Why are Latvian businesses lagging behind on cloud adoption?

In brief:

• Latvian companies are increasingly using cloud services, yet they still lag behind Lithuania, Estonia, and the European Union average.
• Disparities in cloud service adoption are not merely a matter of technology; they impact company efficiency, the speed of decision-making, and long-term competitiveness.
• A successful transition to cloud services is typically gradual, starting with processes that involve the most manual labor and offer the greatest potential for automation.

In recent years, Latvian companies have taken a significant step forward in digital transformation. The use of cloud services is growing, and an increasing number of businesses are incorporating remotely accessible 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 the adoption of cloud solutions. This raises an important question: if technologies are becoming more accessible and the benefits are clear, what is still holding companies back from taking the next step?

The answer is often unrelated to the technology itself. It is influenced by habits, the complexity of existing processes, perceptions of costs, and concerns about implementing change. At the same time, companies that adopt digital solutions purposefully often gain not only more efficient processes but also greater flexibility and competitiveness.

What are cloud services?

Cloud services are a way for companies to use software and digital tools without the need to maintain them on their own infrastructure. Instead, a 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 do not even realize that a particular solution is running in a cloud environment: it is simply available and ready to use.

It is important to understand that the cloud is not just data storage on the internet. It is an operating model where a portion of system maintenance, updates, and technical availability is provided 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 already using paid cloud computing services. For comparison, in 2014, that figure was only 17.8%. In other words, in less than a decade, the use of cloud services by companies in Europe has nearly tripled.

Interestingly, companies most often use cloud services to support daily processes. The most popular usage scenarios, according to Eurostat data, remain very 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, demonstrating a shift from individual digital tools to the digitalization of core business processes.

Dynamics of cloud service adoption in the Baltics and Europe

In the European Union, the use of cloud services by companies has more than tripled over the last decade. This marks a clear transition from a niche IT solution to standard corporate infrastructure. In the Baltic states, this same trend is occurring with one significant difference—the timing and speed of adoption.

Three development trajectories in the Baltics

Looking at the Baltics as a whole, three distinct paths of digitalization can be observed: early adoption, rapid growth, and slower but steady development.

Estonia: Early adoption and steady growth

In Estonia, cloud services were already relatively widespread by 2016, with approximately 35–38% of companies using them. By 2020, this figure reached about 50%, and by 2025, it climbed to 60–61%. This indicates that Estonia began its digitalization journey earlier and developed it gradually, without experiencing sharp spikes in later years.

Lithuania: Later but rapid growth

In Lithuania, cloud service adoption was around 18–20% in 2016, rising to about 31% in 2020 and reaching 58% by 2025. This reveals an opposite pattern: a lower starting point followed by rapid growth in recent years, which has significantly narrowed the gap with regional leaders.

Latvia: Consistent but slower development

In Latvia, approximately 15% of companies used cloud services in 2016, rising to about 29% in 2020 and 44.1% in 2025 (based on data from the Central Statistical Bureau of Latvia). Growth has been consistent, yet it started from a lower baseline and has progressed at a slower pace, meaning the gap with neighboring countries remains.

This combination—early adoption, later rapid growth, and steady but slower development—is what creates the current digital divide in the region. Furthermore, there is a structural factor at the company level in Latvia: large enterprises (83.4%) use cloud services significantly more often than medium-sized (59.2%) and small (40.1%) ones, meaning that digitalization disparities exist both between countries and across company scales. (Central Statistical Bureau of Latvia, 2025)

Why is the transition to cloud services in Latvia slower?

The slower adoption of cloud services in Latvia is not due to a single specific reason. Rather, it stems from a combination of factors, including 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 usually happens incrementally and only when a specific need arises.

Additionally, many companies have long relied on local solutions that still "function well enough." As a result, the transition to cloud services is often not perceived as an urgent priority, especially if existing processes do not cause critical daily issues.

The approach to digitalization as a whole also plays a significant role. In some companies, technology is still viewed as a separate IT matter rather than a tool for business efficiency or competitiveness. This means that investments are more often deferred until change becomes unavoidable.

At the same time, cloud service adoption is also hindered by practical considerations—concerns regarding data security, migration complexity, costs, and employee adaptation to new systems. Although some of these concerns are based on outdated perceptions, they still influence decision-making. This is not limited to the client side; many software developers, such as the accounting program Zalktis, do not utilize 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 manifests in practice as a difference in operational speed, information accessibility, and the ability to adapt to change.

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 that management and employees work with the same information without the need 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 creates a delay between an event and the reaction—especially in situations requiring quick business decisions.

This difference directly impacts three critical aspects of business operations: the speed of decision-making, the use of administrative resources, and the risk of errors. The more manual steps and systems there are, the more time is diverted to data processing rather than business development. Over time, this impact becomes structural. The differences in cloud service adoption between companies not only persist but often intensify.

Companies that start digitalization earlier build a unified system environment faster. This means that subsequent improvements—automation, integrations, and new tools—are implemented with lower complexity and less resistance from existing systems. Conversely, for companies that delay the transition, systems gradually become more fragmented. Each new solution is added to the existing structure rather than replacing it, which increases both maintenance complexity and reliance on manual processes.

This effect can be described as digital inertia: the further a company is in its digitalization, the easier it is to continue development and implement new solutions. The longer the transition is delayed, the greater the technical and organizational burden that hinders it. At the same time, the market is moving ever faster toward an environment where clients, partners, and systems are already operating in the cloud.

How can a company transition to cloud services?

The transition to cloud services usually does not happen overnight. For most companies, it is a gradual process of streamlining operations step-by-step, reducing manual work, and replacing systems that no longer meet daily business needs.

Assess the company's current position

The first step is to understand which systems are already in use and where the greatest daily workload occurs.

These are most commonly:

• email and communication tools;
• document storage;
• accounting or financial systems;
• customer or order tracking.

For example, the cloud version of the Jumis solution is already used by 98% of all clients. In some companies, certain processes are already operating in the cloud, even if it is not perceived as a deliberate digitalization strategy.

Identify the processes that consume the most time

The transition to cloud services provides the greatest impact where there are still many manual operations within the company.

For example:

• entering the same data into multiple systems;
• sending files via email;
• manual report preparation;
• gathering information from various sources;
• multi-stage document approval.

These are precisely the areas where the greatest time losses and risks of error typically occur.

Do not start with everything at once

One of the most common mistakes is attempting to digitize all company processes in a short period. In practice, it is much more effective to start with one area where the benefits will be visible sooner—for example, document workflow, 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 benefit of cloud services is not just remote access. The greatest value emerges when systems begin to exchange data with each other.

The less information that needs to be re-entered, the less time a company spends on administrative processes. Therefore, in the long term, it is important to think not only about individual tools but also about how they interact with one another.

Change is not just a matter of technology

Transitioning to cloud services often requires changing daily work organization—how documents are approved, how teams share information, and how remote work is structured.

Digitalization is a continuous process

Implementing cloud services is not a project with a single finish line. As companies evolve, so do their processes, teams, and needs. Therefore, the most successful companies view digitalization not as a one-time IT project, but as an ongoing process of company development.

Cloud services are no longer a matter of the future

The adoption of cloud services in companies is no longer just a technology trend or a matter of choice. Data from Europe and the Baltics clearly show that daily business processes are increasingly shifting to a digital, interconnected environment, where fast data access and system integration are becoming the standard.

In Latvia, this transition is happening, but more slowly than in neighboring countries. This means the question is no longer whether companies will digitize, but how quickly they will be able to adapt to the direction of the market. Companies that gradually implement cloud services and streamline their processes gain greater flexibility, faster information flow, and less dependence on manual labor in the long run. Conversely, for those that delay digitalization, the transition becomes more difficult in the future. Systems become more fragmented, the volume of manual processes increases, and more time is spent on data maintenance rather than business development.

This is precisely why the most successful approach is usually not a rapid and chaotic "total digitalization," but a purposeful, gradual development of processes. It is not about trying to implement everything at once, but about a consistent move toward a more efficient, connected, and flexible business environment. And, most likely, it is the ability of companies to adapt to these changes in a timely manner that will increasingly determine their competitiveness in the coming years.

Frequently asked questions

What are cloud services for businesses?

Cloud services allow businesses to utilize software, data storage, and other digital solutions without the need to maintain their own server infrastructure. Systems are available online as a service, and businesses can access them from the office, remotely, or from various locations.

Are cloud solutions secure?

Security largely depends on the service provider and the company's own 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 that lack regular IT oversight.

How long does the transition to cloud services take?

It depends on the size of the company, existing systems, and the chosen solution. Migrating individual processes, such as file storage or document workflows, can take a few days or weeks. Conversely, the implementation of more complex systems often occurs gradually over several months.

Are cloud services cost-effective for a small business?

Yes, especially when a company wants to reduce manual labor and avoid the costs of maintaining additional infrastructure. Many cloud solutions are available with a flexible subscription model, and some tools also offer free or basic plans for small teams.

How should one begin the transition to cloud services?

The most practical approach is to start with the processes that currently cause the most manual labor or data management issues. Companies often begin with document storage, accounting systems, or team collaboration tools. The most important thing is not to implement everything at once, but to gradually streamline processes and ensure that systems are integrated.