Massimo Bandinelli, Marketing Manager at Aruba Cloud, explores Italy’s rise as a key player in the European data centre and cloud scene.

Italy’s cloud market has seen notable growth in recent years. With a 19% market increase since 2022, it is now worth over 5.5 billion euros, according to data from the Cloud Transformation Observatory. It will come as no surprise, therefore, that the region is attracting the attention of European cloud providers looking to expand their reach. Growth has been driven not only by software services (SaaS), but also by infrastructure services (IaaS) reaching a value of over 1.51 billion euros, up 29% since 2022.

So, with investment in the Italian data centre industry set to rise by up to 15 billion euros between 2023 and 2025, what makes the region so attractive for investment? Let’s take a look at some of the factors…

Compliance and data sovereignty

With strict data protection regulation in place across the EU, international businesses operating in Italy often have to follow slightly different conduct to ensure they are compliant. The General Data Protection Regulation (GDPR), for example, dictates how businesses must handle personal information and data. This is where the growing Italian cloud region can benefit. By being able to offer services that automatically comply with European laws, businesses can avoid the risk of facing sanctions and violations of privacy regulations.

Digital sovereignty has also been a topic central to discussions around Europe’s digital economy, making Italy, and other emerging cloud regions, more attractive for local cloud providers to set up shop. Recent geopolitical events have highlighted a new cohesion at the Italian and European levels on data management, as European states push for more control over their internal resources without the intervention of non-European businesses. Until recently, this level of collaboration did not seem possible. However, as digital policy continues to be a key priority for the EU, it will encourage the development of the Italian data centre market.

Wavering importance of the FLAP-D market

The European data centre market has historically been dominated by the regions making up the FLAP-D region (Frankfurt, London, Amsterdam, Paris and Dublin). With the highest concentration of data centres in Western Europe, investment in cloud and data centre infrastructure has traditionally been concentrated in these areas. However, the European market has experienced a shift, growing the digital economy in nearby countries such as Italy, Spain and Portugal.

The reason for this is twofold. Certain internal changes in the countries that make up the FLAP-D regions have definitely had an impact. The Netherlands, for example, has increased scrutiny around data centre energy usage. In 2022, the government imposed a nine-month block on permits for sites larger than 10 hectares, pushing many providers to find more forgiving regions to set up shop.

The second reason comes down to geography. Sitting at the crossroads of Europe and the Mediterranean, emerging data centre regions like Italy and Spain are strategically placed for businesses looking to expand reach across multiple continents. Data centre and cloud businesses operating in these regions are able to provide customers with strong connectivity to increasingly important markets in North Africa and the Middle East, as well as in Northern and West Europe. For businesses with a global customer based, this proximity offers them lower latency and faster connectivity, driving investment in these areas.

The state of digital transformation in Italy

Attitudes towards digital transformation, and Italy’s digital infrastructure as a whole, have come some way in recent years. In the context of a changing socio-economic climate in Europe, the benefits of cloud adoption have become more clear, motivating countries to develop their own national cloud regions. This can act as a catalyst for economic prosperity and technological innovation, opening up a wide range of jobs and opportunities for the region.

Various digital initiatives pioneered by the Italian government have also signalled a change in attitude. The Triennial Plan for IT in Public Administration, for example, acts as a guide to the digital transformation of public administration and the National Recovery and Resilience Plan (PNRR), created in the wake of the Covid-19 pandemic, sets out steps for digital transformation to help overcome socio-economic instability. These initiatives all play a part in encouraging the evolution of cloud and data centre offerings in Italy and opening up opportunities.

Benefits associated with local cloud providers

The growth of Italy’s cloud region can also be attributed, partly, to the growing popularity of regional cloud providers. These types of providers can respond to certain customer needs that hyperscalers do not meet. Equipped with more flexible offerings, highly customised services and attention to local specificities, local cloud providers can meet insistent demands from businesses that require customisable cloud services. For businesses with specifical local or sectorial needs, going with a local provider with a widespread presence in a specific geographical region can be highly beneficial. Local providers breaking away from the ‘one size fits all’ dynamic, offering tailor-made and ad hoc services for the needs of companies migrating to the cloud, are leading this trend and have great influence over Italy’s emergence as a European cloud and data centre hub.

Looking forward

Italy’s ongoing digital transformation presents exciting opportunities for economic growth, job creation, and its continued emergence as a key player in Europe’s digital landscape. As regional  cloud providers continue to position themselves as a beneficial choice for European businesses seeking partnerships which take greater consideration of  local needs, regional laws and regulations, is only set to grow. Combined with the EU’s continued focus on digital sovereignty and external changes within the FLAP-D region, Italy is well-positioned to cement its place as a significant player in the future of the European cloud and data centre scene.