Microsoft executive says EU should fund cloud computing

The European Union's Structural Funds make up around a third of the bloc's annual budget, but the rules for funding projects need to change to reflect the new digital world, Dejan Cvetkovic of technology company Microsoft said recently.

At a recent conference on smart cities in Stavanger, Norway, Cvetkovic advocated that governments should use cloud services instead of off-the-shelf software, to save costs.

“Cloud services are rented. As a city you rent the computing power and the software power from a cloud provider. So you have operational costs, as opposed to capital costs. You don't buy to have a tangible asset, you just rent it, in a model that we call pay-as-you-go”, said Cvetkovic, who is chief technology officer for Microsoft in Central and Eastern Europe, in an interview with EUobserver.

As storage capacity has increased and become cheaper, many companies have switched to cloud computing over the past decade, storing their data on an externally rented server instead of at home. Microsoft also sells cloud services.

“North Americans love to say: buy things that appreciate in value, and lease things that depreciate. What are the things that have a quick turn-over in information technology? Everything. Hardware, because of Moore's law [a theory about ever-decreasing space required in microchips], and software as well, because there is always the next version of software coming up.”

To Cvetkovic, it would make sense if cloud-services were eligible for EU funds, but in order for that to happen the criteria need to change.

“When you buy a server you have to pay, no matter if you are going to use it or not. … Traditional IT [information technology] is a capital expense. Cloud computing IT is an operational expense. European structural funds can be used only for capital expenses”, he said.

“In the traditional [EU-funded] projects where you buy tangible assets, you have a certain number of transactions over a set period of time, three to five years. After five years, the project is implemented, it's self-sustainable, the money is spent, period. In the case of cloud computing it is a pay-as-you-go model. So while it is way cheaper, and the upfront cost is, like, a fraction of the capital expenditure, that cost is ongoing. Which means that from the perspective of the EU-funded project it never ends”, noted the technology expert.

“That policy fully made sense when it comes to IT until five years ago. This doesn't make sense anymore.”

Cvetkovic said Microsoft is working with Brussels to change that policy, calling it “the single biggest thing we need to change.”

He called the European institutions “very receptive and cooperative”.

“It is just that we need to find a way to make things faster. There is a lower level of agility than what we experience in the IT world”, he said. Later, in an e-mail, the Microsoft executive added this is “of course expected - the rhythm in which technology evolves is much faster than that of other industries and organisations.”

Changed relationship with Brussels

The relationship between Microsoft and Brussels has changed significantly in the past few decades. In the 1990s, Microsoft was the subject of various investigations by the European Commission, and in 2008 the Commission slapped a €899 million fine on Microsoft, the largest ever at that time.

“We actually complied with all of the decisions that Europe had made. … I believe that we have a great cooperation today, and great opportunity in Europe, just as Europe has a great opportunity in us”, said Cvetkovic.

EU should "move faster" on digital single market

Cvetkovic said he's “impressed with the overall functionality of Europe”, but noted that the EU should “move faster” on achieving a truly digital single market.

He points to the political discussions over scrapping roaming surcharges, which will take longer than EU politicians had promised.

“The governments of Macedonia, Serbia, and Montenegro ... reached an agreement to kill the roaming charges between these three countries. … I'm surprised that this roaming charge issue is that much slower in Europe compared to three Balkan countries. Okay, they used to be the same country, but they are at different stages of EU integration and NATO integration”, noted Cvetkovic.