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While the European Commission has recently focused on a cloud computing strategy to boost uptake across all businesses in the European Union, many companies still hesitate in adopting cloud computing because of reliability and safety issues. 

"The relative newness and underdevelopment of the cloud computing market is the primary reason that public sector organizations delay adoption," said Frost & Sullivan's Research Analyst, Jayashree Rajagopal. "Several high-profile service outages in 2011 -- such as serious technical difficulties that struck Amazon Web Services and affected a public cloud that serves thousands of businesses -- resulted in more reliability questions."

Organizations worry that a data center problem could result in hacking or the loss of citizens' sensitive personal information. Major entities are considering two options: private clouds that would either be managed internally or by a third-party and hosted internally or externally; and hybrid clouds, in which the organization provides and manages some resources in-house and has others provided externally.

Public sector organizations also face other challenges, such as the lack of international standards, strict data transfer regulations and differences in privacy and confidentiality definitions, which could affect compliance across borders. 

"The amount of data generated and the required security levels vary considerably across public sectors such as healthcare and transportation. A cloud service should meet basic requirements as well as address security concerns specific to a sector," Rajagopal said.

Recent consultations by the European Commission showed that cloud computing can be a low-cost and energy-friendly alternative to existing systems. 

"Encouraging the adoption of cloud in the public sector is an essential step toward establishing a 'cloud-active' European Union. It would set the trend toward a cloud economy," Rajagopal said.