German businesses innovate, grow and navigate uncertainty with AWS

Amazon Web Services (AWS) is generating 11.2 billion EUR in value for businesses across Germany[1], serving tens of thousands of customers with cloud services and creating more than 600 new jobs in country. Cloud computing is one of the most significant technologies of our time. The AWS Cloud helps German customers to drive innovation, economic growth and navigate uncertainty.

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To assert itself in a global market, the German economy must rely on its innovative strength and quality. Without significant sources of raw materials, these skills form the basis of German prosperity. Germany faces a world in which new digital technologies enable businesses from all parts of the globe to expand into new markets quickly at low cost and disrupt existing business models and industries. In this context, hyperscalers, such as AWS, set new impulses and entry points in existing industries, enable completely new business models and bundle digital skills and capabilities. This can also strengthen the data economy in Germany and out of Germany. German businesses themselves can become providers of globally demanded cloud services. They are increasingly facing the choice of investing substantial capital to buy technology, develop technologies in-house or obtain technology resources externally.

However, it shouldn't be an either-or decision, because the challenges of digitalization are best mastered together. According to the European Commission a digital domestic market could contribute 415 billion EUR annually to the economic performance of the European Union and create hundreds of thousands of new jobs. Cloud services play an important role in this context: They enable all businesses and public organizations – independent of their size – to use state of the art technology while focusing on their core competencies, driving innovation and grow.

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To understand the usage and the real impact of cloud computing and AWS in Germany, AWS commissioned a report from an independent consultancy, IW Consult, a subsidiary of the German Economic Institute (Institut der deutschen Wirtschaft).

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The German economy grows and builds resilience with help of the AWS Cloud

The report found that cloud computing is generating 68.5 billion EUR in economic value across Germany in 2021 where AWS accounts for 11.2 billion in tens of thousands of customers alone. The economic value generated by AWS is the equivalent of 0.3% of the German Gross Domestic Product (GDP) 2021. This growth has been enabled by an increased cloud adoption in the country (37.5% in 2021), which allows German companies to save costs and resources, focus on driving innovation, adjust to changing customer demand and foster resilience, which is particularly important in these demanding times to be able to deal with external events.

In fact, 59.4% of respondents of the survey say that using cloud services helps them save costs as they can exchange their large upfront investments in infrastructure and maintenance with variable costs.

Businesses are also able to focus on driving innovation when using cloud services. AWS users report a significantly higher revenue share of new products and services in their portfolio (36.0%) than users of other cloud providers (10.3%) or non-cloud users (7.5%). AWS users are also more likely to use new technologies (82.9% vs. 50.3% users of other cloud providers), such as machine learning.43.7% of AWS users in the survey even state that they are heavy users of such technologies, compared to only 22.2% of other cloud providers. Besides cost savings and driving innovation, businesses are also able to react quicker to the needs of their customers. Respondents of the survey using cloud services report that they are significantly more agile, with AWS users in particular seeing greater agility (77.1%), because their cloud provider offers them an easy access to a wide range of services (64.7% of cloud users) enabling them to drive innovation, respond faster to customer needs and navigate in a competitive environment.

Haufe Group SE, for example, supports its customers - among them all 40 DAX companies - with consulting, digital information and software applications to manage and improve business processes. Moving its SAP HANA environment from on-premises to AWS enabled Germany’s leading media and software company to cut development times for their services and products by 50% which allows Haufe Group SE to provide new innovative services to their customers quicker.

Another major advantage of the cloud is that it helps businesses navigate uncertainty. Businesses feel well prepared for crises: 86.2% of AWS users and 73.0% of users of other cloud providers, say they are very well or well equipped to deal with negative external events, like economic crises, pandemics, international conflicts, or environmental disasters. In this context, cloud computing helps businesses to further increase their resilience: 64.9% of AWS users see their resilience fully or partially increased, compared to 37.1% of users of other cloud providers. This resilience is crucial for innovative and growing businesses, which need to assert themselves under constantly changing conditions and an increased global competition in the future.

Overall, the study found that AWS users are more successful: AWS users are more likely than other cloud users to have experienced a revenue-growth of 10% or more between 2020 and 2021. IW Consult estimates that within the AWS group 73.1% of the companies have grown at 10% or more in 2020, whereas in the other group this share amounts only for 26.9%.

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Germanys economic backbone drives digitalization with help of the AWS Cloud

Small and medium sized enterprises (SMEs) are the backbone of the German economy. According to the Federal Statistical Office, just under 2.6 million companies in 2019, the vast majority (99.4%), are SMEs in Germany. They employ around 56.3% of Germany’s workforce and account for 42.0% of the gross value added in the country. Helping those companies to keep their competitive edge requires giving them access to latest technologies so they can digitalize their business. For instance, according to the Federal Ministry for Economic Affairs and Energy, digitalizing the industrial sector alone has the potential to generate a cumulative value added of 425 billion EUR for Germany by 2025. Productivity increases of up to 30%, annual efficiency increases of 3.3% and cost reductions of 2.6% per year could be possible.

The cloud plays a key role in this scenario: SMEs benefit from cost-effective and demand-oriented access to the latest technologies via the cloud. They can use services, like machine learning, without high investments in own infrastructure and without the need for highly trained staff. By utilizing such technologies, they can for instance, implement predictive maintenance, improve quality control or fraud detection, speed-up diagnostics or management supply chains more efficiently. Among SMEs in Germany already using AWS services are Bettercard, Biomax, defineMedia, MyPoster, and Unzer.

In their survey IW Consult found that SMEs that already use cloud services are more innovative than those that do not use cloud services. They have a higher revenue share of new products and services (13.8.%) than those that don`t use cloud services (7.5%). The revenue share of new products and services of AWS users ranks highest (36.2%).

SMEs that use cloud services from AWS said that they are able to generate additional revenue by reacting better to changing customer demand (58.4% of respondents vs. 48.3% of users of other cloud providers), and grow quicker than those using other cloud providers or non-cloud users (17.1% employee growth from 2019 to 2021 of AWS users vs. 10.9% of users of other cloud providers vs. 3.9% of non-cloud users). Yet, there is still a lot of catching up to do. Only 36.6% of the companies with less than 50 employees surveyed are already using cloud services. Common reasons for not utilizing the cloud include concerns about data security and no perceived return on invest (43.9% small companies, 43.1% medium sized companies, 39.0% large companies), which is contrary to the advantages that SMEs enjoy using cloud services already. Furthermore, the smallest companies (less than 50 employees) state more often than large businesses (more than 250 employees) that they think that cloud services are not relevant for their business model (71.8% vs. 67.2%) or that their employees miss the qualification to profit from cloud services (37.3% vs. 25.9%).

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Innovation made in Germany powered by the AWS Cloud

To remain one of the most innovative countries around the globe, according to the Federal Ministry of Economic Affairs and Climate Action, the German government invested 7.6 billion EUR in startups in 2021. In total, German startups raised 17 billion EUR in 2021 according to EY’s Startup Barometer. In the same year the country counted 26 “unicorns” - these are start-ups with a value of over 1 billion USD - according to Statista. This ranks Germany second after the UK in terms of the number of unicorns in Europe. Many of those unicorns and many of the German startups are running on the AWS Cloud supported by a unique team of former founders, investors, technologists, product managers and industry experts. Some examples are Personio, Scalable Capital, solarisbank, Tier Mobility und Trade Republic. Examples of startups which have grown to large enterprises are Zalando and HelloFresh

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Startups benefit from the cloud because it democratizes technology and lets founders build virtually anything. They do not have to spend high costs to build and maintain their IT infrastructure and still have access to the latest technologies as needed. With the cloud, new products and services can also be rolled out globally quickly.

30.4% of companies that are at most 10 years old participating in IW Consult’s study state, that their business would not be possible without the cloud. Newer AWS users agree more often (41.2%).

Almost all young companies that use AWS's services rate their own business as well or very well prepared for crises (98.6% vs. 77.4% of users of other cloud providers). Furthermore, they are very advanced in using new technologies (73.6% of them use at least two technologies like machine learning or artificial intelligence; vs. 26.7% of users of other cloud providers), which indicates a high degree of innovation. Consequently, the share of revenue of new products and services of those users is higher (69.9%) than compared with young businesses using services of other cloud providers (15.1%).

These results show, that the AWS Cloud helps German companies to grow from small startups to global brands. One example of such a company is the former startup Delivery Hero which moved their Kubernetes environment to AWS and reduced infrastructure costs by approximately 70%. From its beginnings as a Berlin startup, Delivery Hero has become one of the world’s leading local delivery platforms and now processes 100 orders per second (8.5M orders/day) - almost three million orders per day are processed with an SAP environment on AWS - which accounts for roughly one third of all orders, with over 630k restaurant partners and 600k riders in 49 countries across EMEA and APAC.

Startups and founders in Germany also benefit from AWS programs such as AWS Activate where startups receive technical support, and training from AWS or the AWS Startup Loft Accelerator, an equity-free program focused on supporting early stage startups with technology, product development, go-to-market advice and getting them funding ready.

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Core industries in Germany innovate by using the AWS Cloud

German companies from all industries, including those with sensitive data workloads, use cloud services. For example, 28.8% of respondents of manufacturing, 31.8% of vehicle manufacturing, 36.0% of retail and wholesale, 40.3% of the finance industry, 44.6% of media and entertainment, 48.4% of business-related services and 65.1% of the ICT industry (hardware and service providers) are cloud users.

AWS users gain from using AWS cloud services when it comes to generating additional revenue. 58.4% of AWS users agree that by using cloud services they can increase their revenue because they can better react to customer needs (48.3% of users of other cloud providers). It also helps them to be more competitive against larger companies (55.2% vs. 33.8%), and to develop new products and services (49.8% vs 29.6%). Furthermore, AWS users also state more often that cloud services help them to access new markets und customer groups (54.0% vs 26.0%).

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Manufacturers in particular have great potential to benefit from cloud services: According to Fraunhofer ISI, Hochschule Karlsruhe and ILIN institute, the German manufacturing industry has the potential to increase its value added by almost 100 billion EUR if it continuous to drive digitalization of its value chain forward. These gains result from various aspects of industry 4.0 combined with lean management, which leads to higher levels of automation and data exchange in manufacturing technologies. Manufacturing companies can improve the value of their customers and reduce wastage. In IW Consult’s study 91.7% of manufacturing companies using cloud services from AWS say that they already use new technologies like machine learning, artificial intelligence or virtual and augmented reality (vs. 44.7% of users of other cloud providers).

One example is BMW Group. The company has moved data from business groups, across 100 countries, to AWS to increase efficiency, performance, and sustainability across every aspect of the automotive life cycle – from vehicle design to after-sales services. With operations in over 100 countries the BMW Group is using Amazon SageMaker to analyze data from vehicle subsystems, leveraging machine learning to predict the performance of parts, proactively recommend maintenance, and inform parts suppliers of potential issues in manufacturing processes. To analyze and operationalize all of this new data, BMW is upskilling 5,000 employees and certifying more than 2,000 IT experts and software engineers on AWS. AWS has allowed BMW to drive its business forward with the ability to analyze, process, and consistently gain new insights from its data, backed by a workforce that is empowered to innovate alongside the company.

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Germany has the potential to become a safe-harbor for sensitive digital products

Concerns about security, data protection, and data sovereignty seem to slow down adoption of new technologies in Germany and become a threat to the economic development of the country. However, Germany has taken a leading international role in data privacy, security, AI, sustainability and data regulations. For example, the cloud security standard C5 by the Federal German Cybersecurity Agency (BSI) is recognized as a global benchmark for cloud security. This opens a unique opportunity for German companies. A trustworthy, secure, and transparent data infrastructure to exchange and process data can use the economies of scale created by the availability of large data sets in Germany and beyond. Cloud providers, like AWS, can support: They provide the necessary technology, but also experience and the skill set to drive digitalization forward in Germany, and at the same time, they enable compliance with local regulations and laws to handle and protect data.

Many German companies have already recognized this opportunity and have started using cloud services to build or improve their business while at the same time satisfying requirements for data security and regulations. In IW Consult's study, 87.5% of all cloud users say that cloud services help them increase the data security of their IT by ongoing security updates. AWS users in particular feel supported by their provider in this context (90.9% of AWS users vs. 87.0% of users of other cloud providers). 99.2% of cloud users in vehicle manufacturing and 91.4% of cloud users in banking and insurance state that their cloud provider meets their requirements for IT security. 94.6% of vehicle manufacturers and 87.8% of banking and insurance companies state that cloud services fulfill their requirements for legal certainty. IW Consult also found, that security concerns are particularly established amongst those businesses not using cloud services yet. 51% of those respondents report that they have concerns about IT security and 43.9% of them report that they have concerns about meeting data protection laws – both hindering them to move their business to the cloud. Contrary, 77.3% of respondents using cloud services state that cloud services help them meet their IT security goals and 64.4% say the cloud helps them comply with data protection laws.

One major strength of the German economy is that the rural areas have a lot of hidden champions that operate globally. Access to latest technologies is crucial to maintain this strength. The share of cloud users in rural areas of Germany (32.8%) is lower than in the metropolitan areas (45.7%). IW Consult's study shows that 45.7% of non-cloud users in rural areas have a lack of awareness for cloud computing.

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AWS enables sustainable business operations

The sustainable use of our resources is one of the most important topics of our time. A 451 Research study commissioned by AWS found that moving to the cloud could reduce energy consumption by 79% when a typical German enterprise moves workloads to the cloud. Although Germany has been promoting wind and solar installations, the country still has a quantity of fossil fuels in its energy production mix. The potential carbon emissions saved by moving workloads to the cloud could be as much as 1,159 metric tonnes of CO2eq per megawatt annually from servers and another 242 metric tonnes of CO2eq per megawatt annually from more efficient data center facilities. When a cloud provider is powered by 100% renewable energy for its infrastructure in Germany, that could further reduce emissions for enterprises by 333 metric tonnes of CO2eq per megawatt annually, for a total of 1734 metric tonnes. Germany has roughly 11,300 businesses with more than 250 employees. If 25% of these firms put 1MW of IT load into the cloud (a cloud-migration project of moderate size), this could save as much as 4,903,600 metric tonnes of CO2eq per year, equivalent to roughly a year’s worth of emissions from more than 292,000 German households’ electricity use.

In IW Consult’s survey, 58.4% of German companies state that they feel totally or rather committed to social-ecological corporate management. 11.7% of companies don`t feel committed to undertake sustainability efforts. German companies have realized that using cloud services can help them reduce their own emissions and create products and services that are sustainable. A large majority of respondents in IW Consult's study say that cloud services help them achieve sustainability goals by reduced hardware purchases (70.5% of respondents). Reduced energy usage is also seen as major advantage in this context (64.5% of respondents). This is followed by ecological compensation activities (43.5%) and the usage of renewable energies (38.9%). AWS users are particularly concerned about improving their sustainability (78.6% AWS users vs. 72.5% users of other cloud users vs. 49.3% non-cloud users). However, they also state that they particularly benefit from reduced hardware purchases (78.8% vs. 69.3% of users of other cloud providers) and reduced energy usage (74.8% vs. 62.9% of users of other cloud providers).

Notably, companies that are not older than 10 years, are more likely to say that the cloud helps them reduce their carbon footprint by reducing hardware procurement (83.8 percent) and energy consumption (73.2 percent). Those companies in this group which are using the AWS Cloud benefit most: Almost nine out of ten state that cloud technology helps to reduce their carbon footprint.

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AWS in Germany

The results of IW Consult’s study show that AWS is making an important contribution to Germany's economic development. AWS enables companies of all sizes and regardless of the industry in which they operate in to digitize, drive innovation and thus ultimately remain competitive. Processing and storing data securely, complying with local regulations and increasing sustainability are just as important aspects in which German companies benefit from using the AWS Cloud.

AWS is also investing in infrastructure in Germany locally. In October 2014, AWS opened an AWS Region in Frankfurt with two Availability Zones. A third Availability Zone was added to this Region in June 2017, and AWS expanded its infrastructure since the start of the EU (Frankfurt) Region with 21 Edge Locations and one Regional Edge Cache. AWS also announced two new Local Zones in February 2022, which will be built over the course of the next two years in Berlin and Munich to provide customers with even lower latency for their applications.

Among others, key aspects of the AWS Cloud technology, like the AWS Nitro System, are designed in German development centers located in Dresden, Aachen, Berlin and Tuebingen. On May 25, 2022, the research team in Tuebingen also announced a collaboration with the German Max-Planck institute which is aiming at increasing research in the areas of artificial intelligence, computer vision, and machine learning.

Tens of thousands of customers in Germany utilize the AWS Cloud today and gain access to world-class technologies which are vital to innovate and compete. AWS will continue to support those and further businesses in Germany to grow in future.

In 2022, there will be over 600 new jobs created in Germany, across data centers, development centers, and corporate offices, like Berlin and Munich, and other locations.

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[1] According to IW Consults estimate in the “AWS Impact Study Germany”.