at
least about the general aspects of the security thresholds of the service provider Another
aspect that is taken into account is the reputation of the provider more precisely whether the
cloud provider has had incidents of data breaches in the past This was the case for 66 of
the respondents (six out of nine participants) One out of nine SME participants (11)
interviewed preferred to store its data on its own servers as a result of its complexity and of
privacy concerns Generally it can be observed from the in-depth interviews that if the
companyrsquos sector of activity is connected with IT services the more inclined it is to pay
attention to data security aspects
Types of contracts and relative costs
Duration and costs
Half of the service providers (five out of ten respondents) stated that they preferred to offer
flexibility regarding the duration of the contracts ranging from hourly contracts to yearly
subscriptions On average from the responses obtained from the providers during the case
study interviews it could be estimated that contracts had a duration of 12 months The Dutch
Chamber of Commerce also confirmed this information
Negotiability and customisation of CTampC
Most (90) of the service providers (nine out of ten respondents) and one cloud broker
affirmed that they offer SMEs the possibility of negotiating the CTampC to respond to the need
for customisation of service packages However the providers consider that SMEs might not
yet have formed a habit of negotiating cloud computing contracts The in-depth interviews
have shown that in most cases all representatives of SME associations and EEN members
said that their members do not try to negotiate cloud computing contracts Moreover 60
of service providers (six out of ten respondents) believe that SMEs are generally satisfied with
the degree of customisation of cloud computing services offered in standard contracts with
the only negotiation point being the price
Cloud providers indicated that the size of the enterprise was a factor in the initiation of the
negotiation and in the success in negotiating a cloud computing contract Hence 40 of cloud
computing providers (four out of ten respondents) and one cloud broker mentioned that
medium-sized enterprises have an increased tendency to negotiate their service contracts
Types of subscriptions
All of the SMEs interviewed stated that they had contracts with paid subscription Seven out
of the nine SMEs included in the case study interviews had contracts with fixed fees the rest
mentioning variable fees At the same time SMEs with variable fees prefer flexibility of
duration and costs either because of the limited need for the service inside the enterprise or
because they were still exploring the business opportunities that the service may offer One
exception was the SME active in the information and communication sector which had
concluded long-term fixed fees contracts This company purchased cloud computing services
in order to use them widely in the activity of the enterprise or to include them in the service
packages that they offer
Out of the total number of service providers that were interviewed half of them (five out of
ten providers) and one cloud broker only offered contracts with paid subscription and the
other 50 of service providers (five out of ten respondents) sometime offered free trials to
SMEs in the cases where they see potential for signing a more significant contract with paid
subscription afterwards
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
159
Legal framework of contracts
In-depth interviews have revealed that stakeholders believe that the current legal framework
both at national and EU levels needs some improvement in order to make it more suitable to
the needs of SMEs and technological advancement
National authorities the Chamber of Commerce and the national SME Envoy specified that
the currently applicable legal framework is a mix of several legal acts which partially regulated
cloud computing services and mainly focus on general data protection cybersecurity or e-
privacy All of the national authorities interviewed had a positive attitude towards the adoption
of specific legislation targeting SMEs and cloud computing services at national and EU levels
One-fifth of the service providers (two out of ten respondents) and the cloud broker also
believed that the legal framework was not sufficient and argued that guidance through what
could be a code of conduct regarding cloud computing services and how to use it should be
provided at the EU level in order to raise awareness and have a better understanding about
cloud computing services
This opinion was shared by the SMEs as 56 of the participants (five out of nine respondents)
believed that the legal framework could be improved Their suggestions included introducing
a uniform legislation at the EU level and providing a fair contract template that would balance
the powers between service providers and users
Contract-related problems encountered by SMEs
SMEs encountered a moderate amount of issues related to cloud computing contracts Most
frequently they experienced three specific problems unavailability of service low speed and
forced updates Data security although not considered among the leading problems by any
of the SMEs included in the case studies was mentioned as being a constant concern
The most serious problems encountered by SMEs
More than three-quarters (78) of the SMEs (seven out of nine respondents) indicated that
the most serious problem that they encountered was unsatisfactory availability or
discontinuity of the service followed by 11 of SMEs (one out of nine respondents) that
reported low speed of the service and forced updates to the service that eliminated or changed
a necessary function
Other problems encountered by SMEs
The second most important problem indicated by 22 of the SMEs interviewed (two out of
nine respondents) was data security In particular for one SME that operates in the
professional scientific and technical activities sector data security was so important that it
preferred to store its data on its own servers rather than contracting cloud computing
services It maintained that the market didnrsquot offer sufficient information regarding data
protection in order for it to trust the available service providers
However in all but one case the issues either did not affect the day-to-day activities of the
enterprises or only affected the internal processes of the enterprises due to the lack of the
availability of the servers In one case however an SME whose cloud computing problems
affected external business operation chose to move this activity to its own data storage
solutions In this specific case the SME was an IT operating company with storage
infrastructure already in place so its costs were not as high as for any other SME experiencing
this
National authorities and SME Envoys have little information about contract-related problems
encountered by SMEs mentioning the fact that they received few complaints regarding cloud
computing services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
160
When asked about what they considered as the most significant problems encountered by
SMEs service providers provided responses that were similar to those of their customers
Unsatisfactory availability or discontinuity of the service was recognised as the most serious
problem Other problems mentioned include the failure of the provider to identify analyse
and correct hazards and prevent a future re-occurrence high subscription fee and lack of
alignment of the CTampC
Actions taken
In all cases the action that the SMEs first took in order to resolve issues related to cloud
computing service was to formally notify the providers As a result of the complaints in seven
of eight cases the cloud computing service providers resolved the issues The duration of the
action to resolve the problems ranged from a few hours to a few days None of the SMEs
chose to take legal actions when encountering issues with the cloud computing services either
because the issue was resolved quickly it didnrsquot have an impact on the activity of the business
or because they felt intimidated by the reputation and size of the provider
A second action that SMEs took was to involve their staff in resolving the issues Six of the
eight enterprises involved one or two members of the IT or technical departments in the
process of addressing the cloud computing issues The exception was represented by one
enterprise which after the incident decided to renounce the cloud computing contract given
that it took its IT staff 10 days to resolve the problem with its cloud computing service
Another enterprise chose to pay for one member of its IT staff to work during the weekend
to ensure that any issues would be immediately addressed
Nearly one-third (30) of the service providers (three out of ten respondents) and one cloud
broker who participated in the in-depth interviews consider that an important problem arises
from the SMEsrsquo limited technical knowledge that does not allow them to clearly understand
the problems that they encounter
Service providers offered different levels of support through online forums customer care
lines and if the problem was not resolved at the site of the client Exceptionally 10 of the
service providers (one out of ten respondents) offered 247 customer support at no additional
cost
Results of the actions
According to 90 of the service providers (nine out of ten respondents) finding a solution
can vary from a couple of minutes to three days depending on the problem encountered
Usually problems are resolved within a day in the order of arrival
In the cases where service providers required a longer period of time to resolve an issue
80 of service providers (eight out of ten respondents) withheld payment to compensate for
the time spent resolving the issue Moreover in cases when the problems significantly affect
the activity of an SME 50 of the service providers (five out of ten respondents) offered
compensation according to the type of contract and the level of damages or losses caused to
the SME on a case-by-case basis Compensations usually ranged between 5-15 of the
monthly fee for the contract Another 20 of service providers (two out of ten respondents)
did not offer any type of compensation
None of the SMEs interviewed escalated the problem to court for three reasons the issue was
resolved within a few days it did not impact the activity of the business or they felt intimidated
by the reputation and size of the service provider
Future perspectives on the topic
In the opinion of stakeholders cloud computing services will enable SMEs to become more
flexible develop faster compete with the larger enterprises in a complex market and also
generate more revenue
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
161
In particular SMEs associations view the evolution of the cloud computing market toward
more affordable and specialised services More than two-thirds (70) of service providers
(seven out of ten respondents) argued that cloud computing services will evolve by developing
new features According to 20 of the service providers the features that will become
increasingly relevant are artificial intelligence block chain and data analysis
At the same time 66 of national authorities (four out of six respondents) and one national
SME Envoy believe that the right of awareness the right to privacy and data protection as
well as cybersecurity will become more important topics in the future Also the SME Envoy
mentioned possible issues emerging in the future such as non-standard functionalities of some
operational processes or defining a new model of operation of ICT services
The two associations within the EEN considered that the legal framework on how cloud
computing is regulated should be adapted to the emerging technologies Moreover the
associations consider that SMEs still have a long way to evolve in order to assimilate the
complexity of cloud computing services but a better regulated system might help them in
this direction The cloud broker further recognised the need for the authorities to work more
on this and he recommended applying European legislation rather than national legislation
to promote uniformity of the system
Case study interviews conclusions
The results of the case study interviews offered useful insights and complemented the results
already obtained through the CATI The various stakeholders involved confirmed the fact that
the usage of cloud computing across SMEs in the EU is growing and there is a need for
improvement of the current legal framework in order to follow the technological advancement
The interviews further explain the CATI results as the trend is that SMEs do to not try to
negotiate CTampC even if the cloud providers are offering this possibility Moreover the most
serious problems the actions taken to resolve them and the results of the actions are
confirmed by the information gained through the interviews and are comparable with the
earlier results of the study
Overall stakeholders who participated in the case study interviews believed that cloud
computing services will play more important role in the development of SMEs as they could
even help them compete with larger enterprises in a complex market achieve higher profits
and become more efficient
Validation Webinars
The webinars were organised with the objective of validating and triangulating the results of
the study Intended to be complementary to the tasks that were performed so far ie the
desk research CATI online survey and interviews with key stakeholders the webinars
focused on the most important topics of discussion that had emerged ensuring a higher level
of detail Therefore webinars have been used to validate the results obtained and to produce
further useful insights on the problems that were identified during the study in order to gain
a better understanding of the overall situation across the EU
In preparation of the webinars all 33 participants in the case study interviews were invited
to attend The invitation applied to four events in which the stakeholders could participate
Six stakeholders replied that they were available to participate in the webinars three SMEs
(two from Germany and one from Poland) two national authorities (one from Italy and one
from Poland) and one SME association representing the interests of European SMEs
businesses in the different sectors of the economy within the EU
In the end three webinars were held as a result of the preference of the stakeholders for the
time and date of the events
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
162
The events were held using Zoomcopy128 a software tool that facilitates the organisation of
interactive conference calls The advantages considered when choosing the software included
the high quality of video audio and simultaneous screen sharing ease of use and features
that include screen sharing on iPhone and iPad and Zoom Rooms Other notable
characteristics include the software features specially designed for webinars that allow the
participants in the event to perform actions such as raising their hands to announce their
intention to take part in the conversation pooling and a questionanswer dialogue with live
or text answers and close captioning
The participants made contributions regarding
cloud computing services contracted by SMEs during the last two years
the negotiability and customisation of CTampC
the most important problems encountered by SMEs while using cloud computing and
the difficulties encountered when taking action
security problems as factors limiting cloud computing usage
the economic detriment
final conclusions of the study
Regarding the topic of cloud computing services contracted by SMEs during the last two years
the stakeholders involved agreed on the results obtained on the extent of usage at the EU
level
Regarding the negotiability of CTampC the SME association agreed with the information
presented and found it to be in line with its expectations based on the information that the
SME association had Furthermore in the view of the German SMEs and one Polish SME SMEs
donrsquot consider the negotiation of CTampT and the customisation of the cloud services when
acquiring cloud computing services confirming the CATI results that show that the largest
proportion of 46 of SMEs did not try to negotiate CTampC In particular the representatives
of SMEs added that the SME could only negotiate different IT infrastructures but not the
limitation of responsibility that would cover service shortages In their opinion this could be
a general issue for SMEs
Overall the SMEs representatives agreed with the results of the project and commented that
their enterprises can relate to the issues presented In particular concerning the incidence of
contract-related problems the participants discussed the link between the methodology of
sampling of the SMEs that participated in the survey and the data that was presented
concluding that the data was considered to be relevant at the EU level
Regarding the problems encountered by SMEs while using cloud computing services the
national authority representative mentioned receiving few complaints from SMEs on issues
related to cloud computing contracts Additionally the stakeholder mentioned that the
General Data Protection Regulation (GDPR) is already proving to be very useful since it
facilitates the attribution of responsibility for problems that may arise in the provision of cloud
computing services Additionally related to the issues that SMEs encounter when trying to
resolve difficulties with cloud computing services the SMEs representatives added that the
most important issue was finding the contact information of the employee of the service
provider who would be assigned to resolve the problem after a formal complaint to the service
provider was made These statements confirm the results of the CATI as 52 of the SMEs
interviewed stated that they had made a complaint to the provider and that the second
difficulty encountered when trying to solve the problem was trying to reach the appropriate
contact point (35)
The participants in the discussion on security problems mentioned the effects of the GDPR on
cloud computing contracts a topic raised mainly by the representatives of the national
128 Zoom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
163
authorities The representatives added that the lack of SME capacity in negotiating cloud
computing contracts could be helped by the GDPR as it would give SMEs more control over
their data after the service providers apply the regulation The GDPR is considered to place
new obligations on cloud providers that will affect how they implement cloud services The
GDPR will strengthen user privacy as it increases the obligations on providers to protect SMEsrsquo
data and secondly it grants users new powers over how their information is collected used
and stored129
Additionally the representative of the Italian national authority and the German SME
intervened regarding the topic of economic detriment asking if the indirect costs have been
considered It was mentioned that the study looked at the client losses and reputational
damages where the case and furthermore it addressed the overall costs involved in ensuring
an alternative service and costs related to fixing the cloud service problem with external
support The stakeholders commented that they agreed with the issues that were presented
during the webinar which they also experienced They also added that in their opinion there
is a need for more transparency and better regulated services that will eventually lead to
fewer economic losses
During the concluding remarks the participants had several comments and suggestions The
Italian national authority representative added that he would be interested in an updated
version of the study conducted a year after the webinar in order to see the effects of the
enforcement of the GDPR regulation Furthermore the SME from Germany agreed with the
observation of the national authority regarding the effects of the GDPR on cloud computing
contracts and considered that its evolution should be observed together with the issues
concerning internet services as a whole
The SME representatives suggested that a platform should be created that could facilitate a
comparison between cloud computing services in order to better present the types of services
and prices available on the market The SMEs complained about the fact that they all had
difficulties when choosing between cloud computing providers In this case the availability of
only standard services on the market would allow the SME to make a direct comparison
The stakeholders involved in the webinars found the study findings to be in accordance with
the developments in the cloud computing market They provided significant comments and
recommendations especially concerning the future influence that the GDPR could have on the
sector This could mean a better distribution of responsibility especially regarding data
privacy and data protection Moreover the study was seen as being representative at the EU
level and as cloud computing is rapidly evolving the stakeholders expressed the desire to
observe the progress made in SME usage of cloud computing services by supporting the idea
of performing a second study at a later date
129 Analysis performed by Insight Company which is a leading provider of computer hardware software cloud solutions and IT services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
164
HOW TO OBTAIN EU PUBLICATIONS
Free publications
bull one copy
via EU Bookshop (httpbookshopeuropaeu)
bull more than one copy or postersmaps
from the European Unionrsquos representations (httpeceuropaeurepresent_enhtm)
from the delegations in non-EU countries (httpeeaseuropaeudelegationsindex_enhtm)
by contacting the Europe Direct service (httpeuropaeueuropedirectindex_enhtm) or
calling 00 800 6 7 8 9 10 11 (freephone number from anywhere in the EU) () () The information given is free as are most calls (though some operators phone boxes or hotels may charge you)
Priced publications
bull via EU Bookshop (httpbookshopeuropaeu)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
165
Getting in touch with the EU
In person
All over the European Union there are hundreds of Europe Direct information centres You can
find the address of the centre nearest you at httpseuropaeueuropean-unioncontact_en
On the phone or by email
Europe Direct is a service that answers your questions about the European Union You can
contact this service
ndash by freephone 00 800 6 7 8 9 10 11 (certain operators may charge for these calls)
ndash at the following standard number +32 22999696 or
ndash by email via httpseuropaeueuropean-unioncontact_en
Finding information about the EU
Online
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EU publications
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Open data from the EU
The EU Open Data Portal (httpdataeuropaeueuodpen) provides access to datasets from
the EU Data can be downloaded and reused for free both for commercial and non-commercial
purposes
doi 102838962608
ISBN 978-92-79-96750-4
[Cata
logue n
um
ber]
DS-0
3-1
8-4
21-E
N-N
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
1
CONTENTS
List of abbreviations 2
Glossary 4
1 Introduction 7
11 The importance of contract-related problems 7
12 Objectives and scope of the study 10
13 Structure of this report 12
2 Research methodology 14
21 Overview of the approach 14
22 Main limitations encountered 35
3 Usage of cloud computing across EU SMEs the state of play 37
31 Cloud computing usage rate 37
32 Types of cloud computing services contracted 38
33 Types of contracts and relative costs 41
4 Contract-related problems encountered by SMEs 46
41 Types and frequency of encountered problems 46
42 The most serious problems encountered 49
43 Causes of the most serious problems encountered 51
44 Actions taken by SMEs 53
5 Consequences of the encountered problems 57
51 Qualitative assessment 57
52 Quantitative assessment 59
6 Impacts of the economic detriment 72
61 Direct impacts 73
62 Indirect impacts 74
63 Other qualitative impacts of contract-related problems 75
7 Conclusions 77
Annex 1 Methodology for the Survey of SMEs 82
Annex 2 Stakeholders list 84
Annex 3 Bibliography 86
Annex 4 Survey questionnaire 90
Annex 5 SME Survey results 101
Annex 6 Economic detriment ndash further results 114
Annex 7 Impacts on jobs and growth detailed results 136
Annex 8 Case study questionnaires by stakeholder type 146
Annex 9 Case study analysis 154
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
2
List of abbreviations
Acronym Description
CATI Computer Assisted Telephone Interviews
CTampC Contract terms and conditions
DG JUST Directorate-General Justice and Consumers
EC European Commission
EEN Enterprise Europe Network
EU European Union
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat Statistical Office of the European Communities
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GE250 Large enterprises of more than 250 employees
GFD Gross Financial Detriment
GVA Gross Value Added
IaaS Infrastructure as a Service
IOS International Organization for Standardization
MS Member State
NFD Net Financial Detriment
PaaS Platform as a Service
PC Personal computer
PPP Purchasing power parity
R Value of any redress
SaaS Software as a Service
SLA Service level agreement
SLALOM Service Level Agreement ‐ Legal and Open Model
SMEs Micro small and medium-sized enterprise
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
3
EU Member States
AT Austria
BE Belgium
BG Bulgaria
CY Cyprus
CZ The Czech Republic
DE Germany
DK Denmark
EE Estonia
EL Greece
ES Spain
FI Finland
FR France
HR Croatia
HU Hungary
IE Ireland
IT Italy
LV Latvia
LT Lithuania
LU Luxembourg
MT Malta
NL The Netherlands
PL Poland
PT Portugal
RO Romania
SE Sweden
SI Slovenia
SK Slovakia
UK The United Kingdom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
4
Glossary
Term Definition Source
Active enterprise
An enterprise that had either turnover or employment at any time during the reference
period
Eurostat
Cloud computing
A model for enabling ubiquitous convenient on-demand network access to a shared pool of configurable computing resources (such as networks servers storage applications and
services) that can be rapidly provisioned and released with minimal management effort and
service provider intervention
National Institute of Standards and Technology The NIST Definition of Cloud Computing 2011
Cloud Service
One or more capabilities offered via cloud computing invoked by using a defined interface
European Commission Cloud service level agreement standardisation guidelines
2014
Cloud service provider
A party which makes cloud services available European Commission Cloud service level agreement standardisation guidelines 2014
Cloud service agreement
The Cloud Service Agreement or CSA is the main document which sets out the terms and conditions of the contractual relationship between
the provider and the user in relation to the provision of cloud services
Slalom Project Model contract for Cloud Computing 2016
Data portability
Ability to easily transfer data from one system to another without being required to re-enter data
It is the ease of moving the data that is the essence here This might be achieved by the source system supplying the data in exactly the format that is accepted by the target system But even if the formats do not match the
transformation between them may be simple and straightforward to achieve with commonly available tools On the other hand a process of printing out the data and rekeying it for the
target system could not be described as lsquoeasyrsquo
International Organisation for Standardization Information technology mdash Cloud computing mdash Overview and vocabulary 2014
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat
EU15 Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg the Netherlands Portugal Spain Sweden and the
United Kingdom
Eurostat
EU28 Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands
Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom
Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
5
Term Definition Source
Frequency
(F)
The frequency shows how often the mentioned problem appeared and it is measured on a scale from 1 to 4 1 meaning lsquorarelyrsquo (at least once in the last 12 months)2 meaning lsquooccasionallyrsquo (at least once every 3 months) 3 meaning lsquofrequentlyrsquo (at least once a month) and 4 meaning lsquovery frequentlyrsquo (at least once a week)
EY Survey of SMEs 2018
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017Number of SMEs that contracted at least one cloud computing service during 2016-2017
EY Survey of SMEs 2018
Infrastructure as a Service (IaaS)
The capabilities provided to the cloud-service customer include processing storage networks and other fundamental computing resources where the cloud-service customer is able to deploy and run arbitrary software which may
include operating systems and applications The cloud-service customer does not manage or control the underlying cloud infrastructure but does have control over operating systems storage and deployed applications and possibly limited control of select networking components
(such as host firewalls)
European Commission Cloud service level agreement standardisation guidelines 2014
NACE Statistical Classification of Economic Activities in
the European Community
Eurostat
Purchasing power parity
(PPP)
The rate of currency conversion that equalises the purchasing power of different currencies by
eliminating the differences in price levels between countries In its simplest form PPP shows the ratio of prices in the national currency of the same good or service in different countries
Eurostat
Platform as a
Service (PaaS)
The capability provided to the cloud-service
customer is to deploy onto the cloud infrastructure customer-created or acquired applications created using programming languages libraries services and tools
supported by the cloud-service provider The cloud-service customer does not manage or control the underlying cloud infrastructure
including network servers operating systems or storage but does have control over the deployed applications and possibly configuration settings for the application-hosting environment
European Commission Cloud
service level agreement standardisation guidelines 2014
Service level agreement
A Service Level Agreement (SLA) is the service contract component between a service provider
and customer An SLA provides specific and measurable aspects related to service offerings
European Commission Cloud service level agreement
standardisation guidelines 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
6
Term Definition Source
Software as a Service (SaaS)
The capability provided to the cloud-service customer to use the providerrsquos applications running on a cloud infrastructure The applications are accessible from various client devices through either a thin client interface such as a web browser (for example web-based e-mail) or a programme interface The user does
not manage or control the underlying cloud infrastructure including network servers operating systems storage or even individual application capabilities with the possible exception of limited user-specific application
configuration settings
European Commission Cloud service level agreement standardisation guidelines 2014
Service availability
The property of being accessible and usable on demand by an authorised entity
European Commission Cloud service level agreement standardisation guidelines
2014
Service performance
The problem faced by SMEs characterised by the difficulty in understanding the level of performance or the quality of services that has been promised in the contract
European Commission Cloud service level agreement standardisation guidelines 2014
SMEs The category of small and medium-sized enterprises (SMEs) includes enterprises which employ fewer than 250 persons and which have
an annual turnover not exceeding euro50 million andor an annual balance sheet total not exceeding euro43 million
Within the SME category a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover andor annual balance sheet total does not exceed euro10 million
Within the SME category a microenterprise is defined as an enterprise which employs fewer
than 10 persons and whose annual turnover andor annual balance sheet total does not exceed euro2 million
Commission Recommendation of 6 May 2003 concerning the definition of micro small and
medium-sized enterprises (notified under document number C(2003) 1422)
Virtual Data Centre
A pool or collection of cloud infrastructure resources specifically designed for enterprise business needs The basic resources are the
processor (CPU) memory (RAM) storage (disk space) and networking (bandwidth) It is a virtual representation of a physical data centre complete with servers storage clusters and many networking components all of which reside in a virtual space being hosted by one or more actual
data centres
Altman amp Alt A Digital Library for the Dissemination and Replication of Quantitative
Social Science Research The Virtual Data Centre 2001
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
7
1 Introduction
This report represents the final deliverable responding to the request for services
JUST2016RCONFWCIVI0176 (201703) concerning a Study on the economic
detriment to small and medium-sized enterprises arising from unfair and
unbalanced cloud computing contracts The Request for service was issued by the
European Commission Directorate-General Justice and Consumers (DG JUST) Unit A2 -
Contract Law
11 The importance of contract-related problems
Cloud computing has been credited with increasing competitiveness through cost reduction
greater flexibility and optimal resource utilisation1 By using cloud computing services
enterprises are only paying for the amount of storage they are actually consuming and are
not responsible for the daily maintenance of the storage infrastructure
Demonstrable tangible economic benefits have been estimated in 2011 A report published
by the European Commission lsquoQuantitative Estimates of the Demand for Cloud Computing in
Europe and the Likely Barriers to Up-takersquo2 identified as main benefits the lower IT costs
more effective mobile working higher productivity standardisation of processes better ability
to enter new business areas and the ability to open up in new locations
All in all increasing the usage of cloud computing can have a relevant impact in terms of
increasing EU Gross Domestic Product (GDP) by up to euro250 billion and creating 38 million
jobs by 2020 compared to 20123
While the list of the above benefits is not exhaustive it certainly provides a perspective on
the potential economic advantages of the usage of cloud computing compared to more
traditional alternatives such as on-premises information technology infrastructure4
1 Rittinghouse J Ransome J (2009) Cloud Computing Boca Raton CRC Press USA 2 Based on a 2011 survey conducted on 479 enterprises already using cloud computing for their businesses 81 reported lower IT costs with a 10 to 20 reduction being typical but 12 reported
savings of 30 or more Business benefits included more effective mobile working (46) higher
productivity (41) more use of standard processes (35) better ability to enter new business areas (33) and the ability to open up in new locations (32) European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels 3 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe
and the Likely Barriers to Up-take SMART 20110045 Brussels 4 Traditional on-premises infrastructures consist of various pieces of hardware such as desktop computers which are connected to a network via a remote server This server is typically installed on the premises of an enterprise and provides all employees using the hardware with access to the companyrsquos stored data and applications Enterprises with this type of information technology model must purchase additional hardware and upgrades in order to scale up their data storage and services to support more users Mandatory software upgrades are also required with traditional information
technology infrastructure to ensure that failsafe systems are in place to in case a hardware failure occurs For many enterprises with information technology data centres an in-house information
technology department is needed to install and maintain the hardware
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
8
However Eurostat data indicate that in 2016 only 21 of EU small and medium-sized
enterprises (SMEs ie 10 ndash 250 employees) bought cloud computing services used over the
internet5 mostly for hosting their e-mail systems and electronically storing files
If micro enterprises (ie 1 ndash 9 employees) are considered Eurostat data are available only
for few countries (the United Kingdom Slovakia Sweden Portugal and Spain) For these
countries the percentage of micro enterprises that were buying cloud computing services used
over the internet in 2016 was around 11
With regard to the main factors affecting the adoption of cloud computing in most
sectors enterprises reported6 that insufficient knowledge of cloud computing prevented them
from using it (Figure 1) Expertise and sufficient knowledge of contractual and legal aspects
and the details of technical implementation are necessary prerequisites for an enterprise in
deciding to purchase cloud computing services In addition the risk of a security breach was
a key consideration for enterprises the concern over the risk of a security breach scored
highest for both large enterprises and small and medium-sized enterprises (SMEs) (57
and 38 respectively)7
Figure 1 Factors that limit cloud use
Source Eurostat (2016)
Clearly enterprises attach importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
A study commissioned by the Commission8 looked at the main contractual issues that are
of particular interest in a cloud context description of the service and Service Level
Agreement (SLA) acceptable-use policy data protection and disclosure of personal data
intellectual property and other proprietary rights and duties over content warranties direct
and indirect liability indemnification for third party claims the effect on data preservation of
contract termination modification of the contract terms and conditions (CTampC) and security
protection of data and loss of data
5 Eurostat data consider all enterprises with the exception of those in the financial sector consulted in April 2018 6 Eurostat Cloud computing - statistics on the use by enterprises Brussels 7 Ibidem 8 European Commission (2015) Comparative Study on Cloud Computing Contracts Publications Office
of the European Union Luxembourg
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
9
The Commission acknowledged the role of cloud contracts notably in relation to data
portability9 as lsquocontracts often exclude or severely limit the contractual liability of the cloud
provider if the data is no longer available or is unusable or they make it difficult to terminate
the contractrsquo10
Contract-related problems have been addressed by the Commission through various
initiatives
Firstly in 2013 the Commission set up an Expert Working Group on Cloud Computing
Contracts11 to work on identifying safe and fair contract terms for cloud computing services
with a view to addressing concerns of consumers and enterprises
Secondly specific actions have been taken forward on business-to-business cloud computing
contracts beyond the legislative field including
the work of the European Cloud Partnership and the ISO (International Organization
for Standardization) towards the standardisation of cloud SLAs
the SLA standardisation guidelines prepared in June 2014 by the Cloud Select Industry
Group on Service Level Agreements Subgroup (C-SIG SLA)12
the lsquoService Level Agreement Legal and Open Modelrsquo (SLALOM) project13 funded under
the Horizon 2020 Framework Programme which delivered a set of common legal
clauses to cover cloud SLAs and contracts and a standard technical SLA specification
Finally in April 2016 the Commission gave a new impetus to its work on cloud computing by
adopting the Communication on the European Cloud Initiative - Building a competitive
data and knowledge economy in Europe14 where further complementary actions under the
Digital Single Market strategy covering cloud contracts for business users and switching of
cloud services providers have been announced
Thus over recent years the Commission has adopted a true European Cloud Computing
Strategy aimed at removing barriers to cloud computing Additionally work is under way
towards a Code of conduct on switching and porting cloud data and services
A further development of this topic is represented by the lsquoProposal for a Regulation of the
European Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo launched in 201715
The objective of this proposal is to unlock the potential of the EU data market In order to do
so the proposal aims to address the following issues
9 Please see the Glossary for further information 10 European Commission (2012) Unleashing the Potential of Cloud Computing in Europe COM(2012)529 final Brussels 11 The Group has been set up within the framework of the Commission Communication (2015) lsquoA Digital
Single Market Strategy for Europersquo which aims at enhancing trust in cloud computing services and unlocking its potential for boosting economic productivity in Europe 12 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2018 13 The SLALOM project accessed 1 May 2018 14 European Commission (2016) European Cloud Initiative - Building a competitive data and knowledge economy in Europe COM(2016) 178 final Brussels 15 European Commission (2017) Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union COM(2017) 495 final
Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
10
improving the mobility of non-personal data across borders in the Single Market
which is limited today in many Member States by localisation restrictions or legal
uncertainty in the market
ensuring that the powers of competent authorities to request and receive access to
data for regulatory control purposes such as for inspection and audit remain
unaffected and
making it easier for professional users of data storage or other processing services to
switch service providers and to port data while not creating an excessive burden on
service providers or distorting the market
The impact assessment study16 that accompanies the legislative proposal addresses barriers
such as the legislative and administrative localisation restrictions data localisation driven by
legal uncertainty and the lack of trust in the market which is considered to inhibit data
mobility The impact assessment identifies as a preferred option a policy that would enhance
legal certainty maintain the current levels of security of data storage and processing and that
would rely on self-regulation by industry through the development of codes of conduct for
facilitating switching between providers and finally that would positive economic effects
resulting in lower compliance costs for cloud service providers The study took into
consideration that actions at the Member State level would not be able to achieve the legal
certainty necessary for conducting this type of business across the EU or to remedy the lack
of trust that is slowing the development of a thriving data storage andor processing sector
It is presumed that an EU intervention would contribute to further development of secure data
storage capacity for the entire EU
12 Objectives and scope of the study
Objectives
The studyrsquos main objective is to deliver the necessary evidence to support the Commission
in its assessment of the need for and extent of any further EU efforts to increase SMEsrsquo trust
in cloud services and allow them to bring in the full potential benefits of these types of
services
The main specific objectives of the study are
to identify the prevalence nature scope and scale of the contract-related problems
that SMEs encounter in relation to cloud computing services
to analyse whether and to what extent enterprises are able to protect themselves
against problems for example by means of enforcement of rules on business-to-
business unfair contract terms (where they exist)
to quantify the financial detriment as well as the detriment arising from time loss and
consequential damages (such as business interruption) suffered by SMEs in relation
to the contract-related problems encountered
to complement the quantitative measurement with a qualitative assessment of the
detriment suffered by SMEs
to model (in quantitative terms) the impact on growth and jobs of the quantified SME
detriment identified and provide a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and
competitiveness
16 European Parliament (2017) Commission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union SWD(2017) 304 final Brussels
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11
Scope
Cloud computing services covered
The study covers the cloud computing services most commonly used by SMEs taking into
account i) the general delivery models used by the provider ie Infrastructure as a Service
(IaaS) Platform as a Service (PaaS) and Software as a Service (SaaS)17 ii) the core
categories of cloud services available in the market
The study covers cloud computing services provided both in exchange for money and provided
free of charge (ie not provided in exchange for a monetary counter-performance)
Contract-related problems encountered by SMEs
The study investigates the prevalence nature scope and scale of
problems in relation to the conformity of the service with the contract
problems with unfair CTampC
problems in exercising the users rights to remedies for non-conformity of the
service with the contract
Territorial scope
The study assesses the contract-related problems faced by SMEs in all EU28 Member States
Timeline
The study covers the usage of cloud computing services by EU SMEs over the period 2016 ndash
2017
Stakeholders
The following categories of stakeholders are covered
EU SMEs that contracted cloud computing services over the period 2016 ndash 2017
cloud computing providers
cloud computing brokers
National authorities competent in fields related to cloud computing (such as data
privacy protection personal data processing and data security)
the National SMEs Envoys Network18
Chambers of Commerce
the Enterprise Europe Network (EEN)19
SMEs associations
Please refer to Annex 2 for the full list of stakeholders
For the purpose of this study and in order to make the present report more intelligible
whenever the term SMEs is used in the text it refers to
medium-sized enterprises defined as enterprises which employ fewer than 250
persons (50-249) and whose annual turnover andor annual balance sheet total does
not exceed euro50 million
17 See the Glossary for the definition of these terms 18 The network of national SME Envoys was set up in 2011 as part of the review of the Small Business Act (SEC(2008) 2101) Each EU country has nominated a national SME Envoy to complement the role of the EU national SME Envoy who chairs the network The group of national SME Envoys makes up an SBA advisory group that promotes SME friendly regulation and policy making in all EU countries More
information is available at httpeceuropaeugrowthsmesbusiness-friendly-environmentsmall-
business-actsme-envoys_en 19 The Enterprise Europe Network helps businesses innovate and grow on an international scale It is the worldrsquos largest support network for SMEs with international ambitions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
12
small enterprises defined as enterprises which employ fewer than 50 persons (10-
49) and whose annual turnover andor annual balance sheet total does not exceed
euro10 million
micro enterprises defined as enterprises which employ fewer than 10 persons and
whose annual turnover andor annual balance sheet total does not exceed euro2 million
13 Structure of this report
The report is structured as follow
Chapter 1 recaps the objectives and the scope of the study and provides information
about the background of the study that justified the request for service
Chapter 2 presents the methodological framework and the main limitations
encountered Chapter 3 covers the findings related to
- the usage of cloud computing among EU SMEs over the period 2016-2017 and
the reasons for the limitations of the use of cloud computing
- types of cloud computing services that were contracted by SMEs
(complexity of the subscribed cloud computing packages the frequency of the
number of contracted services and the services contracted by SMEs size)
- types of cloud computing contracts and relative costs including the
negotiability of contract terms and conditions (CTampT)
Chapter 4 is dedicated to the analysis of contract-related problems encountered
by SMEs specifically types and frequency of encountered problems and actions taken
by SMEs to address these problems
Chapter 5 presents a qualitative assessment of the consequences faced by SMEs due
to contract-related problems These refer to
- negative effects on the business activity (ie loss of turnover or profit loss of
clients andor reputation damages)
- extra work done with internal or external resources while trying to resolve the
encountered problems
- legal actions taken to exercise the users rights to remedies for non-conformity
of service
Where possible these consequences have been quantified and monetised in order to
assess the economic detriment suffered by SMEs
Chapter 6 is dedicated to the impacts of the economic detriment The analysis
concerns
- direct impacts meaning the Gross Value Added (GVA) and employment
contents of the turnover lost by SMEs that are affected directly by the contract-
related problems
- indirect impacts in the supplier sectors
This chapter also discusses (in qualitative manner) impacts on market functioning and
competitiveness
Chapter 7 presents the conclusions of the overall analysis
Annexes including the following
- methodology for the survey of SMEs
- the list of stakeholders that have been involved in the case studies
- bibliography of consulted and relevant documents
- survey questionnaire used for conducting the survey of SMEs
- results of the survey of SMEs
- further results of the economic analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
13
- detailed results of the impacts on jobs and growth
- case study questionnaires by stakeholder type
- case study interviews and webinars analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
14
2 Research methodology
21 Overview of the approach
The study envisaged three main Tasks
Task 0 ndash Preparatory task Defining the methodological framework and the topics
to be investigated during the research as well as defining the standards and tools to
be used
Task 1 - Survey of SMEs Conducting an online survey on a representative sample
of SMEs and start-ups which are using cloud computing for the purposes of
conducting their business
Task 2 - Economic detriment Quantification of the overall economic detriment
sustained by SMEs in relation to the problems identified under Task 1 Based on these
results the impact on growth and jobs and on the economy as a whole has been
measured
Figure 2 provides an overview of the approach followed synthesising the main activities
objectives and methodstools
Figure 2 Overview of the project Tasks
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15
Task 0 ndash Preparatory Task
This Task envisaged undertaking desk research that allowed the team to clearly define the
methodological framework of the study in terms of
cloud computing services commonly used by micro small and medium-sized
enterprises
potential contract-related problems that may be encountered while using cloud
computing
problem definition which provides an overview of the main causes and effects of the
identified problems It was used to
- better understand the context in which the problems occurred
- identify the intermediate effects and the main drivers
- structure the data collection tools (ie questionnaires for Computer Assisted
Telephone Interviews [CATI] and the online survey)
selecting a sample of countries and sectors to be analysed in depth in order to achieve
the project objectives The sampling strategy included
- the identification of a sample of Member States (MS) and economic sectors to
be analysed in depth
- the definition of a target for a representative sample of micro small and
medium-sized enterprises to be addressed through the survey under Task 1
- ensuring representativeness of the sample size
Table 1 provides the list of cloud computing services identified under Task 0
Table 1 Cloud computing services commonly used
Cloud computing
model
Cloud computing services
Details
SaaS Business applications
Applications used for accounting invoicing planning payments payroll human resources management
Collaboration and communication services
Video conference system business visualisation technology
instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring
Service and support tools
Project and portfolio management solutions services operations management
Big data Business intelligence and data analytics applications
Networking services Creation of an internal private cloud and virtual local networks utilising a pooled server for storing enterprise data and running applications needed each day
Security services Secure content management end point protection malware
protection
PaaS Sales and marketing services
Web configuration forms for marketing and sales purposes
Cloud enablement and information
technology operations
Application integration and monitoring business process management information technology operationrisk
management
Data management Datacontent management
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16
Cloud
computing
model
Cloud computing services
Details
Mobile Usage of managed mobility to serve a multitude of mobile devices anywhere anytime
Platform to create
software applications
Conception and creation of applications through testing and
deployment
Internet of things Asset tracking deployable components intelligent spaces
IaaS Storage and hosting services
Server platform for online storage sharing hosting web-sites files images and similar content
Virtual data centre Usage of a pool of virtualised infrastructure as processor
memory storage space and networking components
High performance computing
Usage of high performance computing clusters workloads and applications
Source EY desk research20
The following potential contract-related problems have been identified
lack of timely updates of the cloud service
forced updates to the service that eliminated or changed a necessary function
unsatisfactory amount of data that could be processed
failure of the cloud provider to identify analyse and correct hazards and to prevent
future re-occurrences (incidence management)
low speed of the service
unsatisfactory availability or discontinuity of the service (due to a crash unannounced
maintenance or other interruptions of service)
unsatisfactory number of users that could access the service
lack of compatibility of the service with user hardware or software
limited data portability
limited data retrievability
extra costs imposed for data portability
data deletion upon contract termination
destruction or loss of data
loss or alteration of data transmitted stored or processed via the cloud service
unauthorised disclosure of or access to data
lack of protection of the data stored in the cloud against theft or viruses
lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
unilateral modification of the servicecontract by the cloud provider
limited liability of the cloud provider
termination of the contract and interruption of the service by the service provider with
no or little prior notice to the user
lack of clarity and transparency of CTampC
Based on the results of desk research the team finalised the methodological approach that
included the definition of the problem tree to clearly understand the links between problems
encountered by enterprises and possible consequences the preparation of the data collection
tools including the questionnaires for the survey of SMEs and the case study template
20 The bibliography serving as basis for the desk research can be found in Annex 3
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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17
Additionally desk research revealed that cloud computing users may encounter the following
problems in exercising their rights to remedy the non-conformity of service with the
contract
absence of a contact point to make a complaint or attempt to resolve issues
length and high cost of the procedure
applicability of foreign jurisdiction
language difficulties
impossibility to enforce the decision after the resolution
The problem definition was structured around the above-mentioned key contract-related
problems and their short- and long-term effects Essentially the problem definition allowed
the team to
identify the main-core problems and the underlying causes
identify who and what is affected and to what extent
foresee the possible evolution of the problems identified
Following the problem definition a problem tree (Box 1) was structured in order to summarise
the identified problems and related causes as well as the links between them
Box 1 Definition of the problem tree
A problem tree or ldquohierarchy of problemsrdquo is useful in providing an overview of the main causes and effects of the identified problems It is used to better understand the context in which the problems occur what the intermediate effects and the main drivers are
The analysis performed during the creation of a problem tree aims at identifying the real bottlenecks
to which stakeholders attach a high priority and which they wish to overcome A clear problem analysis thus provides a sound foundation on which to develop a set of relevant and focused project objectives
A problem tree analysis begins with the establishment of the core problem Using desk research the problem can be formulated in a more specific way Once the core problem has been identified we consider the direct causes and effects of the problem Each cause statement is written in negative terms These items should respect the MECE principle in that they should be Mutually Exclusive and Collectively Exhaustive In many respects the problem analysis is the most critical stage of project
planning as it then guides all subsequent analysis and decision-making on priorities
Once complete the problem tree represents a summary picture of the existing negative situation that can be further used by the decision makers in order to analyse the objectives by reversing the negative statements into possible solutions and then choose the most appropriate solution to be implemented
Source European Commission - Aid Delivery Methods (Vol 1 Project Cycle Management Guideline)
Among the most important sources of information that helped in refining the problem tree
especially with regard to the contract-related problems were21
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in
Europersquo COM(2012)529 final Brussels
Cloud Computing Experts Groups meetings 2013-2014
Cloud Service Level Agreement Standardisation Guidelines from 24 June 2014
European Commission (2015) lsquoComparative Study on cloud computing contractsrsquo
European Commission (2016) lsquoStudy on measuring the economic impact of cloud
computing in Europersquo
European Commission consultations about Cloud Computing (2016)
IDC (2016) lsquoSwitching of Cloud Services Providersrsquo
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprises and Business
Structure Statisticsrsquo
21 The results of the survey of SMEs as well as the case study results have been used in order to update the problem tree
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
18
European Commission (2017) lsquoFinal results of the European Market study measuring
the size and trends of the EU data economyrsquo
European Commission (2017) lsquoProposal for a Regulation of the European Parliament
and of the Council on a framework for the free flow of non-personal data in the
European Unionrsquo
European Parliament (2017) Commission Staff Working Document Impact
Assessment Accompanying the document lsquoProposal for a Regulation of the European
Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo
Figure 3 illustrates the problem tree that was created based on the studyrsquos desk research
The drivers of cloud computing problems are acknowledged in the different sources of
information consulted such as the Digital Single Market strategy This strategy identifies
concerns related to lsquosecurity compliance with fundamental rights and data
protectionrsquo22 as a result of technical and legislative barriers
Moreover the fragmentation of regulation across the EU could be a factor that limits the
usage of cloud computing due to the need for large providers to adapt their services to each
countryrsquos laws that regulate cloud computing23
A lack of fairness and balance in CTampC is considered a driver as lsquocontracts often exclude
or severely limit the contractual liability of the cloud providerrsquo24 By the same token
the unilateral modifications of the contract and the difficulties in exercising the userrsquos
rights are problems arising from the unfairness of CTampC Moreover when targeting SMEs
lsquothe contract is likely to be a take it or leave it contractrsquo25
The limited technical knowledge among SMEs is also a factor affecting the emergence of
the different problems shown in Figure 3 The limited technical knowledge of the users has
been considered when creating a Cloud Select Industry Group in Service Level Agreements
Subgroup26 This subgroup worked towards the development of standardisation guidelines
between cloud providers and cloud customers and these efforts coincide with complementary
action under the Digital Single Market strategy
The mentioned contract-related problems lead to a loss of business opportunities Within one
of the Expert Group Meetings it was concluded that an uninformed choice of terms and
conditions may lead to damages27 Other experts28 have stated that lsquocertain losses are
potentially huge and cannot be compensatedrsquo29 The present study tested the hypothesis that
contract-related problems may lead to losses of profit turnover clients and reputation
damage for SMEs over the short term Over the long term such problems can have a
negative impact on growth and jobs
Over time the lack of awareness of the benefits of cloud computing limits its usage and can
deter businesses from tapping into the full potential of the cloud Over the long term this
could also have a negative effect on GDP and jobs creation Although this scenario was
22 European Commission (2015) A digital Single Market Strategy for Europe COM(2015) 192 final
Brussels 23 Ibidem 24 Ibidem 25 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2017 26 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 2930 January 2014 27 Ibidem 28 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014 29 For example due to the unavailability of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
19
included in the problem tree it is not the purpose of this study to examine these larger
macroeconomic impacts30
The problem tree allowed the team to gain an understanding of the main issues to be
investigated within the study and for which evidence from stakeholders was needed
This understanding was reflected in the data collection tools These included
The Survey questionnaire The structure of the survey questionnaire31 reflected the
different layers of the problem tree It first focused on the usage of cloud computing
and the types of contracts SMEs tend to sign corresponding to the drivers section
Furthermore it addresses the problems that SMEs encounter the actions taken in
order to resolve them and the associated economic detriment32 in order to provide
information for the problems and short-term effects sections of the tree
Interview guidelines for case studies and webinars Findings from the interviews and
the webinars were used to complement the quantitative analysis with detailed
information on the contract-related problems and the costs sustained by SMEs while
trying to resolve the encountered problems
All collected information supported the estimations on the loss of GDP and the loss of jobs at
the EU level
30 The European Commission estimated that cloud computing can increase EU GDP up to euro250 billion and create 38 million jobs More information available in European Commission (2011) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-Take SMART 20110045 Brussels 31 Annex 4 presents the structure of the CATI and online questionnaire 32 The sections B C D and E cover use of cloud computing problems encountered with cloud computing services actions taken by the enterprise in order to address the most serious problem and the economic detriment related to the most serious problem encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
20
Figure 3 Problem tree33
Source EY desk research34
33 LT stands for lsquolong-term effectsrsquo and ST for lsquoshort-term effectsrsquo 34 Annex 3 contains the bibliography serving as basis for the desk research
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
21
Under Task 0 the team also defined the sampling strategy to select 12 MS five economic
sectors to be investigated in depth as well as the sample size of SMEs to be involved in the
survey
For the selection of the MS three criteria were considered (Table 2) In particular the
percentage of enterprises buying cloud computing services as per 2016 Eurostat
statistics was considered to be the best proxy variable35 available for the usage of cloud
computing and it has been used as one of the criteria for defining the sample of countries to
be analysed in greater depth
Table 2 Criteria used for MS selection
Criteria for MS selection Details (Table 3) Source
Percentage of enterprises
buying cloud computing
services
Number of SMEs that
declared they bought at
least one cloud computing service in 2016 out of the total number of SMEs active in the MS
Data on cloud computing service
usage among SMEs Eurostat 2017
[isoc_cicce_use]
Relevance of the country to the
study objectives
Number of SMEs that
declared they bought at least one cloud computing service in 2016 out of the total number of SMEs active in the EU28
Data on cloud computing service
usage among SMEs Eurostat 2017 [isoc_cicce_use]
Structural Business Statistics Eurostat 2017 [sbs_sc_sca_r2]
Geographical balance Balanced number of EU15
and EU13 MS in the sample
NA
Based on the above-mentioned criteria the following 12 MS were selected the Czech
Republic Estonia France Germany Ireland Italy Poland Portugal Romania Sweden
Spain and the Netherlands (Table 3)
A high level of representativeness of the EU is ensured because the selected sample
involves eight MS from the EU15 and four MS from the EU13
refers to countries where more than 70 of the EU SMEs that bought at least one of
the cloud computing services in 2016 (Figure 4) were established
35 A proxy variable is a variable that is used instead of the variable of interest when that variable of interest cannot be measured directly
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
22
Table 3 SMEs buying cloud computing services 2016
EU MS
A B C D E=B+D F=E(A+C) ETotal EU28
EU15 EU13
of active enterprises with 10-250 employees
of enterprises (10-250 empl) buying CC services
of enterprises with 1-9 employees
of enter (1-9 empl) buying CC services 36
Total active SMEs
(Country level)
(EU28 level)
AT 40393 646288 280850 31959 38422 1196 137 EU15
BE 31302 8139 569950 64858 72996 1214 261 EU15
BG 26991 1619 298559 33975 35594 1093 127 EU13
CY na na na na na na na EU13
CZ 38203 6877 961287 109390 116267 1163 416 EU13
DE 411527 61729 1985471 225938 287667 1200 1029 EU15
DK 22681 9072 187367 21322 30394 1447 109 EU15
EE 6439 1417 61513 7000 8416 1239 030 EU13
EL 15368 1383 764471 86993 88376 1133 316 EU15
ES 125000 21250 2337621 116881 138131 561 494 EU15
FI 19187 10361 209328 23821 34182 1496 122 EU15
FR 139335 22294 2765282 314677 336970 1160 1205 EU15
HR 12249 2695 134007 15249 17944 1227 064 EU13
HU 30852 3394 504904 57456 60850 1136 218 EU13
IE 5514 1930 224742 25575 27505 1195 098 EU15
IT 182182 38258 3497783 398032 436290 1186 1560 EU15
LT 13604 2177 172527 19633 21809 1172 078 EU13
LU 3939 670 27841 3168 3838 1208 014 EU15
LV 9226 738 100216 11404 12142 1109 043 EU13
MT 1885 509 24123 2745 3254 1251 012 EU13
NL 48115 15397 1042588 118642 134039 1229 479 EU15
PL 69282 4850 1534086 174572 179422 1119 642 EU13
PT 37353 6350 769043 53833 60183 746 215 EU15
RO 50987 3569 405493 46143 49712 1089 178 EU13
SE 36047 16221 649412 155859 172080 2510 615 EU15
SI 6912 1382 127603 14521 15903 1182 057 EU13
SK 14363 2442 414630 33170 35612 830 127 EU13
UK 199528 65844 1734989 312298 378142 1955 1352 EU15
Tot EU28
1598464 317028 21785686 2479112 2796141 12 100
Selected Countries
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics [sbs_sc_sca_r2])
36 The percentage of micro enterprises (ie enterprises with fewer than 10 employees) that bought at least one CC service is only available for the United Kingdom Slovakia Sweden Portugal and Spain For the other EU countries the average from those countries (1138) has been used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
23
Figure 4 The percentage of enterprises which bought cloud computing services in the
selected EU countries as compared to the total EU28 (2016)
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics
[sbs_sc_sca_r2])
For the selection of the economic sectors to be analysed in depth Eurostat statistics on the
percentage of enterprises buying cloud computing services were used in order to
identify those sectors with the highest usage of cloud computing
Eurostat statistics are available only for some sectors (Table 4) and only for the category 10
persons employed or more which also includes enterprises with more than 250 employees (ie
large enterprises GE250)
However Eurostat statistics have been considered to be relevant in selecting the sectors to be
analysed in depth as the number of enterprises with more than 250 employees represents a
negligible percentage of the overall number of active enterprises at the EU28 level (ie around
45000 out of 23 million enterprises corresponding to 02 of the total)
The sampling strategy envisaged the use of the same criteria used for the selection of MS (ie
percentage of enterprises buying cloud computing services relevance of the sector to the
study objectives)
As a result the five sectors selected included (grey rows in Table 4)
manufacturing (NACE37 code C)
wholesale and retail trade repair of motor vehicles and motorcycles (NACE code G)
professional scientific and technical activities (NACE code M69-M74 hereinafter
referred to as M)
administrative and support service activities (NACE code N)
information and communication (NACE code J)
37 Eurostat Nomenclature des Activiteacutes Eacuteconomiques dans la Communauteacute Europeacuteenne Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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24
Table 4 Economic sectors and usage of cloud computing services (2016)
NACE Code
Sectors
A B C = B100 x
A CD
of active enter (with
more than 10 empl) at
EU28 level
of enter (with more
than 10 empl)
buying CC services
of enter (with more
than 10 empl)
buying CC services
out of the total
C Manufacturing 364432 17 61953 23
D+E Electricity gas steam air conditioning and water supply
18732 19 3559 1
F Construction 200369 15 30055 11
G Wholesale and retail trade repair of motor vehicles and
motorcycles
351278 18 63230 24
H Transportation and storage 90718 16 14514 5
I55 Accommodation 15969 23 3672 1
J Information and communication
55905 52 29070 11
L Real estate activities 10661 24 2558 1
M Professional scientific and technical activities
97073 34 33004 12
N Administrative and support
service activities 121657 22 26764 10
Total 1326794 21 268384 (D) 100
Selected Sectors
Source Cloud computing services for 2016 (Eurostat [isoc_cicce_use]) Business Structure Statistics for 2015 (Eurostat [sbs_sc_sca_r2])
Although the financial and insurance activities sector (K under its respective NACE code) is
considered as one of the economic sectors with the highest usage of cloud computing38 it has
been excluded because of its limited relative weight at the EU28 level39
With the purpose of achieving statistically significant results a target of 500 SMEs that
use cloud computing has been defined This sample size has been chosen in order to ensure a
95 confidence interval and a maximum margin of error of 5 for all the estimates The
sample target size together with the random selection of the respondents ensure that - with
a probability of 95 - the true values of a phenomenon (eg average incidence of cloud
computing problems) in the entire population (ie all EU SMEs) is equal to the average values
observed in the studied sample plusminus the margin error
The box below presents the methodology behind the definition of the sample size
38 76 based on European Commission (2016) Measuring the economic impact of cloud computing in
Europe 39 Based on the lsquoAnnual detailed enterprise statistics for servicesrsquo [sbs_na_1a_se_r2] it was observed that in 2015 for the respective financial and insurance activities a total of approximately 14000 enterprises were active in the EU28 that is 01 of the total active enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
25
Box 2 Definition of the size of the sample
The formula for computing the representative sample size is
Sample size = [z2 p(1-p)e2][1 +( z2 p(1-p)e2N]
Where
N= population size e = margin of error (as a decimal) z = Z-score constant value eg 1645 for a 90 confidence interval 196 for a 95 confidence interval 258 for a 99 confidence interval
and p = average value of a specific indicator as observed in the population (as a decimal)
Our case
From Table 3 we have
N= 2796141 is the estimated number of SMEs that are using CC services
e = 5
Z = 196
P = when this value is not known conventionally is used the value 05
We can conclude that a target of 500 enterprise using CC services is appropriate to ensure a 95 confidence interval with a margin of error of 438 When we put the confidence level and the confidence interval together we can say that we are 95 sure that the true percentage of a phenomenon in the population is between +438 and -438 of the value observed in the studied sample For example if we ask a sample of 500 SMEs using CC if they encountered a certain problem
and 70 say lsquoYesrsquo we can be 95 certain that between 6562 and 7438 of all EU SMEs using CC encountered the same problem
Task 1 ndash Survey of SMEs
Task one was aimed at identifying
the types of cloud services most frequently contracted
the types of CTampC used to regulate the business relationships between users and
providers (for example determining whether enterprises are able to negotiate CTampC
andor to customise them to their needs)
the types the incidence and the frequency of contract-related problems
the types of actions taken by the enterprises in order to resolve the encountered
problems and the results of these actions
The collection of data was based on a questionnaire (see Annex 8) submitted through two
complementary channels
an online questionnaire (online Survey)
CATI
The online questionnaire was translated into the official languages of the MS covered by the
study Likewise the CATI was conducted by native speakers in order to avoid language
barriers
The online survey and the CATI have been developed tested and conducted on a
representative sample of EU SMEs which use the cloud for the purpose of conducting their
business
In order to achieve the above presented target (ie 500 SMEs using CC services)
the contacts of 13000 SMEs were identified during the design of the sampling strategy
3173 SMEs were reached within the 12 MS and the five sectors selected Table 5
presents the distribution of the reached SMEs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
26
1009 SMEs were willing to participate in the survey
Table 5 Distribution of SMEs reached per country and sector ( of respondents 3173)
Sector
Country
Admin and support service
activities
Inform and comm
Manufact
Profess scientific
and technical activities
Wholesale
and retail trade
Total
CZ 13 17 62 30 52 174
EE 5 22 8 12 15 62
FR 184 129 262 126 308 1009
DE 99 123 185 226 249 882
IE 4 18 6 6 13 47
IT 8 9 100 7 15 139
NL 36 49
24 37 146
PL 24 69 16 78 92 279
PT 7 2 9 2 24 44
RO 8 20 2 27 15 72
ES 7 11
26 21 65
SE 41 33 59 30 91 254
Total 436 502 709 594 932 3173
Source Survey of SMEs (2018)
Table 6 presents the participation rate per MS of the 1009 SMEs that agreed to provide
information about their use of cloud computing
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
27
Table 6 Participation rate by MS ( of respondents 3173)
Country
Number of
enterprises that expressed refusal
Number of enterprises
that were willing to participate in the survey
Total Participation
rate ()
A B C = A + B BC
CZ 131 43 174 25
DE 33 158 191 83
EE 715 29 744 4
ES 724 54 778 7
FR 16 294 310 95
IE 24 31 55 56
IT 97 115 212 54
NL 152 49 201 24
PL 11 127 138 92
PT 48 33 81 41
RO 11 24 35 69
SE 202 52 254 20
Total 2164 1009 3173 32
Source Survey of SMEs (2018)
The study targeted all different size categories the largest share of respondent being
represented by medium sized-enterprises (60 Figure 5) Contrary to the SMEs distribution
at the EU level the micro enterprises represented the smallest share of participants in the
survey The smaller the size of the enterprise the lower was its willingness to participate in
the survey
Figure 5 Distribution of participants in the survey by SME size ( of respondents 1009)
Source Survey of SMEs (2018)
The same applies to SME age enterprises active for more than 10 years are better represented
in our sample as compared to younger enterprises (Figure 6) This reflects their willingness to
participate as well as the greater difficulties encountered in reaching younger enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
28
Figure 6 Distribution of enterprises involved in the survey of SMEs by age ( of respondents
1009)
Source Survey of SMEs (2018)
Task 2 ndash Economic detriment and impacts on jobs and growth
Consequences of encountered problems at the micro level
The economic detriment was quantified along the lines recommended in the Guidelines on
impact assessment of the Better Regulation toolbox40 based on data collected from Task 1 and
on data from Eurostat Business Structure Statistics
The measurement of economic detriment41 considered a monetary assessment of the effects
of the problems faced by each SME in the survey and includes the following main dimensions
the gross financial detriment (GFD) associated with the problems encountered
the net financial detriment (NFD) associated with the problems encountered which
corresponds to the GFD associated with the problem encountered minus any remedies
offered by the cloud provider
The GFD incorporated the following components
119866119865119863 = 119871 + 119867119877 + 119874119862
Where
L is alternatively the loss of turnover or profits as perceived by each SME
HR is the costs of the human resources invested by each SME while taking action to
resolve or remedy the most serious encountered problem
OC other costs declared by each SME These include costs such as the costs related to
ensuring an alternative service the costs related to fixing the cloud service problem
using external support any legal costs costs related to reputation damage and costs
related to loss of client(s) and other residual costs
To allow for the measurement of the NFD the value of any redress (R) offered by the service
provider for the damages caused to each SME as reported in the survey questions was
computed
40 The Better Regulation Toolbox is a set of general guidelines that set out the principles that the European Commission follows when preparing new initiatives and proposals and when managing and evaluating existing legislation In this study those principles were considered generally as they were central in
defining the survey the sample and also the methodologies to measure economic detriment and estimate
the impact on growth and jobs 41 Measured using the principles put forward in European Commission (2017) Operational guidance document on measuring personal consumer detriment Brussels
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29
The detailed procedure used to estimate the economic detriment at the EU28 level included
three main steps
The first step was the computation of the following parameters from the survey with the 95
confidence interval level and 5 margin of error
the loss of turnover or profits perceived by each SME
the costs of the human resources invested by each SME while taking action to resolve
or remedy the most serious problem
the other costs covered by each SME while taking action to resolve or remedy the most
serious problem
the value of any redress offered by the service provider for the damages caused to
each SME
The second step required the definition of the number of enterprises affected by contract-
related problems (119873119901)
119873119901 = 119890119906 times 119890119901 times 119864
Where
119890119906 is the proportion (ie the percentage) of enterprises that use cloud computing
services
119890119901 is the incidence (ie the percentage) of contract-related problems
E is the total number of active enterprises
The incidence rates of contract-related problems (119890119901) by country and sector or country and
size class and the proportion of enterprises that use cloud-computing services (119890119906) by country
and sector or country and size cannot be estimated from the sample with the 95 confidence
interval level and 5 margin of error given that the sample is only representative at the EU
level overall
In order to be able to estimate the total number of enterprises experiencing contract-
related problems by country and sector and by country and size class an RAS-based42
procedure has been applied
Box 3 RAS method for estimating the total number of enterprises experiencing contract-
related problems by country and sector
The RAS method is a well-known method for data reconciliation whose aim is to achieve consistency between the entries of some non-negative matrix and pre-specified row and column totals Mathematically the method is an iterative scaling method that can be applied in this case as we just
have non-negative matrices We redistribute proportionally the differences arising from applying the EU level sectorial or size class incidence rates or from country incidence levels considering in this
case as the binding constraint the country level incidence which has been estimated with confidence from the sample (we ensure that the incidence per country is respected)
The procedure started with a preliminary estimation of the number of enterprises (119873119894119895119901)
experiencing contract-related problems in country i and sector or size class j using the following
formula
119873119894119895119901 = (
119890119894119906 + 119890119895
119906
2) times (
119890119894119901 + 119890119895
119901
2) times 119864119894119895
42 See more information at httpseceuropaeueurostatcroscontentras-method_en
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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30
Where
for countries included in our sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the proportion of enterprises using cloud computing services in country i43
computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j44 for all the countries in the sample
- 119890119894119901 is the incidence of cloud computing problems in country i computed from the
survey
- 119890119895119901 is the incidence of cloud computing problems in sector or size class j
computed from the survey for the whole sample
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
While for countries not included in the sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the average proportion of enterprises using cloud computing services in all
countries of the sample computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j45 for all of the countries in the sample
- 119890119894119901 is the average incidence of cloud computing problems in all countries of the
sample as computed from the survey
- 119890119895119901 is the incidence of cloud computing problems in sectorsize class j computed
from the survey
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
In practice this formula takes the joint incidence by country and sector or by country and size
class to be the average of the two marginal incidences which would be the case if the two
distributions were independent In this way it allows a preliminary estimation of the number
of enterprises experiencing cloud computing problems in country i and sector or size class j
43 We use two alternative measures of incidence allowing us to develop two scenarios From the survey data we compute the incidence by country and sector and country and size class considering the answers given by respondents in two alternative ways In one case we compute the incidence as the ratio of
those enterprises that declared they are using cloud computing to all enterprises contacted that declared they are either using or not using cloud computing or that refused to respond to the survey based on criteria that can be seen as meaning that the survey does not apply to them (around 16) Alternatively also from the survey data we can compute the incidence of cloud computing usage as the ratio of those that declared they are using cloud services to the sum of those that explicitly mentioned that they are either using or not using cloud services (around 50) This second scenario can be considered as a theoretical but most unlikely future scenario where a consistent number of EU SMEs use
cloud computing 44 See the previous footnote 45 See the previous footnote
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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31
After obtaining that preliminary estimation 119873119894119895119901 the RAS method of reconciliation is applied by
considering as the binding constraint the total number of enterprises experiencing problems
as that value was estimated directly from the sample with the required confidence and error
levels
This reconciliation of totals performed by the RAS method dismisses the assumption of
independence as it distributes the error across the margins
Concerning the sectors not covered in the sample46 the total number of enterprises
experiencing contract-related problems by country and sector can also be computed by
following the same procedure as above In that case sector incidence would be replaced by
the European average incidence on the other sectors Given the sampling procedure that was
followed in which the sectors with the highest incidence of cloud computing usage were
selected to be covered by the survey applying those incidences of use of cloud computing as
representative to the other sectors would overestimate the impacts Given this situation only
the results for the selected sectors are presented and this constitutes a lower threshold for the
true detriment47
Once the values of the number of enterprises experiencing cloud computing problems for each
country and sector and country and size class are computed they can be aggregated to the
EU level just by summing up the number of enterprises experiencing cloud computing service
problems per country
Finally the third step was the computation of the total losscostvalue of redress by country
sector and size class by multiplying the number of enterprises that experienced contract-
related problems (as computed using the RAS model) by the 95 trimmed mean values
per enterprise for each variable (from the survey)48
The GFD is then computed considering alternatively lost turnover and lost profits and adding
the human resource costs and the other costs NFD is computed taking the two measures of
GFD and subtracting the value of any redress offered by the service provider for the damages
caused to each SME
Afterwards two measures are obtained covering both GFD and NFD computed at country and
sector country and size class and at EU level
Consequences of encountered problems at the macro level
Following the quantification of the economic detriment the consequent impact on growth
and jobs was estimated using one of the methodologies suggested in the impact assessment
toolbox presented by the Joint Research Centre49 of the European Commission
The goal was to estimate the overall GVA and employment content of the detriment In order
to do that the following methodology was used
The starting point was the declared turnover loss one of the components of total detriment
aggregated by country and sector and by country and SME size We first estimated the financial
detriment suffered by each enterprise by considering the different components of detriment
then we aggregated these effects to the EU28 level by summing up the effects suffered by
46 As previously stated only the following sectors were covered by the study Manufacturing (C) Wholesale and retail trade repair of motor vehicles and motorcycles (G) Professional scientific and technical activities (M) Administrative and support service activities (N) and Information and communication (J) 47 Recall that the selected sectors comprise a total of 797 of SMEs and GE250 using cloud computing
services 48 Given each variable the 95 trimmed version was obtained by discarding the 5 lowest and highest observations it is a statistic in the middle of the data range 49 EU Science Hub (2016) Input-output economics Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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32
each enterprise across all enterprises When estimating the macroeconomic effects of the
contract-related cloud computing problems one must consider the overall turnover loss that
was suffered by all enterprises that experienced those problems as turnover is the variable
that best summarises the overall enterprise-level effects that are transmitted into the
economic system through the supply chains and that can be related to aggregate economic
variables thus avoiding double counting
This allowed the team to estimate the so-called direct impacts (the direct consequences in
the enterprises that face contract-related cloud computing problems associated with the
reduction of their economic activity due to those problems) This was done by estimating the
GVA and employment contents of the turnover losses caused by contract-related cloud
computing problems at country and sector level by considering the GVA and employment
coefficients of total turnover at country and sector and country and size class level computed
from Eurostat Business Structure Statistics for 2015 (Eurostat)50
The results were aggregated at the EU level by summing up country results from calculating
the direct GVA and employment contents
Additionally at the aggregate EU level the so-called indirect impacts were also estimated
Indirect effects are the effects on the enterprises that are not directly affected by contract-
related cloud computing problems but that are indirectly affected in their activity by the losses
of turnover from the enterprises that directly experience the problem To estimate these
indirect effects we start by estimating the turnover losses in supplier industries These indirect
losses of turnover arise when the businesses that experience the direct turnover losses reduce
their demand for products from their suppliers and then those supplier enterprises also
experience turnover losses The input-output methodology is used to estimate the turnover
losses in supplier enterprises Essentially this methodology allows us to estimate the amount
of turnover that is lost in one supplier enterprise when the demand from another enterprise is
reduced given the existing technology A symmetric input-output table at basic prices (sector
by sector) available in Eurostat51 for the EU28 was used to estimate the technological
intersectoral relations in the EU economy The methodology used is described in the following
box
Box 4 The Input-Output Methodology
Input-output analysis is the most commonly used benchmark within the study of intersectoral relations The representation of the underlying economies either as a coherent statistical framework as a structural analysis tool of the productive systems or as an economic model is based on a correlation between production and demand through the proportions of the different branches (supply side) or products (demand side) that support that same economies The correspondence between a certain branch of activity and a certain group of products is thereby a condition for coherence of the
input-output analysis
The input-output tables appear as a synthesis of a large amount of statistical data processed in accordance with the goal of specifying the characteristics of the use of the productive factors and products to satisfy the demand ie the open and disaggregated flows (in sectorial terms) that link in both ways demand production and income
The matrix representation of the basic flows characterises the activities of a given economy in a given period It allows a two-dimensional interpretation of the relationships and balances in the flows to be used ie a horizontal (in line) interpretation ndash articulating production and demand that leads to a
separation between intermediate and final demand ndash and a vertical interpretation (in column) ndash
51 Eurostat Symmetric input-output table at basic prices (product by product) Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
33
articulating production and income that leads to the separation between intermediate inputs and
value added
Input-Output matrices
The general shape of an input-output table encompasses four quadrants that correspond to the intersectoral trade of products associated with intermediate consumption (1st quadrant) to the breakdown of each sectorrsquos production through the diverse final uses (2nd quadrant) to the sectorial
decomposition of the GVA (3rd quadrant) and to the nonmarket transfers between sectors of the economy (4th quadrant)
The first quadrant has a square shape (n x n sectors) while the 2nd and 3rd have a rectangular shape (depending on the number of final uses and the number of the GVA components considered) The
equilibrium conditions reflect sector by sector the usage of the production and the mobilised resources and the income generated in the production ie
119883119894 = sum 119883119894119895 + 119884119894
119895
(use logic to be read in line the gross production of each sector is depleted feeding the intermediate
and final demand)
119883119894 = sum 119883119894119895 + 119884119894
119894
(resources and income logic to be read in column the gross production of each sector integrates
the value of the intermediate consumption and of the income generated)
The sectorial equilibrium ie the equality between uses and resources (119883119894 = 119883119895 for 119894 = 119895) leads on
an aggregated level to a match between the sum of the elements of the 2nd and the 3rd quadrants that sustains the ldquothree approachesrdquo of national accounting expenditure income and production
Matrixes coefficients and multipliers
From the general tables we can obtain the technical coefficient matrix (matrix A) Each element of the matrix A (119886119894119895 = 119883119894119895119883119895) expresses the ldquotechnological demandrdquo from the sector j to the sector i ie
the production of the sector i used as an input for the production of the sector j This vertical proportion representing the technological support of the intersectoral flows and the deepening of the intermediate demand from the productive units into the technical characteristics of their respective productive processes is called the technical coefficient (of production)
The input-output analysis as an economic model uses these proportions or coefficients to represent
the function of the economy requiring the adoption of a set of hypotheses namely on the direction of the economic flows ie the role of the supply and demand dynamics
In formal terms the input-output model is considered to be based on the dynamics of the demand The production is obtained through an endogenous process supported by the technical coefficient matrix responding to a final demand determined exogenously Building up the Leontief model in its
OUTPUT (Demand)
INPUT
(Production)Intermediate inputs to
production
(1st Q)
Final demand
(2nd Q)
Primary inputs to
production
(3rd Q)
Primary inputs to final
demand
(4th Q)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
34
reduced form leads to a system of n simultaneous equations like 119883119894 = sum 119886119894119895119884119895119895 written as 119883 = (119868 minus 119860)minus1119884
in matricial notation
Input-output based modelling brings out a matrix (119868 minus 119860)minus1 whose elements are designated as 119886119894119895
The elements of the (119868 minus 119860)minus1 matrix express as coefficients of the simultaneous equations system
that allows to determinate the production according to the final demand the variation (direct and indirect) of the production of a sector according to the unitary change of the final demand of another sector These are called production multipliers also arising as sectorial interdependence indicators
The production multipliers can be partial when they indicate the variation of the production of a sector i led by a unitary variation of the final demand of a sector j and measured by the corresponding element of the matrix 119886119894119895 or total when they indicate a variation of the production of all sectors led
by a unitary variation of the final demand of a sector and measured by the sum of the corresponding column of the matrix (sum 119886119894119895119895 )
The nature of the measured effects
Taking into account the nature of the used multipliers it is possible to measure direct and indirect effects
Direct impacts Activity effects (value added employment income) associated directly with the value of the lost production due to contract-related problems
Indirect impacts Backward linkage effects meaning the activation of multiple ldquoexternalrdquo effects on demand linked to the loss in production due to contract-related problems They concern the supply
chains that are interrupted due to the production loss associated with contract-related problems
Once the indirect turnover losses were measured their GVA and employment contents were
estimated using the same methodology as for the direct effects
To compute the relative direct and indirect impacts we divided the estimated GVA and
employment content by the total GVA and employment at the EU level
Further qualitative analysis
In addition to the quantitative assessment of the overall impact on growth and jobs taking
into account the results of previous activities (namely the interviews within the case studies
and desk research) other more qualitative effects of the problems encountered namely in
terms of competition competitiveness and market functioning were qualitatively assessed To
this end case studies were used in order to have a more in-depth view of the topic
More generally the case studies allowed the study team to
produce useful insights on the specific problems that were identified in the survey
illustrate in practical terms the economic detriment to SMEs and to understand the
causal links between the signed contracts and the encountered problems
include the perspectives of those stakeholders that were not involved in the previous
study Tasks
This subtask included interviews (33) with eight types of stakeholders namely SMEs cloud
brokers service providers SMEs associations national authorities national SMEs Envoys EEN
associations and chambers of commerce This array of stakeholders contacted was used to
obtain a detailed view of the issue of the economic detriment to SMEs arising from unfair and
unbalanced cloud computing contracts52
nine SMEs
one cloud broker
10 service providers
three SMEs associations
six national authorities
one national SMEs Envoy
52 The questionnaires used detailing the topics covered during the interviews can be found in Annex 8
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
35
two EEN associations
one Chamber of Commerce
Finally three webinars were used to validate and disseminate the results of the study with the
main participating stakeholders
22 Main limitations encountered
This study mainly used data collected from CATI as this tool followed a more direct approach
in contacting SMEs by phone The online questionnaire proved not to be as effective during
the data collection phase as we succeeded in obtaining only three completed questionnaires
from a total of 141 requests to SMEs and European Associations contacted On the other hand
500 completed questionnaires were collected from the SMEs that use cloud computing through
the CATI
In order to maximise the possibility that the SMEs contacted will respond to the survey the
study chose to contact SMEs from the 12 countries that have the most usage of cloud
computing This approach was taken to achieve a twofold purpose to maximise the quality of
the survey results and to ensure that the minimum sample target of 500 questionnaires is
met Even if the sample is randomised the willingness to participate in the survey under these
circumstances might have been positively correlated with cloud computing usage This may
increase the risk of biased results
This limitation was overcome by involving a distinctive group of stakeholders with the aim of
complementing the information gathered The stakeholdersrsquo involvement during the case
studies ensured the accuracy of the results at the EU level
Furthermore it is important to underline that all estimates based on the gathered responses
to the questionnaire should be considered as statistically significant in representing the
average values that might be observed among EU SMEs that are using cloud computing
services Therefore any features presented at the country andor sector andor
company size level were included with the sole aim of documenting gathered
information
In order to be able to estimate results at the country andor sector andor enterprise size level
the RAS model was used to distribute the overall representative results to provide robust
estimates at that level The RAS model even allows estimating the usage rate and the incidence
of problems at enterprise size sectorial and country level
Two scenarios have been developed for the economic analysis that takes into account two
different hypotheses for estimating the usage rate of cloud computing extracted from the
survey
The method of analysis of economic detriment also has some limitations The first one is related
to the fact that only the consequences of the most serious problem are considered Even if the
survey tried to measure also the effects of the second most important problem the fact that
the number of respondents that quantified its effects was very small led to values that did not
seem to be robust enough to use in the analysis This causes the estimates of detriment
that were presented to be the lower thresholds to the actual detriment Yet the
magnitude of the underestimation is limited by the fact that the sectors with the highest cloud
computing usage rates were chosen to be in the sample and they are likely to experience
above average effects A second limitation arises from the fact that many enterprises seem
not to be able to fully assess the financial impacts of problems such as reputational damages
or loss of clients in terms of financial variables and this may also lead to some underestimation
of the true effects that we perceive that might be present but that we are not able to assess
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
36
In terms of measuring the indirect impacts not only does the possible underestimation of the
direct impacts on turnover also affect these impacts but also using the input-output
methodology has limitations While the input-output methodology allows measuring backward
linkages it does not allow considering the downstream effects on clients or final consumers
that are associated with the contract-related cloud computing problems due to relative changes
in the costs borne by enterprises and that are not fully absorbed and thus trickle down to the
consumer level as SMEs pass on the increased costs caused by the problems encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
37
3 Usage of cloud computing across EU SMEs the state of play
First this section presents the analysis of the services contracted by the SMEs the types of
contracts and the negotiability and customisation of CTampC Furthermore it investigates the
incidence and frequency of contract-related cloud computing problems experienced by SMEs
with an emphasis on the most serious problems encountered and their respective causes
Second it presents the types of actions taken by the SMEs in order to address the contract-
related problems as well as the results of the actions taken and possible difficulties encountered
while taking action
And finally it explores the reasons why some SMEs decided not to take action
31 Cloud computing usage rate
In conducting the survey 3173 SMEs replied have been collected out of which
503 from SMEs that declared that they had contracted at least one cloud computing
service during the period 2016ndash201753
509 from SMEs that declared they did not contract any cloud computing service during
the period 2016ndash2017
2164 from SMEs that refused to participate in the survey
The estimation of the rate of usage of cloud computing depends on the hypothesis about the
distribution of the willingness to participate in the survey
For the purpose of the study it was assumed that only SMEs not using cloud computing were
present among those SMEs that were not willing to provide information (2164) Under this
hypothesis the rate of usage of cloud computing services is 159 calculated as the
number of SMEs that declared they are using cloud computing services (503) divided by the
number of SMEs that replied (3173) This can be considered as the central scenario for this
study It provides an indication of the current detriments suffered by SMEs
A theoretical scenario has been constructed by assuming that SMEs using cloud computing
services and SMEs not using cloud computing services are equally distributed among the SMEs
that were not willing to provide information (2164)54 The purpose of this scenario is to provide
an indication of the theoretical evolution of the detriment in case of increasing usage of cloud
computing among EU SMEs
At 159 the rate of usage of cloud computing among SMEs still appears to be low especially
when compared with the 45 that is the most recent estimated usage rate among large
enterprises55
This can be due to a variety of different reasons During the interviews performed it emerged56
that
some SMEs are reluctant to use services that they cannot fully understand (for
example for micro and small enterprises it is difficult to assess how the new services
can improve their everyday work)
53 The distribution by country size and sector of the 503 SMEs that declared they contracted at least one cloud computing service can be found in Annex 5 54 Under this assumption the rate of usage of cloud computing services is 499 calculated as the number of SMEs that declared they are using cloud computing services (503) divided by the total of SMEs
that were willing to provide information (3173 ndash 2164 = 1009) 55 Eurostat Cloud computing - statistics on the use by enterprises Brussels 56 Case study interview with UEAPME European Association of Craft Small and Medium Enterprises representing about 12 million enterprises across Europe
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
38
other SMEs perceive that costs are still high and that it takes too long to recover
the investment (break-even point)
the division of responsibilities between SMEs and providers can sometimes be
a major source of problems as it is poorly documentedexplicated leading to overlaps
and gaps especially with respect to security aspects it is not uncommon for SMEs to
be confused about their responsibilities concerning security such as who makes
backups of data or software which type of failoverredundancy is offered by the
provider and what still needs to be done by the customer All of these issues can
persuade SMEs to not outsource cloud services
asymmetric information when it comes to negotiating and customising CTampC might
limit the capacity of SMEs to find solutions that fit their needs
in contrast to the traditional provision of on-site information technology resources the
multi-tenant nature of cloud computing usually raises questions with respect to
privacy confidentiality and data integrity Cloud computing presents its own set
of security issues coupled with the risks and threats inherent in traditional information
technology computing
32 Types of cloud computing services contracted
Figure 7 presents the most commonly contracted cloud computing services as resulted from
the survey
Two services are more frequently contracted because of their applicability and prevalence
in a wide range of sectors
collaboration and communication services (71) that might include among
others applications used for instant communication video conferencing business
visualisation e-mail antivirus for desktop or PC customer relationship management
or social media monitoring
storage and hosting services (65) that comprises services such as server
platforms for online storage sharing hosting websites files images and similar
content
The third most commonly contracted service (43) is associated to security support (this is
related to the need for protecting the corporate network when accessed via remote devices
such as laptops or other wireless and mobile devices)
The next eight significant types of cloud computing services contracted do not range far from
each other with their usage varying between 43 and 26
No significant differences emerged from the analysis at countrysector level (see section B
within Annex 5 for further details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
39
Figure 7 The cloud computing services most commonly contracted by SMEs during 2016-
2017 ( of respondents 503 of answers 2522)57
Source Survey of SMEs (2018)
A more detailed analysis of the numbers behind Figure 7 reveals the complexity of the
subscribed cloud computing packages
the answers from the (503) SMEs that declared that are using CC services also
revealed that 2522 services have been contracted over the period 2016 ndash 2017 (Table
7) that implies each SME contracted on average five different services
micro enterprises are the size class contracting the highest number of services (ie
55 on average Table 7) this might be related to the fact that the medium-sized
enterprises might have the financial and technical capacity to develop more
effectiveefficient solutions internally58
Table 7 The cloud computing services most commonly contracted by SMEs during 2016-2017 by SMEs size class ( of respondents 503)
SME size class
of respondents
of contracted services
Average of contracted
services Micro 91 503 55
Small 140 723 52
Medium 272 1296 48
Total 503 2522 50
Source Survey of SMEs (2018)
57 Multiple choice question 58 Eight out of the 10 service providers interviewed under Task 2 stated that the usage depends on the enterprisesrsquo size as medium-sized enterprises are better able to internalise most of the needed IT
services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
40
Even the analysis of the frequency of the answers provided allowed the research team to better
understand how the usage of CC is evolving among SMEs (Figure 8) around 40 of SMEs
contracted a limited number of cloud services (one two or three)59
Figure 8 Frequency of the number of contracted services ( of respondents 503 of answers 2522)
Source Survey of SMEs (2018)
Furthermore the analysis of the mix of contracted services revealed that there are two
services lsquoPlatform to create software applicationsrsquo and lsquoStorage and hostingrsquo that are most
commonly contracted either alone (12) or together (6)
The number the types and the mix of contracted services showed that EU SMEs are having a
lsquobasicrsquo usage of cloud computing
This is also confirmed by the results reported in Table 8 services falling under the SaaS model
are the most contracted ones (47) This cloud computing model was the first one introduced
to the market (1999) and the easiest to use (as it includes applications that can be run directly
from a web browser without any downloads or installations required although some require
plug-ins)
The medium-sized enterprises present a different trend from the small and micro firms as
they probably need a more advanced package of services For the medium-sized enterprises
the IaaS model (47) is the most contracted followed by PaaS (30) and finally by SaaS
(21)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
41
Table 8 Services contracted by SMEs size ( of respondents 503 of answers 2522)
SMEs size Total
respondents of services contracted
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 252 149 97 5
50 30 19 1
Small 140 723 332 224 157 10
46 31 22 1
Medium 272 1296 609 393 276 18
21 30 47 1
Total 503 2522 1193 766 530 33
47 30 21 1
Source Survey of SMEs (2018)
33 Types of contracts and relative costs
In this section we analyse if SMEs have the possibility to negotiate CTampC the degree of
customisation of contracted services and the types of subscriptions chosen by SMEs
Negotiability of CTampC
In the survey SMEs that are using CC services were asked if they were able to negotiate CTampC
(Figure 9) The majority of the SMEs declared they signed standard terms and
conditions offered by the provider (ie 64 of SMEs either did not try to negotiate or were
not able to negotiate CTampC see Figure 9)
Figure 9 Negotiability of the CTampC among SMEs that contracted cloud computing services ( of respondents 503)
Source Survey of SMEs (2018)
Only 19 of the SMEs using cloud computing (97 out of 503) were able to negotiate
the CTampC in relation to all cloud computing contracted services while 17 were able
to negotiate contract terms and conditions for a limited number of services
This trend is maintained at the country and sectorial levels as well (see Annex 5 for further
details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
42
Together with the negotiability of CTampC also the reasons for not negotiating have been
investigated (Figure 10) The decision to adopt the standard CTampC is made either because
these meet the usersrsquo expectations (41) or because it is assumedknown that a negotiation
would have no chance to succeed (28)
Figure 10 Reasons provided by SMEs for not trying to negotiate ( of respondents 229)
Source Survey of SMEs (2018)
The possibility of the SMEs negotiating the services contracted correlates with the size class
As seen in Table 9 only 106 of the services contracted have been negotiated by the SMEs
It can be stated that on average SMEs negotiate CTampC related to less than one service out of
the average of five used
Table 9 Number of services for which SMEs were able to negotiate CTampC
SMEs
size
Total of
respond
of services
contracted
of customised
services
of services
SMEs were able to
negotiate
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 48 24 11 10 3 0
Small 140 723 123 89 36 31 20 2
Medium 272 1296 120 155 78 44 31 2
Total 503 2522 106 268 125 85 54 4
Source Survey of SMEs (2018)
After the negotiability of CTampC the research team explored the types of services for which
SMEs negotiated signed contracts (Figure 11) Surprisingly the most commonly contracted
services (ie collaboration and communication storage and hosting and security services)60
do not appear among the ones for which negotiating CTampC is possible Rather negotiability is
higher for those services that due to their nature are more lsquobusiness drivenrsquo (such as business
applications mobile services and data management) Figure 11 presents for each contracted
service the number of SMEs that were able to negotiate CTampC (in blue) and the number of
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
43
SMEs that signed standard CTampC for the specific service contracted (in grey) The total of the
numbers in each row represents the number of SMEs that declared contracting a specific
service61 Detailed information related to all services can be found in Annex 5
Figure 11 Services in relation to which SMEs were able to negotiate the CTampC ( of respondents 179 of answers 264)
Source Survey of SMEs (2018)
Customisation of contracted services
SMEs that didnrsquot sign standard CTampC were asked if the negotiation allowed the customisation
of the contracted services
Figure 12 shows that out of the 179 SMEs (36 of the SMEs that are using CC services) that
were able to negotiate the CTampC only 101 (representing 20 of all surveyed SMEs that
are using cloud services) pointed out that besides simply negotiating the CTampC they
were able to fully customise the service package according to their needs
61 For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service (cf Figure 7) only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
44
Figure 12 Share of SMEs that declared they were able to customise the service package
according to their specific needs ( of respondents 503)
Source Survey of SMEs (2018)
The ability of SMEs to customise the purchased service package correlates with the size class
(as illustrated in Figure 12)
Table 10 SMEs that declared they were able to customise the service package according to their specific needs by enterprise size ( of respondents 503)
Size category
Total
Respondents
SMEs that did
not negotiate
CTampC
SME negotiated CTampC
Full customisation
Partial customisation
No Customisation
Micro 91 69 16 6 0
100 76 17 7 0
Small 140 86 27 15 12
100 61 19 11 9
Medium 272 169 58 26 19
100 62 21 10 7
Total 503 324 101 47 31
100 64 56 26 17
Source Survey of SMEs (2018)
Types of contract subscription
The majority of respondents have signed a paid subscription with fixed or variable fees
(79 of the total users Figure 13) It should to be noted that 73 SMEs did not provide any
response as most of them did not know the type of subscription contracted
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
45
Figure 13 Type of cloud computing subscription ( of respondents 503 of answers 489)62
Source Survey of SMEs (2018)
This trend is maintained across both countries and sectors without any significant differences
62 Multiple choice question
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46
4 Contract-related problems encountered by SMEs
The current section presents an overview of the types and most frequent contract related
problems encountered by SMEs while using cloud computing services
Moreover the most serious problems (that is the problems that created the highest impact
on SMEsrsquo everyday activities andor in terms of costs faced to resolve them) have been
identified together with their causes
Finally actions taken by SMEs to remedy the encountered problems are analysed together
with results of the actions and the main difficulties encountered
41 Types and frequency of encountered problems
Nearly one-quarter (24) of the SMEs using cloud computing (ie 122 out of 503)
encountered contract-related problems during the period 2016ndash2017 (Figure 11)
The incidence seems to be higher for micro and medium-sized enterprises
Table 11 Share of respondents that indicated encounteringnot encountering problems by size
of SMEs Micro Small Medium Total
Did not encounter problems
66 116 199 381
Encountered problems
25 24 73 122
27 17 27 24
Source Survey of SMEs (2018)
Problems encountered by the SMEs have been further analysed by taking into account the
following two dimensions frequency and incidence
Table 12 Frequency and incidence of contract-related problems
Dimension of analysis Details
Frequency
(F)
The frequency shows how often did the mentioned problem appeared and it is measured on a scale from 1 to 4
1 - rarely (at least once in the last 12
months)
2 - occasionally (at least once every 3 months)
3 - frequently (at least once a month)
4 - very frequently (at least once a week)
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017number of SMEs that contracted at least one cloud computing service during 2016-2017
Source Survey of SMEs (2018)
Four problems have been faced by more than 25 of the cloud computing users (Figure 14)
low speed of service (55)
unsatisfactory availability or discontinuity of the service (49)
forced updates to the service (32)
lack of clarity of the instructions on how to use cloud computing services (26)
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
47
Figure 14 Incidence and frequency of contract-related problems among SMEs that declared they encountered problems during 2016-2017 ( of respondents 122 of answers 505)63
Source Survey of SMEs (2018)
63 Multiple choice question
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48
No significant differences emerged from the analysis at the sectorial and country levels
(please see Annex 5 for further details)
The cases studies64 included in-depth interviews with the SMEs that already contributed in
the survey In particular problems encountered by them were discussed with a special focus
on the following lack of clarity and transparency of contract terms and conditions unilateral
modification of the servicecontracts and limited liability of cloud providers
Five out of the eight SMEs that were interviewed recognised the fact that the lack of clarity
of the instructions on how to use cloud computing services is a problem that they are facing
This was explained by the fact that there is no common understanding of what cloud
computing is and how it operates The SME users expressed the need for better information
when contracting such services
The findings from the consultation of cloud providers (ten providers have been interviewed
during the case studied) indicated that business users for different reasons very often
encounter difficulties in understanding the CTampC This problem is particularly relevant
due to
lack of knowledge on how to use cloud computing services of the SME users
lack of attention of the SME users when signing the contracts
Two additional problems even if faced by less than 20 of the users are among the ones
that appeared most frequently65
lack of clarity and transparency of CTampCs (frequency = 215)
limited liability of the provider (frequency = 179)
During the consultations with national authorities and SMEs the participants indicated that
the limited liability of cloud providers commonly manifested when the following undesired
anomalies occurred
information access was interrupted or there was a problem of information
portability this group of anomalies encompasses technical aspects of the
information delivery including risks caused for example by denial-of-service attacks
These kinds of technical problems are most likely to cause liability Especially regular
updates can despite being administered properly result in downtime and thus in a
potential economic loss
data privacy and data protection were affected making information available to
the public can infringe on privacy and data protection provisions since cloud
computing services are of a cross-border nature privacy law conflicts between
national legislations are likely to occur Furthermore cloud computing services need
to comply with the principles of authenticity and integrity of information However the
entry into force of the General Data Protection Regulation (GDPR) (EU) 201667966
on 25 May 2018 is perceived as a factor that will effectively limit this issue in the
future
Even if affecting only a limited number of SMEs67 (less than 10 of the users participating in
the SMEs survey) problems related to security68 are quite frequent especially in regard to
64 See Annex 5 for further information 65 The incidence and frequency of the full list of SMEsrsquo problems can be found in Annex 5 66 Regulation (EU) 2016679 of the European Parliament and of the Council of 27 April 2016 on the
protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 9546EC (General Data Protection Regulation) OJ L 119
452016 67 More frequently among the micro and small enterprises 68 For further analysis see Annex 5
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and unbalanced cloud computing contracts
49
the lack of protection of the data stored in the cloud against theft or viruses and
unauthorised disclosure of or access to data
The analysis of the number of answers provided allows a deeper understanding of the
problems faced by SMEs
on average amongst the SMEs that experienced problems each SME encountered
four different problems over the period 2016 ndash 2017 (Table 13)
micro enterprises are the ones facing the highest number of problems (Table 13)
more than 23 of SMEs faced a high number of problems (between five and eight
Figure 15)69
Table 13 Number of problems faced by SMEs during 2016-2017 by SME size class ( of respondents 122)
SME size class
of SMEs that encountered problems
of encountered problems
Average of encountered problems
Micro 25 116 464
Small 24 92 383
Medium 73 290 397
Total 122 498 408
Source Survey of SMEs (2018)
Figure 15 Frequency of the number of encountered problems ( of respondents 122 of answers 494)
Source Survey of SMEs (2018)
42 The most serious problems encountered
Types of problems
After listing all problems encountered respondents were asked to mention the most serious
one among them survey results shows a correlation between the incidence of the declared
problems and the most serious problems experienced by the SMEs (Figure 16)
69 82 of SMEs that encountered problems declared 5 different problems 33 of SMEs faced 6 problems 66 of SMEs faced 7 problems and 49 of SMEs faced 8 different problems
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50
Figure 16 The most serious problems experienced by the SMEs during 2016-2017 ( of
respondents 122)70
Source Survey of SMEs (2018)
Additionally the survey investigated the potential existence of a second most serious
problem Nearly half of the respondents (46) declared that they encountered only one
serious problem (Figure 17) However lsquolow speed of the servicersquo and lsquounsatisfactory
availability or discontinuity of the servicersquo remained the most prominent problems as
previously presented in Figure 16
Figure 17 The second most serious problem experienced by the SMEs during 2016-2017 ( of respondents 122)71
Source Survey of SMEs (2018)
Besides indicating the most serious problem SMEs were asked to assess the relevance of the
resulting cost (ie what percentage of costs deriving from all encountered problems was due
to the most serious problem only)
As presented in Table 14 more than 50 of the SMEs declared that the costs related to the
most serious problem represented a cost that counted for more than 80 of the overall
sustained costs The remaining 48 who declared that they had other problems did not
declare relevant costs related to the second most serious problem (either they provided values
that were not relevant72 or were not able to quantify the costs)
70 Incidence management is understood as the failure of the cloud provider to identify analyse and
correct hazards and prevent a future re-occurrence 71 Incidence management is understood as the failure of the cloud provider to identify analyse and correct hazards and prevent a future re-occurrence 72 Respondents declared values equal to zero
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Table 14 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by size class ( of respondents 122)
Size
Incidence of the costs related to the most serious problem compared with the total costs occurred
Below 50 Between 50 -
80 Above 80 10073 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Most affected service
All mentioned serious problems (both the first and second) were mainly related to the usage
of lsquocollaboration and communication servicesrsquo (Figure 18)74 which are indeed the most widely
used ones The next two types of cloud computing services linked to the most serious problem
are lsquobusiness applicationsrsquo and lsquostorage and hosting servicesrsquo Even though security services
are among the most widely used services (Figure 7) it seems they do not generate many
problems As also confirmed during the case studies75 (interviews with SMEs) security is often
perceived as the key risk when outsourcing information technology services because these
services may affect critical data However once cloud services are used problems related to
security appear only rarely
Figure 18 The type of cloud computing services linked with the most serious problems declared by the SMEs ( of respondents 122)76
Source Survey of SMEs (2018)
43 Causes of the most serious problems encountered
As previously illustrated the survey investigated also the causes of the most serious problems
encountered The main cause of the most serious problems is non-conformity of the
service provided with what was established in the contract (Figure 19)
73 Enterprises that declared they encountered only one problem 74 For the analysis of the second most serious problems and its link with used services please refer to
Annex 5 75 See Case study analysis for further information 76 Multiple choice question
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and unbalanced cloud computing contracts
52
Figure 19 The main causes of the most serious problems ( of respondents 122 of
responses provided 124)77
Source Survey of SMEs (2018)
The unfairness of CTampC78 is also perceived as a possible cause of the most serious problems
declared This was mentioned by 12 of the SMEs that encountered problems (ie 15
respondents out of 122)
However in 13 of the cases the problems encountered were not within the service
providerrsquos responsibility but resulted from technical issues with SME and internal factors
When providing further details the SMEs acknowledged that the problems may have been
caused by the enterprisersquos own mistake due to miscommunication limited training of the
employees or lack of capacityknowledge
The relevance of lsquonon conformity of the servicesrsquo lsquotechnical problemsrsquo and lsquounfairness of CTampCrsquo
is confirmed also when the analysis of the causes is restricted to most serious problems only79
(Table 15)
77 Multiple choice question 78 CTampC were considered unfair by the respondents because of the impossibility of negotiating its
content because the contract might have included limited liability of the providers andor the possibility for the provider to modify unilaterally one or more clauses 79 Unsatisfactory availability Low speed of the service and Forced updates to the service
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and unbalanced cloud computing contracts
53
Table 15 The causes of the three most serious problems ( of respondents 122 of
responses provided 59)80
The 3 most serious
problems
of SMEs declaring
this as the most
serious problem
of SMEs that consider
lsquonon-conformity of the servicersquo as the cause
of SMEs that consider
lsquotechnical problemsrsquo as
the cause
of SMEs that consider lsquounfairness of CTampCrsquo as the cause
of SMEs that declared other causes for the most
serious problem
encountered
Unsatisfactory availability
32 23 3 3 3
100 73 9 9 9
Low speed of
the service
27 13 5 2 7
100 48 19 7 26
Forced updates to the service
16 6 2 4 4
100 38 13 25 25
Source Survey of SMEs (2018)
Even the second most serious problems are frequently due to similar causes (ie non-
conformity of the service provided with what was established in the contract Figure
20)
Figure 20 The main causes of the second most serious problems ( of respondents 66 of responses provided 70)81
Source Survey of SMEs (2018)
44 Actions taken by SMEs
As anticipated in the introduction of Section 4 actions taken by SMEs in order to remedy the
encountered problems have been investigated
Nearly three-quarters (74) of the SMEs that encountered contract-related problems
(90 out of the 122 respondents) chose to take action to resolve or to remedy the most
serious problem
The 32 respondents who declared that no action had been taken provided usually more than
one justification for their answer The results that stood out were given by the fact that the
80 Multiple choice question 81 Multiple choice question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
54
provider fixed the problem (16) that the problem was assessed as not that
important (8) and that the procedure was too complicated (5)
The overall trend regarding actions taken to resolve the problem is maintained for each
type of sector included in the study where between 60 and 90 of the SMEs chose to
take action (see Annex 5 for further details)
Two main actions have been taken by SMEs to resolve the encountered problems using the
direct support of the provider andor making a complaint to the customer support
service (Figure 21)
Figure 21 The actions taken by the SMEs to resolve or remedy the most serious problems
( of respondents 90 of answers 165)82
Source Survey of SMEs (2018)
Also interestingly there are two types of actions to address the problem which have not been
declared at all both concerning legal measures going to mediationarbitration and
filing an action with a court
The replies received from the service providers during the case studies83 reveal that there
were cases where SMEs went to court to obtain compensation for the time and money lost
However providers remark that from their experience the probability that SMEs will win
these legal disputes is limited since it is difficult to demonstrate objective responsibilities
Additional insights were gained by investigating the replies within the category lsquoothersrsquo
chosen by more than 20 of the SMEs that took actions This reveals that about half of them
(21) SMEs took some type of internal measure such as changing an internal procedure or
moving the cloud computing services internally
The results revealed also that on average SMEs take more than one action to resolve or
remedy the most serious problems
At the same time among the 90 SMEs that took action 78 affirmed that they did not
encounter any difficulties in resolving the most serious problem (see question D121
from Annex 5 for further details)84
82 Multiple choice question 83 See Case study analysis (Annex 9) 84 All respondents (ie 90) that declared they took action were requested to say if they encountered
any difficulties while trying to resolve or remedy the encountered problem
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and unbalanced cloud computing contracts
55
Moreover the survey revealed that the most likely challenge for SMEs when trying to resolve
the most serious problem is the length of the procedure (Figure 22)85
Figure 22 Difficulties encountered when trying to resolve the most serious contract-related problem ( of respondents 20 of answers 34)86
Source Survey of SMEs (2018)
The findings from the case studies revealed (through interviews with providers) that different
forms of assistance are offered when needed and that the support did not depend on the
enterprisersquos size but rather on the severity of the issue Providers also mentioned that the
length of the remedy procedure varies from a minimum of a few hours to a maximum of three
or four days
Results of the actions
Following the actions taken the majority of the SMEs signalled that their problem was
either entirely resolved (70) or partially resolved (18) as shown in Figure 23
Figure 23 The results of the actions taken to resolve or remedy the most serious problem
( of respondents 90)
Source Survey of SMEs (2018)
85 The two responses regarding the lsquootherrsquo option were first related to the lack of a timely response from
the provider and secondly to the fact that the provider offered only partial help to resolve the problem 86 Multiple choice question The question was addressed to the 20 respondents that declared encountering problems when taking action to resolve or remedy the problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
56
The extent to which the problem was fully resolved varies across sectors ranging from 41
for administrative and support service activities to 89 for wholesale and retail trade (Figure
24)
Figure 24 Number of SMEs for which the problem was fully resolved as a result of the action(s) taken by sector ( of respondents 63)
Source Survey of SMEs (2018)
From the service providersrsquo viewpoint if the problem falls under the providersrsquo responsibility
they try to partially compensate for the cost of the service One specific provider declared
that the approach commonly used in the market is to compensate for administrative costs
but only in exceptional cases87 to also reimburse the entire costs of the subscribed package
The reimbursed amount varies between 5 and 15 of the monthly fees Moreover within
one Expert Group Meeting there was mention of lsquoa practice in Spain on a regulated market
where money is returned to customers for downtime within 60 daysrsquo88
87 These rare cases might vary according to the specific problem The provider might consider the
reimbursement of the entire cost if the unavailability of the services exceeds the scheduled period needed in order to fix the problem 88 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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57
5 Consequences of the encountered problems
This section investigates the nature of the financial detriment suffered by the SMEs as
consequence of the encountered problems as identified in Section 4
This might be related to
negative consequences for business activities such as
- potential loss of turnover or profits as a consequence of the encountered
problem
- loss of clients
- reputation damages
extra work that is done with internal human resources while taking action to
resolve the encountered problems
extra effort or costs to ensure an alternative service andor to fix the cloud
service problem
legal actions taken to exercise the users rights to remedies for non-conformity of
service
The prevalence of these consequences has been verified during the implementation of the
survey and their economic assessment where possible has been discussed and validated
during the case studies and webinars
This section also discusses some more qualitative aspects of how the encountered problems
may affect individual companies
51 Qualitative assessment
SMEs declared several negative consequences for business activities arising from contract-
related problems (Figure 25)
Figure 25 Perceived consequences for business activities ( of respondents 122)
Source Survey of SMEs (2018)
The limited availability of a service or its limited speed might reduce the capacity of SMEs to
respond to customersrsquo needs in a timely manner causing loss of clients or having a negative
impact on reputation Around one out of five SMEs that encountered problems declared that
those problems generated loss of clients or reputational damages
Reputation is a strategic intangible asset and it may play a very important role not only in
improving SMEsrsquo financial results but also (or even more importantly) in overcoming barriers
that significantly hinder their development The most important factor which builds a
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
58
companyrsquos reputation is the opinion and trust shared by stakeholders (especially customers
and third parties)
Interestingly Figure 25 also shows that the proportion of SMEs that perceive some financial
impacts arising from contract-related cloud computing problems in terms of lost profits or
turnover is slightly lower (16 and 14 respectively out of the 122 that faced contract-
related cloud computing problems) which suggests that at least some of those SMEs that
declared to have experienced negative consequences considered that they somehow managed
to counteract the impacts in terms of lost clients and reputational damages and that these
consequences did not translate into financial losses It is true that some of the effects of those
losses of clients or reputational damages that were reported may take some time to translate
into turnover losses and this helps in explaining why the proportion of enterprises that
declared to have experienced losses of turnover and profits is lower than that the one that
declared to have suffered from losses of clients or reputational damages Moreover this can
also be explained by the fact that it is not inherently an easy task to ask an SME to quantify
such costs as this might also depend on the person who answers and how knowledgeable he
is on the firmsrsquo accounts
Besides the consequences mentioned above the results of the survey and the findings of the
case studies confirmed that the most important consequence for cloud computing business
users is the extra work that had to be performed with internal human resources
overall 93 of the enterprises that encountered problems have had to mobilise some internal
human resources to sort out the problems (Table 16)
In particular while acting to resolve the encountered problems
76 of the enterprises have had to use technical staff to resolve the encountered
problems
administrative and senior officers and managers were used by nearly half of the
enterprises (48)
the complexity of the encountered problems forced 60 of the SMEs (73 out of 122
that encountered problems) to use at least two skill levels
Table 16 Number of enterprises in which human resources were invested while taking action to resolve or remedy the most serious problem by skill level of employee
( of respondents 122)
Skill level of
enterprises
Administrative 59 48
Technical 93 76
Senior officer(s)manager(s) 59 48
At least one of the above 113 93
Source Survey of SMEs (2018)
The importance and the prevalence of the extra work are also confirmed by the fact that about
one-third (31) of the SMEs that encountered problems reported no other consequences
besides human resources costs while taking action to resolve the most serious problem (Table
17)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
59
Table 17 Number of enterprises that have incurred costs (besides human resources) while
taking action to resolve or remedy the most serious problem by type of costs ( of respondents 122)89
Other costs encountered (different from costs related to internal HR)
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Other residual Costs 9 7
None 38 31
Source Survey of SMEs (2018)
It is interesting to note that when the problems were not resolved SMEs faced additional
costs related to ensuring an alternative service (34) and costs related to fixing the
cloud service problem with external support (32 Table 17)
Other hidden costs may also appear when SMEs face contract-related problems Even if legal
measures (ie going to mediationarbitration and filing an action with a court) were not
chosen as the action to resolve the problems (see Section 42 for further details) 18 of the
SMEs incurred some legal costs when exercising user rights to receiving remedies for non-
conformity of the contracted service
Whilst the perception of the nine SMEs that took part in the in-depth interviews is that the
encountered problems do not always have direct and important consequences for the financial
performance of the enterprises (ie loss of profit or turnover) it should also be noted that in
the survey not all SMEs were able to provide an estimate of the detriment encountered Such
estimation is indeed challenging and the unwillingnessincapability of the SMEs to provide an
estimate may also be due to the fact that effects on the balance sheet may only materialise
over a longer time horizon
However cloud services can be critical for SMEs This was reflected in some very high
estimates of detriment reported by individual SMEs For example this could be the case for
where the data lies at the core of the SMErsquos activity (eg an accounting firm) In extreme
cases the problem may cause the market exit of efficient companies The larger the costs
generated by the encountered problems the larger the risk of market inefficiencies
The next section is aimed at quantifying the monetary value of the consequences analysed so
far
52 Quantitative assessment
The quantification of the consequences suffered by SMEs (economic detriment) relied on the
computation of the following parameters90
proportion of enterprises that use cloud computing services (cloud computing usage
rate)91
the incidence of contract-related problems by sector--size classes (namely the
percentage of enterprises that encountered problems)
the 95 trimmed mean values by enterprise for
89 Multiple choice question 90 Please refer to Section 21 for further details on the methodology used to quantify the economic detriment 91 Please refer to Section 31 for further details
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
60
- losses of turnover or alternatively losses of profits
- number of working days involved in resolving the problems
- the level of other costs incurred
- the value of any redress offered by the service provider as a compensation
All of these parameters have been quantified by using the results of the survey To compute
the average and 95 trimmed mean values for each dimension of detriment only the answers
of SMEs that quantified the detriment associated with that dimension were considered
For some dimensions SMEs were asked first whether they suffered some cost and then to
quantify it SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems but that were not able to provide an estimate of the detriment suffered
due to that cost cannot be considered in this quantification exercise This quantification
exercise must thus be regarded as an estimate of the financial consequences of contract-
related cloud computing problems
Table 18 presents in the first column the number of enterprises that declared that they
suffered each cost92 then in the second column it presents the number of SMEs that were
able to quantify the cost and in the third column the number of SMEs that declared some
positive value for each cost As it can be seen the difference between the number of
enterprises that declared that they suffered a cost and that were able to quantify its effect is
quite diverse across the different dimensions of detriment
Table 18 Enterprises that declared that they suffered some costs and that were able to
quantify these costs
Component
Number of
enterprises that declared
they suffered the cost
Number of
enterprises that
quantified the cost
Number of enterprises
that
quantified
with positive values
of enterprises
that
quantified
with positive values
Loss of turnover na 122 17 14
Loss of profits na 122 19 16
Internal human resource costs 113 113 105 93
Other costs (at least one) 90 78 31 40
Costs related to ensuring an alternative service
42 41 15 37
Costs related to fixing the cloud service problem
39 39 15 38
Legal costs 22 22 1 5
Costs related to reputation
damage 23 23 3 13
Costs related to loss of client(s)
25 24 2 8
Other residual costs 47 34 5 15
Redress 15 15 7 47
Source Survey of SMEs (2018)
92 For lost turnover and lost profits as it was not asked separately whether the SME experienced some loss there is no information (see Annex 4 section E for further details on how the data collection was structured)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
61
Regarding turnover and profit losses all companies had to answer the question in the survey
and in that sense had to quantify those dimensions of detriment Despite this fact and as
already discussed only 14 and 16 respectively provided numbers for their estimates of
losses of turnover and profits These low figures may be due to the fact that at least some of
those SMEs that declared to having experienced other negative consequences might have
managed to counteract the impacts related to lost clients and reputational damages and other
costs and that those costs did not translate into financial losses Yet it is also true that some
of the effects of those losses of clients or reputational damages that were reported may take
some time to translate into turnover losses and this may help to explain why the proportion
of enterprises that declared to have experienced losses of turnover and profits is lower than
that which declared to have suffered losses of clients or reputational damages
For internal human resources costs 93 of the enterprises that mobilised internal human
resources declared losses of some working days that were considered in the analysis of
detriment thus most enterprises were considered in the analysis
For other costs 78 (80) of the enterprises that declared to have borne some costs were
able to quantify at least one of these costs
It is important to point out that some of the SMEs that declared to have borne costs arising
from contract-related cloud computing problems were not able to provide an estimate of the
cost of the detriment suffered This means that while there is some under-reporting of the
percentage of enterprises that faced relevant costs it does not necessarily imply a bias in the
overall estimate of detriment given that calculating average values for the impact can correct
the under-reporting problem if the true values of those that are not able to quantify have the
same distribution as those that were able to do so In practice by taking into consideration
only those that SMEs that quantified the detriment may lead to underestimation
overestimation or no bias at all
The fact that enterprises only assess the current financial losses and are not able to foresee
the future financial losses associated with problems such as the loss of clients or reputation
damages can imply an underestimation of the true detriment
Computed values have been discussed and validated during the webinars realised under Task
3 (see Annex 9 for further details)
Cloud computing usage rate
Two possible scenarios for the estimate of the usage rate of cloud computing were considered
based on the survey of SMEs
the first which is the central scenario in this study considers all enterprises that
did not respond to the survey as not using cloud computing services arriving at a
universe of 3173 SMEs In this case the usage rate corresponds to a value of 159
in the second only those enterprises that explicitly declared that they are not using
cloud computing services are added to those that declare its use corresponding to a
universe of 1009 The usage rate in this case is higher reaching a value of 499
which can be regarded as an upper estimate representing a possible future situation
in which the usage rate of cloud computing increases significantly
Incidence of contract-related problems
The sample available from the survey also allows the calculation with a 95 confidence
interval level and 5 margin of error of the incidence of contract-related problems
Losses of turnover
For all cost categories (ie loss of turnoverprofit costs of human resources other costs) and
for the value of redress the research team considered the 95 trimmed mean of the values
from the survey
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
62
Trimmed means are robust estimators of a general trend To compute the 95 trimmed
mean the research team i) removed 25 of observations on each side of the distribution
of survey answers ii) computed the average of the remaining observations
Using trimmed means confers one main advantage the standard error of the trimmed mean
is less affected by outliers and asymmetry than the mean93
The following tables present both trimmed mean and average values for all costs the latter
being included for illustrative purpose only
Table 19 Loss of turnover by enterprises
Value of
Losses (euro)
Number of
Enterprises
Relative frequency Cumulative
frequency
000 105 861 861
700 1 08 869
30000 1 08 877
104690 2 16 893
157035 1 08 902
200000 1 08 910
209380 1 08 918
500000 2 16 934
1000000 1 08 943
2000000 1 08 951
5000000 1 08 959
10469012 1 08 967
15000000 2 16 984
20000000 1 08 992
50000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Based on these values the value of the 95 trimmed mean is euro42094 Losses by sector
size class and country are presented in Annex 5
Loss of profit
Looking at profits (Table 20) we can see that also only 156 (19) of the enterprises out of
the 122 that suffered contract-related cloud computing problems declared a loss of profits
corresponding to a 95 trimmed mean of euro177 (Annex 5)95
Table 20 Loss of profits by enterprise
Value of Losses (euro)
Number of Enterprises
Relative frequency Cumulative frequency
000 103 844 844
1200 1 08 852
93 It must be emphasised that all very high value answers (outliers) have been double-checked and they do not seem to include errors in any case we take the more robust scenario (when the 95 trimmed
mean is used) to measure the impact and present the results considering the average values only as a
sensitivity in the appendix 94 The average value is euro985869 95 The average loss of profits per enterprise is about euro1913
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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63
Value of
Losses (euro)
Number of
Enterprises Relative frequency
Cumulative
frequency
20938 1 08 861
51500 1 08 869
52345 1 08 877
60000 1 08 885
90000 1 08 893
150000 1 08 902
157035 1 08 910
200000 2 16 926
209380 1 08 934
300000 1 08 943
500000 2 16 959
523451 1 08 967
2093802 1 08 975
3000000 1 08 984
5234506 1 08 992
10000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Internal human resources costs
When one considers the number of working days involved in resolving the problems96 there
is a significant level of dispersion and only 17 out of the 122 enterprises that suffered contract-
related cloud computing problems did not invest working days in resolving the problem97 The
95 trimmed mean was about 32 days98
To compute the human resources costs incurred when resolving the problems as the actual
values of wages of those involved in resolving the problems were not provided the number
of working days was multiplied by the average cost of labour per working day per country and
industry which was computed from Eurostat data as INDIC_SB - Personnel costs - million
euroINDIC_SB - Persons employed - number)260
Eurostat data are not differentiated by skill level but by using the average wage level by
sector and country during that period we have a robust estimate of the average cost of labour
on the affected enterprises and so the estimate is likely to be close to actual conditions
96 For the measurement of the detriment only the overall number of working days was used as the responses to the survey regarding wages were not robust and so the average wage for each country was used to estimate the human resources costs and accordingly only the overall number of working
days had to be used from the survey 97 This means that 93 of the enterprises that mobilised internal human resources to sort out the problems declared some losses of working days 98 The average number of working days involved in resolving the problem was about 72
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64
Figure 26 Total number of working days involved in resolving the problem by enterprise
Source Survey of SMEs (2018)99
Other costs and value of redress
With regard to the other costs100 incurred by the SMEs to resolve the problem a qualitative
assessment has been presented in Section 51 above
With respect to these other costs Table 21 shows the number of SMEs that declared relevant
values as well as the trimmed mean and the average of the declared values for each of the
individual costs
The incidence of each of the individual other costs is quite different with the costs related to
ensuring an alternative service and costs related to fixing the cloud service problem as those
that are perceived as having greater impact Overall only seven enterprises experienced more
than one type of other costs
Table 21 Values for other costs
Component
Number of enterprises
that quantified
costs
Number of enterprises
that declared positive values
of total 122
95 trimmed
mean of the values
declared by enterprises
experiencing
each cost euro
Average of
the values declared by enterprises
experiencing each cost
euro
Costs related to ensuring an alternative service
41 15 123 1187 5892
Costs related to fixing the cloud service problem
39 15 123 1311 13657
99 See Annex 5 for further details 100 ie costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
65
Component
Number of enterprises
that quantified
costs
Number of enterprises
that
declared positive values
of total
122
95
trimmed
mean of the values
declared by enterprises
experiencing each cost
euro
Average of
the values declared by enterprises
experiencing each cost
euro
Legal costs 22 1 08 00 19
Costs related to reputation damage
23 3 25 00 2701
Costs related to loss of
client(s) 24 2 16 00 8663
Other residual costs 34 5 41 23 6255
Source Survey of SMEs (2018)
As discussed above not in all cases were consulted stakeholders able to associate an
economic value with the consequence that was faced or they simply considered the costs that
were borne as not relevant
Since for some of the individual other costs there were very few answers provided we chose
to consider an aggregate value of other costs in the assessment of the detriment suffered by
SMEs given that the use of an aggregate value increases the robustness of the estimate101
To arrive at the aggregate value we first computed the total value of other costs borne by
each enterprise (by adding up each of the individual other costs) and then computed the
trimmed mean of the aggregate declared other costs The 95 trimmed mean per
enterprise that suffered problems102 of the overall other costs borne was euro341 (Table
22)103
Table 22 Parameters used in detriment assessment
Component
Number of enterprises that
declared
relevant values ()
of the 122 enterprises that
faced problems
95 trimmed mean of the
values declared by enterprises
that quantified the component
euro
Average of the values declared by enterprises that quantified the component
euro
Turnover losses 17 139 41954 985869
Profit losses 19 156 17690 191346
Costs of human resources
105 861 36006 80621
Other costs 30 246 34124 371871
Redress 7 57 095 6042
Source Survey of SMEs (2018)
101 For this reason the trimmed mean based on total other costs has been used instead of the trimmed
means for each individual other cost 102 The trimmed mean has been computed over 122 SMEs 103 An average of euro3718 per enterprise
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66
Finally also the value of any redress offered by the service providers to compensate for
the problem has been computed Only seven enterprises out of the 122 that suffered contract-
related cloud computing problems (6) declared to having received a positive amount as
redress corresponding to a 95 trimmed mean of about euro1 per enterprise that
suffered problems104 which shows that SMEs are not able to be compensated for the costs
suffered
Table 22 summarises the parameters discussed above for each component of detriment that
is used in the quantitative analysis
Measuring the economic detriment
Having those parameters and the total number of enterprises that experienced contract-
related cloud computing problems it is possible to compute the value of the economic
detriment they suffered by using the formulas presented in Section 21 of this report
Gross financial detriment is measured by taking into account alternatively the loss of turnover
or profits as perceived by each SME and then adding the costs of the human resources
invested by each SME while taking action to resolve or remedy the most serious encountered
problem and the other costs declared by each SME including costs such as the costs related
to ensuring an alternative service the costs related to fixing the cloud service problem any
legal costs costs related to reputation damage and costs related to loss of client(s) and other
residual costs
The measures of gross financial detriment per enterprise computed from the previous
parameters are presented in Table 23 and those for net financial detriment are shown in Table
24
Table 23 Measures of gross and net financial detriment per enterprise considering lost turnover (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Turnover losses 4195 374 98587 685
Costs of human resources 3601 321 8062 56
Other costs 3412 304 37187 259
Gross detriment 11208 1000 143836 1000
Redress 10 604
Net detriment 11199 143232
Source Survey of SMEs (2018) and Eurostat Business Statistics
104 An average of euro6042
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67
Table 24 Measures of gross and net financial detriment per enterprise considering lost
profits (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Profit losses 1769 201 19135 297
Costs of human resources
3601 410 8062 125
Other costs 3412 389 37187 578
Gross detriment 8782 1000
64384 1000
Redress 10 604
Net detriment 8773 63780
Source Survey of SMEs (2018) and Eurostat Business Statistics
As mentioned above considering these values two scenarios have been developed that take
into account the two measures of cloud computing usage rate
The estimates presented are lower thresholds of the actual detriment as they only consider
the most serious problem which represents less than 80 of the total losses for 48 of the
companies105 The size of underestimation is limited by the fact that sectors with the highest
usage rates of cloud computing are considered in the analysis and they are likely to bear more
costs than the average sector
Table 25 to Table 30 below present the results for economic detriment at the EU level
The interpretation of the results on the economic detriment caused by contract-related
cloud computing problems shows that in the central scenario (when 159 of the total
number of enterprises use cloud computing) the number of enterprises that suffered contract-
related problems across the EU28 is around 583000 (Table 25) In the alternative
scenario (when about 50 of the enterprises use cloud computing) this value increases to
about 18 million
105 The risk of underestimation is less pronounced as the sectors selected for the sample are those for which the usage rate of cloud computing is higher
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68
Table 25 Number of enterprises at the EU28 level suffering economic detriment
Scenario 1
(average incidence of CC use
159)
Scenario 2
(average incidence of CC use
499)
(number)
Secto
r
Manufacturing 82256 245581
Wholesale and retail trade repair of motor vehicles and motorcycles
198877 628761
Information and communication 49890 156187
Professional scientific and technical activities
195098 599588
Administrative and support service activities
56803 203001
Total 582924 1833118
Siz
e
cla
ss Micro 548001 1722427
Small 22827 70148
Medium 12096 40543
Total 582924 1833118
Source Computations based on Survey of SMEs (2018) and Eurostat
When considering lost turnover and all other costs incurred (Table 24) contract-
related problems generated a gross economic detriment that ranges from approximately
euro650 million in the scenario of 159 cloud computing usage to about euro21 billion in the
scenario of 499 cloud computing usage When considering the lost profits and all other
costs incurred (Table 27) the value of gross detriment goes from just over euro500 million
in the scenario of 159 cloud computing usage to about euro16 billion in the scenario of
499 cloud computing usage
Table 26 Gross economic detriment at the EU28 level - considering lost turnover and all other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2947
Wholesale and retail trade repair of motor vehicles and motorcycles
1673 5235
Information and communication 369 1145
Professional scientific and technical
activities 1557 4723
Administrative and support service activities
1918 6495
Total 6534 20546
Siz
e
cla
ss Micro 4816 15124
Small 1144 3562
Medium 574 1861
Total 6534 20546
Source Computations based on Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
69
Table 27 Gross economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 649 1906
Wholesale and retail trade repair
of motor vehicles and motorcycles 1548 4852
Information and communication 345 1074
Professional scientific and technical activities
1421 4323
Administrative and support service
activities 1157 3943
Total 5119 16098
Siz
e
cla
ss Micro 4013 12609
Small 801 2488
Medium 306 1002
Total 5119 16098
Source Computations based on Survey of SMEs (2018) and Eurostat
The value of the gross detriment per enterprise that faces problems when considering
lost turnover and all other costs incurred is about euro1100 When considering lost profits
and all the other costs incurred the value of the detriment per enterprise is around euro880
Table 28 Average gross economic detriment per SME
Average gross economic detriment per SME suffering economic
detriment euro
Considering lost turnover and all
other costs incurred
Considering lost profit and all other
costs incurred
Micro 8788 7323
Small 50116 35090
Medium 47454 25298
Total 11209 8782
The net economic detriment associated with contract-related cloud computing problems
ranges from around euro650 million to euro21 billion when considering lost turnover and
all other costs incurred (Table 29) and from euro501 million to euro16 billion when considering
the lost profits and all other costs incurred (Table 30)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
70
Table 29 Net economic detriment at the EU 28 level - considering lost turnover and all
other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2946
Wholesale and retail trade repair of
motor vehicles and motorcycles 1673 5234
Information and communication 369 1145
Professional scientific and technical activities
1556 4722
Administrative and support service
activities 1913 6481
Total 6528 20529
Siz
e
cla
ss Micro 4815 15118
Small 1143 3562
Medium 570 1850
Total 6528 20529
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 30 Net economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 648 1906
Wholesale and retail trade repair of motor vehicles and motorcycles
1548 4851
Information and communication 345 1074
Professional scientific and technical activities
1420 4322
Administrative and support service activities
1152 3928
Total 5114 16081
Siz
e
cla
ss Micro 4011 12603
Small 800 2488
Medium 302 990
Total 5114 16081
Source Computations based on Survey of SMEs (2018) and Eurostat
Moving to the analysis of the different components of detriment considering the more detailed
results presented in Annex 5 one can see that the overall turnover loss (Table 77) arising
from contract-related cloud computing problems across the EU28 ranges from euro245 million
to euro770 million when the 95 trimmed mean loss per enterprise is considered depending on
the cloud computing usage rate
In the measures of detriment that consider the lost turnover and all other costs incurred this
component is the most significant component of detriment in both scenarios with values
around 37 (Figure 27) When measuring detriment considering the lost profits and all other
costs incurred the most important component of detriment varies across the different
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
71
scenarios being either the other costs covered106 or the costs of human resources invested
in resolving the problem
The costs of human resources involved in resolving the problem represent around 32 of
the total detriment when considering lost turnover (Table 23)
Even if figures by industry should be looked at carefully in all scenarios in which detriment is
measured considering the lost turnover and all other costs incurred the sectors lsquoWholesale
and retail trade repair of motor vehicles and motorcyclesrsquo lsquoProfessional scientific and
technical activitiesrsquo and lsquoAdministrative and support service activitiesrsquo together account for
about 90 of the overall gross detriment In the scenarios in which detriment is measured
considering lost profits and all other costs incurred lsquoWholesale and retail trade repair of
motor vehicles and motorcyclesrsquo and lsquoProfessional scientific and technical activitiesrsquo together
account for about 60 of the total detriment
In all scenarios micro enterprises account for close to 70 of the global economic detriment
106 These costs include costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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72
6 Impacts of the economic detriment
This section assesses (in quantitative terms) the impact on growth and jobs of the quantified
SMEs detriment identified and provides a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and competitiveness
In order to quantify the effects on growth and jobs the research team estimated
the direct impact meaning the GVA and employment contents of the turnover lost
by SMEs that are affected directly by the contract-related problems This is done by
taking from Eurostat data for each countrysector
- the output per employee
- the output per unit of GVA107
Dividing the turnover losses estimated by these coefficients allows to estimate the GVA
associated with the turnover losses as follow
119863119868(119866119881119860)119894 = sum119871(119879)119894119895
119884119894119895 119866119881119860119894119895frasl
5
119895=1
Where
119863119868(119866119881119860)119894 is the direct impact in terms of GVA for the country i considering the five
sectors under the scope of the study
119871(119879)119894119895 is the loss turnover for the country i in the sector j
119884119894119895 is the average total output produced in the country i and in the sector j during the
period 2014-2016 computed from Eurostat National accounts aggregates by industry
(up to NACE A64) [nama_10_a64]
119866119881119860119894119895 is the average total GVA produced in the country i and in the sector j during
the period 2014-2016 computed from Eurostat National accounts aggregates by
industry (up to NACE A64) [nama_10_a64]
The same approach has been used for the estimate of the loss of jobs associated with the
turnover losses
119863119868(119864)119894 = sum119871(119879)119894119895
119884119894119895 119864119894119895frasl
5
119895=1
Where
- 119863119868(E)119894 is the direct impact in terms of employment for the country i considering
the five sectors under the scope of the study
- 119871(119879)119894119895 is the loss turnover for the country i in the sector j
- 119884119894119895 is the average total output produced in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64]
- 119864119894119895 is the average number of employees in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64_e]
107 Average values for 2014-2016 were considered to increase robustness and to cover almost the same period as we are considering in the assessment
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73
For instance in the first scenario the total turnover losses arising from contract-related cloud
computing problems in manufacturing in Belgium is euro448 million (Table 81) Since each
person in manufacturing in Belgium produces euro4293 thousand of output (Table 84) that
turnover is associated with 104 jobs And given that for each euro of GVA in manufacturing in
Belgium there are euro41 of turnover (Table 83) that turnover is associated euro 108 million of
GVA
indirect impacts also measured as GVA and employment losses but in the supplier
industries were also assessed by using the input-output methodology presented in
Box 4
The basic requirement is to estimate the amount of turnover that is lost in supplier industries
given the existing supply chains The input-output methodology allows estimating those losses
based on the interlinkages between sectors existing in a given economy We then use the
input-output tables for the EU28 to estimate how much turnover would be lost in the supplier
industries due to the turnover losses associated with contract-related cloud computing
problems in the industries directly affected by those problems After estimating the turnover
losses in the supplier industries it is possible to measure the GVA and employment contents
of the production lost in those industries by using the same procedure described above that
was used for direct effects The input-output analysis is only used to estimate the turnover
losses in supplier industries when the methodology described above is applied
61 Direct impacts
At the enterprise level we estimated the financial detriment suffered by each enterprise by
considering different components and then aggregated those measures to the EU28 level by
adding up the effects suffered by each enterprise across all enterprises
When estimating the macroeconomic effects of the contract-related problems as discussed in
the methodology one must consider the overall turnover losses that were sustained by all
enterprises that experienced those problems This is due to the fact that turnover is the
variable that summarises the overall effects at the enterprise level and that is transmitted to
the economic system through the supply chains and can be related to aggregate economic
variables At the same time by considering turnover as an overall effect helps to avoid double
counting
Estimated turnover losses are presented in section 52 by considering the average loss of
turnover experienced by each enterprise and the total number of enterprises that suffered
problems related to cloud computing As discussed in that section there may be some
underestimation of the loss of turnover as we are only considering the consequences of the
most serious problem and also because enterprises many times are not able to assess108 how
some costs such as loss of clients or reputational damages translate into turnover losses or
other financial losses
Keeping the previous considerations in mind the overall results show that depending on the
scenario of cloud computing usage the direct loss of jobs associated with the loss of turnover
caused by contract-related cloud computing problems ranges from 3672 to 11816 jobs At
maximum this represents 001 of the total employment in the EU28 showing that the
overall direct effects of contract-related problems in terms of jobs is quite limited
With respect to gross value added the direct impact of the losses of turnover caused by
contract-related cloud computing problems ranges from euro119 million to euro379 million which
is again negligible when considering the overall EU28 level
108 Namely because there is a time lag and no linear proportion between the costs and damage (eg reputational damage) and the turnover losses
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Table 31 Direct impact on growth and jobs of the losses of turnover caused by contract-
related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 1191 3788
EU GVA 000 000
Impact on jobs
Persons 3672 11816
EU
employment 000 001
Source Computations based on Survey of SMEs (2018) and Eurostat
Annex 7 presents tables that provide details by sector and country The tables that provide
details by country and sector show that effects are more significant in the sectors
lsquoProfessional scientific and technical activitiesrsquo and lsquoAdministrative and support service
activitiesrsquo One can also find some differences across countries
62 Indirect impacts
Turning to the indirect effects as mentioned we measured the consequences of the turnover
losses on supplier industries by using the input-output model to identify the supply chains
It is important to take into account that not only the described limitations related to the direct
effects do not fully translate into the indirect effects but the methodology used is also not
able to capture some opportunity costs that are particularly relevant for instance for human
resources or downstream effects namely on final consumers Thus the current
measurement of indirect effects must be seen as a lower threshold to the true indirect effects
Despite these limitations the input-output methodology is the best available methodology to
explore the interlinkages that exist between sectors and to estimate the indirect impacts
arising from contract-related problems
The measured indirect impacts on supplier industries are similar in magnitude to the direct
effects
Depending on the scenario of cloud computing usage the loss of jobs in supplier industries
associated with the loss of turnover caused by cloud computing contract-related problems
ranges from 1733 to 5402 Losses of GVA range from euro99 million to euro308 million
Overall adding direct and indirect effects we may refer to maximum impacts of about 5400
jobs (000 of EU28 employment) in scenario 1 and 17818 jobs in scenario 2 (001 of
total employment Regarding the loss of GVA the sum of direct and indirect effects adds up
to euro220 million in scenario 1 and to euro687 million in scenario 2 (both 000 of EU28 GVA)
which shows that the impact is not very significant at the EU28 level
Table 32 Indirect impact on growth and jobs of the losses of turnover caused by contract-related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 987 3079
EU GVA 000 000
Impact on jobs Persons 1733 5402
EU employment 000 000
Source Computations based on Survey of SMEs (2018) and Eurostat
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75
63 Other qualitative impacts of contract-related problems
The previous sections show that even with some possible underestimation the overall direct
and indirect impacts are not very significant for the time being but as was pointed out in the
analysis some companies have already experienced problems that had very significant effects
(demonstrated by the size of the average of all detriment components compared with the
95 trimmed mean presented in Table 22) and in a scenario of increasing usage rates these
effects are likely to become more relevant and more likely to affect the market
The analysis also revealed that some SMEs had difficulties in quantifying the costs relating to
cloud computing problems
However it is important to keep in mind that besides those quantitative impacts there might
be some other more qualitative effects arising from contract-related cloud computing
problems that create distortions affecting the allocative efficiency in the EU economy
eventually diminishing the overall welfare
The efficiency with which goods and services are produced or distributed is fundamental to
ensuring the competitiveness of the various business entities Using the best available
technologies and taking full advantage of them to reduce costs or improve the quality of the
goods and services provided are relevant factors in ensuring SMEsrsquo competitiveness
In the ongoing debate on macroeconomic imbalances and external competitiveness there has
been an increasing interest in competitiveness indicators regarding both cost competitiveness
and quality and non-cost competitiveness
General industrial economics theories show that contract-related problems as they increase
transaction costs may affect that competitiveness as they are a type of context cost which
are costs that affect the activity of enterprises and are not imputable to the investor to his
business or to his organisation These context costs gain increasing relevance with the
increasing integration of various enterprises into the global economy given that in a scenario
in which enterprises located in different territories face different contextual costs those costs
may significantly distort competition favouring the enterprises located in jurisdictions with
lower context costs
Contract-related problems are therefore a type of problem that may impact competitiveness
of enterprises and hinder their development in several different ways They may represent an
additional cost that reduces the price competitiveness of enterprises But they can also
constitute a non-cost barrier to competitiveness if they affect the presence of enterprises in
the market and their ability to efficiently supply their products namely if those problems
significantly reduce the possibility of accessing the best available technologies
Taking into account the previous considerations it is then important to analyse whether the
contract-related problems encountered and described above may have generated other
significant effects through both cost and non-cost competitiveness109
The analysis so far has already shown that contract-related problems have an impact in terms
of reputation and loss of clients besides the financial impacts on enterprise performance Even
if SMEs are not able to translate those effects into financial costs they are likely to have an
impact over the long run
During the interviews and case studies questions were also raised about whether the contract-
related problems might have caused other problems such as reputation damages or losses of
109 The outliers in the sample showed that in a few extreme cases the effects of contract related problems had very high effects and although these values have been excluded using the Trimmed Mean they should not be disregarded when trying to understand the whole context
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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76
competitiveness that may have impacted significantly on the economic performance of the
companies affected
For the time being it seems that given the fact that at the micro level (ie enterprise level)
most of the detriment is associated with extra work required to sort out the problems
enterprises are able to accommodate this effect at least to some extent
The relatively low value of detriment per enterprise perceived by SMEs as being caused by
contract-related problems suggests that enterprises consider they are able to absorb some of
those costs110 If those effects were greater they would have to transmit them more heavily
to their clients namely through increases in prices
Yet in considering all of the factors our general assessment is that even if enterprises are
able to partially absorb the costs they have incurred some of those costs will show up sooner
or later in financial variables and will translate into larger distortions that are likely to affect
allocative efficiency market functioning and competitiveness
110 Again the difficulties evidenced by some SMEs to quantify the costs arising from contract related problems suggests they might not be able to sufficiently account for the opportunity costs associated with solving those problems
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7 Conclusions
Demonstrable tangible economic benefits of cloud computing have been estimated and
confirmed for some years now The main benefits realised are lower information technology
costs more effective mobile working higher productivity standardisation of processes better
ability to enter new business areas and the ability to open up in new locations
While the above list of the benefits is not exhaustive it certainly provides an impression of
the high potential economic advantages that can be gained from the usage of cloud computing
compared to more traditional alternatives such as on-premises information technology
infrastructure
All in all the growing usage of cloud computing is expected to have a relevant impact on
increasing EU GDP and creating additional jobs111
The present study investigated the cloud computing services that are most commonly used
by micro small and medium-sized enterprises in the EU In particular a survey was
conducted on 3173 EU SMEs
The survey results allowed the estimation of the usage rate of cloud computing across SMEs
as 159 calculated from the number of SMEs that declared they are using cloud computing
services (503) divided by the number of SMEs reached (3173)
However EU SMEs are still only making basic use of cloud computing services in terms of the
number and types of contracted services
on average SMEs that declared that they used cloud services contracted five
different cloud computing services but one-third of the SMEs that used cloud
computing contracted only a limited number of services (up to three)
furthermore the use of cloud computing is mainly related to more mature applications
(such as collaboration and communication tools storage and hosting support)
Although the usage of cloud computing services is growing the following potential factors
limiting cloud computing usage were investigated during the interviews with different
stakeholders (including cloud services providersbrokers SMEs business associations ndash
including EEN associations Chamber of Commerce national authorities national SMEs
Envoy)
some SMEs have difficulties in assessing how the new services can improve their
everyday work
other SMEs perceive that costs of cloud services are still high and that it takes too
long to recover the investment
the division of responsibilities between SMEs and cloud providers can
sometimes become a major source of problems as it is not always clearly
documentedexplicated leading to overlaps and gaps especially with respect to
security aspects It is not uncommon for SMEs to be confused about their
responsibilities concerning security such as who makes backups of data or software
which type of failoverredundancy is offered by the provider and what still needs to
be done by the customer All of these issues can have an impact on the willingness of
SMEs to outsource cloud services
security matters generally influence SMEsrsquo decisions about what types of services to
be used One of the aspects that has been mentioned during the interviews as a factor
influencing the SMEsrsquo choices is the reputation of the provider more precisely
whether the cloud provider has had incidents of data breaches in the past
111 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels
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78
Another important factor discussed during the interviews is the asymmetry of information
when it comes to negotiating and customising the services covered by the CTampC and that
might limit the capacity of SMEs to find solutions that fit their needs
As a consequence the survey results showed that the SMEs tended to sign the standard
terms and conditions offered by the cloud provider (this is true for 64 out of 503 SMEs
that are using cloud computing services) either because they did not try at all to negotiate
(46) or were not able to do so (18) The decision to adopt the standard terms and
conditions was made either because these met the usersrsquo expectations (18) or because it
was assumedknown that a negotiation would have no chance to succeed (13)
In contrast to the traditional provision of on-premises IT resources the multi-tenant nature
of cloud computing usually raises concerns with respect to privacy confidentiality and
data integrity Cloud computing presents its own set of security issues which coupled with
the risks and threats inherent in traditional IT computing are also limiting its usage
However the stakeholders involved in the study indicated that the shortcomings in the SMEsrsquo
capacity for negotiating cloud computing contracts could be helped somewhat by the entry
into force of the GDPR as the new legislative framework gives SMEs more control over data
once the service providers apply the regulation
While the main objective of the study was to deliver the necessary evidence to support the
European Commission in its assessment of the need for and extent of any further EU efforts
to increase SMEsrsquo trust in cloud services it investigated
the prevalence nature scope and scale of the contract-related problems that SMEs
encounter in relation to cloud computing services
whether and to what extent enterprises are able to protect themselves against
contract-related problems when deciding to use cloud services
Based on the results of the survey it was estimated that around one SME cloud computing
user out of four (24) encountered contract-related problems during the period 2016-
2017 The main problems were related to the non-conformity of the service provided with
what was established in the contract concerning
the speed of service (55 of those SMEs who experienced problems)
the availability or continuity of the service (49)
updates to the service (32)
clarity of the instructions on how to use cloud computing services (26)
Problems related to security even if having impact on only a limited number of SMEs (less
than 10 of the cloud computing users that experienced problems) were quite frequent
especially with regard to the lack of protection of the data stored in the cloud against theft or
viruses and unauthorised disclosure of or access to data (both showing frequencies of almost
once every three months)
This was an important element arising from the study as security is often perceived as the
key risk when outsourcing information technology services because it may affect critical data
Clearly enterprises attach high importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
Cloud computing users who experienced problems in relation to cloud computing services
were asked to select the most serious among them (ie the problem that created the highest
impact on the everyday activities andor in terms of costs faced in order to resolve it) The
analysis of the results showed a correlation between the most frequent problems and the
problems with the highest impacts on enterprises Indeed unsatisfactory availability or
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79
discontinuity of the service low speed of the service and forced updates were
considered as the most serious problems
The main cause of the most serious problems was the non-conformity of the service
provided with what was established in the contract (51 of the 122 SMEs declaring
that they encountered problems) The unfairness of contract terms was also perceived as a
possible cause for the most serious problems declared this being mentioned by 15
respondents out of 122 (12) Some practical examples were provided in the Surveyrsquos open
questions and the contract terms were considered to be unfair by the respondents when there
was no possibility of negotiating their content or when they included limited liability of the
providers or the possibility for them to unilaterally amend the contract
However in 19 of the cases the problems encountered were not under the service providerrsquos
responsibility but arose from technical issues and enterprisesrsquo internal factors112
In order to protect themselves the majority of the SMEs (74 of those that encountered
problems) chose to take action to resolve or to remedy the problems encountered
Conversely for those SMEs that decided not to take any action this was justified by the fact
that the cloud provider fixed the problem or that the problem was assessed as not important
or the procedure was considered to be too complicated Interestingly there are two types of
actions which SMEs showed reluctance to use both concerning legal measures going to
mediationarbitration and filing an action with a court This is because the costs associated
with these proceedings did not appear to be worth it
Following the actions taken to address the problem the majority of the SMEs indicated that
their problem was either entirely resolved (70) or partially resolved (18) but the vast
majority of the surveyed SMEs that experienced problems (88) were not offered any redress
by the cloud service providers for the damage caused
The research team estimated that 582924 micro small and medium-sized enterprises
have encountered contract-related problems while using cloud computing and have
faced an economic detriment that is related to different components
losses of turnover and profits
costs of human resources
other costs incurred113
Regarding the human resources invested by the SMEs to address problems members of the
technical staff were by far the most used (76 of the enterprises that faced problems
invested in such resources) Furthermore about one-third (31) of the SMEs reported no
other costs besides human resources when taking action to resolve the cloud computing
problems The ones that did indicate other actions mostly sustained costs related to ensuring
an alternative service (34) and costs related to fixing the cloud service problem (32)
Contract-related problems generated a gross economic detriment measured by
considering lost turnover and all other costs equal to euro6534 million
The loss of turnover was the most significant component of the detriment representing
37 of the total detriment while costs of human resources involved in resolving the
problem represent around 32 of the total detriment
Micro enterprises accounted for around 74 of the global economic detriment (compared to
175 for small and 88 for the medium) but it is in small enterprises that the average
112 When providing further details the cloud computing users acknowledged the fact that there were
cases where the enterprisersquos own mistake such as a miscommunication or lack of capacityknowledge
was admitted to be the cause of the cloud computing problem 113 These costs include overall costs in ensuring an alternative service and costs related to fixing the cloud service problem
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gross detriment per enterprise was highest (ie euro 5012 compared to euro 4745 for medium
and euro878 for micro enterprises)
It is important to note that this estimate is a lower threshold of actual detriment as
not all SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems were able to provide an estimate of the detriment suffered
it only considers the costs associated with the most serious problem During the
survey 48 of the enterprises that encountered contract-related problems declared
that costs related to the most serious problem represented less than 80 of the total
losses However they were not able to provide relevant estimations regarding the
other encountered problems
However the magnitude of the underestimation is limited by the fact that the Member States
and the sectors chosen to be in the sample are those with highest cloud computing usage
rates and so are likely to bear costs above the average
Having computed the economic detriment suffered by micro small and medium-sized
enterprises the following have also been considered
direct impacts of a reduction in economic activity of the enterprises suffering from
contract-related cloud computing problems on their overall gross value added and
employment
effects on the gross value added and employment of supplier industries arising from
the turnover losses they suffer (indirect impacts)114
Direct impacts were estimated by considering the gross value added and employment
contents of the turnover losses at country and sector levels and the coefficients of total
turnover at country and sector levels computed from Eurostat data115
The overall results show that the 3672 direct jobs were lost in the sectors where contract-
related problems were encountered With respect to gross value added the direct impact of
the losses of turnover was a reduction of euro119 million within the same sectors
The indirect effects measured as gross value added and employment lost in the supplier
industries were still quite considerable The indirect impact associated with the loss of
turnover caused by contract-related cloud computing problems led to losses of 1733 jobs
and around euro987 million of Gross Value Added
Again it should be emphasised that the measured indirect effects must be seen as lower
thresholds to the actual indirect effects not only because of the above-mentioned limitations
but also because the input-output methodology while very good at estimating backward
linkages along the supply chain has some limitations in capturing opportunity costs and
intangibles or downstream effects of the problems in client industries or final consumers
Besides measuring the detriment caused by contract-related cloud computing service
problems the analysis addressed the issue of whether those problems might have generated
other effects
114 These indirect losses arise from the fact that the industries that suffered from the direct turnover losses reduced their demand for products from their suppliers 115 National accounts aggregated by industry (up to NACE A64) [nama_10_a64]
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Results show that contract-related cloud computing problems had an impact on enterprises
in dimensions such as reputational damages or loss of clients but that these effects did not
translate116 into very significant effects on financial variables during the period considered
The study covered the problems faced by SMEs during 2016ndash2017 The survey has been
implemented during 2018 The fact that some enterprises were not able to provide an
estimate of the detriment encountered may also be due to the fact that effects on the balance
sheet may only materialise over a longer time horizon
The analysis also has shown that most enterprises incurred internal human resources costs
or other external costs in order to resolve those problems The allocation of resources to
resolve those problems is likely to create some inefficiencies and to affect the competitiveness
of the companies
Given the size of the effects estimated and even if it is likely that there is some
underestimation enterprises are probably still able to at least partially absorb some of the
costs caused by cloud computing problems
But as we have seen there have already been some cases of contract-related cloud computing
problems that had very large impacts
Over time as increasing usage rates lead to rising incidence of contract-related cloud
computing problems and the longer term consequences of reputational damages and losses
of clients on financial variables become evident it will make it more likely that enterprises
will stop being able to absorb the effects of the encountered problems and this will increase
the impact of those problems on allocative efficiency market functioning and
competitiveness eventually affecting clients and final consumers and reducing the aggregate
welfare
116 The study covered the problems faced during 2016 ndash 2017 The survey has been implemented during
2018 The fact that some enterprises were not able to provide an estimate of the detriment encountered may also be due to the fact that effects on the balance sheet may only materialise over a longer time horizon
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Annex 1 Methodology for the Survey of SMEs
In order to maximise the response to the survey of SMEs a detailed introduction to the online
survey and CATI was prepared and discussed with the EC for approval The introduction
presented the purpose of the study the sponsor and last but not least the reason it is
beneficial for the SME to cooperate with the study
During the interview phase it was of utmost importance to speak with the person in each
enterprise who has the most knowledge about the topic of cloud computing So we
recommended adding a so-called ldquoscreenerrdquo question in order to verify if the interviewer is
speaking with the most suitable interlocutor within the enterprise
The screener question can be found below
S1 Would you describe yourself as the person familiar with the services that your enterprise is using over the internet (cloud computing services) and have general knowledge about the enterprise
1 Yes that is me
2 No that is someone else
ltIf 1 go to Section Bgt
ltIf 2gt
lsquoI am sorry but I would like to speak to the person familiar with the services that the enterprise is using over the internet (cloud computing) and has general knowledge about the enterprise Can you give me hisher name or connect mersquo
ltIf connected to new person re-ask question S1gt
ltIf given name note down new name and make call back appointmentgt
In the CATI quotas were set at country level size classes and sectors in such a way that
when the target per country andor size class was achieved the remaining sample records of
this countrysize class were disabled automatically
The CATI was handled by the Global Data Collection Company (GDCC) The assigned project
manager of GDCC was responsible for drafting detailed briefing instructions for the
interviewers This assigned project manager was responsible for giving the initial briefing to
the interviewers in cooperation with the team leaders and senior interviewers depending on
the language of the questionnaire The initial briefing was held via web conference since the
project was implemented in various locations The team leaders were briefed using the English
version of the questionnaire and they went through the test link by clicking on all the available
options After this initial briefing the team leaders briefed the interviewers in all locations If
any changes were necessary during the process the team leaders held the briefings again
Whenever a new interviewer was added to the project heshe was additionally briefed
All briefings were held in one of the GDCC briefing rooms In these rooms up to 15
interviewers were instructed simultaneously on this project The questionnaire was projected
on the big screen during the briefings All relevant notesremarks from the briefings were
incorporated into the project briefing document and made electronically available to the
interviewers in the interview application
After the briefing the interviewers conducted dummy interviews in the so-called ldquotest moderdquo
of the data collection application in order to familiarise with the questionnaire
Relevant issues which arose during the fieldwork were promptly communicated to ALL
interviewers working on the project via a bulletin board in the CATI platform andor a revision
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of the briefing form which was also available to the interviewer via the questionnaire in
electronically format
During the fieldwork a maximum of 10 phone calls were made to each SME in order to obtain
an interview If no interview was conducted after those 10 attempts the addressee was
considered as a non-response
Call-back appointments were not terminated after 10 attempts as experience has shown that
once a potential respondent has given permission to schedule a call to do the interview often
more attempts are needed to conduct the interview
The interviews for the survey were conducted as much as possible during the usual opening
hours of businesses in the respective countries
The team engaged in the fieldwork was comprised not only of a significant number of
experienced (native speaker) interviewers but for almost every EU country at least two native
speaker evaluators were available The evaluators aside from being very experienced
interviewers were selected for this ask because of their background (education) and
knowledge of the specific country Evaluators were responsible for the final check of the
translations and where necessary suggesting country-specific changes The final translation
checks however were performed by the GDCC translation department The research team
double-checked all the translations This methodology of centralising data collection
benefiting from the native speaker interviewersrsquo knowledge of the local markets has a proven
track record over many projects
All interviews were 100 recorded Aside from live listening-in particular parts of the
interviews were recorded in order to be listened to by a native speaker team leader or
evaluator Besides listening to the interviews the team leaders andor evaluators also called
back respondents who participated in an interview during this call-back a short interview
with verification questions about the recent interview was held The only reason for conducting
a call-back was to recollect information that was first collected incorrectly and further
questions needed to be asked All of the respondents who had completed interviews were
called back in order to record the name of the enterprise and to match the data from the
sample with the enterprise that had completed the survey The quality checking procedure
was generally random but there was also a focus on outliners where applicable117
Overall at least 10 of all interviews per country were covered by the quality control
procedures as mentioned above In the dataset the monitored interviews were labelled
accordingly
Besides this quality procedure the conducted CATI interviews were continuously checked for
outliers The data from interviews with (for example) a deviation in the average interview
time (too short or too long) were checked and when necessary corrective action was taken
This action either involved a telephone call in order to verify the data or the data were
removed from the dataset
After finalising the fieldwork a short fieldwork report was prepared
117 An outlier means something outside of the average therefore GDCC looked at interviewers who
conduct interviews much longershorter than the average or who had more or fewer refusals than the
average or who had a lower or higher incidence rate than the average Focusing on these main (outlier) points helped to determine if the interviewer was doing things correctly and if not the interviewer was retrained in order to help normalise the performance
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Annex 2 Stakeholders list
No Category Member State InstitutionCompany Contribution
1 Cloud broker The
Netherlands BPdelivery Interview
2 EEN The Netherlands
The Dutch Chamber of Commerce Interview
3 EEN Romania ARIES T - Romanian Association for Electronic Industry and
Software - Transylvania Branch
Interview
4 EEN France CCI Paris IDF Interview
5 National authority
Italy The Italian Data Protection Authority
Interview and Webinar
6 National authority
Romania
Romanian National Computer
Security Incident Response Team (CERT)
Interview
7 National authority
Romania The National Supervisory Authority for Personal Data Processing of Romania
Interview
8 National authority
France
Commission Nationale de
lInformatique et des Liberteacutes (CNIL)
Interview
9 National authority
Poland Inspector General for the Protection of Personal Data
Interview and Webinar
10 National authority
Estonia Estonian Data Protection Inspectorate
Interview
11 Service provider
Sweden Glesys Interview
12 Service provider
Spain Ibermaacutetica Interview
13 Service provider
Spain Gigas Interview
14 Service provider
Sweden Hetzner Interview
15 Service provider
Ireland Blueface Interview
16 Service provider
Romania Star Storage Interview
17 Service provider
Romania GTS Interview
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and unbalanced cloud computing contracts
85
No Category Member State InstitutionCompany Contribution
18 Service provider
Portugal PT Empresas Interview
19 Service
provider Romania Telekom Interview
20 Service provider
Ireland Salesforce Interview
21 SME Poland Biuro Rozwoju Gdanska Interview
22 SME Germany Quality Services International
GmbH Interview and Webinar
23 SME Germany Thieme Compliance GmbH Interview and Webinar
24 SME Germany Leibniz-Institut Fuumlr Astrophysik Potsdam (AIP)
Interview
25 SME Poland Konsorcjum Biuro Klub Sp Interview
26 SME France Qosmos Tech Interview
27 SME Poland Vsoft S A Interview
28 SME Spain Timbrados Elche Sl Interview
29 SME Spain Sistemas de Datos Interview and Webinar
30 SME Association
Belgium EUAPME Interview and Webinar
31 SME
Association Portugal
Associaccedilatildeo Industrial do Distrito de
Aveiro Interview
32 SME Association
The Netherlands
VNO-NCW Interview
33 SME Envoys Network
The Czech Republic
Ministry of Industry and Trade Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
86
Annex 3 Bibliography
Relevant legislation and policy documents
Committee of the Regions (2016) lsquoEuropean Cloud Initiative and ICT Standardisation
Priorities for the Digital Single Market 2016rsquo Opinion of the Committee of the Regions (SEDEC-
VI-012)
European Commission (2003) lsquoRecommendation of 6 May 2003 concerning the definition of
micro small and medium-sized enterprisesrsquo (notified under document number C(2003) 1422)
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in Europersquo
COM(2012)529 final Brussels
European Commission (2013a) lsquoCommission Decision of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404) OJ 1746
European Council (2013b) lsquoCouncil resolution of 10 December 2013 on unleashing the
potential of cloud computing in Europersquo
European Commission (2014 June) lsquoCloud Service Level Agreement Standardisation
Guidelinesrsquo httpseceuropaeudigital-single-marketennewscloud-service-level-
agreement-standardisation-guidelines
European Commission (2015a) lsquoA Digital Single Market Strategy for Europersquo (COM
(2015)0192) and the accompanying Commission staff working document (SWD(2015)0100)
European Commission (2015b) lsquoCommunication on cloud select industry group service level
agreementsrsquo httpseceuropaeudigital-single-marketencloud-select-industry-group-
service-level-agreements COM (2015) 634 final
European Commission (2015c) lsquoProposal for a Directive on certain aspects concerning
contracts for the supply of digital contentrsquo (COM(2015) 634 final)
European Commission (2015d) lsquoTowards a modern more European copyright frameworkrsquo
COM20150626 final
European Commission (2016a) lsquoEuropean Cloud Initiative ndash Building a competitive data and
knowledge economy in Europersquo (COM (2016)0178) and the accompanying Commission staff
working document (SWD (2016) 0106)
European Commission (2016b) lsquoICT Standardisation Priorities for the Digital Single Marketrsquo
(COM (2016)0176)
European Commission Directorate-General for Research amp Innovation (RTD) (2016c) lsquoOpen
Innovation Open Science Open to the World ndash A vision for Europersquo
European Commission (2017a) lsquoProposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Unionrsquo
COM(2017) 495 final Brussels
European Commission (2018a) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
European Commission (2018b) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo Annexes and Impact
Assessment
European Commission (2018c) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
87
European Parliament (2017) lsquoCommission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Union
SWD(2017) 304 final Brussels
European Council (2016) lsquoCouncil resolution of 19 January 2016 on Towards a Digital Single
Market Actrsquo
European Parliament and European Council (2001) lsquoRegulation (EC) 452001 of the European
Parliament and of the Council of 18 December 2000 on the protection of individuals with
regard to the processing of personal data by the Community institutions and bodies and on
the free movement of such datarsquo
European Parliament and European Council (2011) lsquoDirective 201183EU of the European
Parliament and of the Council of 25 October 2011 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council
and repealing Council Directive 85577EEC and Directive 977EC of the European Parliament
and of the Council Text with EEA relevancersquo
European Parliament and European Council (2015) lsquoProposal for a DIRECTIVE OF THE
EUROPEAN PARLIAMENT AND OF THE COUNCIL on certain aspects concerning contracts for
the supply of digital contentrsquo (Text with EEA relevance) SWD(2015) 274 final SWD(2015)
275 final
Reports studies and other documents
Alberto M Bento A K (2012) Cloud Computing Service and Deployment Models Layers
and Management IGI Global
Altman M Andreev L Diggory M King G Kolster E Sone A Verba S Kiskis DL
Krot (2001) lsquoOverview of The Virtual Data Center Project and Software Harvard Universityrsquo
JCDL rsquo01 First Joint Conference on Digital Libraries pp 203-204
Buyya R Broberg J and Goscinski A M (eds) (2010) Cloud computing Principles and
paradigms Vol 87 John Wiley amp Sons
Cave J Robinson N Kobzar S and Rebecca H (2015) lsquoUnderstanding Regulatory and
Consumer Interest in the Cloudrsquo Regulating the Cloud Policy for Computing Infrastructure
Cloud Security Alliance (2017) Custom Applications and IaaS Trends 2017
Department of Justice United States (2015) HERFINDAHL-HIRSCHMAN INDEX
El-Gazzar R F (2014) lsquoA literature review on cloud computing adoption issues in enterprisesrsquo
presented at the International Working Conference on Transfer and Diffusion of IT pp 214ndash
242
ESRC Centre for Competition Policy (2014 January) lsquoSmall Business as Consumers Are They
Sufficiently Well Protectedrsquo A report for the Federation of Small Businesses
European Commission (2013a) lsquoCOMMISSION DECISION of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404)
European Commission (2013b) Final Report of the study SMART 20130043- Uptake of Cloud
in Europe
European Commission (2013 2014) Cloud computing Experts groups meetings
European Commission (2015) Comparative Study on cloud computing contracts Publications
Office of the European Union Luxembourg
European Commission (2014b) European Commission - Strategy - Digital Single Market -
News Retrieved from European Commission - Digital Single Market
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
88
European Commission (2014c) Study regarding the Uptake of Cloud in Europe Follow-up of
IDC Study on Quantitative estimates of the demand for Cloud Computing in Europe and the
likely barriers to take-up
European Commission (2004d) Project Cycle Management Guidelines
European Commission (2016a) Consultation on Cloud Computing Research Innovation
Challenges for WP 2018-2020
European Commission (2016b) Measuring the economic impact of cloud computing in Europe
European Commission (2016c) Platform-to-business trading practices
European Commission (2017a) Collaboration in Research and Methodology for Official
Statistics RAS (Method)
European Commission (2017b) The Economic and Social Impact of Software and Services in
Competitiveness and Innovation
European Commission (2017c) Final results of the European Market study measuring the size
and trends of the EU data economy European Commission (2018) Consultations about Cloud
Computing
European Commission (2018a) 2018 reform of EU data protection rules
European Commission (2018b) Press release lsquoOnline platforms Commission sets new
standards on transparency and fairnessrsquo
European Commission (2018c) Operational guidance document on measuring personal
consumer detriment
Etro F (2009) lsquoThe economic impact of cloud computing on business creation employment
and output in Europersquo Review of Business and Economics vol 54 no 2 pp 179ndash208
Expert Group on Cloud Computing Contracts (2013-2014) Cloud Computing Expert Group
Gartner (2017) Predicts 2017 Cloud Computing Enters its Second Decade
Hon K Millar C and Walde I (2012) rsquoNegotiating Cloud Contract Looking at Clouds from
Both Sides Nowlsquo in Stanford Technology Law Review Vol 16 No 1
IDC Arthurrsquos Legal (2016) Switching Cloud Providers (SMART 20160032)
International Organization for Standardization (2014) lsquoInformation technology mdash Cloud
computing mdash Overview and vocabularyrsquo ISOIEC Retrieved from International Organization
for Standardization
Mahmood Z (2011) lsquoData Location and Security Issues in Cloud Computingrsquo Proceedings of
the 2nd International Conference on Emerging Intelligent Data and Web Technologies (EIDWT
rsquo11) (pp 49ndash54)
National Institute of Standards and Technology (2011) lsquoThe NIST Definition of Cloud
Computingrsquo Retrieved from National Institute of Standards and Technology
OECD (2014) Cloud computing The Concept Impacts and the Role of Government Policy
Opara-Martins J Sahandi R and Tian F (2015) lsquoA Business Analysis of Cloud Computing
Data Security and Contract Lock-in Issuesrsquo presented at P2P Parallel Grid Cloud and
Internet Computing (3PGCIC)
Pearson S (2013) lsquoPrivacy security and trust in cloud computingrsquo in Privacy and Security
for Cloud Computing Springer pp 3ndash42
Rabinobich M Rabinovich I (nd) A Dynamic Object Replication and Migration Protocol for
an
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
89
Rittinghouse J Ransome J (2009) Cloud Computing CRC Press Boca Raton
Rohrmann CA amp Cunha JFSR (2015) Some Legal Aspects of Cloud Computing Contracts
Journal of International Commercial Law and Technology Vol10 No1 May
SLALOM Project httpslalom-projecteu(2018)
Synergy Research Group (2017) httpswwwsrgresearchcomarticlesmicrosoft-google-
and-ibm-charge-public-cloud-expense-smaller-providers
Technopedia (2018) httpswwwtechopediacomdefinition30463virtual-data-center
Retrieved from Virtual Data Centre
Databases
Amadeus Database httpsamadeusbvdinfocomversion-
2016720homeservproduct=amadeusneo
Eurostat (2015) sbs_sc_sca_r2 Retrieved from Structural Business Statistics
httpappssoeurostateceuropaeunuishowdodataset=sbs_sc_sca_r2amplang=en
Eurostat (2016) Cloud Computing Services Retrieved from EUROSTAT - Digital Economy and
Society httpeceuropaeueurostatwebdigital-economy-and-societydatadatabase
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprisesrsquo
httpeceuropaeueurostatstatistics-explainedindexphpCloud_computing_-
_statistics_on_the_use_by_enterprises
Eurostat (2017) Cloud computing services [isoc_cicce_use]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
90
Annex 4 Survey questionnaire
A Background information
(Everyone answers section A)
A1 What is the name of your company
[open question]
A2 Where is your company located
(People who answer A2 m) are taken straight to the end of the survey)
[single choice question]
a) Czech Republic
b) Estonia c) France d) Germany e) Ireland f) Italy g) Poland h) Portugal
i) Romania
j) Sweden k) Spain l) Netherlands m) Other (please specify)
A3 In which sector is your company mainly active
(People who answer A3 f) are taken straight to the end of the survey)
[multiple choice question]
a) Manufacturing b) Wholesale and retail trade repair of motor vehicles and motorcycles c) Information and communication d) Professional scientific and technical activities e) Administrative and support service activities
f) Other (please specify)
A4 Since how long does your company exist
[single choice question]
a) Less than 1 year b) Between 1 and 5 years
c) Between 5 and 10 years d) Over 10 years
A5 What is the number of employees in your company
(People who answer A5 d) are taken straight to the end of the survey)
= Compulsory question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
91
(Everyone answers section A)
[single choice question]
Nordm of employees in FTE (full-time equivalent)
a) Less than 10 employees b) 10 to 49 employees c) 50 to 250 employees d) More than 250 employees
B Use of Cloud Computing Services
(Everyone answers Section B)
B1 In the last two years has your company used any of the following cloud computing services for
the purpose of conducting business
(People who answer B1 q) are taken straight to the end of the survey)
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business
visualisation technology instant communications applications e-mail account virtual
desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
websites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
n) Security services (eg secure content management endpoint protection malware protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
q) None of the above my company is not using cloud computing services
B11 For the cloud computing services that you have used in the last two years were you able to
negotiate contract terms and conditions
(People who answer B11 b) are taken to Question B111)
(People who answer B11 d) are taken to Question B113)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
92
(People who answer B11 a) or b) are taken to Question B112)
[single choice question]
a) Yes we were able to negotiate contract terms and conditions for all the cloud computing services used
b) Yes we were able to negotiate contract terms and conditions but only in relation to some
services c) No we were not able to negotiate any contract terms and conditions d) We didnrsquot try to negotiate
B111 Please specify in relation to which services were you able to negotiate the contract terms and
conditions
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components) j) High Performance Computing (eg usage of high performance computing clusters
workloads and applications) k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each
day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces)
p) Other (please specify)
B112 For the cloud computing services for which you negotiated the contract terms and conditions
were you able to customise the service package according to your specific needs
[single choice question]
a) Yes (please specify what you were able to customise) b) Partially (please specify what you werewere not able to customise) c) No (please specify)
B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
[single choice question]
a) We were pleased with the offered contract terms and conditions
b) We knew it would be pointless c) We assumed it would be pointless d) Could not find a contact
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
93
e) Other (please specify)
B2 What type of contract(s) did you have for cloud computing services during the last two years
(People who answer B3 d) are taken straight to section C)
[multiple choice question]
a) Paid subscription ndash Fixed Fees b) Paid subscription ndash Variable Fees c) Partly with and partly without payment d) Without payment (eg advertising financed) e) I donrsquot know (please specify)
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the average
amount you paid per month for the cloud computing services
(NB the amount declared should not include over-extra charges or hidden fees)
[open question]
Amount in local currency please specify the currency applied
C Problems encountered with cloud computing services
(Everyone answers Section C)
C1 What type of problems and how often did you encounter them in relation to cloud computing
services in the last two years
Problems
Very
frequently
(at least once a week)
Frequentl
y (at least once a month)
Occasiona
lly (at least
once every 3 months)
Rarely (at
least once in the last
12 months)
Never
a) Lack of timely updates of the cloud service
b) Forced updates to the service that eliminated or changed a necessary function
c) Unsatisfactory amount of data that could be processed
d) Failure of the cloud provider to identify analyse and correct
hazards and prevent a future re-occurrence (incidence management)
e) Low speed of the service
f) The lack of clarity and
completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or
discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions
of service)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
94
(Everyone answers Section C)
h) Unsatisfactory number of users that could have access to the
service
i) The lack of compatibility of the service with user hardware or software
j) Data could not be exported at all
k) Data could not be retrieved in
easily usable format
l) Extra costs were imposed for data portability
m) The provider deleted the data
upon contract termination
n) Destruction or loss of data
o) Loss or alteration of data transmitted stored or processed via the cloud service
p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses
r) Lack of clarity and transparency of contract terms and conditions
s) Termination of the contract and interruption of the service by the service provider with no or little prior notice to the user
t) Unilateral modification of the servicecontract by the cloud provider
u) Limited liability of the cloud provider
C2 Did you encounter any other problems in relation to cloud computing services in the last two
years
[single choice question]
a) Yes (please specify) b) No
C3 Which was the most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
[single choice question]
a) Lack of timely updates of the cloud service b) Forced updates to the service that eliminated or changed a necessary function c) Unsatisfactory amount of data that could be processed d) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) e) Low speed of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
95
(Everyone answers Section C)
f) The lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced
maintenance or other interruptions of service) h) Unsatisfactory number of users that could have access to the service i) The lack of compatibility of the service with user hardware or software j) Data could not be exported at all k) Data could not be retrieved in easily usable format l) Extra costs were imposed for data portability
m) The provider deleted the data upon contract termination n) Destruction or loss of data o) Loss or alteration of data transmitted stored or processed via the cloud service p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses r) Lack of clarity and transparency of contract terms and conditions s) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user t) Unilateral modification of the servicecontract by the cloud provider u) Limited liability of the cloud provider v) Other (please specify)
C31 What caused the most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the
contract b) The contract terms and conditions of the cloud provider were unfair
c) Other (please specify)
C32 To which type of cloud computing services was the most serious problem linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business
process management IT operationrisk management) e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
96
n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
C4 Which was the second most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
People who select C4 a) are taken straight to Section D)
[single choice question]
a) I only encountered one serious problem in the last 2 years
b) Lack of timely updates of the cloud service c) Forced updates to the service that eliminated or changed a necessary function
d) Unsatisfactory amount of data that could be processed e) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) f) Low speed of the service g) The lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
h) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions of service)
i) Unsatisfactory number of users that could have access to the service j) The lack of compatibility of the service with user hardware or software k) Data could not be exported at all l) Data could not be retrieved in easily usable format
m) Extra costs were imposed for data portability
n) The provider deleted the data upon contract termination o) Destruction or loss of data p) Loss or alteration of data transmitted stored or processed via the cloud service q) Unauthorised disclosure of or access to data r) Lack of protection of the data stored in the cloud against theft or viruses s) Lack of clarity and transparency of contract terms and conditions t) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user u) Unilateral modification of the servicecontract by the cloud provider v) Limited liability of the cloud provider w) Other (please specify)
C41 What caused the second most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the contract
b) The contract terms and conditions of the cloud provider were unfair c) Other (please specify)
C42 To which type of cloud computing services was the second most serious problem
linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
97
desktop antivirus for server or PC applications for customer relationship management
social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications)
h) Storage and hosting services (eg server platform for online storage sharing hosting web-sites files images and similar content)
i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
D Actions taken by your company in order to address the most serious
problem
(Everyone who encountered problems answers Section D)
D1 Did your company take action to resolve or remedy the most serious problem experienced
(People who select D1 b) are taken straight to question D2)
a) Yes
b) No
D11 What actions has your company taken to resolve or remedy this problem
[multiple choice question]
a) Used the support services of the provider b) Made a complaint to the provider c) Withheld payment for the service
d) Asked the provider for a refund e) Asked the provider for compensation for damages or losses f) Changed provider g) Went to mediationarbitration (the dispute was taken to a third party mediatorarbitrator) h) Filed an action with a court i) Hired a third party expert to resolve the problem
j) Other (please specify)
D12 What was the result of the actions taken to resolve or remedy this problem
[single choice question]
a) The problem was fully resolved
b) The problem was partially resolved c) The problem was not yet resolved but I was informed that the investigation was ongoing
d) The problem was not resolved and I have not received any reply e) Not resolved and I decided not to do anything about it
D121 Did you encounter any difficulties when taking action to resolve or remedy this problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
98
(Everyone who encountered problems answers Section D)
[multiple choice question]
a) No I did not encounter any difficulties b) Yes there was no contact point to make a complaint or attempt to resolve issues c) Yes the procedure took too long d) Yes the procedure was too expensive e) Yes foreign law applied
f) Yes the procedure was only possible abroad g) Yes language difficulties (eg the procedure was in a foreign language) h) Yes the action taken was not suited to resolve the problem i) Yes it was not possible to enforce the decision after the resolution j) Other (please specify)
D2 Why did your company decide not to take any action to resolve or remedy this problem
[multiple choice question]
a) Provider fixed the problem on its own
b) The cloud provider was unlikely to find a solution to the problem
c) The cloud provider excluded its liability for the problem
d) The cloud provider restricted its liability for damages (eg to a certain type of damage or
to a monetary threshold (a franchise or a maximum amount)
e) Limited access to dispute resolution (eg contract terms restrict how and where your
company can take legal action)
f) We tried to complain about other problems in the past but it was not successful
g) High cost of proceedings
h) It would take too long
i) The procedure was too complicated
j) We didnt know where to complain
k) Lack of knowledge how to start the proceeding
l) The applicable procedure is in a foreign country or in foreign language (specify which
foreign country)
m) The company did not want to damage business relationship with the cloud provider
n) The problem was not that important
o) Other (please specify)
E Economic detriment related to the most serious problems encountered
(Everyone who encountered problems answers Section E)
E1 What were the human resources invested by your company while taking action to resolve or
remedy the most serious problem
[open question]
Nordm of employees
involved in solving the problem separately per skill level of employee(s)
Nordm of work days
involved for solving the problem separately per skill level employee(s)
Average monthly
compensation of employee(s) involved in solving the problem (amount in local
currency)118
118 Total labour cost that includes gross wages and employer social security contributions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
99
(Everyone who encountered problems answers Section E)
Administrative
Technical
Senior
official(s)manager(s)
E2 Select what costs has your company covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
Please provide the costs without considering any reimbursement or compensation you may have
received from the provider(s) who rendered the service(s)
[multiple choice question]
a) Costs related to ensuring an alternative service (please specify the amount in local currency)
b) Costs related to fixing the cloud service problem (please specify the amount in local currency)
c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency) e) Costs related to loss of client(s) (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E3 What is the loss of turnover and profit caused by the most serious problem encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E4 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in
local currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
E5 Considering the costs human resources involved and loss of turnoverprofit related to the most
serious problem what share they represented of the total costs suffered by your company from
problems faced while using cloud computing services
(People who select E5 a) or b) are taken straight to section F)
(People who select C4 a) are taken straight to section F after answering E5)
[single choice question]
a) Above 80 b) 50 to 80 c) Below 50
E6 What were the human resources invested by your company while trying to resolve or remedy
the second most serious problem
[open question]
Nordm of employees
involved in solving the problem separately
Nordm of work days
involved for solving the problem separately
Average monthly
compensation of employee(s) involved
in solving the problem
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and unbalanced cloud computing contracts
100
per skill level of
employee(s)
per skill level
employee(s)
(amount in local
currency)119
Administrative
Technical
Senior
official(s)manager(s)
E7 Select which costs has your company covered (besides the human resources mentioned before)
while taking action to resolve or remedy the second most serious problem
[multiple choice question] Please provide the costs without considering any reimbursement or
compensation you may have received from the provider(s) who rendered the service(s)
a) Costs related to ensuring an alternative service (please specify the amount in local
currency) b) Costs related to fixing the cloud service problem (please specify the amount in local
currency) c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency)
e) Costs related to loss of client (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E9 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in local
currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
F Background information on turnover and profit
G (Everyone answers Section F)
F1 Please complete the following table specifying the amount in local currency
[open question]
The annual turnover in
2016
The annual turnover in
2017
The annual profit before
tax in 2016
The annual profit before
tax in 2017
119 Total labour cost that includes gross wages and employer social security contributions
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Annex 5 SME Survey results
A Background information
A3 In which sector is your company mainly active
Type of sector Total
Manufacturing 137
Wholesale and retail trade 131
Information and communication 83
Professional scientific and technical activities 92
Administrative and support services 92
A4 Since how long does your company exist
A5 What is the number of employees in your company
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and unbalanced cloud computing contracts
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B Use of Cloud Computing Services
B1 In the last two years has your company used any of the following cloud computing services
for the purpose of conducting business
Services
Sectors
Collaboration and
communication services
Storage and hosting
services
Security
services
Networking
services
Administrative and support service activities
61 60 49 40
Information and communication 79 78 41 52
Manufacturing 70 54 48 42
Professional scientific and technical activities
71 70 40 39
Wholesale and retail trade 72 62 38 38
B11 For the cloud computing services that you have used in the last two years were you
able to negotiate contract terms and conditions
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and unbalanced cloud computing contracts
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B111 Please specify in relation to which services you were able to negotiate the contract
terms and conditions120
120 The first figure presents for each contracted service the number of SMEs that were able to negotiate
CTampC (in blue) and the number of SMEs that signed standard CTampC for the specific service contracted
(in grey) The total of the numbers in each row represents the number of SMEs that declared contracting a specific service For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
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and unbalanced cloud computing contracts
104
B112 For the cloud computing services for which you negotiated the contract terms and
conditions were you able to customise the service package according to your specific needs
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and unbalanced cloud computing contracts
105
B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
B2 What type of contract(s) did you have for cloud computing services during the last two
years
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the
average amount you paid per month for the cloud computing services
Country of answers Average in euros
CZ 18 850
EE 18 112
FR 34 4675
DE 33 861
IE 19 1127
IT 58 716
NL 21 6672
PL 20 411
PT 7 433
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and unbalanced cloud computing contracts
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Country of answers Average in euros
RO 7 278
ES 13 127
SE 19 2866
Total 267 1787
C Problems encountered with cloud computing services
C1 What types of problems and how often did you encounter them in relation to cloud
computing services in the last two years
C3 Which was the most serious problem you experienced in the last two years
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and unbalanced cloud computing contracts
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C31 What caused the most serious problem
C32 To which type of cloud computing services was the most serious problem linked
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and unbalanced cloud computing contracts
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C4 Which was the second most serious problem you experienced in the last two years
C41 What caused the second most serious problem
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and unbalanced cloud computing contracts
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C42 To which type of cloud computing services was the second most serious problem linked
D Actions taken by your company in order to address the most serious problem
D1 Did your company take action to resolve or remedy the most serious problem
experienced
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and unbalanced cloud computing contracts
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D11 What actions has your company taken to resolve or remedy this problem
D12 What was the result of the actions taken to resolve or remedy this problem
D121 Did you encounter any difficulties when taking action to resolve or remedy this
problem
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and unbalanced cloud computing contracts
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D2 Why did your company decide not to take any action to resolve or remedy this problem
E Economic detriment related to the most serious problems encountered
E1 What were the human resources invested by your company while taking action to resolve
or remedy the most serious problem
Human resources invested - working days involved in resolving the problem by sector
Sector Number of
enterprises
95 Trimmed
mean Average
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Human resources invested - working days involved in resolving the problem by size class
Size class Number of enterprises
95 Trimmed mean
Average
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Human resources invested - working days involved in solving the problem by country
Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
EE 5 222 220
FR 22 282 395
DE 19 471 1074
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
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and unbalanced cloud computing contracts
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Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
RO 1 200 200
ES 11 631 718
SE 18 251 361
Total 122 322 721
E2 Select what costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E3 What is the loss of turnover and profit caused by the most serious problem encountered
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E4 Did the cloud provider offer any redress for the damages caused to your company
of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
E5 Considering the costs human resources involved and loss of turnoverprofit related to the
most serious problem what share did they represent of the total costs suffered by your
company from problems faced while using cloud computing services of enterprises
Below 50 105 87
50 to 80 8 7
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and unbalanced cloud computing contracts
113
of enterprises
Above 80 9 7
Total 122 100
E6 What were the human resources invested by your company while trying to resolve or
remedy the second most serious problem
Skill level of enterprises
Administrative 59 48
Technical 93 76
Senior officersmanager(s) 59 48
E7 Select which costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the second most serious problem of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered121
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E9 Did the cloud provider offer any redress for the damages caused to your company of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
121 Please see section 52 for a better understanding of why in the detriment equation it was considered only the most serious problem
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and unbalanced cloud computing contracts
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Annex 6 Economic detriment ndash further results
This annex presents more detailed results of the analyses that were performed to carry out
the economic detriment assessment allowing for more in-depth analysis of impact
Incidence cloud computing usage by sector size or country level
For the scenarios presented it is possible to compute the incidence of cloud computing usage
The sample answering the questionnaire is representative of the overall population of EU
SMEs We present in Table 33 to Table 35 some features at the country and enterprise
size or sector level with the sole aim of documenting the gathered information
The data show evidence of significant differences across those dimensions
Table 33 Incidence of cloud computing usage by sector
Sector Scenario 1 Scenario 2
Manufacturing 179 496
Wholesale and retail trade 111 364
Information and communication 199 613
Professional scientific and technical activities 195 574
Administrative and support service activities 131 543
Total 159 499
Source Survey of SMEs (2018)
Table 34 Incidence of cloud computing usage by enterprise size class
Size class Scenario 1 Scenario 2
Micro 178 535
Small 226 606
Medium 133 447
Total 159 499
Source Survey of SMEs (2018)
Table 35 Incidence of cloud computing usage by country
Country Scenario 1 Scenario 2
CZ 172 698
EE 323 690
FR 79 272
DE 80 449
IE 468 710
IT 719 870
NL 205 612
PL 143 315
PT 455 606
RO 278 833
ES 538 648
SE 138 673
Total 159 499
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
115
Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 36 to Table 46
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while resolving the most serious contract-
related cloud computing problem
Table 36 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the most serious problem by
country and skill level of employee ( of respondents 122)
Country Administrative Technical
Senior
officersmanager(s)
CZ 2 29 3 43 4 57
DE 9 47 15 79 8 42
EE 4 80 4 80 3 60
ES 4 36 6 55 5 45
FR 8 36 19 86 11 50
IE 1 25 2 50 3 75
IT 7 54 10 77 4 31
NL 4 67 6 100 4 67
PL 5 38 12 92 5 38
PT 1 33 2 67 0 0
RO 1 100 1 100 0 0
SE 13 72 13 72 12 67
Total 59 93 59
Source Survey of SMEs (2018)
Table 37 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by sector and skill level of employee ( of respondents 122)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 6 46 9 69 10 77
Information and commun 18 75 21 88 12 50
Manufacturing 13 42 22 71 11 35
Profess scientific and
technical activities 10 34 27 93 14 48
Wholesale and retail trade repair of motor vehicles and motorcycles
12 48 14 56 12 48
Total 59 93 59
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
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Table 38 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by size class and skill level of employee ( of respondents 122)
Size class Administrative Technical
Senior officers
manager(s)
Micro 11 52 12 57 11 52
Small 24 75 22 69 16 50
Medium 24 35 59 86 32 46
Total 59 93 59
Source Survey of SMEs (2018)
Table 39 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious
problem by country and type of costs ( of respondents 122)
Co
un
try
Costs related to
ensuring an
alternative service
Costs related to
fixing the cloud
service problem
Legal costs
Costs
related to reputation
damage
Costs
related to loss of
client(s)
Other
costsNone
CZ 3 43 0 0 0 0 0 0 1 14 3 43
DE 4 21 6 32 2 11 2 11 3 16 5 26
EE 0 0 2 40 0 0 0 0 0 0 3 60
ES 7 64 1 9 0 0 0 0 0 0 3 27
FR 13 59 13 59 12
55 11 50 11 50 18 82
IE 1 25 3 75 0 0 0 0 1 25 0 0
IT 4 31 2 15 1 8 1 8 2 15 2 15
NL 1 17 1 17 1 17 2 33 1 17 5 83
PL 1 8 1 8 2 15 1 8 1 8 2 15
PT 1 33 1 33 0 0 1 33 1 33 0 0
RO 1 100 0 0 1 100 1 100 1 100 1 100
SE 6 33 9 50 3 17 4 22 3 17 5 28
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 40 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious problem by sector and type of costs ( of respondents 122)
Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related to loss of client(s)
Other
costsNone
Admin and support service
activities
5 38 1 8 2 15 1 8 1 8 6 46
Information and
commun 12 50 11 46 7 29 7 29 7 29 8 33
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and unbalanced cloud computing contracts
117
Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related
to loss of client(s)
Other costsNone
Manufacturing 8 26 6 19 3 10 4 13 5 16 8 26
Profess
scientific and technical activities
13 45 12 41 10 34 10 34 11 38 16 55
Wholesale and
retail trade
repair of motor vehicles and motorcycles
4 16 9 36 0 0 1 4 1 4 9 36
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 41 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the most serious
problem by enterprise size class and type of costs ( of respondents 122)
Size class
Costs related to ensuring
an
alternative service
Costs related to fixing the
cloud
service problem
Legal costs
Costs related to
reputation
damage
Costs related to
loss of
client(s)
Other
costs
None
Micro 6 29 11 52 4 19 6 29 5 24 8 38
Small 13 41 12 38 9 28 7 22 8 25 13 41
Medium 23 33 16 23 9 13 10 14 12 17 26 38
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 42 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the most serious problem encountered by sector ( of
respondents 122)
Sector Loss of turnover Loss of profit
Administrative and support
service activities 2 15 2 15
Information and communication 4 17 4 17
Manufacturing 6 19 5 16
Professional scientific and
technical activities 1 3 3 10
Wholesale and retail trade repair
of motor vehicles and motorcycles 4 16 5 20
Total 17 19
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
118
Table 43 Number and of total enterprises that faced problems that reported loss of
turnover or profit caused by the most serious problem encountered by size class ( of respondents 122)
Size class Loss of turnover Loss of profit
Micro 2 10 4 19
Small 8 25 8 25
Medium 7 10 7 10
Total 17 19
Source Survey of SMEs (2018)
Table 44 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by country and type of redress ( of respondents
122)
Country
Financial
compensation
Reduction in the
cost of subscription
Other
The company did
not offer any redress
CZ 1 14 0 0 1 14 5 71
DE 0 0 0 0 1 5 18 95
EE 0 0 0 0 0 0 5 100
ES 0 0 0 0 0 0 11 100
FR 2 9 1 5 1 5 19 86
IE 0 0 0 0 0 0 4 100
IT 1 8 0 0 0 0 12 92
NL 0 0 2 33 1 17 4 67
PL 0 0 3 23 0 0 10 77
PT 0 0 1 33 0 0 2 67
RO 0 0 0 0 0 0 1 100
SE 0 0 1 6 1 6 16 89
Total 4 8 5 107
Source Survey of SMEs (2018)
Table 45 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress ( of respondents
122)
Sector
Financial compensation
Reduction in
the cost of subscription
Other
The company
did not offer any redress
Administrative and
support service activities 2 15 1 8 0 0 10 77
Information and communication
1 4 1 4 3 13 20 83
Manufacturing 0 0 2 6 1 3 29 94
Professional scientific and technical activities
1 3 2 7 1 3 25 86
Wholesale and retail trade repair of motor
vehicles and motorcycles 0 0 2 8 0 0 23 92
Total 4 8 5 107
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
119
Table 46 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by size class and type of redress ( of respondents 122)
Size class
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 1 5 1 5 0 0 19 90
Small 0 0 2 6 2 6 28 88
Medium 3 4 5 7 3 4 60 87
Total 4 8 5 107
Source Survey of SMEs (2018)
Distribution of enterprises by the weight of the most serious problem by sector enterprise
size or country level
Again with the sole aim of documenting the gathered information Table 47 to Table 49
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while solving the most serious contract-related
cloud computing problem
Table 47 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by country ( of respondents 122)
Country Below 50 50 to 80 Above 80 100122 Total
CZ 3 43 0 0 0 0 4 57 7
DE 3 60 0 0 0 0 2 40 5
EE 11 50 1 5 0 0 10 45 22
ES 11 58 1 5 1 5 6 32 19
FR 3 75 0 0 0 0 1 25 4
IE 5 38 0 0 0 0 8 62 13
IT 1 17 0 0 1 17 4 67 6
NL 5 38 0 0 1 8 7 54 13
PL 2 67 0 0 0 0 1 33 3
PT 1 11 0 0 0 0 8 89 9
RO 3 38 0 0 0 0 5 63 8
SE 7 10 2 3 4 6 56 81 69
Total 55 31 4 2 7 4 112 63 178
Source Survey of SMEs (2018)
122 Enterprises that declared they encountered only one problem
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and unbalanced cloud computing contracts
120
Table 48 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by sector ( of respondents 122)
Sector Below 50 50 to 80 Above 80 100123 Total
Administrative and support service activities
26 74 0 0 5 14 4 11 35
Information and communication
20 56 0 0 0 0 16 44 36
Manufacturing 30 64 3 6 0 0 14 30 47
Professional scientific and technical activities
39 65 8 13 1 2 12 20 60
Wholesale and retail
trade repair of motor vehicles and motorcycles
29 57 0 0 12 24 10 20 51
Total 144 63 11 5 18 8 56 24 229
Source Survey of SMEs (2018)
Table 49 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by size class ( of respondents 122) Below 50 Between 50 -
80 Above 80 100124 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the second most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 50 to Table 59
present the differences by country size and sector of the distribution of enterprises that
experienced the various costs while resolving the second most serious contract-related cloud
computing problem
Table 50 Number and of enterprises in which human resources were invested while
taking action to resolve or remedy the second most serious problem by country and skill
level of employee ( of respondents 55)
Country Administrative Technical
Senior officersmanager(s)
CZ 0 0 1 33 2 67
DE 5 45 9 82 3 27
EE 3 100 3 100 1 33
ES 1 33 2 67 1 33
FR 4 36 7 64 4 36
IE 1 33 2 67 1 33
IT 2 40 3 60 1 20
123 Enterprises that declared they encountered only one problem 124 Enterprises that declared they encountered only one problem
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and unbalanced cloud computing contracts
121
Country Administrative Technical
Senior
officersmanager(s)
NL 1 100 1 100 1 100
PL 2 40 5 100 0 0
PT 1 50 1 50 2 100
RO 0 0 0 0 0 0
SE 3 43 5 71 2 29
Total 23 39 18
Source Survey of SMEs (2018)
Table 51 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the second most serious problem
by sector and skill level of employee ( of respondents 55)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 3 50 4 67 2 33
Information and commun 7 70 9 90 4 40
Manufacturing 5 31 11 69 4 25
Profess scientific and
technical activities 3 27 8 73 3 27
Wholesale and retail trade
repair of motor vehicles and motorcycles
5 42 7 58 5 42
Total 23 39 18
Source Survey of SMEs (2018)
Table 52 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the second most serious problem
by size class and skill level of employee ( of respondents 55)
Size class Administrative Technical
Senior officers
manager(s)
Micro 3 38 5 63 2 25
Small 10 63 13 81 6 38
Medium 10 32 21 68 10 32
Total 23 39 18
Source Survey of SMEs (2018)
Table 53 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by country and type of costs ( of respondents 55)
Co
un
try Costs
related to
ensuring an
alternative service
Costs
related to
fixing the cloud
service problem
Legal costs
Costs related
to reputation damage
Costs
related to loss of
client(s)
Other
costsnone
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and unbalanced cloud computing contracts
122
CZ 0 0 0 0 0 0 0 0 0 0 3 100
DE 5 45 4 36 3 27 3 27 3 27 9 82
EE 0 0 2 67 0 0 0 0 0 0 1 33
ES 1 33 0 0 0 0 0 0 0 0 2 67
FR 6 55 5 45 5 45 5 45 5 45 10 91
IE 1 33 0 0 0 0 0 0 0 0 2 67
IT 2 40 1 20 1 20 1 20 2 40 3 60
NL 0 0 0 0 0 0 0 0 0 0 1 100
PL 0 0 1 20 1 20 1 20 1 20 2 40
PT 1 50 0 0 0 0 1 50 1 50 0 0
RO 1 100 1 100 1 100
1 100 1 100 1 100
SE 1 14 2 29 1 14 2 29 2 29 5 71
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 54 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the second most
serious problem by sector and type of costs ( of respondents 55)
Sector
Costs
related to ensuring
an alternative service
Costs
related to fixing the
cloud service problem
Legal costs
Costs related to reputation
damage
Costs related to
loss of client(s)
Other costs
none
Admin and support service
activities 1 17 1 17 2 33 1 17 1 17 5 83
Information and commun
3 30 3 30 1 10 2 20 2 20 6 60
manufacturing 4 25 5 31 4 25 4 25 4 25 15 94
Profess scientific and technical
activities
7 64 6 55 5 45 6 55 6 55 7 64
Wholesale and retail trade
repair of motor vehicles and motorcycles
3 25 1 8 0 0 1 8 2 17 6 50
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
123
Table 55 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by enterprise size class and type of costs ( of respondents 55)
Size class
Costs related to ensuring
an alternative
service
Costs related to fixing the
cloud service problem
Legal
costs
Costs related to
reputation damage
Costs related to
loss of client(s)
Other
costsnone
Micro 3 19 4 25 2 13 0 0 2 13 2 13
Small 12 39 8 26 7 23 0 0 9 29 10 32
Medium 3 38 4 50 3 38 5 63 3 38 3 38
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 56 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by size class (
of respondents 55)
Size class Loss of turnover Loss of profit
Micro 0 0 1 13
Small 5 31 5 31
Medium 2 6 2 6
Total 7 8
Source Survey of SMEs (2018)
Table 57 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by sector ( of
respondents 55)
Sector Loss of turnover Loss of profit
Administrative and support service activities
1 17 1 17
Information and communication 1 10 1 10
Manufacturing 2 13 2 13
Professional scientific and
technical activities 1 9 2 18
Wholesale and retail trade repair
of motor vehicles and motorcycles Total
2 17 2 17
Total 7 8
Source Survey of SMEs (2018)
Distribution of enterprises that have been provided any kind of redress for the damage caused
by the contract-related cloud computing problems by sector size or country level
Again with the sole aim of documenting the gathered information Table 58 to Table 60
present the differences by country size and sector of the distribution of enterprises that have
been provided any kind of redress for the damage caused by the contract-related cloud
computing problems
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and unbalanced cloud computing contracts
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Table 58 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by country and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any
redress
CZ 1 33 0 0 0 0 2 67
DE 0 0 0 0 0 0 11 100
EE 0 0 0 0 0 0 3 100
ES 0 0 0 0 0 0 3 100
FR 1 9 0 0 0 0 10 91
IE 0 0 0 0 0 0 3 100
IT 0 0 0 0 0 0 5 100
NL 0 0 0 0 0 0 1 100
PL 0 0 1 20 0 0 4 80
PT 0 0 1 50 0 0 1 50
RO 0 0 0 0 0 0 1 100
SE 0 0 1 14 0 0 6 86
Total 2 3 0 50
Source Survey of SMEs (2018)
Table 59 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress
( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Administrative and support service activities
2 33 0 0 0 0 4 67
Information and
communication 0 0 0 0 0 0 10 100
Manufacturing 0 0 0 0 0 0 16 100
Professional
scientific and
technical activities
0 0 1 9 0 0 10 91
Wholesale and retail trade repair of motor vehicles and motorcycles
0 0 1 8 0 0 10 83
Total 2 3 0 50
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
125
Table 60 Number of enterprises that have been provided any kind of redress for the
damage caused by size class and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 0 0 2 13 0 0 14 88
Small 2 6 0 0 0 0 29 94
Medium 0 0 1 13 0 0 7 88
Total 2 3 0 50
Source Survey of SMEs (2018)
Distribution of loss of turnover by sector size or country level
Having estimated the different components of turnover Table 61 to Table 63 present the loss
of turnover in enterprises by country size and sector caused by the contract-related cloud
computing problems documenting significant differences
Table 61 Loss of turnover per enterprise by sector
Sectors
Number of
enterprises ()
95 Trimmed mean125
(euro)
Average
(euro)
Manufacturing 28 348469 1177465
Wholesale and retail trade 22 4759 232031
Information and communication 25 6599 27509
Professional scientific and technical activities 31 3226 490323
Administrative and support service activities 16 1827366 4144629
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 62 Loss of turnover per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 023 4217
Small 24 271159 1119043
Medium 73 99060 1278261
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 63 Loss of turnover per enterprise by country
Country Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 160819 894737
EE 5 117 140
125 A trimmed mean is a method of averaging that removes a small designated percentage of the largest and smallest values before calculating the mean
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
126
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
ES 11 000 000
FR 22 742424 3009091
IE 4 4583333 5125000
IT 13 192308 423077
NL 6 3889 5000
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 100166 613600
Total 122 41954 985869
Source Survey of SMEs (2018)
Distribution of loss of profits by sector size or country level
Table 64 to Table 66 present the loss of profits by country enterprise size and sector caused
by the contract-related cloud computing problems once again documenting significant
differences
Table 64 Loss of profits per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 43651 121207
Wholesale and retail trade 22 4980 242652
Information and communication 25 7720 14729
Professional scientific and technical activities 31 1452 9355
Administrative and support service activities 16 413456 872111
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 65 Loss of profits per enterprise by size class
Size class
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Micro 25 063 5742
Small 24 38235 50293
Medium 73 18681 301282
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 66 Loss of profits per enterprise by country
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 877 15789
EE 5 200 240
ES 11 000 000
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
127
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
FR 22 161111 613182
IE 4 152778 162500
IT 13 14957 38462
NL 6 17315 18583
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 221012 460637
Total 122 17690 191346
Source Survey of SMEs (2018)
Distribution of working days per enterprise involved in resolving the problem by sector size
or country level
Table 67 to Table 69 present the distribution of working days per enterprise involved in
resolving the problem caused by the contract-related cloud computing problems by country
size and sector again documenting significant differences
Table 67 Human resources invested - working days per enterprise involved in resolving the problem by sector
Sector
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Source Survey of SMEs (2018)
Table 68 Human resources invested - working days per enterprise involved in resolving the problem by size class
Size class
Number of
enterprises
()
95
Trimmed mean
( days)
Average
( days)
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
128
Table 69 Human resources Invested - working days per enterprise involved in resolving the
problem by country
Country
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
CZ 7 226 229
DE 19 471 1074
EE 5 222 220
ES 11 631 718
FR 22 282 395
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
RO 1 200 200
SE 18 251 361
Total 122 322 721
Source Survey of SMEs (2018)
Distribution of other costs covered per enterprise by sector size or country level
Table 70 to Table 72 present the other costs covered per enterprise to resolve the contract-
related cloud computing problems by country size and sector documenting again significant
differences
Table 70 Other costs covered per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 28919 706177
Wholesale and retail trade 22 141217 366265
Information and communication 25 11556 112400
Professional scientific and technical activities 31 50573 147290
Administrative and support service activities 16 150107 635096
Total 122 34124 371871
Source Survey of SMEs (2018)
Table 71 Other costs covered per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 2278 10725
Small 24 178472 389792
Medium 73 39973 489660
Total 122 34124 371871
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
129
Table 72 Other costs covered per enterprise by country
Country
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 387 535
DE 19 183333 665000
EE 5 6111 7000
ES 11 115657 229091
FR 22 682 50659
IE 4 166667 175000
IT 13 184615 416154
NL 6 15935 16917
PL 13 14575 37479
PT 3 3333 3333
RO 1 000 000
SE 18 332811 1241741
Total 122 34124 371871
Source Survey of SMEs (2018)
Distribution of the total value of redress received per enterprise by sector size or country
level
Table 73 to Table 75 present the total value of redress received per enterprise for contract-
related cloud computing problems by country size and sector
Table 73 Total value of redress received per enterprise by sector
Sector
Number of
enterprises
()
95 Trimmed
mean
(euro)
Average
(euro)
Manufacturing 28 000 1607
Wholesale and retail trade 22 000 1704
Information and communication 25 000 696
Professional scientific and technical activities 31 187 748
Administrative and support service activities 16 25195 38379
Total 122 095 6042
Source Survey of SMEs (2018)
Table 74 Total value of redress received per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 0 000 00
Small 0 000 00
Medium 7 17120 57096
Total 122 095 6042
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
130
Table 75 Total value of redress received per enterprise by country
Country Number of enterprises
(euro)
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 1867 5354
DE 19 000 000
EE 5 000 000
ES 11 000 000
FR 22 000 13636
IE 4 000 000
IT 13 1346 3462
NL 6 000 000
PL 13 2504 3123
PT 3 000 000
RO 1 000 000
SE 18 1939 17448
Total 122 095 6042
Source Survey of SMEs (2018)
Costs or labour per working day by sector and country level
Table 76 Cost of labour per working day (euro per day per worker)
Country Manufacturing
Wholesale and retail
trade repair of
motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
Total
economy
AT 2089 1323 2194 1331 1201 1616
BE 2285 1512 2294 1363 1190 1670
BG 705 691 1435 471 622 665
CY 705 691 1435 471 622 665
CZ 544 408 930 469 352 500
DE 2069 1080 2070 1568 821 1503
DK 1978 1601 2248 2281 1580 1871
EE 616 522 861 538 458 577
EL 721 434 945 307 407 505
ES 1352 827 1912 1072 725 1028
FI 1929 1366 2186 1764 1083 1639
FR 2055 1526 2487 2163 276 1791
HR 452 405 692 275 327 410
HU 506 336 662 368 309 424
IE 1967 1281 2605 2163 1189 1493
IT 1407 772 1702 659 840 1052
LT 383 305 627 317 317 351
LU 2204 1754 2862 2942 1192 2097
LV 969 315 590 333 276 347
MT 405 475 1017 333 571 477
NL 2083 1087 1970 1499 688 1286
PL 456 303 626 332 385 391
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
131
Country Manufacturing
Wholesale
and retail trade
repair of motor
vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Administrative and support
service activities
Total
economy
PT 640 524 1106 385 330 547
RO 290 236 576 333 230 287
SE 2197 1675 2618 2088 1259 1922
SI 871 731 980 523 546 762
SK 551 368 810 404 314 470
UK 1745 1047 2230 1989 1146 1455
EU 28 1491 1774 3687 1695 511 1118
Note Costs were computed as (INDIC_SB - Personnel costs - million euroINDIC_SB - Persons employed - number)260
Source Eurostat
Distribution of the overall components of financial detriment by sector and size class in the
different scenarios
The following tables present the distribution of the estimated components of financial
detriment by sector and enterprise size class for the different scenarios showing relevant
differences across those dimensions
Table 77 Lost turnover at the EU-28 level in SMEs experiencing cloud computing service problems
Scenario 1
(average incidence126 of CC
use 159)
Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 515 1450
Wholesale and retail trade repair of motor vehicles
and motorcycles 240 728
Information and communication 59 175
Professional scientific and technical activities 237 694
Administrative and support service activities 1395 4645
Total 2446 7691
Siz
e
cla
ss Micro 1405 4402
Small 598 1866
Medium 442 1423
Total 2446 7691
Source Computations based on Survey of SMEs (2018) and Eurostat
126 Average percentage of cloud computing services used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
132
Table 78 Lost profits at the EU28 level in SMEs experiencing cloud computing service
problems
Scenario 1 (average incidence of CC use 159)
(Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 146 409
Wholesale and retail trade repair of motor vehicles and motorcycles
114 345
Information and communication 35 103
Professional scientific and technical activities 101 293
Administrative and support service activities 634 2092
Total 1031 3243
Siz
e
cla
ss Micro 602 1887
Small 255 792
Medium 174 564
Total 1031 3243
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 79 Costs of human resources invested in resolving the problem in SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 341 1019
Wholesale and retail trade repair of motor vehicles and motorcycles
474 1511
Information and communication 236 741
Professional scientific and technical activities 816 2503
Administrative and support service activities 232 826
Total 2099 6600
Siz
e
cla
ss Micro 1961 6167
Small 97 295
Medium 41 138
Total 2099 6600
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 80 Other costs covered by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 162 479
Wholesale and retail trade repair of motor vehicles and motorcycles
959 2996
Information and communication 74 229
Professional scientific and technical activities 503 1527
Administrative and support service activities 291 1024
Total 1989 6255
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
133
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Siz
e
cla
ss Micro 1450 4555
Small 449 1401
Medium 90 300
Total 1989 6255
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 81 Total value of redress received by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 2
(average incidence of CC use 159)
Scenario 1
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 00 00
Wholesale and retail trade repair of motor vehicles
and motorcycles 00 01
Information and communication 00 00
Professional scientific and technical activities 00 01
Administrative and support service activities 05 15
Total 06 17
Siz
e
cla
ss Micro 02 06
Small 00 00
Medium 04 11
Total 06 17
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 27 Distribution by component of gross detriment considering lost turnover and all the other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 1 (average incidence of cloud computing use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
134
Figure 28 Distribution by sector of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 29 Distribution by enterprise size class of gross detriment considering lost turnover
and all other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 2 (average incidence of CC use 499)
Scenario 1 (average incidence of CC use 159)
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
135
Figure 30 Distribution by country of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
136
Annex 7 Impacts on jobs and growth detailed results
Inputs for the assessment of macroeconomic impacts
The following two tables present the results of the estimation of turnover losses by industry
and country in the two scenarios that are used as inputs on assessment of impacts on jobs
and growth
Table 82 Turnover losses arising from contract-related cloud computing service problems - Scenario 1 considering average incidence of CC use 159 (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor
vehicles and
motorcycles
Information
and communication
Professional
scientific
and technical activities
Administrative and support
service
activities
Total
AT 06 02 00 01 10 19
BE 54 01 00 01 50 106
BG 02 00 00 00 05 07
CY 08 03 01 05 44 61
CZ 40 68 19 69 80 275
DE 02 06 02 06 03 21
DK 41 29 09 36 138 254
EE 92 86 09 69 136 392
EL 62 02 01 01 108 173
ES 07 00 00 00 85 92
FI 13 02 01 02 29 47
FR 15 01 00 00 35 51
HR 39 02 00 01 189 231
HU 05 01 00 01 08 15
IE 18 01 01 02 105 128
IT 14 06 04 12 38 73
LT 03 01 00 01 15 19
LU 23 09 01 08 39 81
LV 12 05 01 02 18 37
MT 01 00 00 00 03 05
NL 02 01 00 01 08 11
PL 00 00 00 00 03 03
PT 12 03 01 04 41 61
RO 01 00 00 00 02 03
SE 04 01 00 01 13 20
SI 07 02 01 02 20 32
SK 05 01 00 01 08 15
UK 25 07 06 11 162 211
EU28 515 240 59 237 1395 2446
Note values refer to the turnover losses estimated by country and sector that are used in the assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
137
Table 83 Turnover losses arising from contract-related cloud computing service problems -
Scenario 2 considering average incidence of CC use 499 - (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor vehicles
and motorcycle
s
Information and
communication
Profession
al scientific
and technical activities
Administrative and
support service
activities
Total
AT 17 05 01 03 35 61
BE 156 03 01 02 172 333
BG 05 00 00 00 17 22
CY 22 09 03 13 144 191
CZ 112 211 57 198 288 866
DE 07 18 07 20 12 65
DK 110 91 26 98 474 800
EE 278 256 30 218 452 1234
EL 168 05 02 02 366 544
ES 18 01 00 00 271 290
FI 37 07 02 05 96 147
FR 42 02 00 01 115 160
HR 113 06 01 02 605 728
HU 15 03 01 02 27 48
IR 50 04 02 06 340 402
IT 38 19 11 32 129 230
LT 07 02 01 02 48 61
LU 66 29 03 23 135 256
LV 33 15 02 06 62 117
MT 04 01 00 01 10 16
NL 07 02 01 02 25 36
PL 01 01 00 01 08 11
PT 32 09 04 10 136 191
RO 02 01 00 01 07 10
SE 12 03 01 03 45 62
SI 19 06 02 07 67 101
SK 13 02 01 03 27 46
UK 67 19 16 31 530 663
EU28 1450 728 175 694 4645 769
1
Note values refer to the turnover losses estimated by country and sector that are used in the
assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
138
Parameters for the assessment of macroeconomic impacts
Table 84 Output per unit of GVA by sector
(euro value of turnover by euro of GVA ndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail trade
repair of motor vehicles
and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
AT 31 18 22 20 15
BE 41 20 22 21 20
BG 44 20 19 22 24
CY 33 17 30 15 16
CZ 38 21 19 25 29
DE 29 17 19 17 16
DK 27 18 21 19 21
EE 40 19 19 19 18
EL 36 19 20 18 22
ES 40 18 20 18 18
FI 35 19 20 18 17
FR 33 20 19 22 17
HR 29 19 19 18 20
HU 40 21 17 16 18
IE 24 18 39 19 19
IT 38 19 22 17 21
LT 30 14 16 16 17
LU 37 30 49 20 80
LV 32 18 19 17 21
MT 33 16 26 23 19
NL 41 17 20 19 15
PL 36 16 20 17 20
PT 38 16 22 21 16
RO 28 26 18 22 21
SE 30 16 20 18 18
SI 31 19 21 19 17
SK 46 20 20 24 26
UK 29 18 17 16 18
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat National accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
139
Table 85 Output per unit of employment by sector
(euro million of turnover by thousand persons employedndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail
trade repair of motor
vehicles and motorcycles
Information
and communication
Professional
scientific and
technical activities
Administrati
ve and support service
activities
AT 2789 1006 2094 1227 864
BE 4293 1566 2999 1533 788
BG 453 197 499 306 160
CY 871 468 2187 814 414
CZ 1106 466 1047 625 485
DE 2414 780 2031 1060 721
DK 3251 1214 2246 1564 1118
EE 967 497 740 712 626
ES 2754 616 1770 858 474
FI 3160 1078 2014 1100 748
FR 2862 1077 2263 1650 898
GR 1643 392 1263 416 476
HR 603 364 702 652 432
HU 1137 320 658 384 255
IR 8130 1091 11774 1822 2848
IT 2329 899 2006 977 754
LT 944 378 711 406 303
LU 2988 3000 8840 1977 4646
LV 689 378 648 389 387
MT 1084 513 1866 1264 617
NL 3923 1047 2190 1314 556
PL 862 467 824 646 378
PT 1151 537 1397 648 275
RO 584 323 917 958 337
SE 3272 1189 2874 1706 955
SI 1236 647 1072 609 354
SK 1452 456 962 760 485
UK 2550 910 1750 1080 708
Note These values express the value of output that is produced by one employee in each industry For instance each worker in manufacturing in Belgium produces and output of euro4293 thousand Source Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
140
Detailed results of the assessment of macroeconomic impacts
Table 86 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems ndash Scenario 1 considering average incidence of CC use 159
Co
un
try
Sectors
Manufact
Wholesale
and retail trade repair
of motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Admin and
support service
activities
Total
(
of ctry
GVA)
(euro million)
AT 02 01 00 01 13 18 000
BE 02 02 00 02 22 29 000
BG 03 02 00 01 08 14 000
CY 00 00 00 00 02 03 000
CZ 14 00 00 00 18 33 000
DE 14 17 05 21 85 143 000
DK 01 00 00 00 07 09 000
EE 00 00 00 00 03 03 000
EL 07 05 01 05 18 34 000
ES 10 01 00 00 107 118 000
FI 01 00 00 01 08 10 000
FR 12 33 10 31 47 133 000
HR 02 00 00 00 04 07 000
HU 03 01 01 02 23 31 000
IE 01 03 01 03 02 10 000
IT 24 44 04 41 64 178 000
LT 02 01 00 01 06 10 000
LU 00 00 00 00 00 01 000
LV 01 00 00 00 04 05 000
MT 00 00 00 00 01 02 000
NL 04 01 00 01 69 76 000
PL 17 01 00 00 55 74 000
PT 02 00 00 00 54 55 000
RO 05 00 00 00 17 23 000
SE 05 04 02 06 21 38 000
SI 02 00 00 01 05 07 000
SK 03 01 00 01 11 16 000
UK 09 04 03 07 89 112 000
To
tal
EUR
million 146 126 30 128 761 1191
of
total 000 000 000 na 001 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
141
Table 87 Direct employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 1 considering average incidence of CC use 159
Co
un
try
Sector
Manufact
Wholesale and retail
trade repair
of motor vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total ( of
ctry GVA)
(euro million)
BE 2 2 0 3 56 63 000
BG 26 25 1 7 112 171 001
CZ 49 2 0 1 103 155 000
DK 1 1 0 1 13 15 000
DE 17 38 5 34 191 285 000
EE 2 0 0 0 9 10 000
EL 14 24 1 19 83 141 000
IE 0 6 0 4 1 11 013
ES 14 3 0 1 398 417 000
HR 9 3 0 1 18 31 000
IT 39 96 5 71 180 391 002
CY 2 1 0 0 7 10 000
LV 4 2 0 2 19 27 001
LT 6 5 0 3 34 48 001
LU 0 0 0 0 1 1 000
HU 10 9 2 10 161 192 001
MT 1 0 0 0 3 5 000
NL 5 1 0 2 189 197 000
AT 3 2 0 2 23 30 000
PL 72 4 1 1 286 363 000
PT 6 0 0 0 311 317 000
RO 25 2 0 0 104 132 000
SI 4 1 0 2 23 29 001
SK 9 5 1 2 59 76 001
FI 1 1 0 1 18 21 000
SE 4 5 1 7 40 57 001
UK 10 7 3 10 229 260 000
To
tal Persons 348 306 31 225 2761 3672
of
total 000 000 000 000 002 000
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
142
Table 88 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems Scenario 2 considering average incidence of CC use 499 - euro million
Co
un
try
Sector
Manufact
Wholesale and retail trade
repair of
motor vehicles and
motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total
(
of ctry
GVA)
AT 06 04 01 03 43 57 000
BE 05 05 01 06 74 91 000
BG 07 08 01 03 26 45 001
CY 01 01 00 00 06 09 001
CZ 41 01 00 01 60 104 001
DE 38 53 13 57 293 455 000
DK 03 01 01 01 23 29 000
EE 01 00 00 00 10 11 001
EL 18 15 02 13 60 108 001
ES 28 03 00 01 342 376 000
FI 03 01 00 02 26 33 000
FR 33 104 30 90 169 427 000
HR 05 02 00 01 13 22 001
HU 08 04 02 06 77 98 001
IE 03 10 02 11 06 32 000
IT 73 132 14 129 211 560 000
LT 06 04 00 02 21 33 001
LU 00 00 00 00 01 02 000
LV 02 01 00 01 12 16 001
MT 01 00 00 00 03 05 001
NL 12 02 01 03 224 242 000
PL 46 03 01 01 186 237 001
PT 05 00 00 00 170 175 001
RO 15 01 00 00 56 72 001
SE 13 12 06 18 73 121 000
SI 04 01 00 02 16 23 001
SK 08 03 01 02 37 52 001
UK 23 10 09 19 292 354 000
To
tal
EUR
million 411 382 88 375 2532 3788
of
total 000 000 000 na 004 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
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and unbalanced cloud computing contracts
143
Table 89 Direct Employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 2 considering average incidence of CC use 499
Co
un
try
Sector
Manufac
t
Wholesale and retail
trade repair of
motor vehicles
and motorcy
cles
Informati
on and communi
cation
Professio
nal scientific
and technical activities
Admin and
support service
activities
Total ( of ctry
employment)
(Persons)
AT 7 6 1 6 77 97 000
BE 5 6 1 8 183 203 000
BG 72 76 4 19 384 555 002
CY 4 3 0 1 24 31 001
CZ 141 6 1 3 356 506 001
DE 46 117 13 93 657 925 000
DK 2 2 1 1 43 49 000
EE 5 0 0 0 28 33 001
EL 40 73 3 56 284 455 001
ES 41 10 0 3 1277 1331 001
FI 4 2 0 2 60 69 000
FR 39 196 25 120 321 701 000
HR 24 8 1 4 63 99 001
HU 28 28 5 27 535 623 001
IE 1 17 1 11 4 33 000
IT 119 284 15 223 599 1242 001
LT 18 14 1 8 116 157 001
LU 0 0 0 0 2 3 000
LV 10 5 1 4 65 85 001
MT 2 1 0 1 11 15 001
NL 13 4 1 5 612 634 001
PL 195 11 2 4 970 1182 001
PT 16 1 0 1 986 1004 002
RO 72 6 0 1 342 420 000
SE 12 16 4 19 136 186 000
SI 11 3 1 5 78 97 001
SK 25 14 2 7 199 247 001
UK 26 21 9 29 749 834 000
To
tal
Persons 977 930 92 660 9157 11816
of total 000 000 000 000 006 001
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
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and unbalanced cloud computing contracts
144
Table 90 Indirect loss of gross value added at EU28 level by sector
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(euro million)
Agriculture forestry and fishing 20 59
Mining and quarrying 09 27
Manufacturing 151 454
Electricity gas steam and air conditioning supply 22 68
Water supply sewerage waste management and remediation activities 13 39
Construction 20 64
Wholesale and retail trade repair of motor vehicles and motorcycles 98 301
Transportation and storage 76 237
Accommodation and food service activities 18 59
Information and communication 71 223
Financial and insurance activities 66 207
Real estate activities 72 226
Professional scientific and technical activities 157 493
Administrative and support service activities 155 498
Public administration and defence compulsory social security 11 33
Education 10 33
Human health and social work activities 02 07
Arts entertainment and recreation 05 17
Other service activities 10 33
Activities of households as employers undiff goods- and services-
producing activities of households for own use 00 00
Total euro million 987 3079
of EU28 total 000 000
Note Values refer to the GVA content of the indirect turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses
by the coefficients of GVA at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Table 91 Indirect loss of Employment at EU28 level by sector
Scenario 1 (average
incidence of CC use 159)
Scenario 2 (average
incidence of CC use 499)
(Persons)
Agriculture forestry and fishing 119 353
Mining and quarrying 8 24
Manufacturing 252 759
Electricity gas steam and air conditioning supply 13 39
Water supply sewerage waste management and remediation activities 16 50
Construction 43 135
Wholesale and retail trade repair of motor vehicles and motorcycles 241 739
Transportation and storage 137 428
Accommodation and food service activities 55 176
Information and communication 75 235
Financial and insurance activities 60 190
Real estate activities 12 39
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and unbalanced cloud computing contracts
145
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(Persons)
Professional scientific and technical activities 234 734
Administrative and support service activities 374 1203
Public administration and defence compulsory social security 20 63
Education 26 82
Human health and social work activities 6 18
Arts entertainment and recreation 13 40
Other service activities 29 93
Activities of households as employers undiff goods- and services-producing activities of households for own use
1 2
Total Persons 1733 5402
of EU28 total 000 000
Note Values refer to the employment content of the indirect turnover losses caused by contract-
related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses by the coefficients of employment at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
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146
Annex 8 Case study questionnaires by stakeholder type
EY Interview Guide ndash Cloud computing contracts (service providers and cloud
brokers)
Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into to what extent SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
As part of the study an SME survey was conducted to get a better understanding of the
incidence and the scope of problems encountered with this type of service In order to
complement and to get a better understanding of the results we obtained from the survey
we also want to get a better understanding of the services offered to SMEs by providers and
what types of problems are notified to providers
Timing 2 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and
check whether this is the best representative to interview from the national authority
Can you tell a bit more about yourself and what position do you hold
Can you reply to our questionnaire and if not can you put us in contact with somebody who can
Can you tell us a little more about the cloud computing provider you work for What type of services do you offer
What can you tell us about the contracts being offered by the cloud computing provider to SMEs
Elements to be evaluated
Understanding of the function Understanding if the person is competent enough to give relevant answers to the topic in
question Understanding of the extent of knowledge that the person has of cloud computing contracts
and company
Timing 05 min
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and unbalanced cloud computing contracts
147
Services offered to SMEs and differences compared to services offered to larger enterprises
Cloud computing services offered to SMEs
The objective of this section is to get full understanding of whether and how the provider considers
SMEs as a specific type of customer
What kind of cloud computing contracts do you offer To what extent do SMEs rely on this service What is the size of the SMEs to which you provide this service Do you offer services for micro enterprises and what is the difference between the service
offered to micro and larger enterprises
Do you offer this service based on a fee or for free
How flexible are you on the contracts that you offer in terms of negotiating Do you have standard terms amp conditions for SMEs or are they negotiable Do companies tend to negotiate the terms of the contract or are they satisfied with the service
offered in the contract To what extent can SMEs monitor the performance of the contract
Elements to be discussed
Understanding of the company and type of services offered Understanding if and how SMEs are considered as a specific category of customer Knowledge and understanding on the type of the service used paid or not by SME customers
Knowledge and understanding of the whether the contracts are negotiated or not
Timing 10 min
Complaints received and actions taken by the provider to address the issues encountered
Complaints received from SMEs concerning the services provided
Objective is to get an understanding of the number and scope of complaints that providers receive and to what extent SME complaints are different from other complaints received
How often do you receive complaints from SME customers Compared to other customers is this higher or lower
What types of complaints do you receive from SMEs (different from other groups) Which was the most serious problem encountered that you received a complaint about and to
which type of cloud computing service was it related What caused these problems What is the internal procedure to handle these problems In the past 12 months did you receive complaints not directly from customers but through
3rd party complaints-handling bodies
To what extent was this complaint different from other complaints you received directly from customers
Elements to be discussed
Understanding of the types of complaints received from SMEs Understanding of severity and frequency of complaints received from SMEs
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
Low speed of services Unsatisfactory availability or discontinuity of the service
Forced updates to the service that eliminated or changed a necessary function
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148
Lack of clarity and transparency of contract terms and conditions
Timing 10 min
Specific actions taken by provider in order to address the problems
What is the standard procedure to handle complaints To what extent do you as cloud computing provider provide assistance to the SMEs when they
encounter a problem
How much time does it in general take to solve issues encountered by SMEs (in line with other complaints handled for other customers)
When encountering a problem in general what type of action do SMEs expect you as provider to take
Have you experienced that consumers easily switch provider or terminate the contract Does
this happen more often after they have filed a complaint
What types of costs do you compensate to SME customers when they encounter a problem Do customers in general accept the offered remedies Have you encountered cases where the
SME customer was not happy with the solution offered What other solutions were offered in place
Did the complaint escalate Any court proceedings arbitrationhellip
Elements to be evaluated
Understanding of the actions taken by the cloud computing provider Were these remedies enough to solve the problem The resources involved and used in the resolving of the problem
Where there any extra costs covered by the company
Timing 10 min
Future perspectives on the topic
How will Cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made due
to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services
Legalpolicy consequences of potential future evolutions
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 2 min
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149
EY Interview Guide ndash Cloud computing contracts (Associations of SMEs)
D Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Timing 2 min
General introduction questions
Generate understanding of the position and knowledge of the interviewee on the specific subject
Can you tell a bit more about the types of activities that the companies in your association
are performing
Timing 05 min
Cloud computing services used (IT)
The objective of this section is to get full understanding of what cloud computing services are used for by the members of the SME associations
Are you aware of any of the following Cloud Computing services being used by SMEs
Collaboration and communication services Storage and hosting services Security services
Networking services
Data management Business applications
Are you aware of any other cloud computing services being used by SMEs
Timing 5 min
Type of contracts (legal)
The objective of this section is to get full understanding of what kind of contract the SMEs which are part of the association have
What type of cloud computing contract do the companies in your association have (with or
without remuneration if with remuneration- how much do they pay per month) What is the average duration of the contracts
Do the companies in your association have a preferred provider or type of package of services Do the companies in your association negotiate their cloud computing contracts What parts
are they able to negotiate if any Are the companies in your association satisfied with the degree of customisation of the
contracts What specific needs do the companies in your association have regarding cloud computing
Do they succeed in covering them in the process of negotiating cloud computing contracts with the providers of cloud computing services
Timing 10 min
Problems encountered (legalIT)
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150
Objective is to get a better understanding of the problems encountered by the members of SME associations while contracting cloud computing services
Are you aware of any of the following problems existing with cloud computing services used by SMEs
low speed of the service unsatisfactory availability or discontinuity of the service forced updates to the service that eliminated or changed a necessary function
lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
lack of clarity and transparency of contract terms and conditions
Are you aware of any other problems existing with cloud computing services used by SMEs
What was the action taken by companies inside your association in order to resolve the issues
Do the companies in your association usually decide to take legal action
Do you believe that unfair contract terms and conditions of the cloud provider could be considered as
a cause of the problems of the companies that are members in your association
Why you diddid not consider security matters as one of the problems declared
Timing 15 min
Costs of the cloud computing services contract (legalIT)
Objective is to get an understanding of the costs sustained by the members of the SME associations while contracting cloud computing services
Would you consider that there have been any negative effects on the everyday business
activities of the companies in your association after facing the mentioned problem If yes please explain what the negative effects were
What types of costs have the companies sustained while resolving the problems Were they offered any compensation from the cloud provider
Timing 5 min
Future perspectives on the topic
How will the SMEs use the cloud computing services in the future
To what extend do you think cloud computing services will become moreless important for companies in the future
Do you see any other evolutionstrends that could be relevant with regard to cloud computing
services for SMEs
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 5 min
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151
EY Interview Guide ndash Cloud computing contracts (National authorities and national
SMEs envoys)
E Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into the extent to which SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
More concretely the following services are included collaboration and communication
services storage and hosting services security service networking services data
management business applications service and support tools cloud enablement and IT
operations virtual data centre mobile data centre
As part of the study an SME survey was conducted Results of the survey show that the
incidence of problems is relatively high in ltyour countrygt The objective of this interview is
to get a better understanding of the national context with regard to this subject
Timing 5 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and check whether this is the best person to interview within the national authority
Can you tell a bit more about yourself and what position do you hold To what extent are you familiar with the subject of cloud computing services
Elements to be discussed
Understanding of the function Understanding if the person is competent to give relevant answers to the problematic in
question Understanding of the extent that the person has of cloud computing contracts
Timing 05 min
Legal framework of cloud computing contracts
Cloud computing contracts in ltyour countrygt
Generate understanding of the overall situation in the country policy attention given to the subject and the specific legal framework applicable
Cloud computing services are a relative new service To what extent are national authorities working on this issue
Any data available
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and unbalanced cloud computing contracts
152
Knowledgeawareness of the availability of these services in ltyour countrygt
Specific attention for this topic at policy level
Under what applicable legal framework do these services fall Are there specific national initiatives developed with regard to this type of services
Our study focuses specifically on the situation of cloud computing services used within SMEs Do you have any knowledge of the existence of specific rules applicable only to SMEs in your country
Do you think the legal framework is sufficiently protecting cloud computing users and more
specifically SMEs Do you think that Terms amp Conditions are clear for SMEs Should they have specific rules for
this group of customers What is (or should be) the possibility of SMEs to monitor performance of contract Terms and
Conditions
What remedies are at SMEsrsquo disposal Is switching providers a remedy
Elements to be discussed
Knowledge and understanding of the specific sector Knowledge and understanding of the extent that these services are used
Knowledge and understanding of the legal framework applicable in the country
Timing 10 min
Problems with regard to cloud computing services
Notifications received on problems encountered by SMEs
Are you aware of any problems existing with cloud computing services used by SMEs
Have you received any complaints with regard to this type of services
Have there been any complaints on the terms amp conditions of the contracts How are these complaints handled What is the intended procedure to follow
What follow up is given to complaints regarding cloud computing services
Do you as a national authority have sufficient competences to enforce regulations in your country
Elements to be discussed
Knowledge and understanding of the problems encountered by SMEs Understanding of the types of problems encountered
Understanding of how complaints are handled and if complaints did lead to further actions taken by public authorities
Relevant information
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
low speed of services unsatisfactory availability or discontinuity of the service
forced updates to the service that eliminated or changed a necessary function
lack of clarity and transparency of contract terms and conditions
Timing 10 min
Future perspectives on the topic
How will cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
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and unbalanced cloud computing contracts
153
Do you consider it likely that more problems will arise with regard to cloud computing
services
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made
due to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services Legalpolicy consequences of potential future evolutions
To what extent national authorities are working on the topic or will address more attention to it in the future
Timing 10 min
Closing of Interview
Thank you for your interest and for your time
Any further questions
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and unbalanced cloud computing contracts
154
Annex 9 Case study analysis
Case study interviews
Objectives
The objective of the case studies was to produce useful insights on the specific problems that
were identified by the survey and complement the results obtained by using CATI and the
online survey Additional information was gained through interviews that also involved
stakeholders that had not previously participated in the Online Survey and CATI thus these
inputs were used to further enrich the results that have been obtained so far
Scope
The case studies targeted the following categories of stakeholders
Cloud service providers
National authorities
SMEs that already provided information either in the online survey or during the CATI
and that declared their availability for an in-depth interview
National SMEs Envoy
European SMEs associations (including Enterprise Europe Network associations)
Cloud brokers
Chambers of Commerce
The topics discussed with each type of stakeholder involved in the case study interviews are
presented in Figure 31
Figure 31 Topics discussed with each type of stakeholder
Stakeholder category
Topics discussed
SMEs that declared their availability for
an in-depth interview127
- type of contract (services included duration service providers what has been negotiated - if any and what degree of customisation)
- possibility to monitor performance of contract if SMEs can or cannot monitor
service performance and if they only detect the most obvious and impactful service performance defects and what types of modifications occur in practice
- costs of the cloud computing services contract(s)
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint if the details regarding the internal procedure
of the provider (if any) were investigated how much time it took and how the
problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- actions taken (HR and financial costs of actions taken)
- results of the actions taken
- disruptionreduction of activity
127 The in-depth interviews with the SMEs already included in CATI involved discussing the problems encountered by them and with a special focus on the following contract-related problems lack of clarity
and transparency of contract terms and conditions unilateral modification of the servicecontracts and
limited liability of cloud providers The special emphasis on these problems is given with the aim of complementing the information already obtained by the CATI The interviews targeted three different departments where possible legal IT and managementfinance departments
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155
Stakeholder
category Topics discussed
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME affected by the problem encountered
- potential loss of competitiveness (business opportunities lost) in terms of profitturnover lost customers market shares
- additional costs (eg costs related to ensuring an alternative service)
Cloud service providers and cloud brokers
- types of cloud computing contracts offered to SMEs
- services offered to SMEs and differences from services offered to larger enterprises
- the level of negotiability and customisation of the services offered to SMEs
- flexibility regarding the negotiation of cloud computing contracts
- contract-related problems encountered by SMEs
- causes of the contract-related problems encountered by SMEs
- actions taken by service providers and cloud brokers to address contract-related problems encountered by SMEs
- costs compensations for contract-related problems encountered by SMEs
- escalation of contract-related issues to court proceedings
Competent national authorities
- familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs Envoy - familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs associations
- awareness of specific cloud computing services used by SMEs
- type of contract (services included duration service providers what has been negotiated - if any and what was the degree of customisation) concluded by the SMEs in the associations
- average duration of cloud computing contracts concluded by SMEs
- satisfaction of SMEs regarding the degree of customisation of cloud computing contracts
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint were the details regarding the internal procedure of the provider (if any) further investigated how much time it took and how the problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME
affected by the problem encountered
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156
Findings
During the CATI and the online survey 20 SMEs mentioned their availability to be contacted
for in-depth interviews Out of these 20 companies nine SMEs managed to take part in the
case study interviews They represented five sectors wholesale and retail trade repair of
motor vehicles and motorcycles professional scientific and technical activities information
and communication and manufacturing
Additionally in the process of conducting the interviews another 104 stakeholders from 12
Member States (see Figure 32) have been contacted Of these 24 agreed to participate in
the case study interviews
Figure 32 Stakeholders contacted for in-depth interviews
Finally in total 33 interviews were conducted with SMEs (see Figure 33 for SMEs involved by
country sector and size) and SMEs associations a Chamber of Commerce EEN National
Authorities an SME Envoy and service providers (see Figure 34 for the stakeholders list by
category country and name)
Figure 33 The list of SMEs involved
No Country Sector Size
1 Poland Manufacturing Medium-sized
2 Germany Manufacturing Small
3 Germany Information and communication Medium-sized
4 Germany Professional scientific and technical activities Medium-sized
5 Poland Information and communication Small
6 France Information and communication Medium-sized
7 Poland Professional scientific and technical activities Medium-sized
8 Spain Professional scientific and technical activities Small
9 Spain Information and communication Small
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and unbalanced cloud computing contracts
157
Figure 34 Details of stakeholders who participated in the in-depth interviews
Category Country
Chamber of Commerce The Netherlands
Cloud broker The Netherlands
EEN Romania
France
National authority
Italy
Romania
Romania
France
Poland
Estonia
Service provider
Sweden
Spain
Spain
Sweden
Ireland
Romania
Romania
Portugal
Romania
Germany
SME Association
EU
Portugal
The Netherlands
SME Envoys Network The Czech Republic
Services contracted
Use and types of cloud computing services contracted by EU SMEs
The use of cloud computing services by SMEs is increasing Each type of stakeholder was
aware of the spread of the use of the service
More precisely the interviews revealed that 50 of the national authorities (three out of six
respondents) the national SME Envoy the members of EEN and one cloud broker shared the
opinion that SMEs are using more cloud computing services compared to previous years
A quarter of the cloud providers observed that the usage of a specific cloud computing model
depends on the enterprise size with smaller enterprises relying more on the SaaS model
especially in contracting communication and collaboration services This confirmed the CATI
results as it showed that 50 of the micro enterprises chose a service from the SaaS model
Security
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and unbalanced cloud computing contracts
158
Security issues are generally an important matter for SMEs leading them to be concerned at
least about the general aspects of the security thresholds of the service provider Another
aspect that is taken into account is the reputation of the provider more precisely whether the
cloud provider has had incidents of data breaches in the past This was the case for 66 of
the respondents (six out of nine participants) One out of nine SME participants (11)
interviewed preferred to store its data on its own servers as a result of its complexity and of
privacy concerns Generally it can be observed from the in-depth interviews that if the
companyrsquos sector of activity is connected with IT services the more inclined it is to pay
attention to data security aspects
Types of contracts and relative costs
Duration and costs
Half of the service providers (five out of ten respondents) stated that they preferred to offer
flexibility regarding the duration of the contracts ranging from hourly contracts to yearly
subscriptions On average from the responses obtained from the providers during the case
study interviews it could be estimated that contracts had a duration of 12 months The Dutch
Chamber of Commerce also confirmed this information
Negotiability and customisation of CTampC
Most (90) of the service providers (nine out of ten respondents) and one cloud broker
affirmed that they offer SMEs the possibility of negotiating the CTampC to respond to the need
for customisation of service packages However the providers consider that SMEs might not
yet have formed a habit of negotiating cloud computing contracts The in-depth interviews
have shown that in most cases all representatives of SME associations and EEN members
said that their members do not try to negotiate cloud computing contracts Moreover 60
of service providers (six out of ten respondents) believe that SMEs are generally satisfied with
the degree of customisation of cloud computing services offered in standard contracts with
the only negotiation point being the price
Cloud providers indicated that the size of the enterprise was a factor in the initiation of the
negotiation and in the success in negotiating a cloud computing contract Hence 40 of cloud
computing providers (four out of ten respondents) and one cloud broker mentioned that
medium-sized enterprises have an increased tendency to negotiate their service contracts
Types of subscriptions
All of the SMEs interviewed stated that they had contracts with paid subscription Seven out
of the nine SMEs included in the case study interviews had contracts with fixed fees the rest
mentioning variable fees At the same time SMEs with variable fees prefer flexibility of
duration and costs either because of the limited need for the service inside the enterprise or
because they were still exploring the business opportunities that the service may offer One
exception was the SME active in the information and communication sector which had
concluded long-term fixed fees contracts This company purchased cloud computing services
in order to use them widely in the activity of the enterprise or to include them in the service
packages that they offer
Out of the total number of service providers that were interviewed half of them (five out of
ten providers) and one cloud broker only offered contracts with paid subscription and the
other 50 of service providers (five out of ten respondents) sometime offered free trials to
SMEs in the cases where they see potential for signing a more significant contract with paid
subscription afterwards
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and unbalanced cloud computing contracts
159
Legal framework of contracts
In-depth interviews have revealed that stakeholders believe that the current legal framework
both at national and EU levels needs some improvement in order to make it more suitable to
the needs of SMEs and technological advancement
National authorities the Chamber of Commerce and the national SME Envoy specified that
the currently applicable legal framework is a mix of several legal acts which partially regulated
cloud computing services and mainly focus on general data protection cybersecurity or e-
privacy All of the national authorities interviewed had a positive attitude towards the adoption
of specific legislation targeting SMEs and cloud computing services at national and EU levels
One-fifth of the service providers (two out of ten respondents) and the cloud broker also
believed that the legal framework was not sufficient and argued that guidance through what
could be a code of conduct regarding cloud computing services and how to use it should be
provided at the EU level in order to raise awareness and have a better understanding about
cloud computing services
This opinion was shared by the SMEs as 56 of the participants (five out of nine respondents)
believed that the legal framework could be improved Their suggestions included introducing
a uniform legislation at the EU level and providing a fair contract template that would balance
the powers between service providers and users
Contract-related problems encountered by SMEs
SMEs encountered a moderate amount of issues related to cloud computing contracts Most
frequently they experienced three specific problems unavailability of service low speed and
forced updates Data security although not considered among the leading problems by any
of the SMEs included in the case studies was mentioned as being a constant concern
The most serious problems encountered by SMEs
More than three-quarters (78) of the SMEs (seven out of nine respondents) indicated that
the most serious problem that they encountered was unsatisfactory availability or
discontinuity of the service followed by 11 of SMEs (one out of nine respondents) that
reported low speed of the service and forced updates to the service that eliminated or changed
a necessary function
Other problems encountered by SMEs
The second most important problem indicated by 22 of the SMEs interviewed (two out of
nine respondents) was data security In particular for one SME that operates in the
professional scientific and technical activities sector data security was so important that it
preferred to store its data on its own servers rather than contracting cloud computing
services It maintained that the market didnrsquot offer sufficient information regarding data
protection in order for it to trust the available service providers
However in all but one case the issues either did not affect the day-to-day activities of the
enterprises or only affected the internal processes of the enterprises due to the lack of the
availability of the servers In one case however an SME whose cloud computing problems
affected external business operation chose to move this activity to its own data storage
solutions In this specific case the SME was an IT operating company with storage
infrastructure already in place so its costs were not as high as for any other SME experiencing
this
National authorities and SME Envoys have little information about contract-related problems
encountered by SMEs mentioning the fact that they received few complaints regarding cloud
computing services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
160
When asked about what they considered as the most significant problems encountered by
SMEs service providers provided responses that were similar to those of their customers
Unsatisfactory availability or discontinuity of the service was recognised as the most serious
problem Other problems mentioned include the failure of the provider to identify analyse
and correct hazards and prevent a future re-occurrence high subscription fee and lack of
alignment of the CTampC
Actions taken
In all cases the action that the SMEs first took in order to resolve issues related to cloud
computing service was to formally notify the providers As a result of the complaints in seven
of eight cases the cloud computing service providers resolved the issues The duration of the
action to resolve the problems ranged from a few hours to a few days None of the SMEs
chose to take legal actions when encountering issues with the cloud computing services either
because the issue was resolved quickly it didnrsquot have an impact on the activity of the business
or because they felt intimidated by the reputation and size of the provider
A second action that SMEs took was to involve their staff in resolving the issues Six of the
eight enterprises involved one or two members of the IT or technical departments in the
process of addressing the cloud computing issues The exception was represented by one
enterprise which after the incident decided to renounce the cloud computing contract given
that it took its IT staff 10 days to resolve the problem with its cloud computing service
Another enterprise chose to pay for one member of its IT staff to work during the weekend
to ensure that any issues would be immediately addressed
Nearly one-third (30) of the service providers (three out of ten respondents) and one cloud
broker who participated in the in-depth interviews consider that an important problem arises
from the SMEsrsquo limited technical knowledge that does not allow them to clearly understand
the problems that they encounter
Service providers offered different levels of support through online forums customer care
lines and if the problem was not resolved at the site of the client Exceptionally 10 of the
service providers (one out of ten respondents) offered 247 customer support at no additional
cost
Results of the actions
According to 90 of the service providers (nine out of ten respondents) finding a solution
can vary from a couple of minutes to three days depending on the problem encountered
Usually problems are resolved within a day in the order of arrival
In the cases where service providers required a longer period of time to resolve an issue
80 of service providers (eight out of ten respondents) withheld payment to compensate for
the time spent resolving the issue Moreover in cases when the problems significantly affect
the activity of an SME 50 of the service providers (five out of ten respondents) offered
compensation according to the type of contract and the level of damages or losses caused to
the SME on a case-by-case basis Compensations usually ranged between 5-15 of the
monthly fee for the contract Another 20 of service providers (two out of ten respondents)
did not offer any type of compensation
None of the SMEs interviewed escalated the problem to court for three reasons the issue was
resolved within a few days it did not impact the activity of the business or they felt intimidated
by the reputation and size of the service provider
Future perspectives on the topic
In the opinion of stakeholders cloud computing services will enable SMEs to become more
flexible develop faster compete with the larger enterprises in a complex market and also
generate more revenue
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
161
In particular SMEs associations view the evolution of the cloud computing market toward
more affordable and specialised services More than two-thirds (70) of service providers
(seven out of ten respondents) argued that cloud computing services will evolve by developing
new features According to 20 of the service providers the features that will become
increasingly relevant are artificial intelligence block chain and data analysis
At the same time 66 of national authorities (four out of six respondents) and one national
SME Envoy believe that the right of awareness the right to privacy and data protection as
well as cybersecurity will become more important topics in the future Also the SME Envoy
mentioned possible issues emerging in the future such as non-standard functionalities of some
operational processes or defining a new model of operation of ICT services
The two associations within the EEN considered that the legal framework on how cloud
computing is regulated should be adapted to the emerging technologies Moreover the
associations consider that SMEs still have a long way to evolve in order to assimilate the
complexity of cloud computing services but a better regulated system might help them in
this direction The cloud broker further recognised the need for the authorities to work more
on this and he recommended applying European legislation rather than national legislation
to promote uniformity of the system
Case study interviews conclusions
The results of the case study interviews offered useful insights and complemented the results
already obtained through the CATI The various stakeholders involved confirmed the fact that
the usage of cloud computing across SMEs in the EU is growing and there is a need for
improvement of the current legal framework in order to follow the technological advancement
The interviews further explain the CATI results as the trend is that SMEs do to not try to
negotiate CTampC even if the cloud providers are offering this possibility Moreover the most
serious problems the actions taken to resolve them and the results of the actions are
confirmed by the information gained through the interviews and are comparable with the
earlier results of the study
Overall stakeholders who participated in the case study interviews believed that cloud
computing services will play more important role in the development of SMEs as they could
even help them compete with larger enterprises in a complex market achieve higher profits
and become more efficient
Validation Webinars
The webinars were organised with the objective of validating and triangulating the results of
the study Intended to be complementary to the tasks that were performed so far ie the
desk research CATI online survey and interviews with key stakeholders the webinars
focused on the most important topics of discussion that had emerged ensuring a higher level
of detail Therefore webinars have been used to validate the results obtained and to produce
further useful insights on the problems that were identified during the study in order to gain
a better understanding of the overall situation across the EU
In preparation of the webinars all 33 participants in the case study interviews were invited
to attend The invitation applied to four events in which the stakeholders could participate
Six stakeholders replied that they were available to participate in the webinars three SMEs
(two from Germany and one from Poland) two national authorities (one from Italy and one
from Poland) and one SME association representing the interests of European SMEs
businesses in the different sectors of the economy within the EU
In the end three webinars were held as a result of the preference of the stakeholders for the
time and date of the events
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
162
The events were held using Zoomcopy128 a software tool that facilitates the organisation of
interactive conference calls The advantages considered when choosing the software included
the high quality of video audio and simultaneous screen sharing ease of use and features
that include screen sharing on iPhone and iPad and Zoom Rooms Other notable
characteristics include the software features specially designed for webinars that allow the
participants in the event to perform actions such as raising their hands to announce their
intention to take part in the conversation pooling and a questionanswer dialogue with live
or text answers and close captioning
The participants made contributions regarding
cloud computing services contracted by SMEs during the last two years
the negotiability and customisation of CTampC
the most important problems encountered by SMEs while using cloud computing and
the difficulties encountered when taking action
security problems as factors limiting cloud computing usage
the economic detriment
final conclusions of the study
Regarding the topic of cloud computing services contracted by SMEs during the last two years
the stakeholders involved agreed on the results obtained on the extent of usage at the EU
level
Regarding the negotiability of CTampC the SME association agreed with the information
presented and found it to be in line with its expectations based on the information that the
SME association had Furthermore in the view of the German SMEs and one Polish SME SMEs
donrsquot consider the negotiation of CTampT and the customisation of the cloud services when
acquiring cloud computing services confirming the CATI results that show that the largest
proportion of 46 of SMEs did not try to negotiate CTampC In particular the representatives
of SMEs added that the SME could only negotiate different IT infrastructures but not the
limitation of responsibility that would cover service shortages In their opinion this could be
a general issue for SMEs
Overall the SMEs representatives agreed with the results of the project and commented that
their enterprises can relate to the issues presented In particular concerning the incidence of
contract-related problems the participants discussed the link between the methodology of
sampling of the SMEs that participated in the survey and the data that was presented
concluding that the data was considered to be relevant at the EU level
Regarding the problems encountered by SMEs while using cloud computing services the
national authority representative mentioned receiving few complaints from SMEs on issues
related to cloud computing contracts Additionally the stakeholder mentioned that the
General Data Protection Regulation (GDPR) is already proving to be very useful since it
facilitates the attribution of responsibility for problems that may arise in the provision of cloud
computing services Additionally related to the issues that SMEs encounter when trying to
resolve difficulties with cloud computing services the SMEs representatives added that the
most important issue was finding the contact information of the employee of the service
provider who would be assigned to resolve the problem after a formal complaint to the service
provider was made These statements confirm the results of the CATI as 52 of the SMEs
interviewed stated that they had made a complaint to the provider and that the second
difficulty encountered when trying to solve the problem was trying to reach the appropriate
contact point (35)
The participants in the discussion on security problems mentioned the effects of the GDPR on
cloud computing contracts a topic raised mainly by the representatives of the national
128 Zoom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
163
authorities The representatives added that the lack of SME capacity in negotiating cloud
computing contracts could be helped by the GDPR as it would give SMEs more control over
their data after the service providers apply the regulation The GDPR is considered to place
new obligations on cloud providers that will affect how they implement cloud services The
GDPR will strengthen user privacy as it increases the obligations on providers to protect SMEsrsquo
data and secondly it grants users new powers over how their information is collected used
and stored129
Additionally the representative of the Italian national authority and the German SME
intervened regarding the topic of economic detriment asking if the indirect costs have been
considered It was mentioned that the study looked at the client losses and reputational
damages where the case and furthermore it addressed the overall costs involved in ensuring
an alternative service and costs related to fixing the cloud service problem with external
support The stakeholders commented that they agreed with the issues that were presented
during the webinar which they also experienced They also added that in their opinion there
is a need for more transparency and better regulated services that will eventually lead to
fewer economic losses
During the concluding remarks the participants had several comments and suggestions The
Italian national authority representative added that he would be interested in an updated
version of the study conducted a year after the webinar in order to see the effects of the
enforcement of the GDPR regulation Furthermore the SME from Germany agreed with the
observation of the national authority regarding the effects of the GDPR on cloud computing
contracts and considered that its evolution should be observed together with the issues
concerning internet services as a whole
The SME representatives suggested that a platform should be created that could facilitate a
comparison between cloud computing services in order to better present the types of services
and prices available on the market The SMEs complained about the fact that they all had
difficulties when choosing between cloud computing providers In this case the availability of
only standard services on the market would allow the SME to make a direct comparison
The stakeholders involved in the webinars found the study findings to be in accordance with
the developments in the cloud computing market They provided significant comments and
recommendations especially concerning the future influence that the GDPR could have on the
sector This could mean a better distribution of responsibility especially regarding data
privacy and data protection Moreover the study was seen as being representative at the EU
level and as cloud computing is rapidly evolving the stakeholders expressed the desire to
observe the progress made in SME usage of cloud computing services by supporting the idea
of performing a second study at a later date
129 Analysis performed by Insight Company which is a leading provider of computer hardware software cloud solutions and IT services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
164
HOW TO OBTAIN EU PUBLICATIONS
Free publications
bull one copy
via EU Bookshop (httpbookshopeuropaeu)
bull more than one copy or postersmaps
from the European Unionrsquos representations (httpeceuropaeurepresent_enhtm)
from the delegations in non-EU countries (httpeeaseuropaeudelegationsindex_enhtm)
by contacting the Europe Direct service (httpeuropaeueuropedirectindex_enhtm) or
calling 00 800 6 7 8 9 10 11 (freephone number from anywhere in the EU) () () The information given is free as are most calls (though some operators phone boxes or hotels may charge you)
Priced publications
bull via EU Bookshop (httpbookshopeuropaeu)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
165
Getting in touch with the EU
In person
All over the European Union there are hundreds of Europe Direct information centres You can
find the address of the centre nearest you at httpseuropaeueuropean-unioncontact_en
On the phone or by email
Europe Direct is a service that answers your questions about the European Union You can
contact this service
ndash by freephone 00 800 6 7 8 9 10 11 (certain operators may charge for these calls)
ndash at the following standard number +32 22999696 or
ndash by email via httpseuropaeueuropean-unioncontact_en
Finding information about the EU
Online
Information about the European Union in all the official languages of the EU is available on
the Europa website at httpseuropaeueuropean-unionindex_en
EU publications
You can download or order free and priced EU publications from EU Bookshop at
httpspublicationseuropaeu bookshop
Multiple copies of free publications may be obtained by contacting Europe Direct or your local
information centre (see httpseuropaeueuropean-unioncontact_en)
EU law and related documents
For access to legal information from the EU including all EU law since 1952 in all the official
language versions go to EUR-Lex at httpeur-lexeuropaeu
Open data from the EU
The EU Open Data Portal (httpdataeuropaeueuodpen) provides access to datasets from
the EU Data can be downloaded and reused for free both for commercial and non-commercial
purposes
doi 102838962608
ISBN 978-92-79-96750-4
[Cata
logue n
um
ber]
DS-0
3-1
8-4
21-E
N-N
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
2
List of abbreviations
Acronym Description
CATI Computer Assisted Telephone Interviews
CTampC Contract terms and conditions
DG JUST Directorate-General Justice and Consumers
EC European Commission
EEN Enterprise Europe Network
EU European Union
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat Statistical Office of the European Communities
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GE250 Large enterprises of more than 250 employees
GFD Gross Financial Detriment
GVA Gross Value Added
IaaS Infrastructure as a Service
IOS International Organization for Standardization
MS Member State
NFD Net Financial Detriment
PaaS Platform as a Service
PC Personal computer
PPP Purchasing power parity
R Value of any redress
SaaS Software as a Service
SLA Service level agreement
SLALOM Service Level Agreement ‐ Legal and Open Model
SMEs Micro small and medium-sized enterprise
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
3
EU Member States
AT Austria
BE Belgium
BG Bulgaria
CY Cyprus
CZ The Czech Republic
DE Germany
DK Denmark
EE Estonia
EL Greece
ES Spain
FI Finland
FR France
HR Croatia
HU Hungary
IE Ireland
IT Italy
LV Latvia
LT Lithuania
LU Luxembourg
MT Malta
NL The Netherlands
PL Poland
PT Portugal
RO Romania
SE Sweden
SI Slovenia
SK Slovakia
UK The United Kingdom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
4
Glossary
Term Definition Source
Active enterprise
An enterprise that had either turnover or employment at any time during the reference
period
Eurostat
Cloud computing
A model for enabling ubiquitous convenient on-demand network access to a shared pool of configurable computing resources (such as networks servers storage applications and
services) that can be rapidly provisioned and released with minimal management effort and
service provider intervention
National Institute of Standards and Technology The NIST Definition of Cloud Computing 2011
Cloud Service
One or more capabilities offered via cloud computing invoked by using a defined interface
European Commission Cloud service level agreement standardisation guidelines
2014
Cloud service provider
A party which makes cloud services available European Commission Cloud service level agreement standardisation guidelines 2014
Cloud service agreement
The Cloud Service Agreement or CSA is the main document which sets out the terms and conditions of the contractual relationship between
the provider and the user in relation to the provision of cloud services
Slalom Project Model contract for Cloud Computing 2016
Data portability
Ability to easily transfer data from one system to another without being required to re-enter data
It is the ease of moving the data that is the essence here This might be achieved by the source system supplying the data in exactly the format that is accepted by the target system But even if the formats do not match the
transformation between them may be simple and straightforward to achieve with commonly available tools On the other hand a process of printing out the data and rekeying it for the
target system could not be described as lsquoeasyrsquo
International Organisation for Standardization Information technology mdash Cloud computing mdash Overview and vocabulary 2014
EU13 Bulgaria Croatia Cyprus the Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia and Slovenia
Eurostat
EU15 Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg the Netherlands Portugal Spain Sweden and the
United Kingdom
Eurostat
EU28 Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands
Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom
Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
5
Term Definition Source
Frequency
(F)
The frequency shows how often the mentioned problem appeared and it is measured on a scale from 1 to 4 1 meaning lsquorarelyrsquo (at least once in the last 12 months)2 meaning lsquooccasionallyrsquo (at least once every 3 months) 3 meaning lsquofrequentlyrsquo (at least once a month) and 4 meaning lsquovery frequentlyrsquo (at least once a week)
EY Survey of SMEs 2018
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017Number of SMEs that contracted at least one cloud computing service during 2016-2017
EY Survey of SMEs 2018
Infrastructure as a Service (IaaS)
The capabilities provided to the cloud-service customer include processing storage networks and other fundamental computing resources where the cloud-service customer is able to deploy and run arbitrary software which may
include operating systems and applications The cloud-service customer does not manage or control the underlying cloud infrastructure but does have control over operating systems storage and deployed applications and possibly limited control of select networking components
(such as host firewalls)
European Commission Cloud service level agreement standardisation guidelines 2014
NACE Statistical Classification of Economic Activities in
the European Community
Eurostat
Purchasing power parity
(PPP)
The rate of currency conversion that equalises the purchasing power of different currencies by
eliminating the differences in price levels between countries In its simplest form PPP shows the ratio of prices in the national currency of the same good or service in different countries
Eurostat
Platform as a
Service (PaaS)
The capability provided to the cloud-service
customer is to deploy onto the cloud infrastructure customer-created or acquired applications created using programming languages libraries services and tools
supported by the cloud-service provider The cloud-service customer does not manage or control the underlying cloud infrastructure
including network servers operating systems or storage but does have control over the deployed applications and possibly configuration settings for the application-hosting environment
European Commission Cloud
service level agreement standardisation guidelines 2014
Service level agreement
A Service Level Agreement (SLA) is the service contract component between a service provider
and customer An SLA provides specific and measurable aspects related to service offerings
European Commission Cloud service level agreement
standardisation guidelines 2014
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
6
Term Definition Source
Software as a Service (SaaS)
The capability provided to the cloud-service customer to use the providerrsquos applications running on a cloud infrastructure The applications are accessible from various client devices through either a thin client interface such as a web browser (for example web-based e-mail) or a programme interface The user does
not manage or control the underlying cloud infrastructure including network servers operating systems storage or even individual application capabilities with the possible exception of limited user-specific application
configuration settings
European Commission Cloud service level agreement standardisation guidelines 2014
Service availability
The property of being accessible and usable on demand by an authorised entity
European Commission Cloud service level agreement standardisation guidelines
2014
Service performance
The problem faced by SMEs characterised by the difficulty in understanding the level of performance or the quality of services that has been promised in the contract
European Commission Cloud service level agreement standardisation guidelines 2014
SMEs The category of small and medium-sized enterprises (SMEs) includes enterprises which employ fewer than 250 persons and which have
an annual turnover not exceeding euro50 million andor an annual balance sheet total not exceeding euro43 million
Within the SME category a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover andor annual balance sheet total does not exceed euro10 million
Within the SME category a microenterprise is defined as an enterprise which employs fewer
than 10 persons and whose annual turnover andor annual balance sheet total does not exceed euro2 million
Commission Recommendation of 6 May 2003 concerning the definition of micro small and
medium-sized enterprises (notified under document number C(2003) 1422)
Virtual Data Centre
A pool or collection of cloud infrastructure resources specifically designed for enterprise business needs The basic resources are the
processor (CPU) memory (RAM) storage (disk space) and networking (bandwidth) It is a virtual representation of a physical data centre complete with servers storage clusters and many networking components all of which reside in a virtual space being hosted by one or more actual
data centres
Altman amp Alt A Digital Library for the Dissemination and Replication of Quantitative
Social Science Research The Virtual Data Centre 2001
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
7
1 Introduction
This report represents the final deliverable responding to the request for services
JUST2016RCONFWCIVI0176 (201703) concerning a Study on the economic
detriment to small and medium-sized enterprises arising from unfair and
unbalanced cloud computing contracts The Request for service was issued by the
European Commission Directorate-General Justice and Consumers (DG JUST) Unit A2 -
Contract Law
11 The importance of contract-related problems
Cloud computing has been credited with increasing competitiveness through cost reduction
greater flexibility and optimal resource utilisation1 By using cloud computing services
enterprises are only paying for the amount of storage they are actually consuming and are
not responsible for the daily maintenance of the storage infrastructure
Demonstrable tangible economic benefits have been estimated in 2011 A report published
by the European Commission lsquoQuantitative Estimates of the Demand for Cloud Computing in
Europe and the Likely Barriers to Up-takersquo2 identified as main benefits the lower IT costs
more effective mobile working higher productivity standardisation of processes better ability
to enter new business areas and the ability to open up in new locations
All in all increasing the usage of cloud computing can have a relevant impact in terms of
increasing EU Gross Domestic Product (GDP) by up to euro250 billion and creating 38 million
jobs by 2020 compared to 20123
While the list of the above benefits is not exhaustive it certainly provides a perspective on
the potential economic advantages of the usage of cloud computing compared to more
traditional alternatives such as on-premises information technology infrastructure4
1 Rittinghouse J Ransome J (2009) Cloud Computing Boca Raton CRC Press USA 2 Based on a 2011 survey conducted on 479 enterprises already using cloud computing for their businesses 81 reported lower IT costs with a 10 to 20 reduction being typical but 12 reported
savings of 30 or more Business benefits included more effective mobile working (46) higher
productivity (41) more use of standard processes (35) better ability to enter new business areas (33) and the ability to open up in new locations (32) European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels 3 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe
and the Likely Barriers to Up-take SMART 20110045 Brussels 4 Traditional on-premises infrastructures consist of various pieces of hardware such as desktop computers which are connected to a network via a remote server This server is typically installed on the premises of an enterprise and provides all employees using the hardware with access to the companyrsquos stored data and applications Enterprises with this type of information technology model must purchase additional hardware and upgrades in order to scale up their data storage and services to support more users Mandatory software upgrades are also required with traditional information
technology infrastructure to ensure that failsafe systems are in place to in case a hardware failure occurs For many enterprises with information technology data centres an in-house information
technology department is needed to install and maintain the hardware
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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8
However Eurostat data indicate that in 2016 only 21 of EU small and medium-sized
enterprises (SMEs ie 10 ndash 250 employees) bought cloud computing services used over the
internet5 mostly for hosting their e-mail systems and electronically storing files
If micro enterprises (ie 1 ndash 9 employees) are considered Eurostat data are available only
for few countries (the United Kingdom Slovakia Sweden Portugal and Spain) For these
countries the percentage of micro enterprises that were buying cloud computing services used
over the internet in 2016 was around 11
With regard to the main factors affecting the adoption of cloud computing in most
sectors enterprises reported6 that insufficient knowledge of cloud computing prevented them
from using it (Figure 1) Expertise and sufficient knowledge of contractual and legal aspects
and the details of technical implementation are necessary prerequisites for an enterprise in
deciding to purchase cloud computing services In addition the risk of a security breach was
a key consideration for enterprises the concern over the risk of a security breach scored
highest for both large enterprises and small and medium-sized enterprises (SMEs) (57
and 38 respectively)7
Figure 1 Factors that limit cloud use
Source Eurostat (2016)
Clearly enterprises attach importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
A study commissioned by the Commission8 looked at the main contractual issues that are
of particular interest in a cloud context description of the service and Service Level
Agreement (SLA) acceptable-use policy data protection and disclosure of personal data
intellectual property and other proprietary rights and duties over content warranties direct
and indirect liability indemnification for third party claims the effect on data preservation of
contract termination modification of the contract terms and conditions (CTampC) and security
protection of data and loss of data
5 Eurostat data consider all enterprises with the exception of those in the financial sector consulted in April 2018 6 Eurostat Cloud computing - statistics on the use by enterprises Brussels 7 Ibidem 8 European Commission (2015) Comparative Study on Cloud Computing Contracts Publications Office
of the European Union Luxembourg
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
9
The Commission acknowledged the role of cloud contracts notably in relation to data
portability9 as lsquocontracts often exclude or severely limit the contractual liability of the cloud
provider if the data is no longer available or is unusable or they make it difficult to terminate
the contractrsquo10
Contract-related problems have been addressed by the Commission through various
initiatives
Firstly in 2013 the Commission set up an Expert Working Group on Cloud Computing
Contracts11 to work on identifying safe and fair contract terms for cloud computing services
with a view to addressing concerns of consumers and enterprises
Secondly specific actions have been taken forward on business-to-business cloud computing
contracts beyond the legislative field including
the work of the European Cloud Partnership and the ISO (International Organization
for Standardization) towards the standardisation of cloud SLAs
the SLA standardisation guidelines prepared in June 2014 by the Cloud Select Industry
Group on Service Level Agreements Subgroup (C-SIG SLA)12
the lsquoService Level Agreement Legal and Open Modelrsquo (SLALOM) project13 funded under
the Horizon 2020 Framework Programme which delivered a set of common legal
clauses to cover cloud SLAs and contracts and a standard technical SLA specification
Finally in April 2016 the Commission gave a new impetus to its work on cloud computing by
adopting the Communication on the European Cloud Initiative - Building a competitive
data and knowledge economy in Europe14 where further complementary actions under the
Digital Single Market strategy covering cloud contracts for business users and switching of
cloud services providers have been announced
Thus over recent years the Commission has adopted a true European Cloud Computing
Strategy aimed at removing barriers to cloud computing Additionally work is under way
towards a Code of conduct on switching and porting cloud data and services
A further development of this topic is represented by the lsquoProposal for a Regulation of the
European Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo launched in 201715
The objective of this proposal is to unlock the potential of the EU data market In order to do
so the proposal aims to address the following issues
9 Please see the Glossary for further information 10 European Commission (2012) Unleashing the Potential of Cloud Computing in Europe COM(2012)529 final Brussels 11 The Group has been set up within the framework of the Commission Communication (2015) lsquoA Digital
Single Market Strategy for Europersquo which aims at enhancing trust in cloud computing services and unlocking its potential for boosting economic productivity in Europe 12 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2018 13 The SLALOM project accessed 1 May 2018 14 European Commission (2016) European Cloud Initiative - Building a competitive data and knowledge economy in Europe COM(2016) 178 final Brussels 15 European Commission (2017) Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union COM(2017) 495 final
Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
10
improving the mobility of non-personal data across borders in the Single Market
which is limited today in many Member States by localisation restrictions or legal
uncertainty in the market
ensuring that the powers of competent authorities to request and receive access to
data for regulatory control purposes such as for inspection and audit remain
unaffected and
making it easier for professional users of data storage or other processing services to
switch service providers and to port data while not creating an excessive burden on
service providers or distorting the market
The impact assessment study16 that accompanies the legislative proposal addresses barriers
such as the legislative and administrative localisation restrictions data localisation driven by
legal uncertainty and the lack of trust in the market which is considered to inhibit data
mobility The impact assessment identifies as a preferred option a policy that would enhance
legal certainty maintain the current levels of security of data storage and processing and that
would rely on self-regulation by industry through the development of codes of conduct for
facilitating switching between providers and finally that would positive economic effects
resulting in lower compliance costs for cloud service providers The study took into
consideration that actions at the Member State level would not be able to achieve the legal
certainty necessary for conducting this type of business across the EU or to remedy the lack
of trust that is slowing the development of a thriving data storage andor processing sector
It is presumed that an EU intervention would contribute to further development of secure data
storage capacity for the entire EU
12 Objectives and scope of the study
Objectives
The studyrsquos main objective is to deliver the necessary evidence to support the Commission
in its assessment of the need for and extent of any further EU efforts to increase SMEsrsquo trust
in cloud services and allow them to bring in the full potential benefits of these types of
services
The main specific objectives of the study are
to identify the prevalence nature scope and scale of the contract-related problems
that SMEs encounter in relation to cloud computing services
to analyse whether and to what extent enterprises are able to protect themselves
against problems for example by means of enforcement of rules on business-to-
business unfair contract terms (where they exist)
to quantify the financial detriment as well as the detriment arising from time loss and
consequential damages (such as business interruption) suffered by SMEs in relation
to the contract-related problems encountered
to complement the quantitative measurement with a qualitative assessment of the
detriment suffered by SMEs
to model (in quantitative terms) the impact on growth and jobs of the quantified SME
detriment identified and provide a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and
competitiveness
16 European Parliament (2017) Commission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union SWD(2017) 304 final Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
11
Scope
Cloud computing services covered
The study covers the cloud computing services most commonly used by SMEs taking into
account i) the general delivery models used by the provider ie Infrastructure as a Service
(IaaS) Platform as a Service (PaaS) and Software as a Service (SaaS)17 ii) the core
categories of cloud services available in the market
The study covers cloud computing services provided both in exchange for money and provided
free of charge (ie not provided in exchange for a monetary counter-performance)
Contract-related problems encountered by SMEs
The study investigates the prevalence nature scope and scale of
problems in relation to the conformity of the service with the contract
problems with unfair CTampC
problems in exercising the users rights to remedies for non-conformity of the
service with the contract
Territorial scope
The study assesses the contract-related problems faced by SMEs in all EU28 Member States
Timeline
The study covers the usage of cloud computing services by EU SMEs over the period 2016 ndash
2017
Stakeholders
The following categories of stakeholders are covered
EU SMEs that contracted cloud computing services over the period 2016 ndash 2017
cloud computing providers
cloud computing brokers
National authorities competent in fields related to cloud computing (such as data
privacy protection personal data processing and data security)
the National SMEs Envoys Network18
Chambers of Commerce
the Enterprise Europe Network (EEN)19
SMEs associations
Please refer to Annex 2 for the full list of stakeholders
For the purpose of this study and in order to make the present report more intelligible
whenever the term SMEs is used in the text it refers to
medium-sized enterprises defined as enterprises which employ fewer than 250
persons (50-249) and whose annual turnover andor annual balance sheet total does
not exceed euro50 million
17 See the Glossary for the definition of these terms 18 The network of national SME Envoys was set up in 2011 as part of the review of the Small Business Act (SEC(2008) 2101) Each EU country has nominated a national SME Envoy to complement the role of the EU national SME Envoy who chairs the network The group of national SME Envoys makes up an SBA advisory group that promotes SME friendly regulation and policy making in all EU countries More
information is available at httpeceuropaeugrowthsmesbusiness-friendly-environmentsmall-
business-actsme-envoys_en 19 The Enterprise Europe Network helps businesses innovate and grow on an international scale It is the worldrsquos largest support network for SMEs with international ambitions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
12
small enterprises defined as enterprises which employ fewer than 50 persons (10-
49) and whose annual turnover andor annual balance sheet total does not exceed
euro10 million
micro enterprises defined as enterprises which employ fewer than 10 persons and
whose annual turnover andor annual balance sheet total does not exceed euro2 million
13 Structure of this report
The report is structured as follow
Chapter 1 recaps the objectives and the scope of the study and provides information
about the background of the study that justified the request for service
Chapter 2 presents the methodological framework and the main limitations
encountered Chapter 3 covers the findings related to
- the usage of cloud computing among EU SMEs over the period 2016-2017 and
the reasons for the limitations of the use of cloud computing
- types of cloud computing services that were contracted by SMEs
(complexity of the subscribed cloud computing packages the frequency of the
number of contracted services and the services contracted by SMEs size)
- types of cloud computing contracts and relative costs including the
negotiability of contract terms and conditions (CTampT)
Chapter 4 is dedicated to the analysis of contract-related problems encountered
by SMEs specifically types and frequency of encountered problems and actions taken
by SMEs to address these problems
Chapter 5 presents a qualitative assessment of the consequences faced by SMEs due
to contract-related problems These refer to
- negative effects on the business activity (ie loss of turnover or profit loss of
clients andor reputation damages)
- extra work done with internal or external resources while trying to resolve the
encountered problems
- legal actions taken to exercise the users rights to remedies for non-conformity
of service
Where possible these consequences have been quantified and monetised in order to
assess the economic detriment suffered by SMEs
Chapter 6 is dedicated to the impacts of the economic detriment The analysis
concerns
- direct impacts meaning the Gross Value Added (GVA) and employment
contents of the turnover lost by SMEs that are affected directly by the contract-
related problems
- indirect impacts in the supplier sectors
This chapter also discusses (in qualitative manner) impacts on market functioning and
competitiveness
Chapter 7 presents the conclusions of the overall analysis
Annexes including the following
- methodology for the survey of SMEs
- the list of stakeholders that have been involved in the case studies
- bibliography of consulted and relevant documents
- survey questionnaire used for conducting the survey of SMEs
- results of the survey of SMEs
- further results of the economic analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
13
- detailed results of the impacts on jobs and growth
- case study questionnaires by stakeholder type
- case study interviews and webinars analysis
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
14
2 Research methodology
21 Overview of the approach
The study envisaged three main Tasks
Task 0 ndash Preparatory task Defining the methodological framework and the topics
to be investigated during the research as well as defining the standards and tools to
be used
Task 1 - Survey of SMEs Conducting an online survey on a representative sample
of SMEs and start-ups which are using cloud computing for the purposes of
conducting their business
Task 2 - Economic detriment Quantification of the overall economic detriment
sustained by SMEs in relation to the problems identified under Task 1 Based on these
results the impact on growth and jobs and on the economy as a whole has been
measured
Figure 2 provides an overview of the approach followed synthesising the main activities
objectives and methodstools
Figure 2 Overview of the project Tasks
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15
Task 0 ndash Preparatory Task
This Task envisaged undertaking desk research that allowed the team to clearly define the
methodological framework of the study in terms of
cloud computing services commonly used by micro small and medium-sized
enterprises
potential contract-related problems that may be encountered while using cloud
computing
problem definition which provides an overview of the main causes and effects of the
identified problems It was used to
- better understand the context in which the problems occurred
- identify the intermediate effects and the main drivers
- structure the data collection tools (ie questionnaires for Computer Assisted
Telephone Interviews [CATI] and the online survey)
selecting a sample of countries and sectors to be analysed in depth in order to achieve
the project objectives The sampling strategy included
- the identification of a sample of Member States (MS) and economic sectors to
be analysed in depth
- the definition of a target for a representative sample of micro small and
medium-sized enterprises to be addressed through the survey under Task 1
- ensuring representativeness of the sample size
Table 1 provides the list of cloud computing services identified under Task 0
Table 1 Cloud computing services commonly used
Cloud computing
model
Cloud computing services
Details
SaaS Business applications
Applications used for accounting invoicing planning payments payroll human resources management
Collaboration and communication services
Video conference system business visualisation technology
instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring
Service and support tools
Project and portfolio management solutions services operations management
Big data Business intelligence and data analytics applications
Networking services Creation of an internal private cloud and virtual local networks utilising a pooled server for storing enterprise data and running applications needed each day
Security services Secure content management end point protection malware
protection
PaaS Sales and marketing services
Web configuration forms for marketing and sales purposes
Cloud enablement and information
technology operations
Application integration and monitoring business process management information technology operationrisk
management
Data management Datacontent management
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16
Cloud
computing
model
Cloud computing services
Details
Mobile Usage of managed mobility to serve a multitude of mobile devices anywhere anytime
Platform to create
software applications
Conception and creation of applications through testing and
deployment
Internet of things Asset tracking deployable components intelligent spaces
IaaS Storage and hosting services
Server platform for online storage sharing hosting web-sites files images and similar content
Virtual data centre Usage of a pool of virtualised infrastructure as processor
memory storage space and networking components
High performance computing
Usage of high performance computing clusters workloads and applications
Source EY desk research20
The following potential contract-related problems have been identified
lack of timely updates of the cloud service
forced updates to the service that eliminated or changed a necessary function
unsatisfactory amount of data that could be processed
failure of the cloud provider to identify analyse and correct hazards and to prevent
future re-occurrences (incidence management)
low speed of the service
unsatisfactory availability or discontinuity of the service (due to a crash unannounced
maintenance or other interruptions of service)
unsatisfactory number of users that could access the service
lack of compatibility of the service with user hardware or software
limited data portability
limited data retrievability
extra costs imposed for data portability
data deletion upon contract termination
destruction or loss of data
loss or alteration of data transmitted stored or processed via the cloud service
unauthorised disclosure of or access to data
lack of protection of the data stored in the cloud against theft or viruses
lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
unilateral modification of the servicecontract by the cloud provider
limited liability of the cloud provider
termination of the contract and interruption of the service by the service provider with
no or little prior notice to the user
lack of clarity and transparency of CTampC
Based on the results of desk research the team finalised the methodological approach that
included the definition of the problem tree to clearly understand the links between problems
encountered by enterprises and possible consequences the preparation of the data collection
tools including the questionnaires for the survey of SMEs and the case study template
20 The bibliography serving as basis for the desk research can be found in Annex 3
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17
Additionally desk research revealed that cloud computing users may encounter the following
problems in exercising their rights to remedy the non-conformity of service with the
contract
absence of a contact point to make a complaint or attempt to resolve issues
length and high cost of the procedure
applicability of foreign jurisdiction
language difficulties
impossibility to enforce the decision after the resolution
The problem definition was structured around the above-mentioned key contract-related
problems and their short- and long-term effects Essentially the problem definition allowed
the team to
identify the main-core problems and the underlying causes
identify who and what is affected and to what extent
foresee the possible evolution of the problems identified
Following the problem definition a problem tree (Box 1) was structured in order to summarise
the identified problems and related causes as well as the links between them
Box 1 Definition of the problem tree
A problem tree or ldquohierarchy of problemsrdquo is useful in providing an overview of the main causes and effects of the identified problems It is used to better understand the context in which the problems occur what the intermediate effects and the main drivers are
The analysis performed during the creation of a problem tree aims at identifying the real bottlenecks
to which stakeholders attach a high priority and which they wish to overcome A clear problem analysis thus provides a sound foundation on which to develop a set of relevant and focused project objectives
A problem tree analysis begins with the establishment of the core problem Using desk research the problem can be formulated in a more specific way Once the core problem has been identified we consider the direct causes and effects of the problem Each cause statement is written in negative terms These items should respect the MECE principle in that they should be Mutually Exclusive and Collectively Exhaustive In many respects the problem analysis is the most critical stage of project
planning as it then guides all subsequent analysis and decision-making on priorities
Once complete the problem tree represents a summary picture of the existing negative situation that can be further used by the decision makers in order to analyse the objectives by reversing the negative statements into possible solutions and then choose the most appropriate solution to be implemented
Source European Commission - Aid Delivery Methods (Vol 1 Project Cycle Management Guideline)
Among the most important sources of information that helped in refining the problem tree
especially with regard to the contract-related problems were21
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in
Europersquo COM(2012)529 final Brussels
Cloud Computing Experts Groups meetings 2013-2014
Cloud Service Level Agreement Standardisation Guidelines from 24 June 2014
European Commission (2015) lsquoComparative Study on cloud computing contractsrsquo
European Commission (2016) lsquoStudy on measuring the economic impact of cloud
computing in Europersquo
European Commission consultations about Cloud Computing (2016)
IDC (2016) lsquoSwitching of Cloud Services Providersrsquo
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprises and Business
Structure Statisticsrsquo
21 The results of the survey of SMEs as well as the case study results have been used in order to update the problem tree
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
18
European Commission (2017) lsquoFinal results of the European Market study measuring
the size and trends of the EU data economyrsquo
European Commission (2017) lsquoProposal for a Regulation of the European Parliament
and of the Council on a framework for the free flow of non-personal data in the
European Unionrsquo
European Parliament (2017) Commission Staff Working Document Impact
Assessment Accompanying the document lsquoProposal for a Regulation of the European
Parliament and of the Council on a framework for the free flow of non-personal data
in the European Unionrsquo
Figure 3 illustrates the problem tree that was created based on the studyrsquos desk research
The drivers of cloud computing problems are acknowledged in the different sources of
information consulted such as the Digital Single Market strategy This strategy identifies
concerns related to lsquosecurity compliance with fundamental rights and data
protectionrsquo22 as a result of technical and legislative barriers
Moreover the fragmentation of regulation across the EU could be a factor that limits the
usage of cloud computing due to the need for large providers to adapt their services to each
countryrsquos laws that regulate cloud computing23
A lack of fairness and balance in CTampC is considered a driver as lsquocontracts often exclude
or severely limit the contractual liability of the cloud providerrsquo24 By the same token
the unilateral modifications of the contract and the difficulties in exercising the userrsquos
rights are problems arising from the unfairness of CTampC Moreover when targeting SMEs
lsquothe contract is likely to be a take it or leave it contractrsquo25
The limited technical knowledge among SMEs is also a factor affecting the emergence of
the different problems shown in Figure 3 The limited technical knowledge of the users has
been considered when creating a Cloud Select Industry Group in Service Level Agreements
Subgroup26 This subgroup worked towards the development of standardisation guidelines
between cloud providers and cloud customers and these efforts coincide with complementary
action under the Digital Single Market strategy
The mentioned contract-related problems lead to a loss of business opportunities Within one
of the Expert Group Meetings it was concluded that an uninformed choice of terms and
conditions may lead to damages27 Other experts28 have stated that lsquocertain losses are
potentially huge and cannot be compensatedrsquo29 The present study tested the hypothesis that
contract-related problems may lead to losses of profit turnover clients and reputation
damage for SMEs over the short term Over the long term such problems can have a
negative impact on growth and jobs
Over time the lack of awareness of the benefits of cloud computing limits its usage and can
deter businesses from tapping into the full potential of the cloud Over the long term this
could also have a negative effect on GDP and jobs creation Although this scenario was
22 European Commission (2015) A digital Single Market Strategy for Europe COM(2015) 192 final
Brussels 23 Ibidem 24 Ibidem 25 European Commission (2013) Cloud Select Industry Group on Service Level Agreements accessed 01 May 2017 26 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 2930 January 2014 27 Ibidem 28 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014 29 For example due to the unavailability of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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19
included in the problem tree it is not the purpose of this study to examine these larger
macroeconomic impacts30
The problem tree allowed the team to gain an understanding of the main issues to be
investigated within the study and for which evidence from stakeholders was needed
This understanding was reflected in the data collection tools These included
The Survey questionnaire The structure of the survey questionnaire31 reflected the
different layers of the problem tree It first focused on the usage of cloud computing
and the types of contracts SMEs tend to sign corresponding to the drivers section
Furthermore it addresses the problems that SMEs encounter the actions taken in
order to resolve them and the associated economic detriment32 in order to provide
information for the problems and short-term effects sections of the tree
Interview guidelines for case studies and webinars Findings from the interviews and
the webinars were used to complement the quantitative analysis with detailed
information on the contract-related problems and the costs sustained by SMEs while
trying to resolve the encountered problems
All collected information supported the estimations on the loss of GDP and the loss of jobs at
the EU level
30 The European Commission estimated that cloud computing can increase EU GDP up to euro250 billion and create 38 million jobs More information available in European Commission (2011) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-Take SMART 20110045 Brussels 31 Annex 4 presents the structure of the CATI and online questionnaire 32 The sections B C D and E cover use of cloud computing problems encountered with cloud computing services actions taken by the enterprise in order to address the most serious problem and the economic detriment related to the most serious problem encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
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20
Figure 3 Problem tree33
Source EY desk research34
33 LT stands for lsquolong-term effectsrsquo and ST for lsquoshort-term effectsrsquo 34 Annex 3 contains the bibliography serving as basis for the desk research
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
21
Under Task 0 the team also defined the sampling strategy to select 12 MS five economic
sectors to be investigated in depth as well as the sample size of SMEs to be involved in the
survey
For the selection of the MS three criteria were considered (Table 2) In particular the
percentage of enterprises buying cloud computing services as per 2016 Eurostat
statistics was considered to be the best proxy variable35 available for the usage of cloud
computing and it has been used as one of the criteria for defining the sample of countries to
be analysed in greater depth
Table 2 Criteria used for MS selection
Criteria for MS selection Details (Table 3) Source
Percentage of enterprises
buying cloud computing
services
Number of SMEs that
declared they bought at
least one cloud computing service in 2016 out of the total number of SMEs active in the MS
Data on cloud computing service
usage among SMEs Eurostat 2017
[isoc_cicce_use]
Relevance of the country to the
study objectives
Number of SMEs that
declared they bought at least one cloud computing service in 2016 out of the total number of SMEs active in the EU28
Data on cloud computing service
usage among SMEs Eurostat 2017 [isoc_cicce_use]
Structural Business Statistics Eurostat 2017 [sbs_sc_sca_r2]
Geographical balance Balanced number of EU15
and EU13 MS in the sample
NA
Based on the above-mentioned criteria the following 12 MS were selected the Czech
Republic Estonia France Germany Ireland Italy Poland Portugal Romania Sweden
Spain and the Netherlands (Table 3)
A high level of representativeness of the EU is ensured because the selected sample
involves eight MS from the EU15 and four MS from the EU13
refers to countries where more than 70 of the EU SMEs that bought at least one of
the cloud computing services in 2016 (Figure 4) were established
35 A proxy variable is a variable that is used instead of the variable of interest when that variable of interest cannot be measured directly
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
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22
Table 3 SMEs buying cloud computing services 2016
EU MS
A B C D E=B+D F=E(A+C) ETotal EU28
EU15 EU13
of active enterprises with 10-250 employees
of enterprises (10-250 empl) buying CC services
of enterprises with 1-9 employees
of enter (1-9 empl) buying CC services 36
Total active SMEs
(Country level)
(EU28 level)
AT 40393 646288 280850 31959 38422 1196 137 EU15
BE 31302 8139 569950 64858 72996 1214 261 EU15
BG 26991 1619 298559 33975 35594 1093 127 EU13
CY na na na na na na na EU13
CZ 38203 6877 961287 109390 116267 1163 416 EU13
DE 411527 61729 1985471 225938 287667 1200 1029 EU15
DK 22681 9072 187367 21322 30394 1447 109 EU15
EE 6439 1417 61513 7000 8416 1239 030 EU13
EL 15368 1383 764471 86993 88376 1133 316 EU15
ES 125000 21250 2337621 116881 138131 561 494 EU15
FI 19187 10361 209328 23821 34182 1496 122 EU15
FR 139335 22294 2765282 314677 336970 1160 1205 EU15
HR 12249 2695 134007 15249 17944 1227 064 EU13
HU 30852 3394 504904 57456 60850 1136 218 EU13
IE 5514 1930 224742 25575 27505 1195 098 EU15
IT 182182 38258 3497783 398032 436290 1186 1560 EU15
LT 13604 2177 172527 19633 21809 1172 078 EU13
LU 3939 670 27841 3168 3838 1208 014 EU15
LV 9226 738 100216 11404 12142 1109 043 EU13
MT 1885 509 24123 2745 3254 1251 012 EU13
NL 48115 15397 1042588 118642 134039 1229 479 EU15
PL 69282 4850 1534086 174572 179422 1119 642 EU13
PT 37353 6350 769043 53833 60183 746 215 EU15
RO 50987 3569 405493 46143 49712 1089 178 EU13
SE 36047 16221 649412 155859 172080 2510 615 EU15
SI 6912 1382 127603 14521 15903 1182 057 EU13
SK 14363 2442 414630 33170 35612 830 127 EU13
UK 199528 65844 1734989 312298 378142 1955 1352 EU15
Tot EU28
1598464 317028 21785686 2479112 2796141 12 100
Selected Countries
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics [sbs_sc_sca_r2])
36 The percentage of micro enterprises (ie enterprises with fewer than 10 employees) that bought at least one CC service is only available for the United Kingdom Slovakia Sweden Portugal and Spain For the other EU countries the average from those countries (1138) has been used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
23
Figure 4 The percentage of enterprises which bought cloud computing services in the
selected EU countries as compared to the total EU28 (2016)
Source Eurostat (Cloud Computing Service [isoc_cicce_use] Structural Business Statistics
[sbs_sc_sca_r2])
For the selection of the economic sectors to be analysed in depth Eurostat statistics on the
percentage of enterprises buying cloud computing services were used in order to
identify those sectors with the highest usage of cloud computing
Eurostat statistics are available only for some sectors (Table 4) and only for the category 10
persons employed or more which also includes enterprises with more than 250 employees (ie
large enterprises GE250)
However Eurostat statistics have been considered to be relevant in selecting the sectors to be
analysed in depth as the number of enterprises with more than 250 employees represents a
negligible percentage of the overall number of active enterprises at the EU28 level (ie around
45000 out of 23 million enterprises corresponding to 02 of the total)
The sampling strategy envisaged the use of the same criteria used for the selection of MS (ie
percentage of enterprises buying cloud computing services relevance of the sector to the
study objectives)
As a result the five sectors selected included (grey rows in Table 4)
manufacturing (NACE37 code C)
wholesale and retail trade repair of motor vehicles and motorcycles (NACE code G)
professional scientific and technical activities (NACE code M69-M74 hereinafter
referred to as M)
administrative and support service activities (NACE code N)
information and communication (NACE code J)
37 Eurostat Nomenclature des Activiteacutes Eacuteconomiques dans la Communauteacute Europeacuteenne Brussels
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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24
Table 4 Economic sectors and usage of cloud computing services (2016)
NACE Code
Sectors
A B C = B100 x
A CD
of active enter (with
more than 10 empl) at
EU28 level
of enter (with more
than 10 empl)
buying CC services
of enter (with more
than 10 empl)
buying CC services
out of the total
C Manufacturing 364432 17 61953 23
D+E Electricity gas steam air conditioning and water supply
18732 19 3559 1
F Construction 200369 15 30055 11
G Wholesale and retail trade repair of motor vehicles and
motorcycles
351278 18 63230 24
H Transportation and storage 90718 16 14514 5
I55 Accommodation 15969 23 3672 1
J Information and communication
55905 52 29070 11
L Real estate activities 10661 24 2558 1
M Professional scientific and technical activities
97073 34 33004 12
N Administrative and support
service activities 121657 22 26764 10
Total 1326794 21 268384 (D) 100
Selected Sectors
Source Cloud computing services for 2016 (Eurostat [isoc_cicce_use]) Business Structure Statistics for 2015 (Eurostat [sbs_sc_sca_r2])
Although the financial and insurance activities sector (K under its respective NACE code) is
considered as one of the economic sectors with the highest usage of cloud computing38 it has
been excluded because of its limited relative weight at the EU28 level39
With the purpose of achieving statistically significant results a target of 500 SMEs that
use cloud computing has been defined This sample size has been chosen in order to ensure a
95 confidence interval and a maximum margin of error of 5 for all the estimates The
sample target size together with the random selection of the respondents ensure that - with
a probability of 95 - the true values of a phenomenon (eg average incidence of cloud
computing problems) in the entire population (ie all EU SMEs) is equal to the average values
observed in the studied sample plusminus the margin error
The box below presents the methodology behind the definition of the sample size
38 76 based on European Commission (2016) Measuring the economic impact of cloud computing in
Europe 39 Based on the lsquoAnnual detailed enterprise statistics for servicesrsquo [sbs_na_1a_se_r2] it was observed that in 2015 for the respective financial and insurance activities a total of approximately 14000 enterprises were active in the EU28 that is 01 of the total active enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
25
Box 2 Definition of the size of the sample
The formula for computing the representative sample size is
Sample size = [z2 p(1-p)e2][1 +( z2 p(1-p)e2N]
Where
N= population size e = margin of error (as a decimal) z = Z-score constant value eg 1645 for a 90 confidence interval 196 for a 95 confidence interval 258 for a 99 confidence interval
and p = average value of a specific indicator as observed in the population (as a decimal)
Our case
From Table 3 we have
N= 2796141 is the estimated number of SMEs that are using CC services
e = 5
Z = 196
P = when this value is not known conventionally is used the value 05
We can conclude that a target of 500 enterprise using CC services is appropriate to ensure a 95 confidence interval with a margin of error of 438 When we put the confidence level and the confidence interval together we can say that we are 95 sure that the true percentage of a phenomenon in the population is between +438 and -438 of the value observed in the studied sample For example if we ask a sample of 500 SMEs using CC if they encountered a certain problem
and 70 say lsquoYesrsquo we can be 95 certain that between 6562 and 7438 of all EU SMEs using CC encountered the same problem
Task 1 ndash Survey of SMEs
Task one was aimed at identifying
the types of cloud services most frequently contracted
the types of CTampC used to regulate the business relationships between users and
providers (for example determining whether enterprises are able to negotiate CTampC
andor to customise them to their needs)
the types the incidence and the frequency of contract-related problems
the types of actions taken by the enterprises in order to resolve the encountered
problems and the results of these actions
The collection of data was based on a questionnaire (see Annex 8) submitted through two
complementary channels
an online questionnaire (online Survey)
CATI
The online questionnaire was translated into the official languages of the MS covered by the
study Likewise the CATI was conducted by native speakers in order to avoid language
barriers
The online survey and the CATI have been developed tested and conducted on a
representative sample of EU SMEs which use the cloud for the purpose of conducting their
business
In order to achieve the above presented target (ie 500 SMEs using CC services)
the contacts of 13000 SMEs were identified during the design of the sampling strategy
3173 SMEs were reached within the 12 MS and the five sectors selected Table 5
presents the distribution of the reached SMEs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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26
1009 SMEs were willing to participate in the survey
Table 5 Distribution of SMEs reached per country and sector ( of respondents 3173)
Sector
Country
Admin and support service
activities
Inform and comm
Manufact
Profess scientific
and technical activities
Wholesale
and retail trade
Total
CZ 13 17 62 30 52 174
EE 5 22 8 12 15 62
FR 184 129 262 126 308 1009
DE 99 123 185 226 249 882
IE 4 18 6 6 13 47
IT 8 9 100 7 15 139
NL 36 49
24 37 146
PL 24 69 16 78 92 279
PT 7 2 9 2 24 44
RO 8 20 2 27 15 72
ES 7 11
26 21 65
SE 41 33 59 30 91 254
Total 436 502 709 594 932 3173
Source Survey of SMEs (2018)
Table 6 presents the participation rate per MS of the 1009 SMEs that agreed to provide
information about their use of cloud computing
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
27
Table 6 Participation rate by MS ( of respondents 3173)
Country
Number of
enterprises that expressed refusal
Number of enterprises
that were willing to participate in the survey
Total Participation
rate ()
A B C = A + B BC
CZ 131 43 174 25
DE 33 158 191 83
EE 715 29 744 4
ES 724 54 778 7
FR 16 294 310 95
IE 24 31 55 56
IT 97 115 212 54
NL 152 49 201 24
PL 11 127 138 92
PT 48 33 81 41
RO 11 24 35 69
SE 202 52 254 20
Total 2164 1009 3173 32
Source Survey of SMEs (2018)
The study targeted all different size categories the largest share of respondent being
represented by medium sized-enterprises (60 Figure 5) Contrary to the SMEs distribution
at the EU level the micro enterprises represented the smallest share of participants in the
survey The smaller the size of the enterprise the lower was its willingness to participate in
the survey
Figure 5 Distribution of participants in the survey by SME size ( of respondents 1009)
Source Survey of SMEs (2018)
The same applies to SME age enterprises active for more than 10 years are better represented
in our sample as compared to younger enterprises (Figure 6) This reflects their willingness to
participate as well as the greater difficulties encountered in reaching younger enterprises
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
28
Figure 6 Distribution of enterprises involved in the survey of SMEs by age ( of respondents
1009)
Source Survey of SMEs (2018)
Task 2 ndash Economic detriment and impacts on jobs and growth
Consequences of encountered problems at the micro level
The economic detriment was quantified along the lines recommended in the Guidelines on
impact assessment of the Better Regulation toolbox40 based on data collected from Task 1 and
on data from Eurostat Business Structure Statistics
The measurement of economic detriment41 considered a monetary assessment of the effects
of the problems faced by each SME in the survey and includes the following main dimensions
the gross financial detriment (GFD) associated with the problems encountered
the net financial detriment (NFD) associated with the problems encountered which
corresponds to the GFD associated with the problem encountered minus any remedies
offered by the cloud provider
The GFD incorporated the following components
119866119865119863 = 119871 + 119867119877 + 119874119862
Where
L is alternatively the loss of turnover or profits as perceived by each SME
HR is the costs of the human resources invested by each SME while taking action to
resolve or remedy the most serious encountered problem
OC other costs declared by each SME These include costs such as the costs related to
ensuring an alternative service the costs related to fixing the cloud service problem
using external support any legal costs costs related to reputation damage and costs
related to loss of client(s) and other residual costs
To allow for the measurement of the NFD the value of any redress (R) offered by the service
provider for the damages caused to each SME as reported in the survey questions was
computed
40 The Better Regulation Toolbox is a set of general guidelines that set out the principles that the European Commission follows when preparing new initiatives and proposals and when managing and evaluating existing legislation In this study those principles were considered generally as they were central in
defining the survey the sample and also the methodologies to measure economic detriment and estimate
the impact on growth and jobs 41 Measured using the principles put forward in European Commission (2017) Operational guidance document on measuring personal consumer detriment Brussels
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29
The detailed procedure used to estimate the economic detriment at the EU28 level included
three main steps
The first step was the computation of the following parameters from the survey with the 95
confidence interval level and 5 margin of error
the loss of turnover or profits perceived by each SME
the costs of the human resources invested by each SME while taking action to resolve
or remedy the most serious problem
the other costs covered by each SME while taking action to resolve or remedy the most
serious problem
the value of any redress offered by the service provider for the damages caused to
each SME
The second step required the definition of the number of enterprises affected by contract-
related problems (119873119901)
119873119901 = 119890119906 times 119890119901 times 119864
Where
119890119906 is the proportion (ie the percentage) of enterprises that use cloud computing
services
119890119901 is the incidence (ie the percentage) of contract-related problems
E is the total number of active enterprises
The incidence rates of contract-related problems (119890119901) by country and sector or country and
size class and the proportion of enterprises that use cloud-computing services (119890119906) by country
and sector or country and size cannot be estimated from the sample with the 95 confidence
interval level and 5 margin of error given that the sample is only representative at the EU
level overall
In order to be able to estimate the total number of enterprises experiencing contract-
related problems by country and sector and by country and size class an RAS-based42
procedure has been applied
Box 3 RAS method for estimating the total number of enterprises experiencing contract-
related problems by country and sector
The RAS method is a well-known method for data reconciliation whose aim is to achieve consistency between the entries of some non-negative matrix and pre-specified row and column totals Mathematically the method is an iterative scaling method that can be applied in this case as we just
have non-negative matrices We redistribute proportionally the differences arising from applying the EU level sectorial or size class incidence rates or from country incidence levels considering in this
case as the binding constraint the country level incidence which has been estimated with confidence from the sample (we ensure that the incidence per country is respected)
The procedure started with a preliminary estimation of the number of enterprises (119873119894119895119901)
experiencing contract-related problems in country i and sector or size class j using the following
formula
119873119894119895119901 = (
119890119894119906 + 119890119895
119906
2) times (
119890119894119901 + 119890119895
119901
2) times 119864119894119895
42 See more information at httpseceuropaeueurostatcroscontentras-method_en
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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30
Where
for countries included in our sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the proportion of enterprises using cloud computing services in country i43
computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j44 for all the countries in the sample
- 119890119894119901 is the incidence of cloud computing problems in country i computed from the
survey
- 119890119895119901 is the incidence of cloud computing problems in sector or size class j
computed from the survey for the whole sample
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
While for countries not included in the sample
- 119873119894119895119901 is the preliminary estimation of the number of enterprises experiencing cloud
computing problems in country i and sector or size class j
- 119890119894119906 is the average proportion of enterprises using cloud computing services in all
countries of the sample computed from the survey
- 119890119895119906 is the proportion of enterprises using cloud computing services in sector or
size class j45 for all of the countries in the sample
- 119890119894119901 is the average incidence of cloud computing problems in all countries of the
sample as computed from the survey
- 119890119895119901 is the incidence of cloud computing problems in sectorsize class j computed
from the survey
- 119864119894119895 is the total number of enterprises in country i and sector or size class j
extracted from the Eurostat Business Structure Statistics for 2015 (Eurostat
[sbs_sc_sca_r2])
In practice this formula takes the joint incidence by country and sector or by country and size
class to be the average of the two marginal incidences which would be the case if the two
distributions were independent In this way it allows a preliminary estimation of the number
of enterprises experiencing cloud computing problems in country i and sector or size class j
43 We use two alternative measures of incidence allowing us to develop two scenarios From the survey data we compute the incidence by country and sector and country and size class considering the answers given by respondents in two alternative ways In one case we compute the incidence as the ratio of
those enterprises that declared they are using cloud computing to all enterprises contacted that declared they are either using or not using cloud computing or that refused to respond to the survey based on criteria that can be seen as meaning that the survey does not apply to them (around 16) Alternatively also from the survey data we can compute the incidence of cloud computing usage as the ratio of those that declared they are using cloud services to the sum of those that explicitly mentioned that they are either using or not using cloud services (around 50) This second scenario can be considered as a theoretical but most unlikely future scenario where a consistent number of EU SMEs use
cloud computing 44 See the previous footnote 45 See the previous footnote
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31
After obtaining that preliminary estimation 119873119894119895119901 the RAS method of reconciliation is applied by
considering as the binding constraint the total number of enterprises experiencing problems
as that value was estimated directly from the sample with the required confidence and error
levels
This reconciliation of totals performed by the RAS method dismisses the assumption of
independence as it distributes the error across the margins
Concerning the sectors not covered in the sample46 the total number of enterprises
experiencing contract-related problems by country and sector can also be computed by
following the same procedure as above In that case sector incidence would be replaced by
the European average incidence on the other sectors Given the sampling procedure that was
followed in which the sectors with the highest incidence of cloud computing usage were
selected to be covered by the survey applying those incidences of use of cloud computing as
representative to the other sectors would overestimate the impacts Given this situation only
the results for the selected sectors are presented and this constitutes a lower threshold for the
true detriment47
Once the values of the number of enterprises experiencing cloud computing problems for each
country and sector and country and size class are computed they can be aggregated to the
EU level just by summing up the number of enterprises experiencing cloud computing service
problems per country
Finally the third step was the computation of the total losscostvalue of redress by country
sector and size class by multiplying the number of enterprises that experienced contract-
related problems (as computed using the RAS model) by the 95 trimmed mean values
per enterprise for each variable (from the survey)48
The GFD is then computed considering alternatively lost turnover and lost profits and adding
the human resource costs and the other costs NFD is computed taking the two measures of
GFD and subtracting the value of any redress offered by the service provider for the damages
caused to each SME
Afterwards two measures are obtained covering both GFD and NFD computed at country and
sector country and size class and at EU level
Consequences of encountered problems at the macro level
Following the quantification of the economic detriment the consequent impact on growth
and jobs was estimated using one of the methodologies suggested in the impact assessment
toolbox presented by the Joint Research Centre49 of the European Commission
The goal was to estimate the overall GVA and employment content of the detriment In order
to do that the following methodology was used
The starting point was the declared turnover loss one of the components of total detriment
aggregated by country and sector and by country and SME size We first estimated the financial
detriment suffered by each enterprise by considering the different components of detriment
then we aggregated these effects to the EU28 level by summing up the effects suffered by
46 As previously stated only the following sectors were covered by the study Manufacturing (C) Wholesale and retail trade repair of motor vehicles and motorcycles (G) Professional scientific and technical activities (M) Administrative and support service activities (N) and Information and communication (J) 47 Recall that the selected sectors comprise a total of 797 of SMEs and GE250 using cloud computing
services 48 Given each variable the 95 trimmed version was obtained by discarding the 5 lowest and highest observations it is a statistic in the middle of the data range 49 EU Science Hub (2016) Input-output economics Brussels
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32
each enterprise across all enterprises When estimating the macroeconomic effects of the
contract-related cloud computing problems one must consider the overall turnover loss that
was suffered by all enterprises that experienced those problems as turnover is the variable
that best summarises the overall enterprise-level effects that are transmitted into the
economic system through the supply chains and that can be related to aggregate economic
variables thus avoiding double counting
This allowed the team to estimate the so-called direct impacts (the direct consequences in
the enterprises that face contract-related cloud computing problems associated with the
reduction of their economic activity due to those problems) This was done by estimating the
GVA and employment contents of the turnover losses caused by contract-related cloud
computing problems at country and sector level by considering the GVA and employment
coefficients of total turnover at country and sector and country and size class level computed
from Eurostat Business Structure Statistics for 2015 (Eurostat)50
The results were aggregated at the EU level by summing up country results from calculating
the direct GVA and employment contents
Additionally at the aggregate EU level the so-called indirect impacts were also estimated
Indirect effects are the effects on the enterprises that are not directly affected by contract-
related cloud computing problems but that are indirectly affected in their activity by the losses
of turnover from the enterprises that directly experience the problem To estimate these
indirect effects we start by estimating the turnover losses in supplier industries These indirect
losses of turnover arise when the businesses that experience the direct turnover losses reduce
their demand for products from their suppliers and then those supplier enterprises also
experience turnover losses The input-output methodology is used to estimate the turnover
losses in supplier enterprises Essentially this methodology allows us to estimate the amount
of turnover that is lost in one supplier enterprise when the demand from another enterprise is
reduced given the existing technology A symmetric input-output table at basic prices (sector
by sector) available in Eurostat51 for the EU28 was used to estimate the technological
intersectoral relations in the EU economy The methodology used is described in the following
box
Box 4 The Input-Output Methodology
Input-output analysis is the most commonly used benchmark within the study of intersectoral relations The representation of the underlying economies either as a coherent statistical framework as a structural analysis tool of the productive systems or as an economic model is based on a correlation between production and demand through the proportions of the different branches (supply side) or products (demand side) that support that same economies The correspondence between a certain branch of activity and a certain group of products is thereby a condition for coherence of the
input-output analysis
The input-output tables appear as a synthesis of a large amount of statistical data processed in accordance with the goal of specifying the characteristics of the use of the productive factors and products to satisfy the demand ie the open and disaggregated flows (in sectorial terms) that link in both ways demand production and income
The matrix representation of the basic flows characterises the activities of a given economy in a given period It allows a two-dimensional interpretation of the relationships and balances in the flows to be used ie a horizontal (in line) interpretation ndash articulating production and demand that leads to a
separation between intermediate and final demand ndash and a vertical interpretation (in column) ndash
51 Eurostat Symmetric input-output table at basic prices (product by product) Brussels
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33
articulating production and income that leads to the separation between intermediate inputs and
value added
Input-Output matrices
The general shape of an input-output table encompasses four quadrants that correspond to the intersectoral trade of products associated with intermediate consumption (1st quadrant) to the breakdown of each sectorrsquos production through the diverse final uses (2nd quadrant) to the sectorial
decomposition of the GVA (3rd quadrant) and to the nonmarket transfers between sectors of the economy (4th quadrant)
The first quadrant has a square shape (n x n sectors) while the 2nd and 3rd have a rectangular shape (depending on the number of final uses and the number of the GVA components considered) The
equilibrium conditions reflect sector by sector the usage of the production and the mobilised resources and the income generated in the production ie
119883119894 = sum 119883119894119895 + 119884119894
119895
(use logic to be read in line the gross production of each sector is depleted feeding the intermediate
and final demand)
119883119894 = sum 119883119894119895 + 119884119894
119894
(resources and income logic to be read in column the gross production of each sector integrates
the value of the intermediate consumption and of the income generated)
The sectorial equilibrium ie the equality between uses and resources (119883119894 = 119883119895 for 119894 = 119895) leads on
an aggregated level to a match between the sum of the elements of the 2nd and the 3rd quadrants that sustains the ldquothree approachesrdquo of national accounting expenditure income and production
Matrixes coefficients and multipliers
From the general tables we can obtain the technical coefficient matrix (matrix A) Each element of the matrix A (119886119894119895 = 119883119894119895119883119895) expresses the ldquotechnological demandrdquo from the sector j to the sector i ie
the production of the sector i used as an input for the production of the sector j This vertical proportion representing the technological support of the intersectoral flows and the deepening of the intermediate demand from the productive units into the technical characteristics of their respective productive processes is called the technical coefficient (of production)
The input-output analysis as an economic model uses these proportions or coefficients to represent
the function of the economy requiring the adoption of a set of hypotheses namely on the direction of the economic flows ie the role of the supply and demand dynamics
In formal terms the input-output model is considered to be based on the dynamics of the demand The production is obtained through an endogenous process supported by the technical coefficient matrix responding to a final demand determined exogenously Building up the Leontief model in its
OUTPUT (Demand)
INPUT
(Production)Intermediate inputs to
production
(1st Q)
Final demand
(2nd Q)
Primary inputs to
production
(3rd Q)
Primary inputs to final
demand
(4th Q)
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and unbalanced cloud computing contracts
34
reduced form leads to a system of n simultaneous equations like 119883119894 = sum 119886119894119895119884119895119895 written as 119883 = (119868 minus 119860)minus1119884
in matricial notation
Input-output based modelling brings out a matrix (119868 minus 119860)minus1 whose elements are designated as 119886119894119895
The elements of the (119868 minus 119860)minus1 matrix express as coefficients of the simultaneous equations system
that allows to determinate the production according to the final demand the variation (direct and indirect) of the production of a sector according to the unitary change of the final demand of another sector These are called production multipliers also arising as sectorial interdependence indicators
The production multipliers can be partial when they indicate the variation of the production of a sector i led by a unitary variation of the final demand of a sector j and measured by the corresponding element of the matrix 119886119894119895 or total when they indicate a variation of the production of all sectors led
by a unitary variation of the final demand of a sector and measured by the sum of the corresponding column of the matrix (sum 119886119894119895119895 )
The nature of the measured effects
Taking into account the nature of the used multipliers it is possible to measure direct and indirect effects
Direct impacts Activity effects (value added employment income) associated directly with the value of the lost production due to contract-related problems
Indirect impacts Backward linkage effects meaning the activation of multiple ldquoexternalrdquo effects on demand linked to the loss in production due to contract-related problems They concern the supply
chains that are interrupted due to the production loss associated with contract-related problems
Once the indirect turnover losses were measured their GVA and employment contents were
estimated using the same methodology as for the direct effects
To compute the relative direct and indirect impacts we divided the estimated GVA and
employment content by the total GVA and employment at the EU level
Further qualitative analysis
In addition to the quantitative assessment of the overall impact on growth and jobs taking
into account the results of previous activities (namely the interviews within the case studies
and desk research) other more qualitative effects of the problems encountered namely in
terms of competition competitiveness and market functioning were qualitatively assessed To
this end case studies were used in order to have a more in-depth view of the topic
More generally the case studies allowed the study team to
produce useful insights on the specific problems that were identified in the survey
illustrate in practical terms the economic detriment to SMEs and to understand the
causal links between the signed contracts and the encountered problems
include the perspectives of those stakeholders that were not involved in the previous
study Tasks
This subtask included interviews (33) with eight types of stakeholders namely SMEs cloud
brokers service providers SMEs associations national authorities national SMEs Envoys EEN
associations and chambers of commerce This array of stakeholders contacted was used to
obtain a detailed view of the issue of the economic detriment to SMEs arising from unfair and
unbalanced cloud computing contracts52
nine SMEs
one cloud broker
10 service providers
three SMEs associations
six national authorities
one national SMEs Envoy
52 The questionnaires used detailing the topics covered during the interviews can be found in Annex 8
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
35
two EEN associations
one Chamber of Commerce
Finally three webinars were used to validate and disseminate the results of the study with the
main participating stakeholders
22 Main limitations encountered
This study mainly used data collected from CATI as this tool followed a more direct approach
in contacting SMEs by phone The online questionnaire proved not to be as effective during
the data collection phase as we succeeded in obtaining only three completed questionnaires
from a total of 141 requests to SMEs and European Associations contacted On the other hand
500 completed questionnaires were collected from the SMEs that use cloud computing through
the CATI
In order to maximise the possibility that the SMEs contacted will respond to the survey the
study chose to contact SMEs from the 12 countries that have the most usage of cloud
computing This approach was taken to achieve a twofold purpose to maximise the quality of
the survey results and to ensure that the minimum sample target of 500 questionnaires is
met Even if the sample is randomised the willingness to participate in the survey under these
circumstances might have been positively correlated with cloud computing usage This may
increase the risk of biased results
This limitation was overcome by involving a distinctive group of stakeholders with the aim of
complementing the information gathered The stakeholdersrsquo involvement during the case
studies ensured the accuracy of the results at the EU level
Furthermore it is important to underline that all estimates based on the gathered responses
to the questionnaire should be considered as statistically significant in representing the
average values that might be observed among EU SMEs that are using cloud computing
services Therefore any features presented at the country andor sector andor
company size level were included with the sole aim of documenting gathered
information
In order to be able to estimate results at the country andor sector andor enterprise size level
the RAS model was used to distribute the overall representative results to provide robust
estimates at that level The RAS model even allows estimating the usage rate and the incidence
of problems at enterprise size sectorial and country level
Two scenarios have been developed for the economic analysis that takes into account two
different hypotheses for estimating the usage rate of cloud computing extracted from the
survey
The method of analysis of economic detriment also has some limitations The first one is related
to the fact that only the consequences of the most serious problem are considered Even if the
survey tried to measure also the effects of the second most important problem the fact that
the number of respondents that quantified its effects was very small led to values that did not
seem to be robust enough to use in the analysis This causes the estimates of detriment
that were presented to be the lower thresholds to the actual detriment Yet the
magnitude of the underestimation is limited by the fact that the sectors with the highest cloud
computing usage rates were chosen to be in the sample and they are likely to experience
above average effects A second limitation arises from the fact that many enterprises seem
not to be able to fully assess the financial impacts of problems such as reputational damages
or loss of clients in terms of financial variables and this may also lead to some underestimation
of the true effects that we perceive that might be present but that we are not able to assess
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
36
In terms of measuring the indirect impacts not only does the possible underestimation of the
direct impacts on turnover also affect these impacts but also using the input-output
methodology has limitations While the input-output methodology allows measuring backward
linkages it does not allow considering the downstream effects on clients or final consumers
that are associated with the contract-related cloud computing problems due to relative changes
in the costs borne by enterprises and that are not fully absorbed and thus trickle down to the
consumer level as SMEs pass on the increased costs caused by the problems encountered
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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37
3 Usage of cloud computing across EU SMEs the state of play
First this section presents the analysis of the services contracted by the SMEs the types of
contracts and the negotiability and customisation of CTampC Furthermore it investigates the
incidence and frequency of contract-related cloud computing problems experienced by SMEs
with an emphasis on the most serious problems encountered and their respective causes
Second it presents the types of actions taken by the SMEs in order to address the contract-
related problems as well as the results of the actions taken and possible difficulties encountered
while taking action
And finally it explores the reasons why some SMEs decided not to take action
31 Cloud computing usage rate
In conducting the survey 3173 SMEs replied have been collected out of which
503 from SMEs that declared that they had contracted at least one cloud computing
service during the period 2016ndash201753
509 from SMEs that declared they did not contract any cloud computing service during
the period 2016ndash2017
2164 from SMEs that refused to participate in the survey
The estimation of the rate of usage of cloud computing depends on the hypothesis about the
distribution of the willingness to participate in the survey
For the purpose of the study it was assumed that only SMEs not using cloud computing were
present among those SMEs that were not willing to provide information (2164) Under this
hypothesis the rate of usage of cloud computing services is 159 calculated as the
number of SMEs that declared they are using cloud computing services (503) divided by the
number of SMEs that replied (3173) This can be considered as the central scenario for this
study It provides an indication of the current detriments suffered by SMEs
A theoretical scenario has been constructed by assuming that SMEs using cloud computing
services and SMEs not using cloud computing services are equally distributed among the SMEs
that were not willing to provide information (2164)54 The purpose of this scenario is to provide
an indication of the theoretical evolution of the detriment in case of increasing usage of cloud
computing among EU SMEs
At 159 the rate of usage of cloud computing among SMEs still appears to be low especially
when compared with the 45 that is the most recent estimated usage rate among large
enterprises55
This can be due to a variety of different reasons During the interviews performed it emerged56
that
some SMEs are reluctant to use services that they cannot fully understand (for
example for micro and small enterprises it is difficult to assess how the new services
can improve their everyday work)
53 The distribution by country size and sector of the 503 SMEs that declared they contracted at least one cloud computing service can be found in Annex 5 54 Under this assumption the rate of usage of cloud computing services is 499 calculated as the number of SMEs that declared they are using cloud computing services (503) divided by the total of SMEs
that were willing to provide information (3173 ndash 2164 = 1009) 55 Eurostat Cloud computing - statistics on the use by enterprises Brussels 56 Case study interview with UEAPME European Association of Craft Small and Medium Enterprises representing about 12 million enterprises across Europe
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
38
other SMEs perceive that costs are still high and that it takes too long to recover
the investment (break-even point)
the division of responsibilities between SMEs and providers can sometimes be
a major source of problems as it is poorly documentedexplicated leading to overlaps
and gaps especially with respect to security aspects it is not uncommon for SMEs to
be confused about their responsibilities concerning security such as who makes
backups of data or software which type of failoverredundancy is offered by the
provider and what still needs to be done by the customer All of these issues can
persuade SMEs to not outsource cloud services
asymmetric information when it comes to negotiating and customising CTampC might
limit the capacity of SMEs to find solutions that fit their needs
in contrast to the traditional provision of on-site information technology resources the
multi-tenant nature of cloud computing usually raises questions with respect to
privacy confidentiality and data integrity Cloud computing presents its own set
of security issues coupled with the risks and threats inherent in traditional information
technology computing
32 Types of cloud computing services contracted
Figure 7 presents the most commonly contracted cloud computing services as resulted from
the survey
Two services are more frequently contracted because of their applicability and prevalence
in a wide range of sectors
collaboration and communication services (71) that might include among
others applications used for instant communication video conferencing business
visualisation e-mail antivirus for desktop or PC customer relationship management
or social media monitoring
storage and hosting services (65) that comprises services such as server
platforms for online storage sharing hosting websites files images and similar
content
The third most commonly contracted service (43) is associated to security support (this is
related to the need for protecting the corporate network when accessed via remote devices
such as laptops or other wireless and mobile devices)
The next eight significant types of cloud computing services contracted do not range far from
each other with their usage varying between 43 and 26
No significant differences emerged from the analysis at countrysector level (see section B
within Annex 5 for further details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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39
Figure 7 The cloud computing services most commonly contracted by SMEs during 2016-
2017 ( of respondents 503 of answers 2522)57
Source Survey of SMEs (2018)
A more detailed analysis of the numbers behind Figure 7 reveals the complexity of the
subscribed cloud computing packages
the answers from the (503) SMEs that declared that are using CC services also
revealed that 2522 services have been contracted over the period 2016 ndash 2017 (Table
7) that implies each SME contracted on average five different services
micro enterprises are the size class contracting the highest number of services (ie
55 on average Table 7) this might be related to the fact that the medium-sized
enterprises might have the financial and technical capacity to develop more
effectiveefficient solutions internally58
Table 7 The cloud computing services most commonly contracted by SMEs during 2016-2017 by SMEs size class ( of respondents 503)
SME size class
of respondents
of contracted services
Average of contracted
services Micro 91 503 55
Small 140 723 52
Medium 272 1296 48
Total 503 2522 50
Source Survey of SMEs (2018)
57 Multiple choice question 58 Eight out of the 10 service providers interviewed under Task 2 stated that the usage depends on the enterprisesrsquo size as medium-sized enterprises are better able to internalise most of the needed IT
services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
40
Even the analysis of the frequency of the answers provided allowed the research team to better
understand how the usage of CC is evolving among SMEs (Figure 8) around 40 of SMEs
contracted a limited number of cloud services (one two or three)59
Figure 8 Frequency of the number of contracted services ( of respondents 503 of answers 2522)
Source Survey of SMEs (2018)
Furthermore the analysis of the mix of contracted services revealed that there are two
services lsquoPlatform to create software applicationsrsquo and lsquoStorage and hostingrsquo that are most
commonly contracted either alone (12) or together (6)
The number the types and the mix of contracted services showed that EU SMEs are having a
lsquobasicrsquo usage of cloud computing
This is also confirmed by the results reported in Table 8 services falling under the SaaS model
are the most contracted ones (47) This cloud computing model was the first one introduced
to the market (1999) and the easiest to use (as it includes applications that can be run directly
from a web browser without any downloads or installations required although some require
plug-ins)
The medium-sized enterprises present a different trend from the small and micro firms as
they probably need a more advanced package of services For the medium-sized enterprises
the IaaS model (47) is the most contracted followed by PaaS (30) and finally by SaaS
(21)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
41
Table 8 Services contracted by SMEs size ( of respondents 503 of answers 2522)
SMEs size Total
respondents of services contracted
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 252 149 97 5
50 30 19 1
Small 140 723 332 224 157 10
46 31 22 1
Medium 272 1296 609 393 276 18
21 30 47 1
Total 503 2522 1193 766 530 33
47 30 21 1
Source Survey of SMEs (2018)
33 Types of contracts and relative costs
In this section we analyse if SMEs have the possibility to negotiate CTampC the degree of
customisation of contracted services and the types of subscriptions chosen by SMEs
Negotiability of CTampC
In the survey SMEs that are using CC services were asked if they were able to negotiate CTampC
(Figure 9) The majority of the SMEs declared they signed standard terms and
conditions offered by the provider (ie 64 of SMEs either did not try to negotiate or were
not able to negotiate CTampC see Figure 9)
Figure 9 Negotiability of the CTampC among SMEs that contracted cloud computing services ( of respondents 503)
Source Survey of SMEs (2018)
Only 19 of the SMEs using cloud computing (97 out of 503) were able to negotiate
the CTampC in relation to all cloud computing contracted services while 17 were able
to negotiate contract terms and conditions for a limited number of services
This trend is maintained at the country and sectorial levels as well (see Annex 5 for further
details)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
42
Together with the negotiability of CTampC also the reasons for not negotiating have been
investigated (Figure 10) The decision to adopt the standard CTampC is made either because
these meet the usersrsquo expectations (41) or because it is assumedknown that a negotiation
would have no chance to succeed (28)
Figure 10 Reasons provided by SMEs for not trying to negotiate ( of respondents 229)
Source Survey of SMEs (2018)
The possibility of the SMEs negotiating the services contracted correlates with the size class
As seen in Table 9 only 106 of the services contracted have been negotiated by the SMEs
It can be stated that on average SMEs negotiate CTampC related to less than one service out of
the average of five used
Table 9 Number of services for which SMEs were able to negotiate CTampC
SMEs
size
Total of
respond
of services
contracted
of customised
services
of services
SMEs were able to
negotiate
out of which
SaaS PaaS IaaS Mixed
Micro 91 503 48 24 11 10 3 0
Small 140 723 123 89 36 31 20 2
Medium 272 1296 120 155 78 44 31 2
Total 503 2522 106 268 125 85 54 4
Source Survey of SMEs (2018)
After the negotiability of CTampC the research team explored the types of services for which
SMEs negotiated signed contracts (Figure 11) Surprisingly the most commonly contracted
services (ie collaboration and communication storage and hosting and security services)60
do not appear among the ones for which negotiating CTampC is possible Rather negotiability is
higher for those services that due to their nature are more lsquobusiness drivenrsquo (such as business
applications mobile services and data management) Figure 11 presents for each contracted
service the number of SMEs that were able to negotiate CTampC (in blue) and the number of
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
43
SMEs that signed standard CTampC for the specific service contracted (in grey) The total of the
numbers in each row represents the number of SMEs that declared contracting a specific
service61 Detailed information related to all services can be found in Annex 5
Figure 11 Services in relation to which SMEs were able to negotiate the CTampC ( of respondents 179 of answers 264)
Source Survey of SMEs (2018)
Customisation of contracted services
SMEs that didnrsquot sign standard CTampC were asked if the negotiation allowed the customisation
of the contracted services
Figure 12 shows that out of the 179 SMEs (36 of the SMEs that are using CC services) that
were able to negotiate the CTampC only 101 (representing 20 of all surveyed SMEs that
are using cloud services) pointed out that besides simply negotiating the CTampC they
were able to fully customise the service package according to their needs
61 For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service (cf Figure 7) only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
44
Figure 12 Share of SMEs that declared they were able to customise the service package
according to their specific needs ( of respondents 503)
Source Survey of SMEs (2018)
The ability of SMEs to customise the purchased service package correlates with the size class
(as illustrated in Figure 12)
Table 10 SMEs that declared they were able to customise the service package according to their specific needs by enterprise size ( of respondents 503)
Size category
Total
Respondents
SMEs that did
not negotiate
CTampC
SME negotiated CTampC
Full customisation
Partial customisation
No Customisation
Micro 91 69 16 6 0
100 76 17 7 0
Small 140 86 27 15 12
100 61 19 11 9
Medium 272 169 58 26 19
100 62 21 10 7
Total 503 324 101 47 31
100 64 56 26 17
Source Survey of SMEs (2018)
Types of contract subscription
The majority of respondents have signed a paid subscription with fixed or variable fees
(79 of the total users Figure 13) It should to be noted that 73 SMEs did not provide any
response as most of them did not know the type of subscription contracted
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
45
Figure 13 Type of cloud computing subscription ( of respondents 503 of answers 489)62
Source Survey of SMEs (2018)
This trend is maintained across both countries and sectors without any significant differences
62 Multiple choice question
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46
4 Contract-related problems encountered by SMEs
The current section presents an overview of the types and most frequent contract related
problems encountered by SMEs while using cloud computing services
Moreover the most serious problems (that is the problems that created the highest impact
on SMEsrsquo everyday activities andor in terms of costs faced to resolve them) have been
identified together with their causes
Finally actions taken by SMEs to remedy the encountered problems are analysed together
with results of the actions and the main difficulties encountered
41 Types and frequency of encountered problems
Nearly one-quarter (24) of the SMEs using cloud computing (ie 122 out of 503)
encountered contract-related problems during the period 2016ndash2017 (Figure 11)
The incidence seems to be higher for micro and medium-sized enterprises
Table 11 Share of respondents that indicated encounteringnot encountering problems by size
of SMEs Micro Small Medium Total
Did not encounter problems
66 116 199 381
Encountered problems
25 24 73 122
27 17 27 24
Source Survey of SMEs (2018)
Problems encountered by the SMEs have been further analysed by taking into account the
following two dimensions frequency and incidence
Table 12 Frequency and incidence of contract-related problems
Dimension of analysis Details
Frequency
(F)
The frequency shows how often did the mentioned problem appeared and it is measured on a scale from 1 to 4
1 - rarely (at least once in the last 12
months)
2 - occasionally (at least once every 3 months)
3 - frequently (at least once a month)
4 - very frequently (at least once a week)
Incidence
(I)
Number of SMEs that encountered the problem during 2016-2017number of SMEs that contracted at least one cloud computing service during 2016-2017
Source Survey of SMEs (2018)
Four problems have been faced by more than 25 of the cloud computing users (Figure 14)
low speed of service (55)
unsatisfactory availability or discontinuity of the service (49)
forced updates to the service (32)
lack of clarity of the instructions on how to use cloud computing services (26)
Study on the economic detriment to small and medium-sized enterprises arising from unfair and unbalanced cloud computing
contracts
47
Figure 14 Incidence and frequency of contract-related problems among SMEs that declared they encountered problems during 2016-2017 ( of respondents 122 of answers 505)63
Source Survey of SMEs (2018)
63 Multiple choice question
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48
No significant differences emerged from the analysis at the sectorial and country levels
(please see Annex 5 for further details)
The cases studies64 included in-depth interviews with the SMEs that already contributed in
the survey In particular problems encountered by them were discussed with a special focus
on the following lack of clarity and transparency of contract terms and conditions unilateral
modification of the servicecontracts and limited liability of cloud providers
Five out of the eight SMEs that were interviewed recognised the fact that the lack of clarity
of the instructions on how to use cloud computing services is a problem that they are facing
This was explained by the fact that there is no common understanding of what cloud
computing is and how it operates The SME users expressed the need for better information
when contracting such services
The findings from the consultation of cloud providers (ten providers have been interviewed
during the case studied) indicated that business users for different reasons very often
encounter difficulties in understanding the CTampC This problem is particularly relevant
due to
lack of knowledge on how to use cloud computing services of the SME users
lack of attention of the SME users when signing the contracts
Two additional problems even if faced by less than 20 of the users are among the ones
that appeared most frequently65
lack of clarity and transparency of CTampCs (frequency = 215)
limited liability of the provider (frequency = 179)
During the consultations with national authorities and SMEs the participants indicated that
the limited liability of cloud providers commonly manifested when the following undesired
anomalies occurred
information access was interrupted or there was a problem of information
portability this group of anomalies encompasses technical aspects of the
information delivery including risks caused for example by denial-of-service attacks
These kinds of technical problems are most likely to cause liability Especially regular
updates can despite being administered properly result in downtime and thus in a
potential economic loss
data privacy and data protection were affected making information available to
the public can infringe on privacy and data protection provisions since cloud
computing services are of a cross-border nature privacy law conflicts between
national legislations are likely to occur Furthermore cloud computing services need
to comply with the principles of authenticity and integrity of information However the
entry into force of the General Data Protection Regulation (GDPR) (EU) 201667966
on 25 May 2018 is perceived as a factor that will effectively limit this issue in the
future
Even if affecting only a limited number of SMEs67 (less than 10 of the users participating in
the SMEs survey) problems related to security68 are quite frequent especially in regard to
64 See Annex 5 for further information 65 The incidence and frequency of the full list of SMEsrsquo problems can be found in Annex 5 66 Regulation (EU) 2016679 of the European Parliament and of the Council of 27 April 2016 on the
protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 9546EC (General Data Protection Regulation) OJ L 119
452016 67 More frequently among the micro and small enterprises 68 For further analysis see Annex 5
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and unbalanced cloud computing contracts
49
the lack of protection of the data stored in the cloud against theft or viruses and
unauthorised disclosure of or access to data
The analysis of the number of answers provided allows a deeper understanding of the
problems faced by SMEs
on average amongst the SMEs that experienced problems each SME encountered
four different problems over the period 2016 ndash 2017 (Table 13)
micro enterprises are the ones facing the highest number of problems (Table 13)
more than 23 of SMEs faced a high number of problems (between five and eight
Figure 15)69
Table 13 Number of problems faced by SMEs during 2016-2017 by SME size class ( of respondents 122)
SME size class
of SMEs that encountered problems
of encountered problems
Average of encountered problems
Micro 25 116 464
Small 24 92 383
Medium 73 290 397
Total 122 498 408
Source Survey of SMEs (2018)
Figure 15 Frequency of the number of encountered problems ( of respondents 122 of answers 494)
Source Survey of SMEs (2018)
42 The most serious problems encountered
Types of problems
After listing all problems encountered respondents were asked to mention the most serious
one among them survey results shows a correlation between the incidence of the declared
problems and the most serious problems experienced by the SMEs (Figure 16)
69 82 of SMEs that encountered problems declared 5 different problems 33 of SMEs faced 6 problems 66 of SMEs faced 7 problems and 49 of SMEs faced 8 different problems
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
50
Figure 16 The most serious problems experienced by the SMEs during 2016-2017 ( of
respondents 122)70
Source Survey of SMEs (2018)
Additionally the survey investigated the potential existence of a second most serious
problem Nearly half of the respondents (46) declared that they encountered only one
serious problem (Figure 17) However lsquolow speed of the servicersquo and lsquounsatisfactory
availability or discontinuity of the servicersquo remained the most prominent problems as
previously presented in Figure 16
Figure 17 The second most serious problem experienced by the SMEs during 2016-2017 ( of respondents 122)71
Source Survey of SMEs (2018)
Besides indicating the most serious problem SMEs were asked to assess the relevance of the
resulting cost (ie what percentage of costs deriving from all encountered problems was due
to the most serious problem only)
As presented in Table 14 more than 50 of the SMEs declared that the costs related to the
most serious problem represented a cost that counted for more than 80 of the overall
sustained costs The remaining 48 who declared that they had other problems did not
declare relevant costs related to the second most serious problem (either they provided values
that were not relevant72 or were not able to quantify the costs)
70 Incidence management is understood as the failure of the cloud provider to identify analyse and
correct hazards and prevent a future re-occurrence 71 Incidence management is understood as the failure of the cloud provider to identify analyse and correct hazards and prevent a future re-occurrence 72 Respondents declared values equal to zero
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51
Table 14 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by size class ( of respondents 122)
Size
Incidence of the costs related to the most serious problem compared with the total costs occurred
Below 50 Between 50 -
80 Above 80 10073 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Most affected service
All mentioned serious problems (both the first and second) were mainly related to the usage
of lsquocollaboration and communication servicesrsquo (Figure 18)74 which are indeed the most widely
used ones The next two types of cloud computing services linked to the most serious problem
are lsquobusiness applicationsrsquo and lsquostorage and hosting servicesrsquo Even though security services
are among the most widely used services (Figure 7) it seems they do not generate many
problems As also confirmed during the case studies75 (interviews with SMEs) security is often
perceived as the key risk when outsourcing information technology services because these
services may affect critical data However once cloud services are used problems related to
security appear only rarely
Figure 18 The type of cloud computing services linked with the most serious problems declared by the SMEs ( of respondents 122)76
Source Survey of SMEs (2018)
43 Causes of the most serious problems encountered
As previously illustrated the survey investigated also the causes of the most serious problems
encountered The main cause of the most serious problems is non-conformity of the
service provided with what was established in the contract (Figure 19)
73 Enterprises that declared they encountered only one problem 74 For the analysis of the second most serious problems and its link with used services please refer to
Annex 5 75 See Case study analysis for further information 76 Multiple choice question
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and unbalanced cloud computing contracts
52
Figure 19 The main causes of the most serious problems ( of respondents 122 of
responses provided 124)77
Source Survey of SMEs (2018)
The unfairness of CTampC78 is also perceived as a possible cause of the most serious problems
declared This was mentioned by 12 of the SMEs that encountered problems (ie 15
respondents out of 122)
However in 13 of the cases the problems encountered were not within the service
providerrsquos responsibility but resulted from technical issues with SME and internal factors
When providing further details the SMEs acknowledged that the problems may have been
caused by the enterprisersquos own mistake due to miscommunication limited training of the
employees or lack of capacityknowledge
The relevance of lsquonon conformity of the servicesrsquo lsquotechnical problemsrsquo and lsquounfairness of CTampCrsquo
is confirmed also when the analysis of the causes is restricted to most serious problems only79
(Table 15)
77 Multiple choice question 78 CTampC were considered unfair by the respondents because of the impossibility of negotiating its
content because the contract might have included limited liability of the providers andor the possibility for the provider to modify unilaterally one or more clauses 79 Unsatisfactory availability Low speed of the service and Forced updates to the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
53
Table 15 The causes of the three most serious problems ( of respondents 122 of
responses provided 59)80
The 3 most serious
problems
of SMEs declaring
this as the most
serious problem
of SMEs that consider
lsquonon-conformity of the servicersquo as the cause
of SMEs that consider
lsquotechnical problemsrsquo as
the cause
of SMEs that consider lsquounfairness of CTampCrsquo as the cause
of SMEs that declared other causes for the most
serious problem
encountered
Unsatisfactory availability
32 23 3 3 3
100 73 9 9 9
Low speed of
the service
27 13 5 2 7
100 48 19 7 26
Forced updates to the service
16 6 2 4 4
100 38 13 25 25
Source Survey of SMEs (2018)
Even the second most serious problems are frequently due to similar causes (ie non-
conformity of the service provided with what was established in the contract Figure
20)
Figure 20 The main causes of the second most serious problems ( of respondents 66 of responses provided 70)81
Source Survey of SMEs (2018)
44 Actions taken by SMEs
As anticipated in the introduction of Section 4 actions taken by SMEs in order to remedy the
encountered problems have been investigated
Nearly three-quarters (74) of the SMEs that encountered contract-related problems
(90 out of the 122 respondents) chose to take action to resolve or to remedy the most
serious problem
The 32 respondents who declared that no action had been taken provided usually more than
one justification for their answer The results that stood out were given by the fact that the
80 Multiple choice question 81 Multiple choice question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
54
provider fixed the problem (16) that the problem was assessed as not that
important (8) and that the procedure was too complicated (5)
The overall trend regarding actions taken to resolve the problem is maintained for each
type of sector included in the study where between 60 and 90 of the SMEs chose to
take action (see Annex 5 for further details)
Two main actions have been taken by SMEs to resolve the encountered problems using the
direct support of the provider andor making a complaint to the customer support
service (Figure 21)
Figure 21 The actions taken by the SMEs to resolve or remedy the most serious problems
( of respondents 90 of answers 165)82
Source Survey of SMEs (2018)
Also interestingly there are two types of actions to address the problem which have not been
declared at all both concerning legal measures going to mediationarbitration and
filing an action with a court
The replies received from the service providers during the case studies83 reveal that there
were cases where SMEs went to court to obtain compensation for the time and money lost
However providers remark that from their experience the probability that SMEs will win
these legal disputes is limited since it is difficult to demonstrate objective responsibilities
Additional insights were gained by investigating the replies within the category lsquoothersrsquo
chosen by more than 20 of the SMEs that took actions This reveals that about half of them
(21) SMEs took some type of internal measure such as changing an internal procedure or
moving the cloud computing services internally
The results revealed also that on average SMEs take more than one action to resolve or
remedy the most serious problems
At the same time among the 90 SMEs that took action 78 affirmed that they did not
encounter any difficulties in resolving the most serious problem (see question D121
from Annex 5 for further details)84
82 Multiple choice question 83 See Case study analysis (Annex 9) 84 All respondents (ie 90) that declared they took action were requested to say if they encountered
any difficulties while trying to resolve or remedy the encountered problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
55
Moreover the survey revealed that the most likely challenge for SMEs when trying to resolve
the most serious problem is the length of the procedure (Figure 22)85
Figure 22 Difficulties encountered when trying to resolve the most serious contract-related problem ( of respondents 20 of answers 34)86
Source Survey of SMEs (2018)
The findings from the case studies revealed (through interviews with providers) that different
forms of assistance are offered when needed and that the support did not depend on the
enterprisersquos size but rather on the severity of the issue Providers also mentioned that the
length of the remedy procedure varies from a minimum of a few hours to a maximum of three
or four days
Results of the actions
Following the actions taken the majority of the SMEs signalled that their problem was
either entirely resolved (70) or partially resolved (18) as shown in Figure 23
Figure 23 The results of the actions taken to resolve or remedy the most serious problem
( of respondents 90)
Source Survey of SMEs (2018)
85 The two responses regarding the lsquootherrsquo option were first related to the lack of a timely response from
the provider and secondly to the fact that the provider offered only partial help to resolve the problem 86 Multiple choice question The question was addressed to the 20 respondents that declared encountering problems when taking action to resolve or remedy the problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
56
The extent to which the problem was fully resolved varies across sectors ranging from 41
for administrative and support service activities to 89 for wholesale and retail trade (Figure
24)
Figure 24 Number of SMEs for which the problem was fully resolved as a result of the action(s) taken by sector ( of respondents 63)
Source Survey of SMEs (2018)
From the service providersrsquo viewpoint if the problem falls under the providersrsquo responsibility
they try to partially compensate for the cost of the service One specific provider declared
that the approach commonly used in the market is to compensate for administrative costs
but only in exceptional cases87 to also reimburse the entire costs of the subscribed package
The reimbursed amount varies between 5 and 15 of the monthly fees Moreover within
one Expert Group Meeting there was mention of lsquoa practice in Spain on a regulated market
where money is returned to customers for downtime within 60 daysrsquo88
87 These rare cases might vary according to the specific problem The provider might consider the
reimbursement of the entire cost if the unavailability of the services exceeds the scheduled period needed in order to fix the problem 88 Expert Group Meeting on Cloud Computing Contracts Synthesis of the meeting of 910 April 2014
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57
5 Consequences of the encountered problems
This section investigates the nature of the financial detriment suffered by the SMEs as
consequence of the encountered problems as identified in Section 4
This might be related to
negative consequences for business activities such as
- potential loss of turnover or profits as a consequence of the encountered
problem
- loss of clients
- reputation damages
extra work that is done with internal human resources while taking action to
resolve the encountered problems
extra effort or costs to ensure an alternative service andor to fix the cloud
service problem
legal actions taken to exercise the users rights to remedies for non-conformity of
service
The prevalence of these consequences has been verified during the implementation of the
survey and their economic assessment where possible has been discussed and validated
during the case studies and webinars
This section also discusses some more qualitative aspects of how the encountered problems
may affect individual companies
51 Qualitative assessment
SMEs declared several negative consequences for business activities arising from contract-
related problems (Figure 25)
Figure 25 Perceived consequences for business activities ( of respondents 122)
Source Survey of SMEs (2018)
The limited availability of a service or its limited speed might reduce the capacity of SMEs to
respond to customersrsquo needs in a timely manner causing loss of clients or having a negative
impact on reputation Around one out of five SMEs that encountered problems declared that
those problems generated loss of clients or reputational damages
Reputation is a strategic intangible asset and it may play a very important role not only in
improving SMEsrsquo financial results but also (or even more importantly) in overcoming barriers
that significantly hinder their development The most important factor which builds a
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
58
companyrsquos reputation is the opinion and trust shared by stakeholders (especially customers
and third parties)
Interestingly Figure 25 also shows that the proportion of SMEs that perceive some financial
impacts arising from contract-related cloud computing problems in terms of lost profits or
turnover is slightly lower (16 and 14 respectively out of the 122 that faced contract-
related cloud computing problems) which suggests that at least some of those SMEs that
declared to have experienced negative consequences considered that they somehow managed
to counteract the impacts in terms of lost clients and reputational damages and that these
consequences did not translate into financial losses It is true that some of the effects of those
losses of clients or reputational damages that were reported may take some time to translate
into turnover losses and this helps in explaining why the proportion of enterprises that
declared to have experienced losses of turnover and profits is lower than that the one that
declared to have suffered from losses of clients or reputational damages Moreover this can
also be explained by the fact that it is not inherently an easy task to ask an SME to quantify
such costs as this might also depend on the person who answers and how knowledgeable he
is on the firmsrsquo accounts
Besides the consequences mentioned above the results of the survey and the findings of the
case studies confirmed that the most important consequence for cloud computing business
users is the extra work that had to be performed with internal human resources
overall 93 of the enterprises that encountered problems have had to mobilise some internal
human resources to sort out the problems (Table 16)
In particular while acting to resolve the encountered problems
76 of the enterprises have had to use technical staff to resolve the encountered
problems
administrative and senior officers and managers were used by nearly half of the
enterprises (48)
the complexity of the encountered problems forced 60 of the SMEs (73 out of 122
that encountered problems) to use at least two skill levels
Table 16 Number of enterprises in which human resources were invested while taking action to resolve or remedy the most serious problem by skill level of employee
( of respondents 122)
Skill level of
enterprises
Administrative 59 48
Technical 93 76
Senior officer(s)manager(s) 59 48
At least one of the above 113 93
Source Survey of SMEs (2018)
The importance and the prevalence of the extra work are also confirmed by the fact that about
one-third (31) of the SMEs that encountered problems reported no other consequences
besides human resources costs while taking action to resolve the most serious problem (Table
17)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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59
Table 17 Number of enterprises that have incurred costs (besides human resources) while
taking action to resolve or remedy the most serious problem by type of costs ( of respondents 122)89
Other costs encountered (different from costs related to internal HR)
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Other residual Costs 9 7
None 38 31
Source Survey of SMEs (2018)
It is interesting to note that when the problems were not resolved SMEs faced additional
costs related to ensuring an alternative service (34) and costs related to fixing the
cloud service problem with external support (32 Table 17)
Other hidden costs may also appear when SMEs face contract-related problems Even if legal
measures (ie going to mediationarbitration and filing an action with a court) were not
chosen as the action to resolve the problems (see Section 42 for further details) 18 of the
SMEs incurred some legal costs when exercising user rights to receiving remedies for non-
conformity of the contracted service
Whilst the perception of the nine SMEs that took part in the in-depth interviews is that the
encountered problems do not always have direct and important consequences for the financial
performance of the enterprises (ie loss of profit or turnover) it should also be noted that in
the survey not all SMEs were able to provide an estimate of the detriment encountered Such
estimation is indeed challenging and the unwillingnessincapability of the SMEs to provide an
estimate may also be due to the fact that effects on the balance sheet may only materialise
over a longer time horizon
However cloud services can be critical for SMEs This was reflected in some very high
estimates of detriment reported by individual SMEs For example this could be the case for
where the data lies at the core of the SMErsquos activity (eg an accounting firm) In extreme
cases the problem may cause the market exit of efficient companies The larger the costs
generated by the encountered problems the larger the risk of market inefficiencies
The next section is aimed at quantifying the monetary value of the consequences analysed so
far
52 Quantitative assessment
The quantification of the consequences suffered by SMEs (economic detriment) relied on the
computation of the following parameters90
proportion of enterprises that use cloud computing services (cloud computing usage
rate)91
the incidence of contract-related problems by sector--size classes (namely the
percentage of enterprises that encountered problems)
the 95 trimmed mean values by enterprise for
89 Multiple choice question 90 Please refer to Section 21 for further details on the methodology used to quantify the economic detriment 91 Please refer to Section 31 for further details
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
60
- losses of turnover or alternatively losses of profits
- number of working days involved in resolving the problems
- the level of other costs incurred
- the value of any redress offered by the service provider as a compensation
All of these parameters have been quantified by using the results of the survey To compute
the average and 95 trimmed mean values for each dimension of detriment only the answers
of SMEs that quantified the detriment associated with that dimension were considered
For some dimensions SMEs were asked first whether they suffered some cost and then to
quantify it SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems but that were not able to provide an estimate of the detriment suffered
due to that cost cannot be considered in this quantification exercise This quantification
exercise must thus be regarded as an estimate of the financial consequences of contract-
related cloud computing problems
Table 18 presents in the first column the number of enterprises that declared that they
suffered each cost92 then in the second column it presents the number of SMEs that were
able to quantify the cost and in the third column the number of SMEs that declared some
positive value for each cost As it can be seen the difference between the number of
enterprises that declared that they suffered a cost and that were able to quantify its effect is
quite diverse across the different dimensions of detriment
Table 18 Enterprises that declared that they suffered some costs and that were able to
quantify these costs
Component
Number of
enterprises that declared
they suffered the cost
Number of
enterprises that
quantified the cost
Number of enterprises
that
quantified
with positive values
of enterprises
that
quantified
with positive values
Loss of turnover na 122 17 14
Loss of profits na 122 19 16
Internal human resource costs 113 113 105 93
Other costs (at least one) 90 78 31 40
Costs related to ensuring an alternative service
42 41 15 37
Costs related to fixing the cloud service problem
39 39 15 38
Legal costs 22 22 1 5
Costs related to reputation
damage 23 23 3 13
Costs related to loss of client(s)
25 24 2 8
Other residual costs 47 34 5 15
Redress 15 15 7 47
Source Survey of SMEs (2018)
92 For lost turnover and lost profits as it was not asked separately whether the SME experienced some loss there is no information (see Annex 4 section E for further details on how the data collection was structured)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
61
Regarding turnover and profit losses all companies had to answer the question in the survey
and in that sense had to quantify those dimensions of detriment Despite this fact and as
already discussed only 14 and 16 respectively provided numbers for their estimates of
losses of turnover and profits These low figures may be due to the fact that at least some of
those SMEs that declared to having experienced other negative consequences might have
managed to counteract the impacts related to lost clients and reputational damages and other
costs and that those costs did not translate into financial losses Yet it is also true that some
of the effects of those losses of clients or reputational damages that were reported may take
some time to translate into turnover losses and this may help to explain why the proportion
of enterprises that declared to have experienced losses of turnover and profits is lower than
that which declared to have suffered losses of clients or reputational damages
For internal human resources costs 93 of the enterprises that mobilised internal human
resources declared losses of some working days that were considered in the analysis of
detriment thus most enterprises were considered in the analysis
For other costs 78 (80) of the enterprises that declared to have borne some costs were
able to quantify at least one of these costs
It is important to point out that some of the SMEs that declared to have borne costs arising
from contract-related cloud computing problems were not able to provide an estimate of the
cost of the detriment suffered This means that while there is some under-reporting of the
percentage of enterprises that faced relevant costs it does not necessarily imply a bias in the
overall estimate of detriment given that calculating average values for the impact can correct
the under-reporting problem if the true values of those that are not able to quantify have the
same distribution as those that were able to do so In practice by taking into consideration
only those that SMEs that quantified the detriment may lead to underestimation
overestimation or no bias at all
The fact that enterprises only assess the current financial losses and are not able to foresee
the future financial losses associated with problems such as the loss of clients or reputation
damages can imply an underestimation of the true detriment
Computed values have been discussed and validated during the webinars realised under Task
3 (see Annex 9 for further details)
Cloud computing usage rate
Two possible scenarios for the estimate of the usage rate of cloud computing were considered
based on the survey of SMEs
the first which is the central scenario in this study considers all enterprises that
did not respond to the survey as not using cloud computing services arriving at a
universe of 3173 SMEs In this case the usage rate corresponds to a value of 159
in the second only those enterprises that explicitly declared that they are not using
cloud computing services are added to those that declare its use corresponding to a
universe of 1009 The usage rate in this case is higher reaching a value of 499
which can be regarded as an upper estimate representing a possible future situation
in which the usage rate of cloud computing increases significantly
Incidence of contract-related problems
The sample available from the survey also allows the calculation with a 95 confidence
interval level and 5 margin of error of the incidence of contract-related problems
Losses of turnover
For all cost categories (ie loss of turnoverprofit costs of human resources other costs) and
for the value of redress the research team considered the 95 trimmed mean of the values
from the survey
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
62
Trimmed means are robust estimators of a general trend To compute the 95 trimmed
mean the research team i) removed 25 of observations on each side of the distribution
of survey answers ii) computed the average of the remaining observations
Using trimmed means confers one main advantage the standard error of the trimmed mean
is less affected by outliers and asymmetry than the mean93
The following tables present both trimmed mean and average values for all costs the latter
being included for illustrative purpose only
Table 19 Loss of turnover by enterprises
Value of
Losses (euro)
Number of
Enterprises
Relative frequency Cumulative
frequency
000 105 861 861
700 1 08 869
30000 1 08 877
104690 2 16 893
157035 1 08 902
200000 1 08 910
209380 1 08 918
500000 2 16 934
1000000 1 08 943
2000000 1 08 951
5000000 1 08 959
10469012 1 08 967
15000000 2 16 984
20000000 1 08 992
50000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Based on these values the value of the 95 trimmed mean is euro42094 Losses by sector
size class and country are presented in Annex 5
Loss of profit
Looking at profits (Table 20) we can see that also only 156 (19) of the enterprises out of
the 122 that suffered contract-related cloud computing problems declared a loss of profits
corresponding to a 95 trimmed mean of euro177 (Annex 5)95
Table 20 Loss of profits by enterprise
Value of Losses (euro)
Number of Enterprises
Relative frequency Cumulative frequency
000 103 844 844
1200 1 08 852
93 It must be emphasised that all very high value answers (outliers) have been double-checked and they do not seem to include errors in any case we take the more robust scenario (when the 95 trimmed
mean is used) to measure the impact and present the results considering the average values only as a
sensitivity in the appendix 94 The average value is euro985869 95 The average loss of profits per enterprise is about euro1913
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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63
Value of
Losses (euro)
Number of
Enterprises Relative frequency
Cumulative
frequency
20938 1 08 861
51500 1 08 869
52345 1 08 877
60000 1 08 885
90000 1 08 893
150000 1 08 902
157035 1 08 910
200000 2 16 926
209380 1 08 934
300000 1 08 943
500000 2 16 959
523451 1 08 967
2093802 1 08 975
3000000 1 08 984
5234506 1 08 992
10000000 1 08 1000
Total 122 100
Source Survey of SMEs (2018)
Internal human resources costs
When one considers the number of working days involved in resolving the problems96 there
is a significant level of dispersion and only 17 out of the 122 enterprises that suffered contract-
related cloud computing problems did not invest working days in resolving the problem97 The
95 trimmed mean was about 32 days98
To compute the human resources costs incurred when resolving the problems as the actual
values of wages of those involved in resolving the problems were not provided the number
of working days was multiplied by the average cost of labour per working day per country and
industry which was computed from Eurostat data as INDIC_SB - Personnel costs - million
euroINDIC_SB - Persons employed - number)260
Eurostat data are not differentiated by skill level but by using the average wage level by
sector and country during that period we have a robust estimate of the average cost of labour
on the affected enterprises and so the estimate is likely to be close to actual conditions
96 For the measurement of the detriment only the overall number of working days was used as the responses to the survey regarding wages were not robust and so the average wage for each country was used to estimate the human resources costs and accordingly only the overall number of working
days had to be used from the survey 97 This means that 93 of the enterprises that mobilised internal human resources to sort out the problems declared some losses of working days 98 The average number of working days involved in resolving the problem was about 72
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
64
Figure 26 Total number of working days involved in resolving the problem by enterprise
Source Survey of SMEs (2018)99
Other costs and value of redress
With regard to the other costs100 incurred by the SMEs to resolve the problem a qualitative
assessment has been presented in Section 51 above
With respect to these other costs Table 21 shows the number of SMEs that declared relevant
values as well as the trimmed mean and the average of the declared values for each of the
individual costs
The incidence of each of the individual other costs is quite different with the costs related to
ensuring an alternative service and costs related to fixing the cloud service problem as those
that are perceived as having greater impact Overall only seven enterprises experienced more
than one type of other costs
Table 21 Values for other costs
Component
Number of enterprises
that quantified
costs
Number of enterprises
that declared positive values
of total 122
95 trimmed
mean of the values
declared by enterprises
experiencing
each cost euro
Average of
the values declared by enterprises
experiencing each cost
euro
Costs related to ensuring an alternative service
41 15 123 1187 5892
Costs related to fixing the cloud service problem
39 15 123 1311 13657
99 See Annex 5 for further details 100 ie costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
65
Component
Number of enterprises
that quantified
costs
Number of enterprises
that
declared positive values
of total
122
95
trimmed
mean of the values
declared by enterprises
experiencing each cost
euro
Average of
the values declared by enterprises
experiencing each cost
euro
Legal costs 22 1 08 00 19
Costs related to reputation damage
23 3 25 00 2701
Costs related to loss of
client(s) 24 2 16 00 8663
Other residual costs 34 5 41 23 6255
Source Survey of SMEs (2018)
As discussed above not in all cases were consulted stakeholders able to associate an
economic value with the consequence that was faced or they simply considered the costs that
were borne as not relevant
Since for some of the individual other costs there were very few answers provided we chose
to consider an aggregate value of other costs in the assessment of the detriment suffered by
SMEs given that the use of an aggregate value increases the robustness of the estimate101
To arrive at the aggregate value we first computed the total value of other costs borne by
each enterprise (by adding up each of the individual other costs) and then computed the
trimmed mean of the aggregate declared other costs The 95 trimmed mean per
enterprise that suffered problems102 of the overall other costs borne was euro341 (Table
22)103
Table 22 Parameters used in detriment assessment
Component
Number of enterprises that
declared
relevant values ()
of the 122 enterprises that
faced problems
95 trimmed mean of the
values declared by enterprises
that quantified the component
euro
Average of the values declared by enterprises that quantified the component
euro
Turnover losses 17 139 41954 985869
Profit losses 19 156 17690 191346
Costs of human resources
105 861 36006 80621
Other costs 30 246 34124 371871
Redress 7 57 095 6042
Source Survey of SMEs (2018)
101 For this reason the trimmed mean based on total other costs has been used instead of the trimmed
means for each individual other cost 102 The trimmed mean has been computed over 122 SMEs 103 An average of euro3718 per enterprise
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66
Finally also the value of any redress offered by the service providers to compensate for
the problem has been computed Only seven enterprises out of the 122 that suffered contract-
related cloud computing problems (6) declared to having received a positive amount as
redress corresponding to a 95 trimmed mean of about euro1 per enterprise that
suffered problems104 which shows that SMEs are not able to be compensated for the costs
suffered
Table 22 summarises the parameters discussed above for each component of detriment that
is used in the quantitative analysis
Measuring the economic detriment
Having those parameters and the total number of enterprises that experienced contract-
related cloud computing problems it is possible to compute the value of the economic
detriment they suffered by using the formulas presented in Section 21 of this report
Gross financial detriment is measured by taking into account alternatively the loss of turnover
or profits as perceived by each SME and then adding the costs of the human resources
invested by each SME while taking action to resolve or remedy the most serious encountered
problem and the other costs declared by each SME including costs such as the costs related
to ensuring an alternative service the costs related to fixing the cloud service problem any
legal costs costs related to reputation damage and costs related to loss of client(s) and other
residual costs
The measures of gross financial detriment per enterprise computed from the previous
parameters are presented in Table 23 and those for net financial detriment are shown in Table
24
Table 23 Measures of gross and net financial detriment per enterprise considering lost turnover (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Turnover losses 4195 374 98587 685
Costs of human resources 3601 321 8062 56
Other costs 3412 304 37187 259
Gross detriment 11208 1000 143836 1000
Redress 10 604
Net detriment 11199 143232
Source Survey of SMEs (2018) and Eurostat Business Statistics
104 An average of euro6042
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67
Table 24 Measures of gross and net financial detriment per enterprise considering lost
profits (euro)
Component
95 trimmed mean of
the values declared by
enterprises that
quantified the
component
euro
Average of the
values declared by
enterprises that
quantified the
component
euro
Profit losses 1769 201 19135 297
Costs of human resources
3601 410 8062 125
Other costs 3412 389 37187 578
Gross detriment 8782 1000
64384 1000
Redress 10 604
Net detriment 8773 63780
Source Survey of SMEs (2018) and Eurostat Business Statistics
As mentioned above considering these values two scenarios have been developed that take
into account the two measures of cloud computing usage rate
The estimates presented are lower thresholds of the actual detriment as they only consider
the most serious problem which represents less than 80 of the total losses for 48 of the
companies105 The size of underestimation is limited by the fact that sectors with the highest
usage rates of cloud computing are considered in the analysis and they are likely to bear more
costs than the average sector
Table 25 to Table 30 below present the results for economic detriment at the EU level
The interpretation of the results on the economic detriment caused by contract-related
cloud computing problems shows that in the central scenario (when 159 of the total
number of enterprises use cloud computing) the number of enterprises that suffered contract-
related problems across the EU28 is around 583000 (Table 25) In the alternative
scenario (when about 50 of the enterprises use cloud computing) this value increases to
about 18 million
105 The risk of underestimation is less pronounced as the sectors selected for the sample are those for which the usage rate of cloud computing is higher
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68
Table 25 Number of enterprises at the EU28 level suffering economic detriment
Scenario 1
(average incidence of CC use
159)
Scenario 2
(average incidence of CC use
499)
(number)
Secto
r
Manufacturing 82256 245581
Wholesale and retail trade repair of motor vehicles and motorcycles
198877 628761
Information and communication 49890 156187
Professional scientific and technical activities
195098 599588
Administrative and support service activities
56803 203001
Total 582924 1833118
Siz
e
cla
ss Micro 548001 1722427
Small 22827 70148
Medium 12096 40543
Total 582924 1833118
Source Computations based on Survey of SMEs (2018) and Eurostat
When considering lost turnover and all other costs incurred (Table 24) contract-
related problems generated a gross economic detriment that ranges from approximately
euro650 million in the scenario of 159 cloud computing usage to about euro21 billion in the
scenario of 499 cloud computing usage When considering the lost profits and all other
costs incurred (Table 27) the value of gross detriment goes from just over euro500 million
in the scenario of 159 cloud computing usage to about euro16 billion in the scenario of
499 cloud computing usage
Table 26 Gross economic detriment at the EU28 level - considering lost turnover and all other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2947
Wholesale and retail trade repair of motor vehicles and motorcycles
1673 5235
Information and communication 369 1145
Professional scientific and technical
activities 1557 4723
Administrative and support service activities
1918 6495
Total 6534 20546
Siz
e
cla
ss Micro 4816 15124
Small 1144 3562
Medium 574 1861
Total 6534 20546
Source Computations based on Survey of SMEs (2018) and Eurostat
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69
Table 27 Gross economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 649 1906
Wholesale and retail trade repair
of motor vehicles and motorcycles 1548 4852
Information and communication 345 1074
Professional scientific and technical activities
1421 4323
Administrative and support service
activities 1157 3943
Total 5119 16098
Siz
e
cla
ss Micro 4013 12609
Small 801 2488
Medium 306 1002
Total 5119 16098
Source Computations based on Survey of SMEs (2018) and Eurostat
The value of the gross detriment per enterprise that faces problems when considering
lost turnover and all other costs incurred is about euro1100 When considering lost profits
and all the other costs incurred the value of the detriment per enterprise is around euro880
Table 28 Average gross economic detriment per SME
Average gross economic detriment per SME suffering economic
detriment euro
Considering lost turnover and all
other costs incurred
Considering lost profit and all other
costs incurred
Micro 8788 7323
Small 50116 35090
Medium 47454 25298
Total 11209 8782
The net economic detriment associated with contract-related cloud computing problems
ranges from around euro650 million to euro21 billion when considering lost turnover and
all other costs incurred (Table 29) and from euro501 million to euro16 billion when considering
the lost profits and all other costs incurred (Table 30)
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70
Table 29 Net economic detriment at the EU 28 level - considering lost turnover and all
other costs incurred
Scenario 1 (average incidence of CC
use 159)
Scenario 2 (average incidence of CC
use 499)
(euro million)
Secto
r
Manufacturing 1017 2946
Wholesale and retail trade repair of
motor vehicles and motorcycles 1673 5234
Information and communication 369 1145
Professional scientific and technical activities
1556 4722
Administrative and support service
activities 1913 6481
Total 6528 20529
Siz
e
cla
ss Micro 4815 15118
Small 1143 3562
Medium 570 1850
Total 6528 20529
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 30 Net economic detriment at the EU28 level - considering lost profits and all other
costs incurred
Scenario 1 (average incidence of CC use
159)
Scenario 2 (average incidence of CC use
499)
(euro million)
Secto
r
Manufacturing 648 1906
Wholesale and retail trade repair of motor vehicles and motorcycles
1548 4851
Information and communication 345 1074
Professional scientific and technical activities
1420 4322
Administrative and support service activities
1152 3928
Total 5114 16081
Siz
e
cla
ss Micro 4011 12603
Small 800 2488
Medium 302 990
Total 5114 16081
Source Computations based on Survey of SMEs (2018) and Eurostat
Moving to the analysis of the different components of detriment considering the more detailed
results presented in Annex 5 one can see that the overall turnover loss (Table 77) arising
from contract-related cloud computing problems across the EU28 ranges from euro245 million
to euro770 million when the 95 trimmed mean loss per enterprise is considered depending on
the cloud computing usage rate
In the measures of detriment that consider the lost turnover and all other costs incurred this
component is the most significant component of detriment in both scenarios with values
around 37 (Figure 27) When measuring detriment considering the lost profits and all other
costs incurred the most important component of detriment varies across the different
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71
scenarios being either the other costs covered106 or the costs of human resources invested
in resolving the problem
The costs of human resources involved in resolving the problem represent around 32 of
the total detriment when considering lost turnover (Table 23)
Even if figures by industry should be looked at carefully in all scenarios in which detriment is
measured considering the lost turnover and all other costs incurred the sectors lsquoWholesale
and retail trade repair of motor vehicles and motorcyclesrsquo lsquoProfessional scientific and
technical activitiesrsquo and lsquoAdministrative and support service activitiesrsquo together account for
about 90 of the overall gross detriment In the scenarios in which detriment is measured
considering lost profits and all other costs incurred lsquoWholesale and retail trade repair of
motor vehicles and motorcyclesrsquo and lsquoProfessional scientific and technical activitiesrsquo together
account for about 60 of the total detriment
In all scenarios micro enterprises account for close to 70 of the global economic detriment
106 These costs include costs related to ensuring an alternative service costs related to fixing the cloud service problem legal costs costs related to reputation damage costs related to loss of client(s) and other residual costs
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72
6 Impacts of the economic detriment
This section assesses (in quantitative terms) the impact on growth and jobs of the quantified
SMEs detriment identified and provides a qualitative evaluation of the overall impact of the
problems encountered by SMEs in terms of market functioningfailures and competitiveness
In order to quantify the effects on growth and jobs the research team estimated
the direct impact meaning the GVA and employment contents of the turnover lost
by SMEs that are affected directly by the contract-related problems This is done by
taking from Eurostat data for each countrysector
- the output per employee
- the output per unit of GVA107
Dividing the turnover losses estimated by these coefficients allows to estimate the GVA
associated with the turnover losses as follow
119863119868(119866119881119860)119894 = sum119871(119879)119894119895
119884119894119895 119866119881119860119894119895frasl
5
119895=1
Where
119863119868(119866119881119860)119894 is the direct impact in terms of GVA for the country i considering the five
sectors under the scope of the study
119871(119879)119894119895 is the loss turnover for the country i in the sector j
119884119894119895 is the average total output produced in the country i and in the sector j during the
period 2014-2016 computed from Eurostat National accounts aggregates by industry
(up to NACE A64) [nama_10_a64]
119866119881119860119894119895 is the average total GVA produced in the country i and in the sector j during
the period 2014-2016 computed from Eurostat National accounts aggregates by
industry (up to NACE A64) [nama_10_a64]
The same approach has been used for the estimate of the loss of jobs associated with the
turnover losses
119863119868(119864)119894 = sum119871(119879)119894119895
119884119894119895 119864119894119895frasl
5
119895=1
Where
- 119863119868(E)119894 is the direct impact in terms of employment for the country i considering
the five sectors under the scope of the study
- 119871(119879)119894119895 is the loss turnover for the country i in the sector j
- 119884119894119895 is the average total output produced in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64]
- 119864119894119895 is the average number of employees in the country i and in the sector j
during the period 2014-2016 computed from Eurostat National accounts
aggregates by industry (up to NACE A64) [nama_10_a64_e]
107 Average values for 2014-2016 were considered to increase robustness and to cover almost the same period as we are considering in the assessment
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73
For instance in the first scenario the total turnover losses arising from contract-related cloud
computing problems in manufacturing in Belgium is euro448 million (Table 81) Since each
person in manufacturing in Belgium produces euro4293 thousand of output (Table 84) that
turnover is associated with 104 jobs And given that for each euro of GVA in manufacturing in
Belgium there are euro41 of turnover (Table 83) that turnover is associated euro 108 million of
GVA
indirect impacts also measured as GVA and employment losses but in the supplier
industries were also assessed by using the input-output methodology presented in
Box 4
The basic requirement is to estimate the amount of turnover that is lost in supplier industries
given the existing supply chains The input-output methodology allows estimating those losses
based on the interlinkages between sectors existing in a given economy We then use the
input-output tables for the EU28 to estimate how much turnover would be lost in the supplier
industries due to the turnover losses associated with contract-related cloud computing
problems in the industries directly affected by those problems After estimating the turnover
losses in the supplier industries it is possible to measure the GVA and employment contents
of the production lost in those industries by using the same procedure described above that
was used for direct effects The input-output analysis is only used to estimate the turnover
losses in supplier industries when the methodology described above is applied
61 Direct impacts
At the enterprise level we estimated the financial detriment suffered by each enterprise by
considering different components and then aggregated those measures to the EU28 level by
adding up the effects suffered by each enterprise across all enterprises
When estimating the macroeconomic effects of the contract-related problems as discussed in
the methodology one must consider the overall turnover losses that were sustained by all
enterprises that experienced those problems This is due to the fact that turnover is the
variable that summarises the overall effects at the enterprise level and that is transmitted to
the economic system through the supply chains and can be related to aggregate economic
variables At the same time by considering turnover as an overall effect helps to avoid double
counting
Estimated turnover losses are presented in section 52 by considering the average loss of
turnover experienced by each enterprise and the total number of enterprises that suffered
problems related to cloud computing As discussed in that section there may be some
underestimation of the loss of turnover as we are only considering the consequences of the
most serious problem and also because enterprises many times are not able to assess108 how
some costs such as loss of clients or reputational damages translate into turnover losses or
other financial losses
Keeping the previous considerations in mind the overall results show that depending on the
scenario of cloud computing usage the direct loss of jobs associated with the loss of turnover
caused by contract-related cloud computing problems ranges from 3672 to 11816 jobs At
maximum this represents 001 of the total employment in the EU28 showing that the
overall direct effects of contract-related problems in terms of jobs is quite limited
With respect to gross value added the direct impact of the losses of turnover caused by
contract-related cloud computing problems ranges from euro119 million to euro379 million which
is again negligible when considering the overall EU28 level
108 Namely because there is a time lag and no linear proportion between the costs and damage (eg reputational damage) and the turnover losses
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74
Table 31 Direct impact on growth and jobs of the losses of turnover caused by contract-
related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 1191 3788
EU GVA 000 000
Impact on jobs
Persons 3672 11816
EU
employment 000 001
Source Computations based on Survey of SMEs (2018) and Eurostat
Annex 7 presents tables that provide details by sector and country The tables that provide
details by country and sector show that effects are more significant in the sectors
lsquoProfessional scientific and technical activitiesrsquo and lsquoAdministrative and support service
activitiesrsquo One can also find some differences across countries
62 Indirect impacts
Turning to the indirect effects as mentioned we measured the consequences of the turnover
losses on supplier industries by using the input-output model to identify the supply chains
It is important to take into account that not only the described limitations related to the direct
effects do not fully translate into the indirect effects but the methodology used is also not
able to capture some opportunity costs that are particularly relevant for instance for human
resources or downstream effects namely on final consumers Thus the current
measurement of indirect effects must be seen as a lower threshold to the true indirect effects
Despite these limitations the input-output methodology is the best available methodology to
explore the interlinkages that exist between sectors and to estimate the indirect impacts
arising from contract-related problems
The measured indirect impacts on supplier industries are similar in magnitude to the direct
effects
Depending on the scenario of cloud computing usage the loss of jobs in supplier industries
associated with the loss of turnover caused by cloud computing contract-related problems
ranges from 1733 to 5402 Losses of GVA range from euro99 million to euro308 million
Overall adding direct and indirect effects we may refer to maximum impacts of about 5400
jobs (000 of EU28 employment) in scenario 1 and 17818 jobs in scenario 2 (001 of
total employment Regarding the loss of GVA the sum of direct and indirect effects adds up
to euro220 million in scenario 1 and to euro687 million in scenario 2 (both 000 of EU28 GVA)
which shows that the impact is not very significant at the EU28 level
Table 32 Indirect impact on growth and jobs of the losses of turnover caused by contract-related cloud computing problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use
499)
Impact on GVA euro million 987 3079
EU GVA 000 000
Impact on jobs Persons 1733 5402
EU employment 000 000
Source Computations based on Survey of SMEs (2018) and Eurostat
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and unbalanced cloud computing contracts
75
63 Other qualitative impacts of contract-related problems
The previous sections show that even with some possible underestimation the overall direct
and indirect impacts are not very significant for the time being but as was pointed out in the
analysis some companies have already experienced problems that had very significant effects
(demonstrated by the size of the average of all detriment components compared with the
95 trimmed mean presented in Table 22) and in a scenario of increasing usage rates these
effects are likely to become more relevant and more likely to affect the market
The analysis also revealed that some SMEs had difficulties in quantifying the costs relating to
cloud computing problems
However it is important to keep in mind that besides those quantitative impacts there might
be some other more qualitative effects arising from contract-related cloud computing
problems that create distortions affecting the allocative efficiency in the EU economy
eventually diminishing the overall welfare
The efficiency with which goods and services are produced or distributed is fundamental to
ensuring the competitiveness of the various business entities Using the best available
technologies and taking full advantage of them to reduce costs or improve the quality of the
goods and services provided are relevant factors in ensuring SMEsrsquo competitiveness
In the ongoing debate on macroeconomic imbalances and external competitiveness there has
been an increasing interest in competitiveness indicators regarding both cost competitiveness
and quality and non-cost competitiveness
General industrial economics theories show that contract-related problems as they increase
transaction costs may affect that competitiveness as they are a type of context cost which
are costs that affect the activity of enterprises and are not imputable to the investor to his
business or to his organisation These context costs gain increasing relevance with the
increasing integration of various enterprises into the global economy given that in a scenario
in which enterprises located in different territories face different contextual costs those costs
may significantly distort competition favouring the enterprises located in jurisdictions with
lower context costs
Contract-related problems are therefore a type of problem that may impact competitiveness
of enterprises and hinder their development in several different ways They may represent an
additional cost that reduces the price competitiveness of enterprises But they can also
constitute a non-cost barrier to competitiveness if they affect the presence of enterprises in
the market and their ability to efficiently supply their products namely if those problems
significantly reduce the possibility of accessing the best available technologies
Taking into account the previous considerations it is then important to analyse whether the
contract-related problems encountered and described above may have generated other
significant effects through both cost and non-cost competitiveness109
The analysis so far has already shown that contract-related problems have an impact in terms
of reputation and loss of clients besides the financial impacts on enterprise performance Even
if SMEs are not able to translate those effects into financial costs they are likely to have an
impact over the long run
During the interviews and case studies questions were also raised about whether the contract-
related problems might have caused other problems such as reputation damages or losses of
109 The outliers in the sample showed that in a few extreme cases the effects of contract related problems had very high effects and although these values have been excluded using the Trimmed Mean they should not be disregarded when trying to understand the whole context
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
76
competitiveness that may have impacted significantly on the economic performance of the
companies affected
For the time being it seems that given the fact that at the micro level (ie enterprise level)
most of the detriment is associated with extra work required to sort out the problems
enterprises are able to accommodate this effect at least to some extent
The relatively low value of detriment per enterprise perceived by SMEs as being caused by
contract-related problems suggests that enterprises consider they are able to absorb some of
those costs110 If those effects were greater they would have to transmit them more heavily
to their clients namely through increases in prices
Yet in considering all of the factors our general assessment is that even if enterprises are
able to partially absorb the costs they have incurred some of those costs will show up sooner
or later in financial variables and will translate into larger distortions that are likely to affect
allocative efficiency market functioning and competitiveness
110 Again the difficulties evidenced by some SMEs to quantify the costs arising from contract related problems suggests they might not be able to sufficiently account for the opportunity costs associated with solving those problems
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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7 Conclusions
Demonstrable tangible economic benefits of cloud computing have been estimated and
confirmed for some years now The main benefits realised are lower information technology
costs more effective mobile working higher productivity standardisation of processes better
ability to enter new business areas and the ability to open up in new locations
While the above list of the benefits is not exhaustive it certainly provides an impression of
the high potential economic advantages that can be gained from the usage of cloud computing
compared to more traditional alternatives such as on-premises information technology
infrastructure
All in all the growing usage of cloud computing is expected to have a relevant impact on
increasing EU GDP and creating additional jobs111
The present study investigated the cloud computing services that are most commonly used
by micro small and medium-sized enterprises in the EU In particular a survey was
conducted on 3173 EU SMEs
The survey results allowed the estimation of the usage rate of cloud computing across SMEs
as 159 calculated from the number of SMEs that declared they are using cloud computing
services (503) divided by the number of SMEs reached (3173)
However EU SMEs are still only making basic use of cloud computing services in terms of the
number and types of contracted services
on average SMEs that declared that they used cloud services contracted five
different cloud computing services but one-third of the SMEs that used cloud
computing contracted only a limited number of services (up to three)
furthermore the use of cloud computing is mainly related to more mature applications
(such as collaboration and communication tools storage and hosting support)
Although the usage of cloud computing services is growing the following potential factors
limiting cloud computing usage were investigated during the interviews with different
stakeholders (including cloud services providersbrokers SMEs business associations ndash
including EEN associations Chamber of Commerce national authorities national SMEs
Envoy)
some SMEs have difficulties in assessing how the new services can improve their
everyday work
other SMEs perceive that costs of cloud services are still high and that it takes too
long to recover the investment
the division of responsibilities between SMEs and cloud providers can
sometimes become a major source of problems as it is not always clearly
documentedexplicated leading to overlaps and gaps especially with respect to
security aspects It is not uncommon for SMEs to be confused about their
responsibilities concerning security such as who makes backups of data or software
which type of failoverredundancy is offered by the provider and what still needs to
be done by the customer All of these issues can have an impact on the willingness of
SMEs to outsource cloud services
security matters generally influence SMEsrsquo decisions about what types of services to
be used One of the aspects that has been mentioned during the interviews as a factor
influencing the SMEsrsquo choices is the reputation of the provider more precisely
whether the cloud provider has had incidents of data breaches in the past
111 European Commission (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-take SMART 20110045 Brussels
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78
Another important factor discussed during the interviews is the asymmetry of information
when it comes to negotiating and customising the services covered by the CTampC and that
might limit the capacity of SMEs to find solutions that fit their needs
As a consequence the survey results showed that the SMEs tended to sign the standard
terms and conditions offered by the cloud provider (this is true for 64 out of 503 SMEs
that are using cloud computing services) either because they did not try at all to negotiate
(46) or were not able to do so (18) The decision to adopt the standard terms and
conditions was made either because these met the usersrsquo expectations (18) or because it
was assumedknown that a negotiation would have no chance to succeed (13)
In contrast to the traditional provision of on-premises IT resources the multi-tenant nature
of cloud computing usually raises concerns with respect to privacy confidentiality and
data integrity Cloud computing presents its own set of security issues which coupled with
the risks and threats inherent in traditional IT computing are also limiting its usage
However the stakeholders involved in the study indicated that the shortcomings in the SMEsrsquo
capacity for negotiating cloud computing contracts could be helped somewhat by the entry
into force of the GDPR as the new legislative framework gives SMEs more control over data
once the service providers apply the regulation
While the main objective of the study was to deliver the necessary evidence to support the
European Commission in its assessment of the need for and extent of any further EU efforts
to increase SMEsrsquo trust in cloud services it investigated
the prevalence nature scope and scale of the contract-related problems that SMEs
encounter in relation to cloud computing services
whether and to what extent enterprises are able to protect themselves against
contract-related problems when deciding to use cloud services
Based on the results of the survey it was estimated that around one SME cloud computing
user out of four (24) encountered contract-related problems during the period 2016-
2017 The main problems were related to the non-conformity of the service provided with
what was established in the contract concerning
the speed of service (55 of those SMEs who experienced problems)
the availability or continuity of the service (49)
updates to the service (32)
clarity of the instructions on how to use cloud computing services (26)
Problems related to security even if having impact on only a limited number of SMEs (less
than 10 of the cloud computing users that experienced problems) were quite frequent
especially with regard to the lack of protection of the data stored in the cloud against theft or
viruses and unauthorised disclosure of or access to data (both showing frequencies of almost
once every three months)
This was an important element arising from the study as security is often perceived as the
key risk when outsourcing information technology services because it may affect critical data
Clearly enterprises attach high importance to the protection of their information technology
systems but the issue can be seen in the wider context of resilience to possible security
breaches when using the cloud Therefore from the enterprisesrsquo point of view (regardless of
their size) the risk of a security breach may be a matter of service providersrsquo liability and
accountability as well as a technical issue
Cloud computing users who experienced problems in relation to cloud computing services
were asked to select the most serious among them (ie the problem that created the highest
impact on the everyday activities andor in terms of costs faced in order to resolve it) The
analysis of the results showed a correlation between the most frequent problems and the
problems with the highest impacts on enterprises Indeed unsatisfactory availability or
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
79
discontinuity of the service low speed of the service and forced updates were
considered as the most serious problems
The main cause of the most serious problems was the non-conformity of the service
provided with what was established in the contract (51 of the 122 SMEs declaring
that they encountered problems) The unfairness of contract terms was also perceived as a
possible cause for the most serious problems declared this being mentioned by 15
respondents out of 122 (12) Some practical examples were provided in the Surveyrsquos open
questions and the contract terms were considered to be unfair by the respondents when there
was no possibility of negotiating their content or when they included limited liability of the
providers or the possibility for them to unilaterally amend the contract
However in 19 of the cases the problems encountered were not under the service providerrsquos
responsibility but arose from technical issues and enterprisesrsquo internal factors112
In order to protect themselves the majority of the SMEs (74 of those that encountered
problems) chose to take action to resolve or to remedy the problems encountered
Conversely for those SMEs that decided not to take any action this was justified by the fact
that the cloud provider fixed the problem or that the problem was assessed as not important
or the procedure was considered to be too complicated Interestingly there are two types of
actions which SMEs showed reluctance to use both concerning legal measures going to
mediationarbitration and filing an action with a court This is because the costs associated
with these proceedings did not appear to be worth it
Following the actions taken to address the problem the majority of the SMEs indicated that
their problem was either entirely resolved (70) or partially resolved (18) but the vast
majority of the surveyed SMEs that experienced problems (88) were not offered any redress
by the cloud service providers for the damage caused
The research team estimated that 582924 micro small and medium-sized enterprises
have encountered contract-related problems while using cloud computing and have
faced an economic detriment that is related to different components
losses of turnover and profits
costs of human resources
other costs incurred113
Regarding the human resources invested by the SMEs to address problems members of the
technical staff were by far the most used (76 of the enterprises that faced problems
invested in such resources) Furthermore about one-third (31) of the SMEs reported no
other costs besides human resources when taking action to resolve the cloud computing
problems The ones that did indicate other actions mostly sustained costs related to ensuring
an alternative service (34) and costs related to fixing the cloud service problem (32)
Contract-related problems generated a gross economic detriment measured by
considering lost turnover and all other costs equal to euro6534 million
The loss of turnover was the most significant component of the detriment representing
37 of the total detriment while costs of human resources involved in resolving the
problem represent around 32 of the total detriment
Micro enterprises accounted for around 74 of the global economic detriment (compared to
175 for small and 88 for the medium) but it is in small enterprises that the average
112 When providing further details the cloud computing users acknowledged the fact that there were
cases where the enterprisersquos own mistake such as a miscommunication or lack of capacityknowledge
was admitted to be the cause of the cloud computing problem 113 These costs include overall costs in ensuring an alternative service and costs related to fixing the cloud service problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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80
gross detriment per enterprise was highest (ie euro 5012 compared to euro 4745 for medium
and euro878 for micro enterprises)
It is important to note that this estimate is a lower threshold of actual detriment as
not all SMEs that declared to have borne a specific cost due to contract-related cloud
computing problems were able to provide an estimate of the detriment suffered
it only considers the costs associated with the most serious problem During the
survey 48 of the enterprises that encountered contract-related problems declared
that costs related to the most serious problem represented less than 80 of the total
losses However they were not able to provide relevant estimations regarding the
other encountered problems
However the magnitude of the underestimation is limited by the fact that the Member States
and the sectors chosen to be in the sample are those with highest cloud computing usage
rates and so are likely to bear costs above the average
Having computed the economic detriment suffered by micro small and medium-sized
enterprises the following have also been considered
direct impacts of a reduction in economic activity of the enterprises suffering from
contract-related cloud computing problems on their overall gross value added and
employment
effects on the gross value added and employment of supplier industries arising from
the turnover losses they suffer (indirect impacts)114
Direct impacts were estimated by considering the gross value added and employment
contents of the turnover losses at country and sector levels and the coefficients of total
turnover at country and sector levels computed from Eurostat data115
The overall results show that the 3672 direct jobs were lost in the sectors where contract-
related problems were encountered With respect to gross value added the direct impact of
the losses of turnover was a reduction of euro119 million within the same sectors
The indirect effects measured as gross value added and employment lost in the supplier
industries were still quite considerable The indirect impact associated with the loss of
turnover caused by contract-related cloud computing problems led to losses of 1733 jobs
and around euro987 million of Gross Value Added
Again it should be emphasised that the measured indirect effects must be seen as lower
thresholds to the actual indirect effects not only because of the above-mentioned limitations
but also because the input-output methodology while very good at estimating backward
linkages along the supply chain has some limitations in capturing opportunity costs and
intangibles or downstream effects of the problems in client industries or final consumers
Besides measuring the detriment caused by contract-related cloud computing service
problems the analysis addressed the issue of whether those problems might have generated
other effects
114 These indirect losses arise from the fact that the industries that suffered from the direct turnover losses reduced their demand for products from their suppliers 115 National accounts aggregated by industry (up to NACE A64) [nama_10_a64]
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81
Results show that contract-related cloud computing problems had an impact on enterprises
in dimensions such as reputational damages or loss of clients but that these effects did not
translate116 into very significant effects on financial variables during the period considered
The study covered the problems faced by SMEs during 2016ndash2017 The survey has been
implemented during 2018 The fact that some enterprises were not able to provide an
estimate of the detriment encountered may also be due to the fact that effects on the balance
sheet may only materialise over a longer time horizon
The analysis also has shown that most enterprises incurred internal human resources costs
or other external costs in order to resolve those problems The allocation of resources to
resolve those problems is likely to create some inefficiencies and to affect the competitiveness
of the companies
Given the size of the effects estimated and even if it is likely that there is some
underestimation enterprises are probably still able to at least partially absorb some of the
costs caused by cloud computing problems
But as we have seen there have already been some cases of contract-related cloud computing
problems that had very large impacts
Over time as increasing usage rates lead to rising incidence of contract-related cloud
computing problems and the longer term consequences of reputational damages and losses
of clients on financial variables become evident it will make it more likely that enterprises
will stop being able to absorb the effects of the encountered problems and this will increase
the impact of those problems on allocative efficiency market functioning and
competitiveness eventually affecting clients and final consumers and reducing the aggregate
welfare
116 The study covered the problems faced during 2016 ndash 2017 The survey has been implemented during
2018 The fact that some enterprises were not able to provide an estimate of the detriment encountered may also be due to the fact that effects on the balance sheet may only materialise over a longer time horizon
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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82
Annex 1 Methodology for the Survey of SMEs
In order to maximise the response to the survey of SMEs a detailed introduction to the online
survey and CATI was prepared and discussed with the EC for approval The introduction
presented the purpose of the study the sponsor and last but not least the reason it is
beneficial for the SME to cooperate with the study
During the interview phase it was of utmost importance to speak with the person in each
enterprise who has the most knowledge about the topic of cloud computing So we
recommended adding a so-called ldquoscreenerrdquo question in order to verify if the interviewer is
speaking with the most suitable interlocutor within the enterprise
The screener question can be found below
S1 Would you describe yourself as the person familiar with the services that your enterprise is using over the internet (cloud computing services) and have general knowledge about the enterprise
1 Yes that is me
2 No that is someone else
ltIf 1 go to Section Bgt
ltIf 2gt
lsquoI am sorry but I would like to speak to the person familiar with the services that the enterprise is using over the internet (cloud computing) and has general knowledge about the enterprise Can you give me hisher name or connect mersquo
ltIf connected to new person re-ask question S1gt
ltIf given name note down new name and make call back appointmentgt
In the CATI quotas were set at country level size classes and sectors in such a way that
when the target per country andor size class was achieved the remaining sample records of
this countrysize class were disabled automatically
The CATI was handled by the Global Data Collection Company (GDCC) The assigned project
manager of GDCC was responsible for drafting detailed briefing instructions for the
interviewers This assigned project manager was responsible for giving the initial briefing to
the interviewers in cooperation with the team leaders and senior interviewers depending on
the language of the questionnaire The initial briefing was held via web conference since the
project was implemented in various locations The team leaders were briefed using the English
version of the questionnaire and they went through the test link by clicking on all the available
options After this initial briefing the team leaders briefed the interviewers in all locations If
any changes were necessary during the process the team leaders held the briefings again
Whenever a new interviewer was added to the project heshe was additionally briefed
All briefings were held in one of the GDCC briefing rooms In these rooms up to 15
interviewers were instructed simultaneously on this project The questionnaire was projected
on the big screen during the briefings All relevant notesremarks from the briefings were
incorporated into the project briefing document and made electronically available to the
interviewers in the interview application
After the briefing the interviewers conducted dummy interviews in the so-called ldquotest moderdquo
of the data collection application in order to familiarise with the questionnaire
Relevant issues which arose during the fieldwork were promptly communicated to ALL
interviewers working on the project via a bulletin board in the CATI platform andor a revision
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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83
of the briefing form which was also available to the interviewer via the questionnaire in
electronically format
During the fieldwork a maximum of 10 phone calls were made to each SME in order to obtain
an interview If no interview was conducted after those 10 attempts the addressee was
considered as a non-response
Call-back appointments were not terminated after 10 attempts as experience has shown that
once a potential respondent has given permission to schedule a call to do the interview often
more attempts are needed to conduct the interview
The interviews for the survey were conducted as much as possible during the usual opening
hours of businesses in the respective countries
The team engaged in the fieldwork was comprised not only of a significant number of
experienced (native speaker) interviewers but for almost every EU country at least two native
speaker evaluators were available The evaluators aside from being very experienced
interviewers were selected for this ask because of their background (education) and
knowledge of the specific country Evaluators were responsible for the final check of the
translations and where necessary suggesting country-specific changes The final translation
checks however were performed by the GDCC translation department The research team
double-checked all the translations This methodology of centralising data collection
benefiting from the native speaker interviewersrsquo knowledge of the local markets has a proven
track record over many projects
All interviews were 100 recorded Aside from live listening-in particular parts of the
interviews were recorded in order to be listened to by a native speaker team leader or
evaluator Besides listening to the interviews the team leaders andor evaluators also called
back respondents who participated in an interview during this call-back a short interview
with verification questions about the recent interview was held The only reason for conducting
a call-back was to recollect information that was first collected incorrectly and further
questions needed to be asked All of the respondents who had completed interviews were
called back in order to record the name of the enterprise and to match the data from the
sample with the enterprise that had completed the survey The quality checking procedure
was generally random but there was also a focus on outliners where applicable117
Overall at least 10 of all interviews per country were covered by the quality control
procedures as mentioned above In the dataset the monitored interviews were labelled
accordingly
Besides this quality procedure the conducted CATI interviews were continuously checked for
outliers The data from interviews with (for example) a deviation in the average interview
time (too short or too long) were checked and when necessary corrective action was taken
This action either involved a telephone call in order to verify the data or the data were
removed from the dataset
After finalising the fieldwork a short fieldwork report was prepared
117 An outlier means something outside of the average therefore GDCC looked at interviewers who
conduct interviews much longershorter than the average or who had more or fewer refusals than the
average or who had a lower or higher incidence rate than the average Focusing on these main (outlier) points helped to determine if the interviewer was doing things correctly and if not the interviewer was retrained in order to help normalise the performance
Study on the economic detriment to small and medium-sized enterprises arising from unfair
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84
Annex 2 Stakeholders list
No Category Member State InstitutionCompany Contribution
1 Cloud broker The
Netherlands BPdelivery Interview
2 EEN The Netherlands
The Dutch Chamber of Commerce Interview
3 EEN Romania ARIES T - Romanian Association for Electronic Industry and
Software - Transylvania Branch
Interview
4 EEN France CCI Paris IDF Interview
5 National authority
Italy The Italian Data Protection Authority
Interview and Webinar
6 National authority
Romania
Romanian National Computer
Security Incident Response Team (CERT)
Interview
7 National authority
Romania The National Supervisory Authority for Personal Data Processing of Romania
Interview
8 National authority
France
Commission Nationale de
lInformatique et des Liberteacutes (CNIL)
Interview
9 National authority
Poland Inspector General for the Protection of Personal Data
Interview and Webinar
10 National authority
Estonia Estonian Data Protection Inspectorate
Interview
11 Service provider
Sweden Glesys Interview
12 Service provider
Spain Ibermaacutetica Interview
13 Service provider
Spain Gigas Interview
14 Service provider
Sweden Hetzner Interview
15 Service provider
Ireland Blueface Interview
16 Service provider
Romania Star Storage Interview
17 Service provider
Romania GTS Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
85
No Category Member State InstitutionCompany Contribution
18 Service provider
Portugal PT Empresas Interview
19 Service
provider Romania Telekom Interview
20 Service provider
Ireland Salesforce Interview
21 SME Poland Biuro Rozwoju Gdanska Interview
22 SME Germany Quality Services International
GmbH Interview and Webinar
23 SME Germany Thieme Compliance GmbH Interview and Webinar
24 SME Germany Leibniz-Institut Fuumlr Astrophysik Potsdam (AIP)
Interview
25 SME Poland Konsorcjum Biuro Klub Sp Interview
26 SME France Qosmos Tech Interview
27 SME Poland Vsoft S A Interview
28 SME Spain Timbrados Elche Sl Interview
29 SME Spain Sistemas de Datos Interview and Webinar
30 SME Association
Belgium EUAPME Interview and Webinar
31 SME
Association Portugal
Associaccedilatildeo Industrial do Distrito de
Aveiro Interview
32 SME Association
The Netherlands
VNO-NCW Interview
33 SME Envoys Network
The Czech Republic
Ministry of Industry and Trade Interview
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
86
Annex 3 Bibliography
Relevant legislation and policy documents
Committee of the Regions (2016) lsquoEuropean Cloud Initiative and ICT Standardisation
Priorities for the Digital Single Market 2016rsquo Opinion of the Committee of the Regions (SEDEC-
VI-012)
European Commission (2003) lsquoRecommendation of 6 May 2003 concerning the definition of
micro small and medium-sized enterprisesrsquo (notified under document number C(2003) 1422)
European Commission (2012) lsquoUnleashing the Potential of Cloud Computing in Europersquo
COM(2012)529 final Brussels
European Commission (2013a) lsquoCommission Decision of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404) OJ 1746
European Council (2013b) lsquoCouncil resolution of 10 December 2013 on unleashing the
potential of cloud computing in Europersquo
European Commission (2014 June) lsquoCloud Service Level Agreement Standardisation
Guidelinesrsquo httpseceuropaeudigital-single-marketennewscloud-service-level-
agreement-standardisation-guidelines
European Commission (2015a) lsquoA Digital Single Market Strategy for Europersquo (COM
(2015)0192) and the accompanying Commission staff working document (SWD(2015)0100)
European Commission (2015b) lsquoCommunication on cloud select industry group service level
agreementsrsquo httpseceuropaeudigital-single-marketencloud-select-industry-group-
service-level-agreements COM (2015) 634 final
European Commission (2015c) lsquoProposal for a Directive on certain aspects concerning
contracts for the supply of digital contentrsquo (COM(2015) 634 final)
European Commission (2015d) lsquoTowards a modern more European copyright frameworkrsquo
COM20150626 final
European Commission (2016a) lsquoEuropean Cloud Initiative ndash Building a competitive data and
knowledge economy in Europersquo (COM (2016)0178) and the accompanying Commission staff
working document (SWD (2016) 0106)
European Commission (2016b) lsquoICT Standardisation Priorities for the Digital Single Marketrsquo
(COM (2016)0176)
European Commission Directorate-General for Research amp Innovation (RTD) (2016c) lsquoOpen
Innovation Open Science Open to the World ndash A vision for Europersquo
European Commission (2017a) lsquoProposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Unionrsquo
COM(2017) 495 final Brussels
European Commission (2018a) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
European Commission (2018b) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo Annexes and Impact
Assessment
European Commission (2018c) lsquoProposal for a Regulation on promoting fairness and
transparency for business users of online intermediation servicesrsquo
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
87
European Parliament (2017) lsquoCommission Staff Working Document Impact Assessment
Accompanying the document Proposal for a Regulation of the European Parliament and of
the Council on a framework for the free flow of non-personal data in the European Union
SWD(2017) 304 final Brussels
European Council (2016) lsquoCouncil resolution of 19 January 2016 on Towards a Digital Single
Market Actrsquo
European Parliament and European Council (2001) lsquoRegulation (EC) 452001 of the European
Parliament and of the Council of 18 December 2000 on the protection of individuals with
regard to the processing of personal data by the Community institutions and bodies and on
the free movement of such datarsquo
European Parliament and European Council (2011) lsquoDirective 201183EU of the European
Parliament and of the Council of 25 October 2011 on consumer rights amending Council
Directive 9313EEC and Directive 199944EC of the European Parliament and of the Council
and repealing Council Directive 85577EEC and Directive 977EC of the European Parliament
and of the Council Text with EEA relevancersquo
European Parliament and European Council (2015) lsquoProposal for a DIRECTIVE OF THE
EUROPEAN PARLIAMENT AND OF THE COUNCIL on certain aspects concerning contracts for
the supply of digital contentrsquo (Text with EEA relevance) SWD(2015) 274 final SWD(2015)
275 final
Reports studies and other documents
Alberto M Bento A K (2012) Cloud Computing Service and Deployment Models Layers
and Management IGI Global
Altman M Andreev L Diggory M King G Kolster E Sone A Verba S Kiskis DL
Krot (2001) lsquoOverview of The Virtual Data Center Project and Software Harvard Universityrsquo
JCDL rsquo01 First Joint Conference on Digital Libraries pp 203-204
Buyya R Broberg J and Goscinski A M (eds) (2010) Cloud computing Principles and
paradigms Vol 87 John Wiley amp Sons
Cave J Robinson N Kobzar S and Rebecca H (2015) lsquoUnderstanding Regulatory and
Consumer Interest in the Cloudrsquo Regulating the Cloud Policy for Computing Infrastructure
Cloud Security Alliance (2017) Custom Applications and IaaS Trends 2017
Department of Justice United States (2015) HERFINDAHL-HIRSCHMAN INDEX
El-Gazzar R F (2014) lsquoA literature review on cloud computing adoption issues in enterprisesrsquo
presented at the International Working Conference on Transfer and Diffusion of IT pp 214ndash
242
ESRC Centre for Competition Policy (2014 January) lsquoSmall Business as Consumers Are They
Sufficiently Well Protectedrsquo A report for the Federation of Small Businesses
European Commission (2013a) lsquoCOMMISSION DECISION of 18 June 2013 on setting up the
Commission expert group on cloud computing contractsrsquo (2013C 17404)
European Commission (2013b) Final Report of the study SMART 20130043- Uptake of Cloud
in Europe
European Commission (2013 2014) Cloud computing Experts groups meetings
European Commission (2015) Comparative Study on cloud computing contracts Publications
Office of the European Union Luxembourg
European Commission (2014b) European Commission - Strategy - Digital Single Market -
News Retrieved from European Commission - Digital Single Market
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
88
European Commission (2014c) Study regarding the Uptake of Cloud in Europe Follow-up of
IDC Study on Quantitative estimates of the demand for Cloud Computing in Europe and the
likely barriers to take-up
European Commission (2004d) Project Cycle Management Guidelines
European Commission (2016a) Consultation on Cloud Computing Research Innovation
Challenges for WP 2018-2020
European Commission (2016b) Measuring the economic impact of cloud computing in Europe
European Commission (2016c) Platform-to-business trading practices
European Commission (2017a) Collaboration in Research and Methodology for Official
Statistics RAS (Method)
European Commission (2017b) The Economic and Social Impact of Software and Services in
Competitiveness and Innovation
European Commission (2017c) Final results of the European Market study measuring the size
and trends of the EU data economy European Commission (2018) Consultations about Cloud
Computing
European Commission (2018a) 2018 reform of EU data protection rules
European Commission (2018b) Press release lsquoOnline platforms Commission sets new
standards on transparency and fairnessrsquo
European Commission (2018c) Operational guidance document on measuring personal
consumer detriment
Etro F (2009) lsquoThe economic impact of cloud computing on business creation employment
and output in Europersquo Review of Business and Economics vol 54 no 2 pp 179ndash208
Expert Group on Cloud Computing Contracts (2013-2014) Cloud Computing Expert Group
Gartner (2017) Predicts 2017 Cloud Computing Enters its Second Decade
Hon K Millar C and Walde I (2012) rsquoNegotiating Cloud Contract Looking at Clouds from
Both Sides Nowlsquo in Stanford Technology Law Review Vol 16 No 1
IDC Arthurrsquos Legal (2016) Switching Cloud Providers (SMART 20160032)
International Organization for Standardization (2014) lsquoInformation technology mdash Cloud
computing mdash Overview and vocabularyrsquo ISOIEC Retrieved from International Organization
for Standardization
Mahmood Z (2011) lsquoData Location and Security Issues in Cloud Computingrsquo Proceedings of
the 2nd International Conference on Emerging Intelligent Data and Web Technologies (EIDWT
rsquo11) (pp 49ndash54)
National Institute of Standards and Technology (2011) lsquoThe NIST Definition of Cloud
Computingrsquo Retrieved from National Institute of Standards and Technology
OECD (2014) Cloud computing The Concept Impacts and the Role of Government Policy
Opara-Martins J Sahandi R and Tian F (2015) lsquoA Business Analysis of Cloud Computing
Data Security and Contract Lock-in Issuesrsquo presented at P2P Parallel Grid Cloud and
Internet Computing (3PGCIC)
Pearson S (2013) lsquoPrivacy security and trust in cloud computingrsquo in Privacy and Security
for Cloud Computing Springer pp 3ndash42
Rabinobich M Rabinovich I (nd) A Dynamic Object Replication and Migration Protocol for
an
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
89
Rittinghouse J Ransome J (2009) Cloud Computing CRC Press Boca Raton
Rohrmann CA amp Cunha JFSR (2015) Some Legal Aspects of Cloud Computing Contracts
Journal of International Commercial Law and Technology Vol10 No1 May
SLALOM Project httpslalom-projecteu(2018)
Synergy Research Group (2017) httpswwwsrgresearchcomarticlesmicrosoft-google-
and-ibm-charge-public-cloud-expense-smaller-providers
Technopedia (2018) httpswwwtechopediacomdefinition30463virtual-data-center
Retrieved from Virtual Data Centre
Databases
Amadeus Database httpsamadeusbvdinfocomversion-
2016720homeservproduct=amadeusneo
Eurostat (2015) sbs_sc_sca_r2 Retrieved from Structural Business Statistics
httpappssoeurostateceuropaeunuishowdodataset=sbs_sc_sca_r2amplang=en
Eurostat (2016) Cloud Computing Services Retrieved from EUROSTAT - Digital Economy and
Society httpeceuropaeueurostatwebdigital-economy-and-societydatadatabase
Eurostat (2016) lsquoCloud computing - statistics on the use by enterprisesrsquo
httpeceuropaeueurostatstatistics-explainedindexphpCloud_computing_-
_statistics_on_the_use_by_enterprises
Eurostat (2017) Cloud computing services [isoc_cicce_use]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
90
Annex 4 Survey questionnaire
A Background information
(Everyone answers section A)
A1 What is the name of your company
[open question]
A2 Where is your company located
(People who answer A2 m) are taken straight to the end of the survey)
[single choice question]
a) Czech Republic
b) Estonia c) France d) Germany e) Ireland f) Italy g) Poland h) Portugal
i) Romania
j) Sweden k) Spain l) Netherlands m) Other (please specify)
A3 In which sector is your company mainly active
(People who answer A3 f) are taken straight to the end of the survey)
[multiple choice question]
a) Manufacturing b) Wholesale and retail trade repair of motor vehicles and motorcycles c) Information and communication d) Professional scientific and technical activities e) Administrative and support service activities
f) Other (please specify)
A4 Since how long does your company exist
[single choice question]
a) Less than 1 year b) Between 1 and 5 years
c) Between 5 and 10 years d) Over 10 years
A5 What is the number of employees in your company
(People who answer A5 d) are taken straight to the end of the survey)
= Compulsory question
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
91
(Everyone answers section A)
[single choice question]
Nordm of employees in FTE (full-time equivalent)
a) Less than 10 employees b) 10 to 49 employees c) 50 to 250 employees d) More than 250 employees
B Use of Cloud Computing Services
(Everyone answers Section B)
B1 In the last two years has your company used any of the following cloud computing services for
the purpose of conducting business
(People who answer B1 q) are taken straight to the end of the survey)
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business
visualisation technology instant communications applications e-mail account virtual
desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
websites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
n) Security services (eg secure content management endpoint protection malware protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
q) None of the above my company is not using cloud computing services
B11 For the cloud computing services that you have used in the last two years were you able to
negotiate contract terms and conditions
(People who answer B11 b) are taken to Question B111)
(People who answer B11 d) are taken to Question B113)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
92
(People who answer B11 a) or b) are taken to Question B112)
[single choice question]
a) Yes we were able to negotiate contract terms and conditions for all the cloud computing services used
b) Yes we were able to negotiate contract terms and conditions but only in relation to some
services c) No we were not able to negotiate any contract terms and conditions d) We didnrsquot try to negotiate
B111 Please specify in relation to which services were you able to negotiate the contract terms and
conditions
[multiple choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for sever or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components) j) High Performance Computing (eg usage of high performance computing clusters
workloads and applications) k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each
day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces)
p) Other (please specify)
B112 For the cloud computing services for which you negotiated the contract terms and conditions
were you able to customise the service package according to your specific needs
[single choice question]
a) Yes (please specify what you were able to customise) b) Partially (please specify what you werewere not able to customise) c) No (please specify)
B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
[single choice question]
a) We were pleased with the offered contract terms and conditions
b) We knew it would be pointless c) We assumed it would be pointless d) Could not find a contact
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and unbalanced cloud computing contracts
93
e) Other (please specify)
B2 What type of contract(s) did you have for cloud computing services during the last two years
(People who answer B3 d) are taken straight to section C)
[multiple choice question]
a) Paid subscription ndash Fixed Fees b) Paid subscription ndash Variable Fees c) Partly with and partly without payment d) Without payment (eg advertising financed) e) I donrsquot know (please specify)
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the average
amount you paid per month for the cloud computing services
(NB the amount declared should not include over-extra charges or hidden fees)
[open question]
Amount in local currency please specify the currency applied
C Problems encountered with cloud computing services
(Everyone answers Section C)
C1 What type of problems and how often did you encounter them in relation to cloud computing
services in the last two years
Problems
Very
frequently
(at least once a week)
Frequentl
y (at least once a month)
Occasiona
lly (at least
once every 3 months)
Rarely (at
least once in the last
12 months)
Never
a) Lack of timely updates of the cloud service
b) Forced updates to the service that eliminated or changed a necessary function
c) Unsatisfactory amount of data that could be processed
d) Failure of the cloud provider to identify analyse and correct
hazards and prevent a future re-occurrence (incidence management)
e) Low speed of the service
f) The lack of clarity and
completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or
discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions
of service)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
94
(Everyone answers Section C)
h) Unsatisfactory number of users that could have access to the
service
i) The lack of compatibility of the service with user hardware or software
j) Data could not be exported at all
k) Data could not be retrieved in
easily usable format
l) Extra costs were imposed for data portability
m) The provider deleted the data
upon contract termination
n) Destruction or loss of data
o) Loss or alteration of data transmitted stored or processed via the cloud service
p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses
r) Lack of clarity and transparency of contract terms and conditions
s) Termination of the contract and interruption of the service by the service provider with no or little prior notice to the user
t) Unilateral modification of the servicecontract by the cloud provider
u) Limited liability of the cloud provider
C2 Did you encounter any other problems in relation to cloud computing services in the last two
years
[single choice question]
a) Yes (please specify) b) No
C3 Which was the most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
[single choice question]
a) Lack of timely updates of the cloud service b) Forced updates to the service that eliminated or changed a necessary function c) Unsatisfactory amount of data that could be processed d) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) e) Low speed of the service
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
95
(Everyone answers Section C)
f) The lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
g) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced
maintenance or other interruptions of service) h) Unsatisfactory number of users that could have access to the service i) The lack of compatibility of the service with user hardware or software j) Data could not be exported at all k) Data could not be retrieved in easily usable format l) Extra costs were imposed for data portability
m) The provider deleted the data upon contract termination n) Destruction or loss of data o) Loss or alteration of data transmitted stored or processed via the cloud service p) Unauthorised disclosure of or access to data
q) Lack of protection of the data stored in the cloud against theft or viruses r) Lack of clarity and transparency of contract terms and conditions s) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user t) Unilateral modification of the servicecontract by the cloud provider u) Limited liability of the cloud provider v) Other (please specify)
C31 What caused the most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the
contract b) The contract terms and conditions of the cloud provider were unfair
c) Other (please specify)
C32 To which type of cloud computing services was the most serious problem linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning payments payroll human resources management)
b) Sales amp Marketing services (eg web configuration forms for marketing and sales purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual desktop antivirus for server or PC applications for customer relationship management social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business
process management IT operationrisk management) e) Service amp Support tools (eg project and portfolio management solutions services
operations management) f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications) h) Storage and hosting services (eg server platform for online storage sharing hosting
web-sites files images and similar content) i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor
memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere anytime)
l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day)
m) Platform to create software applications (eg conception and creation of application through testing and deployment)
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and unbalanced cloud computing contracts
96
n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
C4 Which was the second most serious problem you experienced in the last two years
The most serious problem is the one that created the highest impact (on your everyday activities
andor in terms of costs faced to solve it)
People who select C4 a) are taken straight to Section D)
[single choice question]
a) I only encountered one serious problem in the last 2 years
b) Lack of timely updates of the cloud service c) Forced updates to the service that eliminated or changed a necessary function
d) Unsatisfactory amount of data that could be processed e) Failure of the cloud provider to identify analyse and correct hazards and prevent a future
re-occurrence (incidence management) f) Low speed of the service g) The lack of clarity and completeness of the instructions and information regarding access
andor download of the cloud service
h) Unsatisfactory availability or discontinuity of the service (eg due to a crash unannounced maintenance or other interruptions of service)
i) Unsatisfactory number of users that could have access to the service j) The lack of compatibility of the service with user hardware or software k) Data could not be exported at all l) Data could not be retrieved in easily usable format
m) Extra costs were imposed for data portability
n) The provider deleted the data upon contract termination o) Destruction or loss of data p) Loss or alteration of data transmitted stored or processed via the cloud service q) Unauthorised disclosure of or access to data r) Lack of protection of the data stored in the cloud against theft or viruses s) Lack of clarity and transparency of contract terms and conditions t) Termination of the contract and interruption of the service by the service provider with no or
little prior notice to the user u) Unilateral modification of the servicecontract by the cloud provider v) Limited liability of the cloud provider w) Other (please specify)
C41 What caused the second most serious problem
[multiple choice question]
a) The services received did not conform with the performance that was promised in the contract
b) The contract terms and conditions of the cloud provider were unfair c) Other (please specify)
C42 To which type of cloud computing services was the second most serious problem
linked
[single choice question]
a) Business applications (eg applications used for accounting invoicing planning
payments payroll human resources management) b) Sales amp Marketing services (eg web configuration forms for marketing and sales
purposes)
c) Collaboration and communication services (eg video conference system business visualisation technology instant communications applications e-mail account virtual
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
97
desktop antivirus for server or PC applications for customer relationship management
social media monitoring)
d) Cloud enablement amp IT Operations (eg application integration and monitoring business process management IT operationrisk management)
e) Service amp Support tools (eg project and portfolio management solutions services operations management)
f) Data Management (eg datacontent management) g) Big data (eg business intelligence and data analytics applications)
h) Storage and hosting services (eg server platform for online storage sharing hosting web-sites files images and similar content)
i) Virtual Data Centre (eg usage of a pool of virtualised infrastructure as processor memory storage space and networking components)
j) High Performance Computing (eg usage of high performance computing clusters workloads and applications)
k) Mobile (eg usage of managed mobility to serve a multitude of mobile devices anywhere
anytime) l) Networking services (eg creation of an internal private cloud and virtual local networks
utilising a pooled server for storing company data and running applications needed each day) m) Platform to create software applications (eg conception and creation of application
through testing and deployment) n) Security services (eg secure content management endpoint protection malware
protection)
o) Internet of things (eg asset tracking deployable components intelligent spaces) p) Other (please specify)
D Actions taken by your company in order to address the most serious
problem
(Everyone who encountered problems answers Section D)
D1 Did your company take action to resolve or remedy the most serious problem experienced
(People who select D1 b) are taken straight to question D2)
a) Yes
b) No
D11 What actions has your company taken to resolve or remedy this problem
[multiple choice question]
a) Used the support services of the provider b) Made a complaint to the provider c) Withheld payment for the service
d) Asked the provider for a refund e) Asked the provider for compensation for damages or losses f) Changed provider g) Went to mediationarbitration (the dispute was taken to a third party mediatorarbitrator) h) Filed an action with a court i) Hired a third party expert to resolve the problem
j) Other (please specify)
D12 What was the result of the actions taken to resolve or remedy this problem
[single choice question]
a) The problem was fully resolved
b) The problem was partially resolved c) The problem was not yet resolved but I was informed that the investigation was ongoing
d) The problem was not resolved and I have not received any reply e) Not resolved and I decided not to do anything about it
D121 Did you encounter any difficulties when taking action to resolve or remedy this problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
98
(Everyone who encountered problems answers Section D)
[multiple choice question]
a) No I did not encounter any difficulties b) Yes there was no contact point to make a complaint or attempt to resolve issues c) Yes the procedure took too long d) Yes the procedure was too expensive e) Yes foreign law applied
f) Yes the procedure was only possible abroad g) Yes language difficulties (eg the procedure was in a foreign language) h) Yes the action taken was not suited to resolve the problem i) Yes it was not possible to enforce the decision after the resolution j) Other (please specify)
D2 Why did your company decide not to take any action to resolve or remedy this problem
[multiple choice question]
a) Provider fixed the problem on its own
b) The cloud provider was unlikely to find a solution to the problem
c) The cloud provider excluded its liability for the problem
d) The cloud provider restricted its liability for damages (eg to a certain type of damage or
to a monetary threshold (a franchise or a maximum amount)
e) Limited access to dispute resolution (eg contract terms restrict how and where your
company can take legal action)
f) We tried to complain about other problems in the past but it was not successful
g) High cost of proceedings
h) It would take too long
i) The procedure was too complicated
j) We didnt know where to complain
k) Lack of knowledge how to start the proceeding
l) The applicable procedure is in a foreign country or in foreign language (specify which
foreign country)
m) The company did not want to damage business relationship with the cloud provider
n) The problem was not that important
o) Other (please specify)
E Economic detriment related to the most serious problems encountered
(Everyone who encountered problems answers Section E)
E1 What were the human resources invested by your company while taking action to resolve or
remedy the most serious problem
[open question]
Nordm of employees
involved in solving the problem separately per skill level of employee(s)
Nordm of work days
involved for solving the problem separately per skill level employee(s)
Average monthly
compensation of employee(s) involved in solving the problem (amount in local
currency)118
118 Total labour cost that includes gross wages and employer social security contributions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
99
(Everyone who encountered problems answers Section E)
Administrative
Technical
Senior
official(s)manager(s)
E2 Select what costs has your company covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
Please provide the costs without considering any reimbursement or compensation you may have
received from the provider(s) who rendered the service(s)
[multiple choice question]
a) Costs related to ensuring an alternative service (please specify the amount in local currency)
b) Costs related to fixing the cloud service problem (please specify the amount in local currency)
c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency) e) Costs related to loss of client(s) (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E3 What is the loss of turnover and profit caused by the most serious problem encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E4 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in
local currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
E5 Considering the costs human resources involved and loss of turnoverprofit related to the most
serious problem what share they represented of the total costs suffered by your company from
problems faced while using cloud computing services
(People who select E5 a) or b) are taken straight to section F)
(People who select C4 a) are taken straight to section F after answering E5)
[single choice question]
a) Above 80 b) 50 to 80 c) Below 50
E6 What were the human resources invested by your company while trying to resolve or remedy
the second most serious problem
[open question]
Nordm of employees
involved in solving the problem separately
Nordm of work days
involved for solving the problem separately
Average monthly
compensation of employee(s) involved
in solving the problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
100
per skill level of
employee(s)
per skill level
employee(s)
(amount in local
currency)119
Administrative
Technical
Senior
official(s)manager(s)
E7 Select which costs has your company covered (besides the human resources mentioned before)
while taking action to resolve or remedy the second most serious problem
[multiple choice question] Please provide the costs without considering any reimbursement or
compensation you may have received from the provider(s) who rendered the service(s)
a) Costs related to ensuring an alternative service (please specify the amount in local
currency) b) Costs related to fixing the cloud service problem (please specify the amount in local
currency) c) Legal costs (please specify the amount in local currency) d) Costs related to reputation damage (please specify the amount in local currency)
e) Costs related to loss of client (please specify the amount in local currency) f) Other costs (please specify what was the cost related to and the amount in local currency)
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered
[open question] Please specify amount in local currency
Lost turnoveryear
Lost profityear
E9 Did the cloud provider offer any redress for the damages caused to your company
[multiple choice question]
a) Yes I was offered financial compensation (please specify the amount in local currency) b) Yes I was offered a reduction in the cost of subscription (please specify the amount in local
currency) c) Other (please specify the redress and the amount in local currency) d) No the cloud provider did not offer any redress for the damages caused
F Background information on turnover and profit
G (Everyone answers Section F)
F1 Please complete the following table specifying the amount in local currency
[open question]
The annual turnover in
2016
The annual turnover in
2017
The annual profit before
tax in 2016
The annual profit before
tax in 2017
119 Total labour cost that includes gross wages and employer social security contributions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
101
Annex 5 SME Survey results
A Background information
A3 In which sector is your company mainly active
Type of sector Total
Manufacturing 137
Wholesale and retail trade 131
Information and communication 83
Professional scientific and technical activities 92
Administrative and support services 92
A4 Since how long does your company exist
A5 What is the number of employees in your company
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
102
B Use of Cloud Computing Services
B1 In the last two years has your company used any of the following cloud computing services
for the purpose of conducting business
Services
Sectors
Collaboration and
communication services
Storage and hosting
services
Security
services
Networking
services
Administrative and support service activities
61 60 49 40
Information and communication 79 78 41 52
Manufacturing 70 54 48 42
Professional scientific and technical activities
71 70 40 39
Wholesale and retail trade 72 62 38 38
B11 For the cloud computing services that you have used in the last two years were you
able to negotiate contract terms and conditions
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
103
B111 Please specify in relation to which services you were able to negotiate the contract
terms and conditions120
120 The first figure presents for each contracted service the number of SMEs that were able to negotiate
CTampC (in blue) and the number of SMEs that signed standard CTampC for the specific service contracted
(in grey) The total of the numbers in each row represents the number of SMEs that declared contracting a specific service For example for lsquobusiness applicationsrsquo out of the total number of 190 SMEs that contracted this service only 30 SMEs were able to negotiate CTampC while 160 signed standard CTampCs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
104
B112 For the cloud computing services for which you negotiated the contract terms and
conditions were you able to customise the service package according to your specific needs
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
105
B113 Please specify why you didnrsquot try to negotiate any contract terms and conditions
B2 What type of contract(s) did you have for cloud computing services during the last two
years
B21 For the year(s) you were paying aseveral subscription(s) could you please indicate the
average amount you paid per month for the cloud computing services
Country of answers Average in euros
CZ 18 850
EE 18 112
FR 34 4675
DE 33 861
IE 19 1127
IT 58 716
NL 21 6672
PL 20 411
PT 7 433
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
106
Country of answers Average in euros
RO 7 278
ES 13 127
SE 19 2866
Total 267 1787
C Problems encountered with cloud computing services
C1 What types of problems and how often did you encounter them in relation to cloud
computing services in the last two years
C3 Which was the most serious problem you experienced in the last two years
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and unbalanced cloud computing contracts
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C31 What caused the most serious problem
C32 To which type of cloud computing services was the most serious problem linked
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and unbalanced cloud computing contracts
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C4 Which was the second most serious problem you experienced in the last two years
C41 What caused the second most serious problem
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and unbalanced cloud computing contracts
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C42 To which type of cloud computing services was the second most serious problem linked
D Actions taken by your company in order to address the most serious problem
D1 Did your company take action to resolve or remedy the most serious problem
experienced
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and unbalanced cloud computing contracts
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D11 What actions has your company taken to resolve or remedy this problem
D12 What was the result of the actions taken to resolve or remedy this problem
D121 Did you encounter any difficulties when taking action to resolve or remedy this
problem
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and unbalanced cloud computing contracts
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D2 Why did your company decide not to take any action to resolve or remedy this problem
E Economic detriment related to the most serious problems encountered
E1 What were the human resources invested by your company while taking action to resolve
or remedy the most serious problem
Human resources invested - working days involved in resolving the problem by sector
Sector Number of
enterprises
95 Trimmed
mean Average
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Human resources invested - working days involved in resolving the problem by size class
Size class Number of enterprises
95 Trimmed mean
Average
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Human resources invested - working days involved in solving the problem by country
Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
EE 5 222 220
FR 22 282 395
DE 19 471 1074
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
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and unbalanced cloud computing contracts
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Country Number of
enterprises
95
Trimmed mean Average
CZ 7 226 229
RO 1 200 200
ES 11 631 718
SE 18 251 361
Total 122 322 721
E2 Select what costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the most serious problem
of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E3 What is the loss of turnover and profit caused by the most serious problem encountered
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E4 Did the cloud provider offer any redress for the damages caused to your company
of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
E5 Considering the costs human resources involved and loss of turnoverprofit related to the
most serious problem what share did they represent of the total costs suffered by your
company from problems faced while using cloud computing services of enterprises
Below 50 105 87
50 to 80 8 7
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and unbalanced cloud computing contracts
113
of enterprises
Above 80 9 7
Total 122 100
E6 What were the human resources invested by your company while trying to resolve or
remedy the second most serious problem
Skill level of enterprises
Administrative 59 48
Technical 93 76
Senior officersmanager(s) 59 48
E7 Select which costs your company has covered (besides the human resources mentioned
before) while taking action to resolve or remedy the second most serious problem of enterprises
Costs related to ensuring an alternative service 42 34
Costs related to fixing the cloud service problem 39 32
Legal costs 22 18
Costs related to reputation damage 23 19
Costs related to loss of client(s) 25 21
Other costs 9 7
None 38 31
Total 122
E8 What is the loss of turnover and profit caused by the second most serious problem
encountered121
Country Loss of turnover Loss of profit
CZ 0 0 0 0
EE 1 20 1 20
FR 4 18 5 23
DE 2 11 1 5
IE 2 50 2 50
IT 2 15 1 8
NL 1 17 2 33
PL 0 0 0 0
PT 0 0 0 0
RO 0 0 0 0
ES 0 0 0 0
SE 5 28 7 39
Total 17 19
E9 Did the cloud provider offer any redress for the damages caused to your company of enterprises
Financial compensation 4 3
Reduction in the cost of subscription 8 7
Other 5 4
The company did not offer any redress 107 88
121 Please see section 52 for a better understanding of why in the detriment equation it was considered only the most serious problem
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and unbalanced cloud computing contracts
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Annex 6 Economic detriment ndash further results
This annex presents more detailed results of the analyses that were performed to carry out
the economic detriment assessment allowing for more in-depth analysis of impact
Incidence cloud computing usage by sector size or country level
For the scenarios presented it is possible to compute the incidence of cloud computing usage
The sample answering the questionnaire is representative of the overall population of EU
SMEs We present in Table 33 to Table 35 some features at the country and enterprise
size or sector level with the sole aim of documenting the gathered information
The data show evidence of significant differences across those dimensions
Table 33 Incidence of cloud computing usage by sector
Sector Scenario 1 Scenario 2
Manufacturing 179 496
Wholesale and retail trade 111 364
Information and communication 199 613
Professional scientific and technical activities 195 574
Administrative and support service activities 131 543
Total 159 499
Source Survey of SMEs (2018)
Table 34 Incidence of cloud computing usage by enterprise size class
Size class Scenario 1 Scenario 2
Micro 178 535
Small 226 606
Medium 133 447
Total 159 499
Source Survey of SMEs (2018)
Table 35 Incidence of cloud computing usage by country
Country Scenario 1 Scenario 2
CZ 172 698
EE 323 690
FR 79 272
DE 80 449
IE 468 710
IT 719 870
NL 205 612
PL 143 315
PT 455 606
RO 278 833
ES 538 648
SE 138 673
Total 159 499
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
115
Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 36 to Table 46
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while resolving the most serious contract-
related cloud computing problem
Table 36 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the most serious problem by
country and skill level of employee ( of respondents 122)
Country Administrative Technical
Senior
officersmanager(s)
CZ 2 29 3 43 4 57
DE 9 47 15 79 8 42
EE 4 80 4 80 3 60
ES 4 36 6 55 5 45
FR 8 36 19 86 11 50
IE 1 25 2 50 3 75
IT 7 54 10 77 4 31
NL 4 67 6 100 4 67
PL 5 38 12 92 5 38
PT 1 33 2 67 0 0
RO 1 100 1 100 0 0
SE 13 72 13 72 12 67
Total 59 93 59
Source Survey of SMEs (2018)
Table 37 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by sector and skill level of employee ( of respondents 122)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 6 46 9 69 10 77
Information and commun 18 75 21 88 12 50
Manufacturing 13 42 22 71 11 35
Profess scientific and
technical activities 10 34 27 93 14 48
Wholesale and retail trade repair of motor vehicles and motorcycles
12 48 14 56 12 48
Total 59 93 59
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
116
Table 38 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the most serious problem by size class and skill level of employee ( of respondents 122)
Size class Administrative Technical
Senior officers
manager(s)
Micro 11 52 12 57 11 52
Small 24 75 22 69 16 50
Medium 24 35 59 86 32 46
Total 59 93 59
Source Survey of SMEs (2018)
Table 39 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious
problem by country and type of costs ( of respondents 122)
Co
un
try
Costs related to
ensuring an
alternative service
Costs related to
fixing the cloud
service problem
Legal costs
Costs
related to reputation
damage
Costs
related to loss of
client(s)
Other
costsNone
CZ 3 43 0 0 0 0 0 0 1 14 3 43
DE 4 21 6 32 2 11 2 11 3 16 5 26
EE 0 0 2 40 0 0 0 0 0 0 3 60
ES 7 64 1 9 0 0 0 0 0 0 3 27
FR 13 59 13 59 12
55 11 50 11 50 18 82
IE 1 25 3 75 0 0 0 0 1 25 0 0
IT 4 31 2 15 1 8 1 8 2 15 2 15
NL 1 17 1 17 1 17 2 33 1 17 5 83
PL 1 8 1 8 2 15 1 8 1 8 2 15
PT 1 33 1 33 0 0 1 33 1 33 0 0
RO 1 100 0 0 1 100 1 100 1 100 1 100
SE 6 33 9 50 3 17 4 22 3 17 5 28
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 40 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the most serious problem by sector and type of costs ( of respondents 122)
Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related to loss of client(s)
Other
costsNone
Admin and support service
activities
5 38 1 8 2 15 1 8 1 8 6 46
Information and
commun 12 50 11 46 7 29 7 29 7 29 8 33
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and unbalanced cloud computing contracts
117
Sector
Costs related to ensuring
an alternative
service
Costs
related to fixing the
cloud service problem
Legal costs
Costs
related to reputation
damage
Costs related
to loss of client(s)
Other costsNone
Manufacturing 8 26 6 19 3 10 4 13 5 16 8 26
Profess
scientific and technical activities
13 45 12 41 10 34 10 34 11 38 16 55
Wholesale and
retail trade
repair of motor vehicles and motorcycles
4 16 9 36 0 0 1 4 1 4 9 36
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 41 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the most serious
problem by enterprise size class and type of costs ( of respondents 122)
Size class
Costs related to ensuring
an
alternative service
Costs related to fixing the
cloud
service problem
Legal costs
Costs related to
reputation
damage
Costs related to
loss of
client(s)
Other
costs
None
Micro 6 29 11 52 4 19 6 29 5 24 8 38
Small 13 41 12 38 9 28 7 22 8 25 13 41
Medium 23 33 16 23 9 13 10 14 12 17 26 38
Total 42 39 22 23 25 47
Source Survey of SMEs (2018)
Table 42 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the most serious problem encountered by sector ( of
respondents 122)
Sector Loss of turnover Loss of profit
Administrative and support
service activities 2 15 2 15
Information and communication 4 17 4 17
Manufacturing 6 19 5 16
Professional scientific and
technical activities 1 3 3 10
Wholesale and retail trade repair
of motor vehicles and motorcycles 4 16 5 20
Total 17 19
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
118
Table 43 Number and of total enterprises that faced problems that reported loss of
turnover or profit caused by the most serious problem encountered by size class ( of respondents 122)
Size class Loss of turnover Loss of profit
Micro 2 10 4 19
Small 8 25 8 25
Medium 7 10 7 10
Total 17 19
Source Survey of SMEs (2018)
Table 44 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by country and type of redress ( of respondents
122)
Country
Financial
compensation
Reduction in the
cost of subscription
Other
The company did
not offer any redress
CZ 1 14 0 0 1 14 5 71
DE 0 0 0 0 1 5 18 95
EE 0 0 0 0 0 0 5 100
ES 0 0 0 0 0 0 11 100
FR 2 9 1 5 1 5 19 86
IE 0 0 0 0 0 0 4 100
IT 1 8 0 0 0 0 12 92
NL 0 0 2 33 1 17 4 67
PL 0 0 3 23 0 0 10 77
PT 0 0 1 33 0 0 2 67
RO 0 0 0 0 0 0 1 100
SE 0 0 1 6 1 6 16 89
Total 4 8 5 107
Source Survey of SMEs (2018)
Table 45 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress ( of respondents
122)
Sector
Financial compensation
Reduction in
the cost of subscription
Other
The company
did not offer any redress
Administrative and
support service activities 2 15 1 8 0 0 10 77
Information and communication
1 4 1 4 3 13 20 83
Manufacturing 0 0 2 6 1 3 29 94
Professional scientific and technical activities
1 3 2 7 1 3 25 86
Wholesale and retail trade repair of motor
vehicles and motorcycles 0 0 2 8 0 0 23 92
Total 4 8 5 107
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
119
Table 46 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by size class and type of redress ( of respondents 122)
Size class
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 1 5 1 5 0 0 19 90
Small 0 0 2 6 2 6 28 88
Medium 3 4 5 7 3 4 60 87
Total 4 8 5 107
Source Survey of SMEs (2018)
Distribution of enterprises by the weight of the most serious problem by sector enterprise
size or country level
Again with the sole aim of documenting the gathered information Table 47 to Table 49
present the differences by country enterprise size and sector of the distribution of
enterprises that experienced the various costs while solving the most serious contract-related
cloud computing problem
Table 47 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by country ( of respondents 122)
Country Below 50 50 to 80 Above 80 100122 Total
CZ 3 43 0 0 0 0 4 57 7
DE 3 60 0 0 0 0 2 40 5
EE 11 50 1 5 0 0 10 45 22
ES 11 58 1 5 1 5 6 32 19
FR 3 75 0 0 0 0 1 25 4
IE 5 38 0 0 0 0 8 62 13
IT 1 17 0 0 1 17 4 67 6
NL 5 38 0 0 1 8 7 54 13
PL 2 67 0 0 0 0 1 33 3
PT 1 11 0 0 0 0 8 89 9
RO 3 38 0 0 0 0 5 63 8
SE 7 10 2 3 4 6 56 81 69
Total 55 31 4 2 7 4 112 63 178
Source Survey of SMEs (2018)
122 Enterprises that declared they encountered only one problem
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and unbalanced cloud computing contracts
120
Table 48 Distribution of enterprises by the weight of the most serious problem (in terms of
the costs human resources involved and loss turnoverprofit) represented in the total costs suffered by the company by sector ( of respondents 122)
Sector Below 50 50 to 80 Above 80 100123 Total
Administrative and support service activities
26 74 0 0 5 14 4 11 35
Information and communication
20 56 0 0 0 0 16 44 36
Manufacturing 30 64 3 6 0 0 14 30 47
Professional scientific and technical activities
39 65 8 13 1 2 12 20 60
Wholesale and retail
trade repair of motor vehicles and motorcycles
29 57 0 0 12 24 10 20 51
Total 144 63 11 5 18 8 56 24 229
Source Survey of SMEs (2018)
Table 49 Distribution of enterprises by the weight of the most serious problem (in terms of the costs human resources involved and loss turnoverprofit) represented in the total
costs suffered by the company by size class ( of respondents 122) Below 50 Between 50 -
80 Above 80 100124 Total
Micro 7 28 0 0 2 8 16 64 25
Small 10 42 0 0 1 4 13 54 24
Medium 38 52 4 5 4 5 27 37 73
Total 55 45 4 3 7 6 56 46 122
Source Survey of SMEs (2018)
Distribution of enterprises that suffered the different costs while taking action to resolve or
remedy the second most serious problem by sector size or country level
Again with the sole aim of documenting the gathered information Table 50 to Table 59
present the differences by country size and sector of the distribution of enterprises that
experienced the various costs while resolving the second most serious contract-related cloud
computing problem
Table 50 Number and of enterprises in which human resources were invested while
taking action to resolve or remedy the second most serious problem by country and skill
level of employee ( of respondents 55)
Country Administrative Technical
Senior officersmanager(s)
CZ 0 0 1 33 2 67
DE 5 45 9 82 3 27
EE 3 100 3 100 1 33
ES 1 33 2 67 1 33
FR 4 36 7 64 4 36
IE 1 33 2 67 1 33
IT 2 40 3 60 1 20
123 Enterprises that declared they encountered only one problem 124 Enterprises that declared they encountered only one problem
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
121
Country Administrative Technical
Senior
officersmanager(s)
NL 1 100 1 100 1 100
PL 2 40 5 100 0 0
PT 1 50 1 50 2 100
RO 0 0 0 0 0 0
SE 3 43 5 71 2 29
Total 23 39 18
Source Survey of SMEs (2018)
Table 51 Number and of total enterprises that faced problems in which human resources
were invested while taking action to resolve or remedy the second most serious problem
by sector and skill level of employee ( of respondents 55)
Sector Administrative Technical
Senior
officersmanager(s)
Admin and support service
activities 3 50 4 67 2 33
Information and commun 7 70 9 90 4 40
Manufacturing 5 31 11 69 4 25
Profess scientific and
technical activities 3 27 8 73 3 27
Wholesale and retail trade
repair of motor vehicles and motorcycles
5 42 7 58 5 42
Total 23 39 18
Source Survey of SMEs (2018)
Table 52 Number and of total enterprises that faced problems in which human resources were invested while taking action to resolve or remedy the second most serious problem
by size class and skill level of employee ( of respondents 55)
Size class Administrative Technical
Senior officers
manager(s)
Micro 3 38 5 63 2 25
Small 10 63 13 81 6 38
Medium 10 32 21 68 10 32
Total 23 39 18
Source Survey of SMEs (2018)
Table 53 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by country and type of costs ( of respondents 55)
Co
un
try Costs
related to
ensuring an
alternative service
Costs
related to
fixing the cloud
service problem
Legal costs
Costs related
to reputation damage
Costs
related to loss of
client(s)
Other
costsnone
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and unbalanced cloud computing contracts
122
CZ 0 0 0 0 0 0 0 0 0 0 3 100
DE 5 45 4 36 3 27 3 27 3 27 9 82
EE 0 0 2 67 0 0 0 0 0 0 1 33
ES 1 33 0 0 0 0 0 0 0 0 2 67
FR 6 55 5 45 5 45 5 45 5 45 10 91
IE 1 33 0 0 0 0 0 0 0 0 2 67
IT 2 40 1 20 1 20 1 20 2 40 3 60
NL 0 0 0 0 0 0 0 0 0 0 1 100
PL 0 0 1 20 1 20 1 20 1 20 2 40
PT 1 50 0 0 0 0 1 50 1 50 0 0
RO 1 100 1 100 1 100
1 100 1 100 1 100
SE 1 14 2 29 1 14 2 29 2 29 5 71
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 54 Number and of total enterprises that faced problems that have incurred costs (besides human resources) while taking action to resolve or remedy the second most
serious problem by sector and type of costs ( of respondents 55)
Sector
Costs
related to ensuring
an alternative service
Costs
related to fixing the
cloud service problem
Legal costs
Costs related to reputation
damage
Costs related to
loss of client(s)
Other costs
none
Admin and support service
activities 1 17 1 17 2 33 1 17 1 17 5 83
Information and commun
3 30 3 30 1 10 2 20 2 20 6 60
manufacturing 4 25 5 31 4 25 4 25 4 25 15 94
Profess scientific and technical
activities
7 64 6 55 5 45 6 55 6 55 7 64
Wholesale and retail trade
repair of motor vehicles and motorcycles
3 25 1 8 0 0 1 8 2 17 6 50
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
123
Table 55 Number and of total enterprises that faced problems that have incurred costs
(besides human resources) while taking action to resolve or remedy the second most serious problem by enterprise size class and type of costs ( of respondents 55)
Size class
Costs related to ensuring
an alternative
service
Costs related to fixing the
cloud service problem
Legal
costs
Costs related to
reputation damage
Costs related to
loss of client(s)
Other
costsnone
Micro 3 19 4 25 2 13 0 0 2 13 2 13
Small 12 39 8 26 7 23 0 0 9 29 10 32
Medium 3 38 4 50 3 38 5 63 3 38 3 38
Total 18 16 12 5 14 15
Source Survey of SMEs (2018)
Table 56 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by size class (
of respondents 55)
Size class Loss of turnover Loss of profit
Micro 0 0 1 13
Small 5 31 5 31
Medium 2 6 2 6
Total 7 8
Source Survey of SMEs (2018)
Table 57 Number and of total enterprises that faced problems that reported loss of turnover or profit caused by the second most serious problem encountered by sector ( of
respondents 55)
Sector Loss of turnover Loss of profit
Administrative and support service activities
1 17 1 17
Information and communication 1 10 1 10
Manufacturing 2 13 2 13
Professional scientific and
technical activities 1 9 2 18
Wholesale and retail trade repair
of motor vehicles and motorcycles Total
2 17 2 17
Total 7 8
Source Survey of SMEs (2018)
Distribution of enterprises that have been provided any kind of redress for the damage caused
by the contract-related cloud computing problems by sector size or country level
Again with the sole aim of documenting the gathered information Table 58 to Table 60
present the differences by country size and sector of the distribution of enterprises that have
been provided any kind of redress for the damage caused by the contract-related cloud
computing problems
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and unbalanced cloud computing contracts
124
Table 58 Number and of total enterprises that faced problems that have been provided
any kind of redress for the damage caused by country and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any
redress
CZ 1 33 0 0 0 0 2 67
DE 0 0 0 0 0 0 11 100
EE 0 0 0 0 0 0 3 100
ES 0 0 0 0 0 0 3 100
FR 1 9 0 0 0 0 10 91
IE 0 0 0 0 0 0 3 100
IT 0 0 0 0 0 0 5 100
NL 0 0 0 0 0 0 1 100
PL 0 0 1 20 0 0 4 80
PT 0 0 1 50 0 0 1 50
RO 0 0 0 0 0 0 1 100
SE 0 0 1 14 0 0 6 86
Total 2 3 0 50
Source Survey of SMEs (2018)
Table 59 Number and of total enterprises that faced problems that have been provided any kind of redress for the damage caused by sector and type of redress
( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Administrative and support service activities
2 33 0 0 0 0 4 67
Information and
communication 0 0 0 0 0 0 10 100
Manufacturing 0 0 0 0 0 0 16 100
Professional
scientific and
technical activities
0 0 1 9 0 0 10 91
Wholesale and retail trade repair of motor vehicles and motorcycles
0 0 1 8 0 0 10 83
Total 2 3 0 50
Source Survey of SMEs (2018)
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and unbalanced cloud computing contracts
125
Table 60 Number of enterprises that have been provided any kind of redress for the
damage caused by size class and type of redress ( of respondents 55)
Country
Financial
compensation
Reduction in the cost of
subscription Other
The company did not offer any redress
Micro 0 0 2 13 0 0 14 88
Small 2 6 0 0 0 0 29 94
Medium 0 0 1 13 0 0 7 88
Total 2 3 0 50
Source Survey of SMEs (2018)
Distribution of loss of turnover by sector size or country level
Having estimated the different components of turnover Table 61 to Table 63 present the loss
of turnover in enterprises by country size and sector caused by the contract-related cloud
computing problems documenting significant differences
Table 61 Loss of turnover per enterprise by sector
Sectors
Number of
enterprises ()
95 Trimmed mean125
(euro)
Average
(euro)
Manufacturing 28 348469 1177465
Wholesale and retail trade 22 4759 232031
Information and communication 25 6599 27509
Professional scientific and technical activities 31 3226 490323
Administrative and support service activities 16 1827366 4144629
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 62 Loss of turnover per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 023 4217
Small 24 271159 1119043
Medium 73 99060 1278261
Total 122 41954 985869
Source Survey of SMEs (2018)
Table 63 Loss of turnover per enterprise by country
Country Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 160819 894737
EE 5 117 140
125 A trimmed mean is a method of averaging that removes a small designated percentage of the largest and smallest values before calculating the mean
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and unbalanced cloud computing contracts
126
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
ES 11 000 000
FR 22 742424 3009091
IE 4 4583333 5125000
IT 13 192308 423077
NL 6 3889 5000
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 100166 613600
Total 122 41954 985869
Source Survey of SMEs (2018)
Distribution of loss of profits by sector size or country level
Table 64 to Table 66 present the loss of profits by country enterprise size and sector caused
by the contract-related cloud computing problems once again documenting significant
differences
Table 64 Loss of profits per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 43651 121207
Wholesale and retail trade 22 4980 242652
Information and communication 25 7720 14729
Professional scientific and technical activities 31 1452 9355
Administrative and support service activities 16 413456 872111
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 65 Loss of profits per enterprise by size class
Size class
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Micro 25 063 5742
Small 24 38235 50293
Medium 73 18681 301282
Total 122 17690 191346
Source Survey of SMEs (2018)
Table 66 Loss of profits per enterprise by country
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 000 000
DE 19 877 15789
EE 5 200 240
ES 11 000 000
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and unbalanced cloud computing contracts
127
Country Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
FR 22 161111 613182
IE 4 152778 162500
IT 13 14957 38462
NL 6 17315 18583
PL 13 000 000
PT 3 000 000
RO 1 000 000
SE 18 221012 460637
Total 122 17690 191346
Source Survey of SMEs (2018)
Distribution of working days per enterprise involved in resolving the problem by sector size
or country level
Table 67 to Table 69 present the distribution of working days per enterprise involved in
resolving the problem caused by the contract-related cloud computing problems by country
size and sector again documenting significant differences
Table 67 Human resources invested - working days per enterprise involved in resolving the problem by sector
Sector
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
Manufacturing 28 334 804
Wholesale and retail trade 22 255 268
Information and communication 25 244 264
Professional scientific and technical activities 31 442 477
Administrative and support service activities 16 1036 2388
Total 122 322 721
Source Survey of SMEs (2018)
Table 68 Human resources invested - working days per enterprise involved in resolving the problem by size class
Size class
Number of
enterprises
()
95
Trimmed mean
( days)
Average
( days)
Micro 25 300 404
Small 24 236 258
Medium 73 368 982
Total 122 322 721
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
128
Table 69 Human resources Invested - working days per enterprise involved in resolving the
problem by country
Country
Number of enterprises
()
95 Trimmed
mean
( days)
Average
( days)
CZ 7 226 229
DE 19 471 1074
EE 5 222 220
ES 11 631 718
FR 22 282 395
IE 4 094 100
IT 13 315 338
NL 6 4057 5117
PL 13 286 308
PT 3 300 700
RO 1 200 200
SE 18 251 361
Total 122 322 721
Source Survey of SMEs (2018)
Distribution of other costs covered per enterprise by sector size or country level
Table 70 to Table 72 present the other costs covered per enterprise to resolve the contract-
related cloud computing problems by country size and sector documenting again significant
differences
Table 70 Other costs covered per enterprise by sector
Sector
Number of enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
Manufacturing 28 28919 706177
Wholesale and retail trade 22 141217 366265
Information and communication 25 11556 112400
Professional scientific and technical activities 31 50573 147290
Administrative and support service activities 16 150107 635096
Total 122 34124 371871
Source Survey of SMEs (2018)
Table 71 Other costs covered per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 25 2278 10725
Small 24 178472 389792
Medium 73 39973 489660
Total 122 34124 371871
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
129
Table 72 Other costs covered per enterprise by country
Country
Number of
enterprises
()
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 387 535
DE 19 183333 665000
EE 5 6111 7000
ES 11 115657 229091
FR 22 682 50659
IE 4 166667 175000
IT 13 184615 416154
NL 6 15935 16917
PL 13 14575 37479
PT 3 3333 3333
RO 1 000 000
SE 18 332811 1241741
Total 122 34124 371871
Source Survey of SMEs (2018)
Distribution of the total value of redress received per enterprise by sector size or country
level
Table 73 to Table 75 present the total value of redress received per enterprise for contract-
related cloud computing problems by country size and sector
Table 73 Total value of redress received per enterprise by sector
Sector
Number of
enterprises
()
95 Trimmed
mean
(euro)
Average
(euro)
Manufacturing 28 000 1607
Wholesale and retail trade 22 000 1704
Information and communication 25 000 696
Professional scientific and technical activities 31 187 748
Administrative and support service activities 16 25195 38379
Total 122 095 6042
Source Survey of SMEs (2018)
Table 74 Total value of redress received per enterprise by size class
Size class
Number of enterprises
()
95 Trimmed mean
(euro)
Average
(euro)
Micro 0 000 00
Small 0 000 00
Medium 7 17120 57096
Total 122 095 6042
Source Survey of SMEs (2018)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
130
Table 75 Total value of redress received per enterprise by country
Country Number of enterprises
(euro)
95
Trimmed mean
(euro)
Average
(euro)
CZ 7 1867 5354
DE 19 000 000
EE 5 000 000
ES 11 000 000
FR 22 000 13636
IE 4 000 000
IT 13 1346 3462
NL 6 000 000
PL 13 2504 3123
PT 3 000 000
RO 1 000 000
SE 18 1939 17448
Total 122 095 6042
Source Survey of SMEs (2018)
Costs or labour per working day by sector and country level
Table 76 Cost of labour per working day (euro per day per worker)
Country Manufacturing
Wholesale and retail
trade repair of
motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
Total
economy
AT 2089 1323 2194 1331 1201 1616
BE 2285 1512 2294 1363 1190 1670
BG 705 691 1435 471 622 665
CY 705 691 1435 471 622 665
CZ 544 408 930 469 352 500
DE 2069 1080 2070 1568 821 1503
DK 1978 1601 2248 2281 1580 1871
EE 616 522 861 538 458 577
EL 721 434 945 307 407 505
ES 1352 827 1912 1072 725 1028
FI 1929 1366 2186 1764 1083 1639
FR 2055 1526 2487 2163 276 1791
HR 452 405 692 275 327 410
HU 506 336 662 368 309 424
IE 1967 1281 2605 2163 1189 1493
IT 1407 772 1702 659 840 1052
LT 383 305 627 317 317 351
LU 2204 1754 2862 2942 1192 2097
LV 969 315 590 333 276 347
MT 405 475 1017 333 571 477
NL 2083 1087 1970 1499 688 1286
PL 456 303 626 332 385 391
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
131
Country Manufacturing
Wholesale
and retail trade
repair of motor
vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Administrative and support
service activities
Total
economy
PT 640 524 1106 385 330 547
RO 290 236 576 333 230 287
SE 2197 1675 2618 2088 1259 1922
SI 871 731 980 523 546 762
SK 551 368 810 404 314 470
UK 1745 1047 2230 1989 1146 1455
EU 28 1491 1774 3687 1695 511 1118
Note Costs were computed as (INDIC_SB - Personnel costs - million euroINDIC_SB - Persons employed - number)260
Source Eurostat
Distribution of the overall components of financial detriment by sector and size class in the
different scenarios
The following tables present the distribution of the estimated components of financial
detriment by sector and enterprise size class for the different scenarios showing relevant
differences across those dimensions
Table 77 Lost turnover at the EU-28 level in SMEs experiencing cloud computing service problems
Scenario 1
(average incidence126 of CC
use 159)
Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 515 1450
Wholesale and retail trade repair of motor vehicles
and motorcycles 240 728
Information and communication 59 175
Professional scientific and technical activities 237 694
Administrative and support service activities 1395 4645
Total 2446 7691
Siz
e
cla
ss Micro 1405 4402
Small 598 1866
Medium 442 1423
Total 2446 7691
Source Computations based on Survey of SMEs (2018) and Eurostat
126 Average percentage of cloud computing services used
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
132
Table 78 Lost profits at the EU28 level in SMEs experiencing cloud computing service
problems
Scenario 1 (average incidence of CC use 159)
(Scenario 2 (average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 146 409
Wholesale and retail trade repair of motor vehicles and motorcycles
114 345
Information and communication 35 103
Professional scientific and technical activities 101 293
Administrative and support service activities 634 2092
Total 1031 3243
Siz
e
cla
ss Micro 602 1887
Small 255 792
Medium 174 564
Total 1031 3243
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 79 Costs of human resources invested in resolving the problem in SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 341 1019
Wholesale and retail trade repair of motor vehicles and motorcycles
474 1511
Information and communication 236 741
Professional scientific and technical activities 816 2503
Administrative and support service activities 232 826
Total 2099 6600
Siz
e
cla
ss Micro 1961 6167
Small 97 295
Medium 41 138
Total 2099 6600
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 80 Other costs covered by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 162 479
Wholesale and retail trade repair of motor vehicles and motorcycles
959 2996
Information and communication 74 229
Professional scientific and technical activities 503 1527
Administrative and support service activities 291 1024
Total 1989 6255
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
133
Scenario 1
(average incidence of CC use 159)
Scenario 2
(average incidence of CC use 499)
(euro million)
Siz
e
cla
ss Micro 1450 4555
Small 449 1401
Medium 90 300
Total 1989 6255
Source Computations based on Survey of SMEs (2018) and Eurostat
Table 81 Total value of redress received by SMEs experiencing cloud computing service problems at the EU28 level
Scenario 2
(average incidence of CC use 159)
Scenario 1
(average incidence of CC use 499)
(euro million)
Secto
r
Manufacturing 00 00
Wholesale and retail trade repair of motor vehicles
and motorcycles 00 01
Information and communication 00 00
Professional scientific and technical activities 00 01
Administrative and support service activities 05 15
Total 06 17
Siz
e
cla
ss Micro 02 06
Small 00 00
Medium 04 11
Total 06 17
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 27 Distribution by component of gross detriment considering lost turnover and all the other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 1 (average incidence of cloud computing use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
134
Figure 28 Distribution by sector of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Figure 29 Distribution by enterprise size class of gross detriment considering lost turnover
and all other costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Scenario 2 (average incidence of CC use 499)
Scenario 1 (average incidence of CC use 159)
Scenario 1
(average incidence of CC use 159)
Scenario 2 (average incidence of CC use 499)
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
135
Figure 30 Distribution by country of gross detriment considering lost turnover and all other
costs incurred
Source Computations based on Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
136
Annex 7 Impacts on jobs and growth detailed results
Inputs for the assessment of macroeconomic impacts
The following two tables present the results of the estimation of turnover losses by industry
and country in the two scenarios that are used as inputs on assessment of impacts on jobs
and growth
Table 82 Turnover losses arising from contract-related cloud computing service problems - Scenario 1 considering average incidence of CC use 159 (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor
vehicles and
motorcycles
Information
and communication
Professional
scientific
and technical activities
Administrative and support
service
activities
Total
AT 06 02 00 01 10 19
BE 54 01 00 01 50 106
BG 02 00 00 00 05 07
CY 08 03 01 05 44 61
CZ 40 68 19 69 80 275
DE 02 06 02 06 03 21
DK 41 29 09 36 138 254
EE 92 86 09 69 136 392
EL 62 02 01 01 108 173
ES 07 00 00 00 85 92
FI 13 02 01 02 29 47
FR 15 01 00 00 35 51
HR 39 02 00 01 189 231
HU 05 01 00 01 08 15
IE 18 01 01 02 105 128
IT 14 06 04 12 38 73
LT 03 01 00 01 15 19
LU 23 09 01 08 39 81
LV 12 05 01 02 18 37
MT 01 00 00 00 03 05
NL 02 01 00 01 08 11
PL 00 00 00 00 03 03
PT 12 03 01 04 41 61
RO 01 00 00 00 02 03
SE 04 01 00 01 13 20
SI 07 02 01 02 20 32
SK 05 01 00 01 08 15
UK 25 07 06 11 162 211
EU28 515 240 59 237 1395 2446
Note values refer to the turnover losses estimated by country and sector that are used in the assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
137
Table 83 Turnover losses arising from contract-related cloud computing service problems -
Scenario 2 considering average incidence of CC use 499 - (euro million)
Co
un
try
Manufacturing
Wholesale and retail
trade repair of
motor vehicles
and motorcycle
s
Information and
communication
Profession
al scientific
and technical activities
Administrative and
support service
activities
Total
AT 17 05 01 03 35 61
BE 156 03 01 02 172 333
BG 05 00 00 00 17 22
CY 22 09 03 13 144 191
CZ 112 211 57 198 288 866
DE 07 18 07 20 12 65
DK 110 91 26 98 474 800
EE 278 256 30 218 452 1234
EL 168 05 02 02 366 544
ES 18 01 00 00 271 290
FI 37 07 02 05 96 147
FR 42 02 00 01 115 160
HR 113 06 01 02 605 728
HU 15 03 01 02 27 48
IR 50 04 02 06 340 402
IT 38 19 11 32 129 230
LT 07 02 01 02 48 61
LU 66 29 03 23 135 256
LV 33 15 02 06 62 117
MT 04 01 00 01 10 16
NL 07 02 01 02 25 36
PL 01 01 00 01 08 11
PT 32 09 04 10 136 191
RO 02 01 00 01 07 10
SE 12 03 01 03 45 62
SI 19 06 02 07 67 101
SK 13 02 01 03 27 46
UK 67 19 16 31 530 663
EU28 1450 728 175 694 4645 769
1
Note values refer to the turnover losses estimated by country and sector that are used in the
assessment of impacts The total value is the estimate of total turnover loss in this scenario
Source Survey of SMEs (2018) and Eurostat
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
138
Parameters for the assessment of macroeconomic impacts
Table 84 Output per unit of GVA by sector
(euro value of turnover by euro of GVA ndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail trade
repair of motor vehicles
and motorcycles
Information and
communication
Professional
scientific and technical activities
Administrative
and support service
activities
AT 31 18 22 20 15
BE 41 20 22 21 20
BG 44 20 19 22 24
CY 33 17 30 15 16
CZ 38 21 19 25 29
DE 29 17 19 17 16
DK 27 18 21 19 21
EE 40 19 19 19 18
EL 36 19 20 18 22
ES 40 18 20 18 18
FI 35 19 20 18 17
FR 33 20 19 22 17
HR 29 19 19 18 20
HU 40 21 17 16 18
IE 24 18 39 19 19
IT 38 19 22 17 21
LT 30 14 16 16 17
LU 37 30 49 20 80
LV 32 18 19 17 21
MT 33 16 26 23 19
NL 41 17 20 19 15
PL 36 16 20 17 20
PT 38 16 22 21 16
RO 28 26 18 22 21
SE 30 16 20 18 18
SI 31 19 21 19 17
SK 46 20 20 24 26
UK 29 18 17 16 18
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat National accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
139
Table 85 Output per unit of employment by sector
(euro million of turnover by thousand persons employedndash average values 2014 - 2016)
Country Manufacturing
Wholesale and retail
trade repair of motor
vehicles and motorcycles
Information
and communication
Professional
scientific and
technical activities
Administrati
ve and support service
activities
AT 2789 1006 2094 1227 864
BE 4293 1566 2999 1533 788
BG 453 197 499 306 160
CY 871 468 2187 814 414
CZ 1106 466 1047 625 485
DE 2414 780 2031 1060 721
DK 3251 1214 2246 1564 1118
EE 967 497 740 712 626
ES 2754 616 1770 858 474
FI 3160 1078 2014 1100 748
FR 2862 1077 2263 1650 898
GR 1643 392 1263 416 476
HR 603 364 702 652 432
HU 1137 320 658 384 255
IR 8130 1091 11774 1822 2848
IT 2329 899 2006 977 754
LT 944 378 711 406 303
LU 2988 3000 8840 1977 4646
LV 689 378 648 389 387
MT 1084 513 1866 1264 617
NL 3923 1047 2190 1314 556
PL 862 467 824 646 378
PT 1151 537 1397 648 275
RO 584 323 917 958 337
SE 3272 1189 2874 1706 955
SI 1236 647 1072 609 354
SK 1452 456 962 760 485
UK 2550 910 1750 1080 708
Note These values express the value of output that is produced by one employee in each industry For instance each worker in manufacturing in Belgium produces and output of euro4293 thousand Source Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
140
Detailed results of the assessment of macroeconomic impacts
Table 86 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems ndash Scenario 1 considering average incidence of CC use 159
Co
un
try
Sectors
Manufact
Wholesale
and retail trade repair
of motor vehicles and motorcycles
Information and
communication
Professional
scientific and technical activities
Admin and
support service
activities
Total
(
of ctry
GVA)
(euro million)
AT 02 01 00 01 13 18 000
BE 02 02 00 02 22 29 000
BG 03 02 00 01 08 14 000
CY 00 00 00 00 02 03 000
CZ 14 00 00 00 18 33 000
DE 14 17 05 21 85 143 000
DK 01 00 00 00 07 09 000
EE 00 00 00 00 03 03 000
EL 07 05 01 05 18 34 000
ES 10 01 00 00 107 118 000
FI 01 00 00 01 08 10 000
FR 12 33 10 31 47 133 000
HR 02 00 00 00 04 07 000
HU 03 01 01 02 23 31 000
IE 01 03 01 03 02 10 000
IT 24 44 04 41 64 178 000
LT 02 01 00 01 06 10 000
LU 00 00 00 00 00 01 000
LV 01 00 00 00 04 05 000
MT 00 00 00 00 01 02 000
NL 04 01 00 01 69 76 000
PL 17 01 00 00 55 74 000
PT 02 00 00 00 54 55 000
RO 05 00 00 00 17 23 000
SE 05 04 02 06 21 38 000
SI 02 00 00 01 05 07 000
SK 03 01 00 01 11 16 000
UK 09 04 03 07 89 112 000
To
tal
EUR
million 146 126 30 128 761 1191
of
total 000 000 000 na 001 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
141
Table 87 Direct employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 1 considering average incidence of CC use 159
Co
un
try
Sector
Manufact
Wholesale and retail
trade repair
of motor vehicles and motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total ( of
ctry GVA)
(euro million)
BE 2 2 0 3 56 63 000
BG 26 25 1 7 112 171 001
CZ 49 2 0 1 103 155 000
DK 1 1 0 1 13 15 000
DE 17 38 5 34 191 285 000
EE 2 0 0 0 9 10 000
EL 14 24 1 19 83 141 000
IE 0 6 0 4 1 11 013
ES 14 3 0 1 398 417 000
HR 9 3 0 1 18 31 000
IT 39 96 5 71 180 391 002
CY 2 1 0 0 7 10 000
LV 4 2 0 2 19 27 001
LT 6 5 0 3 34 48 001
LU 0 0 0 0 1 1 000
HU 10 9 2 10 161 192 001
MT 1 0 0 0 3 5 000
NL 5 1 0 2 189 197 000
AT 3 2 0 2 23 30 000
PL 72 4 1 1 286 363 000
PT 6 0 0 0 311 317 000
RO 25 2 0 0 104 132 000
SI 4 1 0 2 23 29 001
SK 9 5 1 2 59 76 001
FI 1 1 0 1 18 21 000
SE 4 5 1 7 40 57 001
UK 10 7 3 10 229 260 000
To
tal Persons 348 306 31 225 2761 3672
of
total 000 000 000 000 002 000
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
142
Table 88 Direct gross value added content of the losses of turnover caused by contract-
related cloud computing service problems Scenario 2 considering average incidence of CC use 499 - euro million
Co
un
try
Sector
Manufact
Wholesale and retail trade
repair of
motor vehicles and
motorcycles
Information
and communication
Professional scientific and
technical activities
Admin
and support service
activities
Total
(
of ctry
GVA)
AT 06 04 01 03 43 57 000
BE 05 05 01 06 74 91 000
BG 07 08 01 03 26 45 001
CY 01 01 00 00 06 09 001
CZ 41 01 00 01 60 104 001
DE 38 53 13 57 293 455 000
DK 03 01 01 01 23 29 000
EE 01 00 00 00 10 11 001
EL 18 15 02 13 60 108 001
ES 28 03 00 01 342 376 000
FI 03 01 00 02 26 33 000
FR 33 104 30 90 169 427 000
HR 05 02 00 01 13 22 001
HU 08 04 02 06 77 98 001
IE 03 10 02 11 06 32 000
IT 73 132 14 129 211 560 000
LT 06 04 00 02 21 33 001
LU 00 00 00 00 01 02 000
LV 02 01 00 01 12 16 001
MT 01 00 00 00 03 05 001
NL 12 02 01 03 224 242 000
PL 46 03 01 01 186 237 001
PT 05 00 00 00 170 175 001
RO 15 01 00 00 56 72 001
SE 13 12 06 18 73 121 000
SI 04 01 00 02 16 23 001
SK 08 03 01 02 37 52 001
UK 23 10 09 19 292 354 000
To
tal
EUR
million 411 382 88 375 2532 3788
of
total 000 000 000 na 004 000
Note Values refer to the GVA content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by the
coefficients of GVA at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
143
Table 89 Direct Employment content of the losses of turnover caused by contract-related
cloud computing service problems Scenario 2 considering average incidence of CC use 499
Co
un
try
Sector
Manufac
t
Wholesale and retail
trade repair of
motor vehicles
and motorcy
cles
Informati
on and communi
cation
Professio
nal scientific
and technical activities
Admin and
support service
activities
Total ( of ctry
employment)
(Persons)
AT 7 6 1 6 77 97 000
BE 5 6 1 8 183 203 000
BG 72 76 4 19 384 555 002
CY 4 3 0 1 24 31 001
CZ 141 6 1 3 356 506 001
DE 46 117 13 93 657 925 000
DK 2 2 1 1 43 49 000
EE 5 0 0 0 28 33 001
EL 40 73 3 56 284 455 001
ES 41 10 0 3 1277 1331 001
FI 4 2 0 2 60 69 000
FR 39 196 25 120 321 701 000
HR 24 8 1 4 63 99 001
HU 28 28 5 27 535 623 001
IE 1 17 1 11 4 33 000
IT 119 284 15 223 599 1242 001
LT 18 14 1 8 116 157 001
LU 0 0 0 0 2 3 000
LV 10 5 1 4 65 85 001
MT 2 1 0 1 11 15 001
NL 13 4 1 5 612 634 001
PL 195 11 2 4 970 1182 001
PT 16 1 0 1 986 1004 002
RO 72 6 0 1 342 420 000
SE 12 16 4 19 136 186 000
SI 11 3 1 5 78 97 001
SK 25 14 2 7 199 247 001
UK 26 21 9 29 749 834 000
To
tal
Persons 977 930 92 660 9157 11816
of total 000 000 000 000 006 001
Note Values refer to the employment content of the direct turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated turnover losses by
the coefficients of employment at sector and country level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
144
Table 90 Indirect loss of gross value added at EU28 level by sector
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(euro million)
Agriculture forestry and fishing 20 59
Mining and quarrying 09 27
Manufacturing 151 454
Electricity gas steam and air conditioning supply 22 68
Water supply sewerage waste management and remediation activities 13 39
Construction 20 64
Wholesale and retail trade repair of motor vehicles and motorcycles 98 301
Transportation and storage 76 237
Accommodation and food service activities 18 59
Information and communication 71 223
Financial and insurance activities 66 207
Real estate activities 72 226
Professional scientific and technical activities 157 493
Administrative and support service activities 155 498
Public administration and defence compulsory social security 11 33
Education 10 33
Human health and social work activities 02 07
Arts entertainment and recreation 05 17
Other service activities 10 33
Activities of households as employers undiff goods- and services-
producing activities of households for own use 00 00
Total euro million 987 3079
of EU28 total 000 000
Note Values refer to the GVA content of the indirect turnover losses caused by contract-related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses
by the coefficients of GVA at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
Table 91 Indirect loss of Employment at EU28 level by sector
Scenario 1 (average
incidence of CC use 159)
Scenario 2 (average
incidence of CC use 499)
(Persons)
Agriculture forestry and fishing 119 353
Mining and quarrying 8 24
Manufacturing 252 759
Electricity gas steam and air conditioning supply 13 39
Water supply sewerage waste management and remediation activities 16 50
Construction 43 135
Wholesale and retail trade repair of motor vehicles and motorcycles 241 739
Transportation and storage 137 428
Accommodation and food service activities 55 176
Information and communication 75 235
Financial and insurance activities 60 190
Real estate activities 12 39
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
145
Scenario 1
(average incidence of CC
use 159)
Scenario 2
(average incidence of CC
use 499)
(Persons)
Professional scientific and technical activities 234 734
Administrative and support service activities 374 1203
Public administration and defence compulsory social security 20 63
Education 26 82
Human health and social work activities 6 18
Arts entertainment and recreation 13 40
Other service activities 29 93
Activities of households as employers undiff goods- and services-producing activities of households for own use
1 2
Total Persons 1733 5402
of EU28 total 000 000
Note Values refer to the employment content of the indirect turnover losses caused by contract-
related cloud computing service problems Values are computed by dividing the estimated indirect turnover losses by the coefficients of employment at EU sector level taken from Eurostat
Source SMEs survey (2018) and Eurostat national accounts aggregates by industry (up to NACE A64) [nama_10_a64]
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Annex 8 Case study questionnaires by stakeholder type
EY Interview Guide ndash Cloud computing contracts (service providers and cloud
brokers)
Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into to what extent SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
As part of the study an SME survey was conducted to get a better understanding of the
incidence and the scope of problems encountered with this type of service In order to
complement and to get a better understanding of the results we obtained from the survey
we also want to get a better understanding of the services offered to SMEs by providers and
what types of problems are notified to providers
Timing 2 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and
check whether this is the best representative to interview from the national authority
Can you tell a bit more about yourself and what position do you hold
Can you reply to our questionnaire and if not can you put us in contact with somebody who can
Can you tell us a little more about the cloud computing provider you work for What type of services do you offer
What can you tell us about the contracts being offered by the cloud computing provider to SMEs
Elements to be evaluated
Understanding of the function Understanding if the person is competent enough to give relevant answers to the topic in
question Understanding of the extent of knowledge that the person has of cloud computing contracts
and company
Timing 05 min
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147
Services offered to SMEs and differences compared to services offered to larger enterprises
Cloud computing services offered to SMEs
The objective of this section is to get full understanding of whether and how the provider considers
SMEs as a specific type of customer
What kind of cloud computing contracts do you offer To what extent do SMEs rely on this service What is the size of the SMEs to which you provide this service Do you offer services for micro enterprises and what is the difference between the service
offered to micro and larger enterprises
Do you offer this service based on a fee or for free
How flexible are you on the contracts that you offer in terms of negotiating Do you have standard terms amp conditions for SMEs or are they negotiable Do companies tend to negotiate the terms of the contract or are they satisfied with the service
offered in the contract To what extent can SMEs monitor the performance of the contract
Elements to be discussed
Understanding of the company and type of services offered Understanding if and how SMEs are considered as a specific category of customer Knowledge and understanding on the type of the service used paid or not by SME customers
Knowledge and understanding of the whether the contracts are negotiated or not
Timing 10 min
Complaints received and actions taken by the provider to address the issues encountered
Complaints received from SMEs concerning the services provided
Objective is to get an understanding of the number and scope of complaints that providers receive and to what extent SME complaints are different from other complaints received
How often do you receive complaints from SME customers Compared to other customers is this higher or lower
What types of complaints do you receive from SMEs (different from other groups) Which was the most serious problem encountered that you received a complaint about and to
which type of cloud computing service was it related What caused these problems What is the internal procedure to handle these problems In the past 12 months did you receive complaints not directly from customers but through
3rd party complaints-handling bodies
To what extent was this complaint different from other complaints you received directly from customers
Elements to be discussed
Understanding of the types of complaints received from SMEs Understanding of severity and frequency of complaints received from SMEs
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
Low speed of services Unsatisfactory availability or discontinuity of the service
Forced updates to the service that eliminated or changed a necessary function
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Lack of clarity and transparency of contract terms and conditions
Timing 10 min
Specific actions taken by provider in order to address the problems
What is the standard procedure to handle complaints To what extent do you as cloud computing provider provide assistance to the SMEs when they
encounter a problem
How much time does it in general take to solve issues encountered by SMEs (in line with other complaints handled for other customers)
When encountering a problem in general what type of action do SMEs expect you as provider to take
Have you experienced that consumers easily switch provider or terminate the contract Does
this happen more often after they have filed a complaint
What types of costs do you compensate to SME customers when they encounter a problem Do customers in general accept the offered remedies Have you encountered cases where the
SME customer was not happy with the solution offered What other solutions were offered in place
Did the complaint escalate Any court proceedings arbitrationhellip
Elements to be evaluated
Understanding of the actions taken by the cloud computing provider Were these remedies enough to solve the problem The resources involved and used in the resolving of the problem
Where there any extra costs covered by the company
Timing 10 min
Future perspectives on the topic
How will Cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made due
to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services
Legalpolicy consequences of potential future evolutions
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 2 min
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EY Interview Guide ndash Cloud computing contracts (Associations of SMEs)
D Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Timing 2 min
General introduction questions
Generate understanding of the position and knowledge of the interviewee on the specific subject
Can you tell a bit more about the types of activities that the companies in your association
are performing
Timing 05 min
Cloud computing services used (IT)
The objective of this section is to get full understanding of what cloud computing services are used for by the members of the SME associations
Are you aware of any of the following Cloud Computing services being used by SMEs
Collaboration and communication services Storage and hosting services Security services
Networking services
Data management Business applications
Are you aware of any other cloud computing services being used by SMEs
Timing 5 min
Type of contracts (legal)
The objective of this section is to get full understanding of what kind of contract the SMEs which are part of the association have
What type of cloud computing contract do the companies in your association have (with or
without remuneration if with remuneration- how much do they pay per month) What is the average duration of the contracts
Do the companies in your association have a preferred provider or type of package of services Do the companies in your association negotiate their cloud computing contracts What parts
are they able to negotiate if any Are the companies in your association satisfied with the degree of customisation of the
contracts What specific needs do the companies in your association have regarding cloud computing
Do they succeed in covering them in the process of negotiating cloud computing contracts with the providers of cloud computing services
Timing 10 min
Problems encountered (legalIT)
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Objective is to get a better understanding of the problems encountered by the members of SME associations while contracting cloud computing services
Are you aware of any of the following problems existing with cloud computing services used by SMEs
low speed of the service unsatisfactory availability or discontinuity of the service forced updates to the service that eliminated or changed a necessary function
lack of clarity and completeness of the instructions and information regarding access andor download of the cloud service
lack of clarity and transparency of contract terms and conditions
Are you aware of any other problems existing with cloud computing services used by SMEs
What was the action taken by companies inside your association in order to resolve the issues
Do the companies in your association usually decide to take legal action
Do you believe that unfair contract terms and conditions of the cloud provider could be considered as
a cause of the problems of the companies that are members in your association
Why you diddid not consider security matters as one of the problems declared
Timing 15 min
Costs of the cloud computing services contract (legalIT)
Objective is to get an understanding of the costs sustained by the members of the SME associations while contracting cloud computing services
Would you consider that there have been any negative effects on the everyday business
activities of the companies in your association after facing the mentioned problem If yes please explain what the negative effects were
What types of costs have the companies sustained while resolving the problems Were they offered any compensation from the cloud provider
Timing 5 min
Future perspectives on the topic
How will the SMEs use the cloud computing services in the future
To what extend do you think cloud computing services will become moreless important for companies in the future
Do you see any other evolutionstrends that could be relevant with regard to cloud computing
services for SMEs
Timing 5 min
Closing of interview
Thank you for your interest and for your time
Any further questions
Timing 5 min
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EY Interview Guide ndash Cloud computing contracts (National authorities and national
SMEs envoys)
E Introduction
Welcome to the interview person
Thank you for joining over the phone
Introduction of the persons present in the call
Introduction of the topic
We are currently conducting a study on cloud computing services More specifically we are
looking into the extent to which SMEs use this type of service and whether they encounter
problems in using these services
For the purpose of this study cloud computing is considered as ldquoa model for enabling
ubiquitous convenient on-demand network access to a shared pool of configurable
computing resources (eg networks servers storage applications and services) that can
be rapidly provisioned and released with minimal management effort or service provider
interactionrdquo
More concretely the following services are included collaboration and communication
services storage and hosting services security service networking services data
management business applications service and support tools cloud enablement and IT
operations virtual data centre mobile data centre
As part of the study an SME survey was conducted Results of the survey show that the
incidence of problems is relatively high in ltyour countrygt The objective of this interview is
to get a better understanding of the national context with regard to this subject
Timing 5 min
General introduction questions
General questions to the person being interviewed
Generate understanding of the position and knowledge of the interviewee on the specific subject and check whether this is the best person to interview within the national authority
Can you tell a bit more about yourself and what position do you hold To what extent are you familiar with the subject of cloud computing services
Elements to be discussed
Understanding of the function Understanding if the person is competent to give relevant answers to the problematic in
question Understanding of the extent that the person has of cloud computing contracts
Timing 05 min
Legal framework of cloud computing contracts
Cloud computing contracts in ltyour countrygt
Generate understanding of the overall situation in the country policy attention given to the subject and the specific legal framework applicable
Cloud computing services are a relative new service To what extent are national authorities working on this issue
Any data available
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152
Knowledgeawareness of the availability of these services in ltyour countrygt
Specific attention for this topic at policy level
Under what applicable legal framework do these services fall Are there specific national initiatives developed with regard to this type of services
Our study focuses specifically on the situation of cloud computing services used within SMEs Do you have any knowledge of the existence of specific rules applicable only to SMEs in your country
Do you think the legal framework is sufficiently protecting cloud computing users and more
specifically SMEs Do you think that Terms amp Conditions are clear for SMEs Should they have specific rules for
this group of customers What is (or should be) the possibility of SMEs to monitor performance of contract Terms and
Conditions
What remedies are at SMEsrsquo disposal Is switching providers a remedy
Elements to be discussed
Knowledge and understanding of the specific sector Knowledge and understanding of the extent that these services are used
Knowledge and understanding of the legal framework applicable in the country
Timing 10 min
Problems with regard to cloud computing services
Notifications received on problems encountered by SMEs
Are you aware of any problems existing with cloud computing services used by SMEs
Have you received any complaints with regard to this type of services
Have there been any complaints on the terms amp conditions of the contracts How are these complaints handled What is the intended procedure to follow
What follow up is given to complaints regarding cloud computing services
Do you as a national authority have sufficient competences to enforce regulations in your country
Elements to be discussed
Knowledge and understanding of the problems encountered by SMEs Understanding of the types of problems encountered
Understanding of how complaints are handled and if complaints did lead to further actions taken by public authorities
Relevant information
Taking into account both the type of problem most often encountered and its frequency the following problems appear as most relevant
low speed of services unsatisfactory availability or discontinuity of the service
forced updates to the service that eliminated or changed a necessary function
lack of clarity and transparency of contract terms and conditions
Timing 10 min
Future perspectives on the topic
How will cloud computing services for SMEs and the legal framework evolve in the future
To what extend do you think cloud computing services will become moreless important in the future
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Do you consider it likely that more problems will arise with regard to cloud computing
services
Is there a need for nationalEuropean authorities to work more on this topic Is the current legal framework sufficient Will some further adjustments need to be made
due to further evolutions of the cloud computing landscape
Do you see any other evolutionstrends that could be relevant with regard to cloud computing services for SMEs
Elements to be discussed
Further evolution of the field of cloud computing services Legalpolicy consequences of potential future evolutions
To what extent national authorities are working on the topic or will address more attention to it in the future
Timing 10 min
Closing of Interview
Thank you for your interest and for your time
Any further questions
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Annex 9 Case study analysis
Case study interviews
Objectives
The objective of the case studies was to produce useful insights on the specific problems that
were identified by the survey and complement the results obtained by using CATI and the
online survey Additional information was gained through interviews that also involved
stakeholders that had not previously participated in the Online Survey and CATI thus these
inputs were used to further enrich the results that have been obtained so far
Scope
The case studies targeted the following categories of stakeholders
Cloud service providers
National authorities
SMEs that already provided information either in the online survey or during the CATI
and that declared their availability for an in-depth interview
National SMEs Envoy
European SMEs associations (including Enterprise Europe Network associations)
Cloud brokers
Chambers of Commerce
The topics discussed with each type of stakeholder involved in the case study interviews are
presented in Figure 31
Figure 31 Topics discussed with each type of stakeholder
Stakeholder category
Topics discussed
SMEs that declared their availability for
an in-depth interview127
- type of contract (services included duration service providers what has been negotiated - if any and what degree of customisation)
- possibility to monitor performance of contract if SMEs can or cannot monitor
service performance and if they only detect the most obvious and impactful service performance defects and what types of modifications occur in practice
- costs of the cloud computing services contract(s)
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint if the details regarding the internal procedure
of the provider (if any) were investigated how much time it took and how the
problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- actions taken (HR and financial costs of actions taken)
- results of the actions taken
- disruptionreduction of activity
127 The in-depth interviews with the SMEs already included in CATI involved discussing the problems encountered by them and with a special focus on the following contract-related problems lack of clarity
and transparency of contract terms and conditions unilateral modification of the servicecontracts and
limited liability of cloud providers The special emphasis on these problems is given with the aim of complementing the information already obtained by the CATI The interviews targeted three different departments where possible legal IT and managementfinance departments
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Stakeholder
category Topics discussed
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME affected by the problem encountered
- potential loss of competitiveness (business opportunities lost) in terms of profitturnover lost customers market shares
- additional costs (eg costs related to ensuring an alternative service)
Cloud service providers and cloud brokers
- types of cloud computing contracts offered to SMEs
- services offered to SMEs and differences from services offered to larger enterprises
- the level of negotiability and customisation of the services offered to SMEs
- flexibility regarding the negotiation of cloud computing contracts
- contract-related problems encountered by SMEs
- causes of the contract-related problems encountered by SMEs
- actions taken by service providers and cloud brokers to address contract-related problems encountered by SMEs
- costs compensations for contract-related problems encountered by SMEs
- escalation of contract-related issues to court proceedings
Competent national authorities
- familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs Envoy - familiarity with the subject of cloud computing services used by SMEs
- coverage of the topic of cloud computing in the activity of the authority
- specific attention to the cloud computing topic at policy and legal levels
- awareness of the most important issues encountered by SMEs with cloud computing services
- complaints from SMEs regarding cloud computing services
SMEs associations
- awareness of specific cloud computing services used by SMEs
- type of contract (services included duration service providers what has been negotiated - if any and what was the degree of customisation) concluded by the SMEs in the associations
- average duration of cloud computing contracts concluded by SMEs
- satisfaction of SMEs regarding the degree of customisation of cloud computing contracts
- problems encountered by those SMEs (the reasons why they decide not to take any legal action and costs of the legal actions)
- in the case of lodging a complaint were the details regarding the internal procedure of the provider (if any) further investigated how much time it took and how the problems were resolved
- the security matters declaredwhy they did not consider security as one of the problems declared
- identification of activities affected by the problem encountered employees involved in order to resolve the problem sectorsdepartments of the SME
affected by the problem encountered
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Findings
During the CATI and the online survey 20 SMEs mentioned their availability to be contacted
for in-depth interviews Out of these 20 companies nine SMEs managed to take part in the
case study interviews They represented five sectors wholesale and retail trade repair of
motor vehicles and motorcycles professional scientific and technical activities information
and communication and manufacturing
Additionally in the process of conducting the interviews another 104 stakeholders from 12
Member States (see Figure 32) have been contacted Of these 24 agreed to participate in
the case study interviews
Figure 32 Stakeholders contacted for in-depth interviews
Finally in total 33 interviews were conducted with SMEs (see Figure 33 for SMEs involved by
country sector and size) and SMEs associations a Chamber of Commerce EEN National
Authorities an SME Envoy and service providers (see Figure 34 for the stakeholders list by
category country and name)
Figure 33 The list of SMEs involved
No Country Sector Size
1 Poland Manufacturing Medium-sized
2 Germany Manufacturing Small
3 Germany Information and communication Medium-sized
4 Germany Professional scientific and technical activities Medium-sized
5 Poland Information and communication Small
6 France Information and communication Medium-sized
7 Poland Professional scientific and technical activities Medium-sized
8 Spain Professional scientific and technical activities Small
9 Spain Information and communication Small
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Figure 34 Details of stakeholders who participated in the in-depth interviews
Category Country
Chamber of Commerce The Netherlands
Cloud broker The Netherlands
EEN Romania
France
National authority
Italy
Romania
Romania
France
Poland
Estonia
Service provider
Sweden
Spain
Spain
Sweden
Ireland
Romania
Romania
Portugal
Romania
Germany
SME Association
EU
Portugal
The Netherlands
SME Envoys Network The Czech Republic
Services contracted
Use and types of cloud computing services contracted by EU SMEs
The use of cloud computing services by SMEs is increasing Each type of stakeholder was
aware of the spread of the use of the service
More precisely the interviews revealed that 50 of the national authorities (three out of six
respondents) the national SME Envoy the members of EEN and one cloud broker shared the
opinion that SMEs are using more cloud computing services compared to previous years
A quarter of the cloud providers observed that the usage of a specific cloud computing model
depends on the enterprise size with smaller enterprises relying more on the SaaS model
especially in contracting communication and collaboration services This confirmed the CATI
results as it showed that 50 of the micro enterprises chose a service from the SaaS model
Security
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Security issues are generally an important matter for SMEs leading them to be concerned at
least about the general aspects of the security thresholds of the service provider Another
aspect that is taken into account is the reputation of the provider more precisely whether the
cloud provider has had incidents of data breaches in the past This was the case for 66 of
the respondents (six out of nine participants) One out of nine SME participants (11)
interviewed preferred to store its data on its own servers as a result of its complexity and of
privacy concerns Generally it can be observed from the in-depth interviews that if the
companyrsquos sector of activity is connected with IT services the more inclined it is to pay
attention to data security aspects
Types of contracts and relative costs
Duration and costs
Half of the service providers (five out of ten respondents) stated that they preferred to offer
flexibility regarding the duration of the contracts ranging from hourly contracts to yearly
subscriptions On average from the responses obtained from the providers during the case
study interviews it could be estimated that contracts had a duration of 12 months The Dutch
Chamber of Commerce also confirmed this information
Negotiability and customisation of CTampC
Most (90) of the service providers (nine out of ten respondents) and one cloud broker
affirmed that they offer SMEs the possibility of negotiating the CTampC to respond to the need
for customisation of service packages However the providers consider that SMEs might not
yet have formed a habit of negotiating cloud computing contracts The in-depth interviews
have shown that in most cases all representatives of SME associations and EEN members
said that their members do not try to negotiate cloud computing contracts Moreover 60
of service providers (six out of ten respondents) believe that SMEs are generally satisfied with
the degree of customisation of cloud computing services offered in standard contracts with
the only negotiation point being the price
Cloud providers indicated that the size of the enterprise was a factor in the initiation of the
negotiation and in the success in negotiating a cloud computing contract Hence 40 of cloud
computing providers (four out of ten respondents) and one cloud broker mentioned that
medium-sized enterprises have an increased tendency to negotiate their service contracts
Types of subscriptions
All of the SMEs interviewed stated that they had contracts with paid subscription Seven out
of the nine SMEs included in the case study interviews had contracts with fixed fees the rest
mentioning variable fees At the same time SMEs with variable fees prefer flexibility of
duration and costs either because of the limited need for the service inside the enterprise or
because they were still exploring the business opportunities that the service may offer One
exception was the SME active in the information and communication sector which had
concluded long-term fixed fees contracts This company purchased cloud computing services
in order to use them widely in the activity of the enterprise or to include them in the service
packages that they offer
Out of the total number of service providers that were interviewed half of them (five out of
ten providers) and one cloud broker only offered contracts with paid subscription and the
other 50 of service providers (five out of ten respondents) sometime offered free trials to
SMEs in the cases where they see potential for signing a more significant contract with paid
subscription afterwards
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Legal framework of contracts
In-depth interviews have revealed that stakeholders believe that the current legal framework
both at national and EU levels needs some improvement in order to make it more suitable to
the needs of SMEs and technological advancement
National authorities the Chamber of Commerce and the national SME Envoy specified that
the currently applicable legal framework is a mix of several legal acts which partially regulated
cloud computing services and mainly focus on general data protection cybersecurity or e-
privacy All of the national authorities interviewed had a positive attitude towards the adoption
of specific legislation targeting SMEs and cloud computing services at national and EU levels
One-fifth of the service providers (two out of ten respondents) and the cloud broker also
believed that the legal framework was not sufficient and argued that guidance through what
could be a code of conduct regarding cloud computing services and how to use it should be
provided at the EU level in order to raise awareness and have a better understanding about
cloud computing services
This opinion was shared by the SMEs as 56 of the participants (five out of nine respondents)
believed that the legal framework could be improved Their suggestions included introducing
a uniform legislation at the EU level and providing a fair contract template that would balance
the powers between service providers and users
Contract-related problems encountered by SMEs
SMEs encountered a moderate amount of issues related to cloud computing contracts Most
frequently they experienced three specific problems unavailability of service low speed and
forced updates Data security although not considered among the leading problems by any
of the SMEs included in the case studies was mentioned as being a constant concern
The most serious problems encountered by SMEs
More than three-quarters (78) of the SMEs (seven out of nine respondents) indicated that
the most serious problem that they encountered was unsatisfactory availability or
discontinuity of the service followed by 11 of SMEs (one out of nine respondents) that
reported low speed of the service and forced updates to the service that eliminated or changed
a necessary function
Other problems encountered by SMEs
The second most important problem indicated by 22 of the SMEs interviewed (two out of
nine respondents) was data security In particular for one SME that operates in the
professional scientific and technical activities sector data security was so important that it
preferred to store its data on its own servers rather than contracting cloud computing
services It maintained that the market didnrsquot offer sufficient information regarding data
protection in order for it to trust the available service providers
However in all but one case the issues either did not affect the day-to-day activities of the
enterprises or only affected the internal processes of the enterprises due to the lack of the
availability of the servers In one case however an SME whose cloud computing problems
affected external business operation chose to move this activity to its own data storage
solutions In this specific case the SME was an IT operating company with storage
infrastructure already in place so its costs were not as high as for any other SME experiencing
this
National authorities and SME Envoys have little information about contract-related problems
encountered by SMEs mentioning the fact that they received few complaints regarding cloud
computing services
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When asked about what they considered as the most significant problems encountered by
SMEs service providers provided responses that were similar to those of their customers
Unsatisfactory availability or discontinuity of the service was recognised as the most serious
problem Other problems mentioned include the failure of the provider to identify analyse
and correct hazards and prevent a future re-occurrence high subscription fee and lack of
alignment of the CTampC
Actions taken
In all cases the action that the SMEs first took in order to resolve issues related to cloud
computing service was to formally notify the providers As a result of the complaints in seven
of eight cases the cloud computing service providers resolved the issues The duration of the
action to resolve the problems ranged from a few hours to a few days None of the SMEs
chose to take legal actions when encountering issues with the cloud computing services either
because the issue was resolved quickly it didnrsquot have an impact on the activity of the business
or because they felt intimidated by the reputation and size of the provider
A second action that SMEs took was to involve their staff in resolving the issues Six of the
eight enterprises involved one or two members of the IT or technical departments in the
process of addressing the cloud computing issues The exception was represented by one
enterprise which after the incident decided to renounce the cloud computing contract given
that it took its IT staff 10 days to resolve the problem with its cloud computing service
Another enterprise chose to pay for one member of its IT staff to work during the weekend
to ensure that any issues would be immediately addressed
Nearly one-third (30) of the service providers (three out of ten respondents) and one cloud
broker who participated in the in-depth interviews consider that an important problem arises
from the SMEsrsquo limited technical knowledge that does not allow them to clearly understand
the problems that they encounter
Service providers offered different levels of support through online forums customer care
lines and if the problem was not resolved at the site of the client Exceptionally 10 of the
service providers (one out of ten respondents) offered 247 customer support at no additional
cost
Results of the actions
According to 90 of the service providers (nine out of ten respondents) finding a solution
can vary from a couple of minutes to three days depending on the problem encountered
Usually problems are resolved within a day in the order of arrival
In the cases where service providers required a longer period of time to resolve an issue
80 of service providers (eight out of ten respondents) withheld payment to compensate for
the time spent resolving the issue Moreover in cases when the problems significantly affect
the activity of an SME 50 of the service providers (five out of ten respondents) offered
compensation according to the type of contract and the level of damages or losses caused to
the SME on a case-by-case basis Compensations usually ranged between 5-15 of the
monthly fee for the contract Another 20 of service providers (two out of ten respondents)
did not offer any type of compensation
None of the SMEs interviewed escalated the problem to court for three reasons the issue was
resolved within a few days it did not impact the activity of the business or they felt intimidated
by the reputation and size of the service provider
Future perspectives on the topic
In the opinion of stakeholders cloud computing services will enable SMEs to become more
flexible develop faster compete with the larger enterprises in a complex market and also
generate more revenue
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In particular SMEs associations view the evolution of the cloud computing market toward
more affordable and specialised services More than two-thirds (70) of service providers
(seven out of ten respondents) argued that cloud computing services will evolve by developing
new features According to 20 of the service providers the features that will become
increasingly relevant are artificial intelligence block chain and data analysis
At the same time 66 of national authorities (four out of six respondents) and one national
SME Envoy believe that the right of awareness the right to privacy and data protection as
well as cybersecurity will become more important topics in the future Also the SME Envoy
mentioned possible issues emerging in the future such as non-standard functionalities of some
operational processes or defining a new model of operation of ICT services
The two associations within the EEN considered that the legal framework on how cloud
computing is regulated should be adapted to the emerging technologies Moreover the
associations consider that SMEs still have a long way to evolve in order to assimilate the
complexity of cloud computing services but a better regulated system might help them in
this direction The cloud broker further recognised the need for the authorities to work more
on this and he recommended applying European legislation rather than national legislation
to promote uniformity of the system
Case study interviews conclusions
The results of the case study interviews offered useful insights and complemented the results
already obtained through the CATI The various stakeholders involved confirmed the fact that
the usage of cloud computing across SMEs in the EU is growing and there is a need for
improvement of the current legal framework in order to follow the technological advancement
The interviews further explain the CATI results as the trend is that SMEs do to not try to
negotiate CTampC even if the cloud providers are offering this possibility Moreover the most
serious problems the actions taken to resolve them and the results of the actions are
confirmed by the information gained through the interviews and are comparable with the
earlier results of the study
Overall stakeholders who participated in the case study interviews believed that cloud
computing services will play more important role in the development of SMEs as they could
even help them compete with larger enterprises in a complex market achieve higher profits
and become more efficient
Validation Webinars
The webinars were organised with the objective of validating and triangulating the results of
the study Intended to be complementary to the tasks that were performed so far ie the
desk research CATI online survey and interviews with key stakeholders the webinars
focused on the most important topics of discussion that had emerged ensuring a higher level
of detail Therefore webinars have been used to validate the results obtained and to produce
further useful insights on the problems that were identified during the study in order to gain
a better understanding of the overall situation across the EU
In preparation of the webinars all 33 participants in the case study interviews were invited
to attend The invitation applied to four events in which the stakeholders could participate
Six stakeholders replied that they were available to participate in the webinars three SMEs
(two from Germany and one from Poland) two national authorities (one from Italy and one
from Poland) and one SME association representing the interests of European SMEs
businesses in the different sectors of the economy within the EU
In the end three webinars were held as a result of the preference of the stakeholders for the
time and date of the events
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
162
The events were held using Zoomcopy128 a software tool that facilitates the organisation of
interactive conference calls The advantages considered when choosing the software included
the high quality of video audio and simultaneous screen sharing ease of use and features
that include screen sharing on iPhone and iPad and Zoom Rooms Other notable
characteristics include the software features specially designed for webinars that allow the
participants in the event to perform actions such as raising their hands to announce their
intention to take part in the conversation pooling and a questionanswer dialogue with live
or text answers and close captioning
The participants made contributions regarding
cloud computing services contracted by SMEs during the last two years
the negotiability and customisation of CTampC
the most important problems encountered by SMEs while using cloud computing and
the difficulties encountered when taking action
security problems as factors limiting cloud computing usage
the economic detriment
final conclusions of the study
Regarding the topic of cloud computing services contracted by SMEs during the last two years
the stakeholders involved agreed on the results obtained on the extent of usage at the EU
level
Regarding the negotiability of CTampC the SME association agreed with the information
presented and found it to be in line with its expectations based on the information that the
SME association had Furthermore in the view of the German SMEs and one Polish SME SMEs
donrsquot consider the negotiation of CTampT and the customisation of the cloud services when
acquiring cloud computing services confirming the CATI results that show that the largest
proportion of 46 of SMEs did not try to negotiate CTampC In particular the representatives
of SMEs added that the SME could only negotiate different IT infrastructures but not the
limitation of responsibility that would cover service shortages In their opinion this could be
a general issue for SMEs
Overall the SMEs representatives agreed with the results of the project and commented that
their enterprises can relate to the issues presented In particular concerning the incidence of
contract-related problems the participants discussed the link between the methodology of
sampling of the SMEs that participated in the survey and the data that was presented
concluding that the data was considered to be relevant at the EU level
Regarding the problems encountered by SMEs while using cloud computing services the
national authority representative mentioned receiving few complaints from SMEs on issues
related to cloud computing contracts Additionally the stakeholder mentioned that the
General Data Protection Regulation (GDPR) is already proving to be very useful since it
facilitates the attribution of responsibility for problems that may arise in the provision of cloud
computing services Additionally related to the issues that SMEs encounter when trying to
resolve difficulties with cloud computing services the SMEs representatives added that the
most important issue was finding the contact information of the employee of the service
provider who would be assigned to resolve the problem after a formal complaint to the service
provider was made These statements confirm the results of the CATI as 52 of the SMEs
interviewed stated that they had made a complaint to the provider and that the second
difficulty encountered when trying to solve the problem was trying to reach the appropriate
contact point (35)
The participants in the discussion on security problems mentioned the effects of the GDPR on
cloud computing contracts a topic raised mainly by the representatives of the national
128 Zoom
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
163
authorities The representatives added that the lack of SME capacity in negotiating cloud
computing contracts could be helped by the GDPR as it would give SMEs more control over
their data after the service providers apply the regulation The GDPR is considered to place
new obligations on cloud providers that will affect how they implement cloud services The
GDPR will strengthen user privacy as it increases the obligations on providers to protect SMEsrsquo
data and secondly it grants users new powers over how their information is collected used
and stored129
Additionally the representative of the Italian national authority and the German SME
intervened regarding the topic of economic detriment asking if the indirect costs have been
considered It was mentioned that the study looked at the client losses and reputational
damages where the case and furthermore it addressed the overall costs involved in ensuring
an alternative service and costs related to fixing the cloud service problem with external
support The stakeholders commented that they agreed with the issues that were presented
during the webinar which they also experienced They also added that in their opinion there
is a need for more transparency and better regulated services that will eventually lead to
fewer economic losses
During the concluding remarks the participants had several comments and suggestions The
Italian national authority representative added that he would be interested in an updated
version of the study conducted a year after the webinar in order to see the effects of the
enforcement of the GDPR regulation Furthermore the SME from Germany agreed with the
observation of the national authority regarding the effects of the GDPR on cloud computing
contracts and considered that its evolution should be observed together with the issues
concerning internet services as a whole
The SME representatives suggested that a platform should be created that could facilitate a
comparison between cloud computing services in order to better present the types of services
and prices available on the market The SMEs complained about the fact that they all had
difficulties when choosing between cloud computing providers In this case the availability of
only standard services on the market would allow the SME to make a direct comparison
The stakeholders involved in the webinars found the study findings to be in accordance with
the developments in the cloud computing market They provided significant comments and
recommendations especially concerning the future influence that the GDPR could have on the
sector This could mean a better distribution of responsibility especially regarding data
privacy and data protection Moreover the study was seen as being representative at the EU
level and as cloud computing is rapidly evolving the stakeholders expressed the desire to
observe the progress made in SME usage of cloud computing services by supporting the idea
of performing a second study at a later date
129 Analysis performed by Insight Company which is a leading provider of computer hardware software cloud solutions and IT services
Study on the economic detriment to small and medium-sized enterprises arising from unfair
and unbalanced cloud computing contracts
164
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165
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