Is Cloud Computing a Job Creator or Job Killer

Is there such a thing as cloud computing job loss? Will cloud computing will be a net job creator or a job killer? The question of cloud computing jobs came up recently and I thought I share my thought on it here. The question began in a post on the Enterprise CIO Forum by Christian Verstraete, HP Chief Technologist for Cloud. In his post Cloud Computing will generate jobs, but how many, Verstraete questions an IDC report cited in Forbes that cloud computing will create 14 million jobs worldwide by 2015.

I thought Verstraete was right to be skeptical of IDC’s numbers but I had a different take on the factors affecting the cloud computing jobs equation which are very relevant to CIO’s putting together ROI’s for computing based on labor savings.

Post-Transitional Job Loss

The build-out of cloud service providers and the enterprise transition to cloud computing of existing IT systems creates a period of technology overlap. The cloud service provider will have to pre-provision some amount of excess capacity and the enterprise has to maintain existing systems through the transition both of which require staff.

The cloud service provider will by definition create new cloud computing jobs perhaps even with some surplus in order to scale. These cloud computing jobs just like the systems duplicate in-house jobs but will ultimately become a net job reduction as the transitions complete and the economies from cloud computing are realized.

Business Data Retention Jobs

One caveat to the post-transition reductions is there are a lot of companies that will need to maintain their old systems for business data records retention and compliance purposes. This happens when old data is stranded because you didn’t want to pay to convert it into your current system or migrate it to the cloud.

But, you need to maintain the ability to recover the old data files until they age off in 7 years, or more for some industries. Right? Just because you have tapes doesn’t mean you can recover the data if the systems that created the tape no longer exist or were moved to a cloud computing solution.

For those companies where this situation exists, they will need to retain some number of jobs unless a new cloud service emerges for this very issue.

Application Cloud Migration Wall

We have to remember the job creation-killer equation for cloud computing jobs isn’t just about virtualization on a cloud infrastructure or cloud storage. Cloud adoption strategies will at some point hit the wall when it comes to moving enterprise applications onto a cloud infrastructure.

Many applications just will not run on a cloud infrastructure. Although you may get some applications to run, many vendors consider cloud to be an unsupported architecture. The conversion of packaged and enterprise apps for cloud architectures will be a long and lengthy process resulting in net job creation that could last a very long time.

Just one example might be for with Banner customers looking at cloud options for Banner hosting instead of having to go with Ellucian’s full Banner application hosting services in order to reduce costs. In this case, although Dell and Ellucian have developed a Banner reference architecture for running the Banner Digital Campus on Dell hardware, Ellucian’s Banner reference architecture does not include the Dell Cloud Computing solutions.

Cloud Services Efficiency

One thing about the cloud service model that is easily overlooked is the effect of standardizing the services creating a much more simplified support model and lower cost per user to support it. This is not just because there is no customization but also because of the efficiencies gained from being able to tightly control the release management process.

Organic Growth of Cloud Services

The democratization of IT made possible by cloud services (accessibility and simplification) combined with the lower cost of entry is producing thousands of start-ups and new products for the enterprise and consumers. This is the greatest source of net new cloud computing jobs.

Labor Arbitrage of Cloud Computing

As cloud services disperse around the globe the potential for labor arbitrage to factor into the job creation equation gets stronger and more confusing.  This is arises from establishing physical cloud infrastructure around the globe and from cloud outsourcing. But there are signs of labor arbitrage benefits are declining making this factor a little more uncertain in the long term.

I sure don’t know what the end result of cloud services will be in terms of net job creator or job killer in the USA let alone worldwide. The answer to that requires more insight than I have on just how much organic growth there will be versus the reductions.

I do know that CIO’s should take care in formulating their cloud computing project ROI’s in order to avoid over committing on labor savings.

 

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