Tehnoloģijas

Why are Latvian companies lagging behind in adopting cloud services?

In brief: Latvian companies are increasingly using cloud services, but they still lag behind Lithuania, Estonia, and the European Union average. Differences in cloud service adoption are not just a technological issue—they affect company efficiency, decision-making speed, and long-term competitiveness. Successful transitions to cloud services typically occur gradually, starting with processes that involve the most manual work and have the greatest automation potential. In recent years, Latvian companies have made significant strides in digital transformation. The use of cloud services is growing, and more companies are incorporating remotely accessible business tools into their daily operations—from email and document storage to accounting and business management systems. However, compared to other European Union countries and Baltic neighbors, Latvia still lags in adopting cloud solutions. This raises an important question: if technology is becoming more accessible and the benefits are clear, what is still holding companies back from taking the next step? The answer often lies beyond the technology itself. Habits, the complexity of existing processes, perceptions of costs, and concerns about implementing changes all play a role. At the same time, companies that purposefully adopt digital solutions often gain not only more efficient processes but also greater flexibility and competitiveness. What are cloud services? Cloud services allow companies to use software and digital tools without needing to maintain them within their own infrastructure. Instead, the company accesses the system as a service and uses it in daily operations—whether in the office, remotely, or across various company locations. In many cases, users might not even realize that a particular solution operates in the cloud; it is simply accessible and usable. It's important to understand that the cloud is not just about storing data online. It is a work model where part of the system maintenance, updates, and technical availability is handled by the service provider. As a result, companies can focus more on business processes rather than infrastructure management. According to Eurostat data, by 2025, 52.7% of European Union companies were using paid cloud computing services. In comparison, in 2014, only 17.8% did. In other words, within less than a decade, the use of cloud services in European companies nearly tripled. Interestingly, companies most often use cloud services to support everyday processes. The most popular use cases, according to Eurostat data, remain highly practical: email systems (85.2% of cloud service users), office software (71.7%), and file storage (71.5%). At the same time, financial, accounting, and business management systems are increasingly being used in the cloud, indicating a shift from standalone digital tools to the digitalization of core business processes. Cloud service adoption dynamics in the Baltics and Europe In the European Union, the use of cloud services in companies has more than tripled over the past decade. This marks a clear transition from a niche IT solution to standard company infrastructure. In the Baltic states, the same trend is occurring with one significant difference—the timing and pace of adoption. Three development trajectories in the Baltics Looking at the Baltics as a whole, three distinct digitalization paths can be observed: early adoption, rapid growth, and slower but steady development. Estonia - early adoption and steady growth In Estonia, cloud services were relatively widespread as early as 2016, with about 35–38% of companies using them. By 2020, this figure reached approximately 50%, and by 2025, 60–61%. This indicates that Estonia started digitalization earlier and developed it gradually, without sharp jumps in later years. Lithuania - later but rapid growth In Lithuania, cloud service usage was around 18–20% in 2016, 31% in 2020, and by 2025, it had risen to 58%. Here, a contrasting model is evident—a lower starting point followed by rapid growth in recent years, significantly narrowing the gap with regional leaders. Latvia - steady but slower development In Latvia, about 15% of companies used cloud services in 2016, 29% in 2020, and 44.1% by 2025 (based on Latvia's Central Statistical Bureau data). Growth has been consistent but from a lower starting point and at a slower pace, meaning the gap with neighboring countries remains. This combination—early adoption, later rapid growth, and steady but slower development—creates the current digital divide in the region. Additionally, structural factors at the company level in Latvia are evident: large companies (83.4%) use cloud services significantly more often than medium-sized (59.2%) and small (40.1%) companies, indicating that digitalization disparities exist both between countries and within company scales. (Latvia's Central Statistical Bureau, 2025) Why is the transition to cloud services slower in Latvia? The slower adoption of cloud services in Latvia is not due to a single specific reason. Rather, it results from a combination of factors—company structure, historical approaches to IT solutions, and digitalization priorities. One of the most significant factors is company size. Latvia is dominated by small and micro-enterprises, which often lack dedicated IT teams or resources for long-term digitalization projects. In such companies, technology adoption typically occurs gradually and only when a specific need arises. Additionally, many companies have long relied on local solutions that still "function well enough." As a result, transitioning to cloud services is often not perceived as an urgent priority, especially if existing processes do not yet cause critical problems in daily operations. A crucial role is also played by the overall approach to digitalization. In some companies, technology is still seen as a separate IT issue rather than a tool for improving efficiency or competitiveness. This means that investments are more likely to be postponed until changes become necessary. At the same time, cloud service adoption is also hindered by practical considerations—concerns about data security, migration complexity, costs, and employee adaptation to new systems. While some of these concerns are based on outdated perceptions, they still influence decision-making. And this is not only on the client side; many software developers—for example, the accounting software Zalktis—do not use the cloud. Why do differences in cloud service adoption create a competitiveness gap? The difference between companies that use cloud services and those that still rely on local or fragmented systems translates into varying work speeds, information accessibility, and adaptability to changes. In companies where cloud services are integrated into daily processes, data is maintained in a unified environment and is available in real-time. This means management and employees work with the same information without needing to manually compile or synchronize it across different systems. As a result, decision-making is faster and based on up-to-date data. Conversely, in companies with local or fragmented systems, information is often stored in multiple locations, and data flow is slower. This means there is a delay between events and reactions—especially in situations requiring quick business decisions. This difference directly impacts three critical aspects of company operations: decision-making speed, administrative resource utilization, and error risk. The more manual steps and systems involved, the more time is diverted to data processing rather than business development. However, this impact becomes structural over time. Differences in cloud service adoption between companies not only persist but often intensify. Companies that start digitalization earlier are quicker to establish unified system environments. This means subsequent improvements—automation, integrations, and new tools—are implemented with lower complexity and less resistance from existing systems. Conversely, companies that delay the transition see their systems gradually become more fragmented. Each new solution is added to the existing structure rather than replacing it, increasing both maintenance complexity and reliance on manual processes. This effect can be described as digital inertia—the further a company progresses in digitalization, the easier it is to continue development and implement new solutions. The longer the transition is postponed, the greater the technical and organizational burden that hinders it. At the same time, the market is increasingly moving toward an environment where clients, partners, and systems already operate in the cloud. How can a company transition to cloud services? The transition to cloud services usually doesn't happen overnight. For most companies, it is a gradual process where step by step, processes are streamlined, manual work is reduced, and systems that no longer meet daily needs are replaced. Evaluate where the company stands currently The first step is understanding what systems are already in use and where the greatest daily workload occurs. Most often, these are: email and communication tools; document storage; accounting or financial systems; customer or order tracking. For example, 98% of all customers already use the cloud version of the Jumis solution. In some companies, certain processes already operate in the cloud, even if it's not perceived as a conscious digitalization strategy. Identify processes that consume the most time The transition to cloud services has the greatest impact where there is still a lot of manual work in the company. For example: re-entering the same data in multiple systems; sending files via email; manually preparing reports; compiling information from various sources; document approval in multiple stages. These are typically the areas where the largest time losses and error risks occur. Don't start with everything at once One of the most common mistakes is attempting to digitalize all company processes in a short time. In practice, it is much more effective to start with one area where the benefit will be seen more quickly—for example, document circulation, accounting, or file storage. This allows the team to gradually adapt to the new work model and reduces resistance to change. Pay attention to system connectivity The main advantage of cloud services is not just remote access. The greatest value emerges when systems start exchanging data with each other. The less information needs to be re-entered, the less time the company spends on administrative processes. Therefore, in the long term, it's important to think not only about individual tools but about how they interact with each other. Changes are not just a technology issue Transitioning to cloud services often requires changes in daily work organization—how documents are approved, how teams share information, and how remote work is organized. Digitalization is a continuous process Implementing cloud services is not a project with a single finish line. As companies grow, their processes, teams, and needs also change. Therefore, the most successful companies view digitalization not as a one-time IT project but as a continuous business development process. Cloud services are no longer a question of the future The adoption of cloud services in companies is no longer just a technological trend or a matter of choice. European and Baltic data clearly show that daily business processes are increasingly transitioning to a digital, interconnected environment where quick access to data and system integration become the standard. In Latvia, this transition is happening, but slower than in neighboring countries. This means the question is no longer whether companies will digitalize but how quickly they can adapt to market direction. Companies that gradually adopt cloud services and streamline their processes gain greater flexibility, faster information flow, and less reliance on manual work in the long term. Conversely, those that delay digitalization face a more complex transition in the future. Systems become more fragmented, manual processes increase, and more time is spent maintaining data rather than developing the business. That's why the most successful approach is usually not a rapid and chaotic "complete digitalization" but a purposeful, gradual development of processes. Not an attempt to implement everything at once, but consistent progress toward a more efficient, interconnected, and flexible business environment. And most likely, the ability of companies to adapt to these changes in time will increasingly determine their competitiveness in the coming years. Frequently Asked Questions What are cloud services for companies? Cloud services allow companies to use software, data storage, and other digital solutions without needing to maintain their own server infrastructure. Systems are accessible online as a service, and companies can use them from the office, remotely, or across various locations. Are cloud solutions secure? Security largely depends on the service provider and the company's approach to data management. Modern cloud services typically include regular security updates, data backups, and access control mechanisms. In many cases, professional cloud solutions are more secure than locally maintained systems without regular IT oversight. How long does the transition to cloud services take? It depends on the company's size, existing systems, and the chosen solution. Moving specific processes, such as file storage or document circulation, can take a few days or weeks. Implementing more complex systems often occurs gradually over several months. Do cloud services pay off for small businesses? Yes, especially in cases where the company wants to reduce manual work and avoid additional infrastructure maintenance costs. Many cloud solutions are available with flexible subscription models, and some tools offer free or basic plans for small teams. Where to start the transition to cloud services? The most practical approach is to start with processes that cause the most manual work or data flow issues in daily operations. Companies often begin with document storage, accounting systems, or team collaboration tools. The key is not to implement everything at once but to gradually streamline processes and ensure systems interact with each other.