Eye on the cloud: cloud computing continues to attract investors to Ireland

Eye on the cloud: cloud computing continues to attract investors to Ireland

By: Damien
07 Oct, 2021
Ireland is a global leader in cloud computing, which is a huge growth area attracting the attention of major blue chip investors.

Internet giant Amazon Web Services (AWS) provided a much-needed boost for the Irish economy last July when it announced the creation of an additional 1,000 jobs to cope with an increase in demand for cloud computing.

Coming during the first four months of the Covid-19 pandemic, when the Irish economy had taken an unprecedented hit, the news was a timely reminder of the Republic’s strength in tech-based sectors.

The new roles, based across offices in Cork and Dublin, brought the number of permanent employees working at AWS in the country to 5,000. Among the highly skilled jobs created were software development engineers, network development engineers and systems development engineers, as well as data centre technicians and mechanical and electrical engineers.

Furthermore, AWS announced it was investing in a new campus in Charlemont Square to house its cloud computing workforce, which is set to open in September 2022.

This was AWS’ latest investment in Ireland since the company first set up an office in the country in 2004. Since then it has expanded its operations numerous times, spending billions. AWS is also partnering with various academic bodies around the Republic to provide education and training programmes.

Mike Beary, AWS Ireland Country Manager, said there has been a surge in demand for cloud computing and the company’s expansion was “a further vote of confidence in the skills and talent of Irish people and will provide a welcome boost to our economy. “We have a strong and proud record in attracting investment, and today’s announcement further bolsters our reputation as a leading nation in global technology.”

Beary’s words reiterated that Ireland has a long-standing reputation as a hub for ICT and many of those businesses are now branching out into cloud computing, as well as other emerging tech fields such as Internet of Things.

What is cloud computing?

In simple terms, cloud computing is where data – be it professional or personal – and programs are stored via the internet, rather than on a computer hard drive.

It has enabled many employees to work seamlessly from home during the lockdown phases of the Covid-19 pandemic, with access to networks and data via their laptops. Cloud computing is also easily scalable. Upgrading traditional servers takes time, space and money, but with the cloud an end user can buy more space whenever it is needed.

It is also more secure than local servers. Many clouds are also backed up to a secure remote server, so if for any reason a system crashes the data can be retrieved within moments.

Another advantage is that it costs less – businesses no longer need to invest in huge server rooms that take up valuable space and power. Dublin has emerged as a hub for cloud computing with AWS, along with other tech giants such as IBM, Citrix and Microsoft, leading the way.

Acquisitions

Demand to acquire cloud computing firms continued last year despite the pandemic. For instance, business consultancy Deloitte bought Dublin-based DNM, which advises companies on the best ways to use cloud computing, for an undisclosed sum in June last year. [www.irishtimes.com/business/retail-and-services/deloitte-expands-into-cloud-computing-with-deal-for-dnm-1.4269040]

Deloitte Ireland’s chief executive, Harry Goddard, said the deal was an “important investment” that expanded the company’s cloud computing services to cope with increasing demand.

DNM, which is now being integrated into Deloitte’s Irish headquarters in Dublin, employs 28 people. Richard Noonan, chief executive of DNM – who joined Deloitte as a partner – said the deal would boost the company’s growth.

Meanwhile, in July Dublin-based iQuate merged with US-based cloud management and governance provider HyperGrid to create CloudSphere [https://cloudsphere.com/]. CloudSphere has a flagship Cloud Governance Platform, which provides governance for migration planning, security posture, identity, compliance and cost management across public clouds.

CloudSphere said it is the only platform that uses application discovery and dependency mapping to build a data set that groups cloud resources by application. This improves cloud migration planning, cloud cost management and cloud security posture management.

Patrick McNally, CEO of CloudSphere, explained the rationale for the deal: “The market has made it clear that the cloud is the path forward, but there remains a clear need for comprehensive cloud governance. Combining these two innovative companies significantly accelerates the path for us to build the governance solutions needed to support this market transformation.”

The merger was funded by more than €9 million financing from Atlantic Bridge Capital, along with private investors.

Investments

This deal also demonstrated the appetite for investment in cloud computing-based companies. Another example came in February when Waterford-based software firm NearForm secured investment worth millions – the exact figure was not revealed – from US-based investment firm Columbia Capital. This was the company’s first major funding round – previously IDA Ireland [www.idaireland.ie] had invested.

NearForm develops software and uses cloud computing to build business platforms and will use the funding to scale its business and recruit more people in North America and Europe.

Investment is also going into research. Chinese firm Huawei invested $70 million in research and development in Ireland in September 2019 across its offices in Dublin, Cork and Athlone.

Why invest in cloud computing businesses in Ireland

There are plenty of reasons to invest in Irish cloud computing companies. For instance, Ireland has a highly qualified workforce, with many having ICT-related degrees. In addition, several universities and higher education institutions offer cloud computing masters degrees, which have been created in association with industry partners, including IBM and, as previously mentioned, Amazon.

On a technological level, with Ireland’s status as a global leader in ICT, the cloud computing sector benefits from an existing dense cluster of data centres and access to Tier1 high speed low latency networks. Ireland also has a ‘free air-cooling’ environment, which reduces the cost of hosting data. In legal terms, Ireland also leads the way in data protection legislation, which is some of the most advanced in Europe – which is a big attractor for overseas companies.

Another reason to invest in cloud computing businesses in Ireland is that the country is now the only native English-speaking nation in the EU, following the UK’s departure at the end of 2020. This makes it attractive for inward investors, especially from the UK, US and Canada. This means Ireland benefits from being part of the single market and the frictionless trade with the 26 other members of the bloc that it brings. Demand for cloud computing services are also developing across Europe so there is growth potential there too.

Ireland is also part of the Euro, which has proved to be a stable currency and not prone to sudden fluctuations, which is always liked by investors.

Future prospects

Cloud computing has grown rapidly in recent years, and this is set to continue for the foreseeable future. The Ireland Data Center Market – Investment Analysis and Growth Opportunities 2020-2025 predicts that data consumption among Ireland businesses will grow by 70% in the next three to four years, which means that demand for cloud computing will rise as that data will need to be stored, and there is an increasing move away from fixed servers, as mentioned earlier.

Advice

With such potential for expansion in the years to come, there should be plenty of chances to invest in cloud computing providers. For those looking to invest, acquire an existing company or establish a new office, then it is crucial to get the right advice.

Those looking to invest or buy should seek out advisers with specialist knowledge of the sector in Ireland – including its history, leading players and local norms. Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects from setting up a company to providing diligence services as part of an M&A deal or funding round in the sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset. Remember, while Ireland may share a land border with the UK, the regulatory regimes can be quite different, which can trip up unwary investors.
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