Cloud for manufacturing and retail market revenue in the Baltics and Eastern European regions will grow at an annual rate of 16.7% between 2022-2029, Fortune Business Insights says. The study, commissioned by Microsoft, reveals that Industry 4.0 technologies such as 3D printing, increasing adoption of email marketing, online grocery and e-commerce in general, and AR/VR (augmented reality/virtual reality), will drive growth and offer further opportunities for expansion of cloud market in the upcoming years. Hungary stands out with a higher than average market revenue growth rate, a record B2C e-commerce growth rate, and the significance of SMEs in generating revenue in its local market.
Based on a study commissioned by Microsoft, Fortune Business Insights predicts the Baltics and Eastern Europe will see a compound annual revenue growth rate of 16.7% from 2022-2029 in the cloud for manufacturing and retail markets. The upturn will be even more pronounced in Eastern Europe, where cloud market revenue is expected to increase at a pace of 17.8% yearly as opposed to the Baltics region, where this rate will be around 13.6% in the upcoming years. Total market revenue will have been three and a half times higher by that time, jumping from USD 9,252.9 million in 2021 to USD 31,464.1 million in 2029. Simply put, the regional cloud market will swell three and a half times its size in seven years.
Relying on a wide range of data, the study claims that strategic partnership and collaboration of hyper scalers across European countries, as well as increasing demand and adoption of cloud computing solutions, SaaS service model penetration, and an increasing familiarity with customer relationship management solutions will augment market growth in the region.
The study identifies an increasing adoption of email marketing, enhanced online grocery and e-commerce, the application of advanced technologies such as AR/VR, transition to Industry 4.0 – like growing popularity of 3D printing – and a high probability of process manufacturing growing and PaaS service model accelerating as opportunities for boom in the cloud market of the Baltics and Eastern European regions. B2C e-commerce growth rate was found to be the highest in Hungary, with a rate of 35%, followed by Croatia (32%), and Slovenia (21%) in 2020.
Cloud usage was highest among Estonian enterprises across the region with a proportion of 58%, while only 13% of the enterprises in Bulgaria used cloud computing services in 2021. There is room for improvement in Hungary as well, as it held a 26% share of usage.
Digitalization level was again the highest in Estonia, while Hungary and Bulgaria were lagging in 2022, mostly due to an insufficient level of integration of digital technology and digital public services. The study showcased a correlation between digitalization and competitiveness. Estonia was ranked 22nd by the World Competitiveness Yearbook, whereas Bulgaria was ranked 53rd. With a ranking of 39th, Hungary has shown a consistent upward trend since 2020.
Hungary’s potential economic and development benefits of digitalization will go beyond USD 9 billion in GDP by 2025, which is expected to grow Hungary’s global market competitiveness, especially in the EU. Approx. 49% of workplace activities in Hungary are expected to get automated by 2030, using cloud technologies. This paradigm shift will result in high productivity, more foreign investments and big mergers and acquisitions.
Also revealed by the study, SMEs will be generating revenue in the regional cloud market at a compound annual growth rate of over 19% in 2022-2029 and will have a market share of over 32% by 2029, growing from 27% at the expense of large enterprises. SMEs have an even more prominent role in the Hungarian market, where their revenue-generating growth rate exceeds 21% and their market share is around 30%, but it is projected at 34% in 2029.
Today, SMEs across Europe use cloud solutions of Microsoft, and especially those designed for the manufacturing industry with respect to their unique needs and often developed in cooperation with the companies concerned For instance, HERZ Armatura Hungária, the Hungarian trading subsidiary of one of Europe’s largest valve and fitting manufacturing company, moved its entire IT infrastructure to the cloud recently. Now Dynamics 365 Business Center provides them with a comprehensive solution that not only streamlines resource management but makes daily work processes more dynamic and lends flexibility to the company to serve their most important markets.
Another example, Coca-Cola Bottling Shqipëria (CCBS) – the only official bottling partner in Albania, part of the Coca-Cola system – runs a complex business, serving thousands of points of sale and delivery locations with a range of refreshing drinks. Needing to move past manual processes and lengthy reporting cycles, CCBS chose to implement Dynamics 365 Finance and Supply Chain Management for its flexibility and ease of integration. Now, the company and its partners enjoy streamlined daily operations, as deeper, real-time connectivity between business areas helps bring people closer together. Optimization helps them streamline their sales processes and let them focus more on the commercial side of business.