Investigation shows: Public companies affected by Lock-in effects on the cloud market

Investigation shows: Public companies affected by Lock-in effects on the cloud market

"Transparent cloud market necessary for public companies"

The current licensing practices on the cloud market lead to a favoration of software and cloud offers and have negative effects on public companies. This emerges from a survey by the center sustainable transformation (ZNT).

The survey results illustrate the trend of public companies to shift their activities to the cloud. According to the survey, 84 percent of the participants have already shifted their affairs to the cloud in whole or in part. Office applications such as text and mail processing, CRM systems and HR applications are the focus.

"Many companies opt for cloud offers that are offered in combination with software solutions," says Prof. Dr. Torsten Oltmanns, Managing partner of the center sustainable transformation. "Our test results indicate that providers actively restrict the selection for public companies with regard to the costs."

The effects of lock-in effects on the software and cloud market must not be underestimated, said Prof. Dr. Patrick Krauskopf from Agon Partners and the Foundation SME for law enforcement. There are complex, long-term dependencies between software and cloud providers and their companies. Prof. Dr. Dennis-Kenji Kipker, scientific director of the Cyberintelligence.Institute (CII), adds: "In particular, the provider Microsoft has been criticized for such lock-in practices in the past. Such competitive behavior leads to further monopoly formation and innovation restrictions, and ultimately the customers are also damaged."

increasing cloud costs for companies

Accordingly, about two thirds of companies (65 %) use the parts or the entire infrastructure to move to the cloud, the cloud of the software provider, with Microsoft Azure being the most used platform. Although switching to the cloud for most companies initially means no additional costs, but about half of the companies did not have the option of transferring their software licenses into the cloud of a third party at no additional cost. This additional cost burden was up to 25 percent. In addition, around 30 percent of the respondents had difficulty predicting the exact costs of software licenses in the cloud due to a lack of transparency and clarity. In total, 74 percent of the respondents expect rising cloud costs over the next five years.

urgent need for a critical review of the cloud market

The interim results of the survey underline the need for a critical analysis of the cloud market and the creation of functional competitive conditions for cloud offers at political and regulatory level, according to Prof. Dr. Torsten Oltmanns.

The survey at an overview In a preliminary study, the CNT examined the topic of conditions on the cloud market in April and May 2024 with six of the eight members of the 8KU, the largest municipal energy supply company in Germany. Since May 2024, a survey has been carried out among the member companies of the VKU and other public companies in Germany. The survey, which is supported by the market and opinion research institute GIM, runs until the end of August 2024. So far, 31 companies have participated in the survey.

The center sustainable transformation (ZNT)

The center of sustainable transformation (ZNT) at the Quadriga University of Berlin is a think tank and consulting company. The ZIT has been developing scientific interventions since 2022, which deals with the challenges of sustainable transformation for companies and politics. The CNT specializes in strategy and implementation of stakeholders management in change situations. The company advises companies and associations on developing solutions with measurable effects. Further information is under