Cloud computing's real creative destruction may be the IT workforce

Cloud computing's real creative destruction may be the IT workforce

Summary: Few disagree that cloud computing will be disruptive to industries, enterprise technology and the way we conduct businesses. The disruption will extend to the workforce.


Cloud computing, which amounts to be the industrialization of enterprise technology infrastructure, will bring a lot of advantages coupled with a lot of lost jobs.

Few disagree that cloud computing will be disruptive to industries, enterprise technology and the way we conduct businesses. The disruption will extend to the workforce.

In other words, humans will be virtualized just like servers are. The upshot from cloud computing is that companies will need fewer data centers. People run data centers. Those jobs are likely to simply disappear.

Johan Jacobs and Ken Brant, two Gartner analysts, made the cloud computing-jobs connection last week at the Gartner Symposium in Orlando. The presentation was categorized as "maverick" in that it may not happen in the allotted time frame. Jacobs and Brant argued by 2020 demand for IT staff dedicated to supporting data centers will collapse.

"The long-run value proposition of IT is not to support the human workforce – it is to replace it," wrote Gartner in its presentation. In other words, any job loss related to offshore outsourcing may look like a walk in the park once cloud computing gets rolling.

The rough argument goes like this:

  • Computing will be outsourced to the cloud and become an IT utility.
  • Business processes will be outsourced to software. That outcome will hit all economies---especially emerging ones like India that now dominate technology outsourcing.
  • As the data center is virtualized the need for people to maintain that infrastructure will go away. In addition, all the people in sales and services linked to building and designing data centers will also lose jobs. When there's less technology infrastructure to support jobs will disappear.
  • Some of those workers will reinvent themselves and find more opportunities. Others will never match those previous positions. Many IT workers will face hollowed out job prospects just like factory workers did as the U.S. manufacturing base disappeared.

This cloud computing-job connection is just a whisper today. But a few executives I talked to see an offshore outsourcing backlash as a possibility for cloud computing.

If Gartner's post-human industry theory, which dictates that intelligent machines will drive the economy more than people, pans out the economic implications will be huge. There is no need for a human-machine singularity to impact career prospects. Creative destruction looks great on the whiteboard, but there is a human cost.

What's the probability for this cloud vs. jobs scenario? In the long run, I'd argue it's highly likely. The timing---2020---is debatable. Jacobs and Brant highlighted a few scenarios.

  • If companies move to private clouds and hybrid infrastructure the job losses won't be as large. Companies will need to maintain people and use brokers for public cloud services.
  • Machines may complement humans more than replace them.
  • However, companies may aim to eliminate assets. Call centers will be run by avatars and software. Business operations will be largely automated.
  • IT utilities emerge. IT utilities will accelerate asset cuts. In this scenario, the goal is to drop physical assets in a hurry.

The last two outcomes will have the most impact on jobs. This scenario ties into what Harvard professor Clay Christensen said last week. Christensen noted that semiconductor companies tout how they are fabless. As a result, Intel is one of the few that actually owns manufacturing facilities. By worshipping profit ratios, companies nuke jobs. In the long run, this focus on ratios hurts innovation.

Gartner noted that this ratio worship is already underway:

CIOs believe that their data centers, servers, desktop and business applications are grossly inefficient and must be rationalized over the next ten years. We believe that the people associated with these inefficient assets will also be rationalized in significant numbers along the way. We foresee a substantial reduction in the U.S. IT workforce, especially among those supporting the data center and applications, in end-user organizations. According to Gartner's 2011 survey of U.S. CIOs, "Reducing the cost of IT," "Reorganizing IT" and "Consolidating IT operations and resources" were ranked high among their top strategies. In the same survey, "Virtualization" and "Cloud Computing" were the two top ranked U.S. CIO technology priorities; 83% of U.S. CIOs estimated that their organizations would conduct "more than half of their transactions on a cloud infrastructure" by 2020.

The other argument here is that IT is becoming a necessity good and that points to services provided by utilities. Toss in the fact that compensation is a large expense line in IT budgets and it's clear that there will be pressure to cut expenses via cloud computing and job cuts.


Topics: Data Centers, CXO, Cloud, Hardware, IT Priorities, Servers, Storage, Virtualization, IT Employment

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  • Like Car industry reduction in Assembly line work force!

    What happened in the last 50 years in car industry, many lost their jobs for the new shiny robots in assembly line, this is what about to happen to the on premises HW support teams, however the move of Google/Apple to have everything on the cloud and managed by the handheld, is pushing enterprise applications towards clouds and thin clients, soon in the future all our enterprise applications will be downloaded from Application market rather than IT Support team!
    • RE: Cloud computing's real creative destruction may be the IT workforce

      There is just one little thing you all are missing. Capital! To move IT to the cloud across all industries, enough to wipe out a larger chunk of IT jobs requires capital. There is no capital, there is no credit. Remember, the credit bubble has popped. Why do you think there are thousands of people around the world occupying something. Until this 500 trillion dollar debt overhang is taken care of, and as long as wall street sucks up all productivity gains, no significant technological industrialization can be funded. So sit back and enjoy stagflation.
  • dsgdsfg
  • RE: Cloud computing's real creative destruction may be the IT workforce

    If you intelligent, skilled, and hard-working, there is a place for you. If you just "get by" then you are in danger. Technology moves the target around from time to time, but it doesn't change this basic fact.<br><br>And some of the assumptions are just wrong. People talk about "infrastructure" as though it magically runs itself somehow. This isn't true for *any* type of infrastructure, whether your talking about highways, the power grid, or the cloud. There are a legion of people in the background making all of these systems work, and that will continue to be the case.
    terry flores
    • RE: Cloud computing's real creative destruction may be the IT workforce

      @terry flores You really don't understand the situation, do you? Like those who claim that automation can't displace workers because the companies building the automation systems have to hire people, you don't see the very valid point to the Gartner argument. If the number of people involved in the automation/cloud solution isn't drastically smaller than the number of people the customers are replacing then the economics don't work out. In both situations there have to be large job losses to cut labor costs as part of the equation to justify the switch. There is absolutely nothing in the post-industrial world that magically guarantees jobs for everyone. We are moving in a direction where fewer and fewer jobs are needed to produce enough to meet demand. Look at how many people currently work in the agriculture sector as opposed to the numbers decades ago if you want to see where we are going.
      • RE: Cloud computing's real creative destruction may be the IT workforce

        @JimSatterfieldW There's a valid argument in both directions here. I can foresee a situation where the net effect is minimal aggregate job loss but massive job concentration and movement. You are correct that the workforce has to be small if we are talking just about a segment of the industry. But consider that MegaCorpA has outsourced its IT to MegaCloudB. MegaCloudB services MegaCorpA with fewer people than MegaCorpA could on it's own due to efficient and automated processes. But MegaCloudB also services TinyCorpA through TinyCorpZZZ who previously had IT handled by either a) nobody b) somebody's nephew who knows computers c) that guy who's kinda techie who also happens to have the job of bookkeeper of d) TinyITProviderA.
        The resources that MegaCloudB uses to support TinyCorpA through TinyCorpZZZ might displace the job of TinyITProviderA or the side income of somebody's nephew but they will be a net add to the IT workforce to offset the loss at MegaCorpA. End result will be a loss of workforce but not on par with the loss of Assembly Line workers. At least not by 2020. 2030? perhaps.
      • RE: Cloud computing's real creative destruction may be the IT workforce

        What you and most other people don't seem to understand, is that there is a person that is still going to be involved. Cloud or no Cloud, there will be a lot of companies not using those kinds of services. Some high-tech defense companies are no way or shape going to be using Cloud computing.

        Also, the whole concept of Cloud computing relies on a data center running a cloud service, so again more people needed.

        Then the other part of the issue is without a connection to the internet you're still going to need a IT person to get reconnected.

        The reliability of internet service is still not there, even if you have a fiber optic connection to the internet there's nothing that can be done if the telephone pole carrying that wire goes down.

        And if people think that Robots will replace the need for the IT staff people, think again. If we get to the point of a Robot replacing IT people, they will also be replacing the CEO's, Board Members, and basically everyone in the company.

        Automation or not, a Human being is still going to be needed for the IT service
  • RE: Cloud computing's real creative destruction may be the IT workforce
  • This is such a blinkered view of the world

    It seems to imply that all business can be done through a mish-mash of cloud services. Any serious business will always have some bespoke processes and IT needs. At worst, a bunch of the IT grunts that follow the procedures written by genuinely skilled IT workers, will be made unnecessary.

    Until the machines can build and repair themselves, skilled IT professionals will always be in work (look at the job boards if you don't believe me). If the machines do start to build and repair themselves, then I suspect we'll have a bigger problem on our hands then looking for a job.
  • IT job loss? You ain't seen nothin' yet.

    Gartner's gloomy outlook is echoed, more broadly, in an an article in today's New York Times titled "More Jobs Predicted for Machines, Not People". An excerpt: " automation is rapidly moving beyond factories to jobs in call centers, marketing and sales parts of the services sector, which provides most jobs in the economy."
    <br>Young people would be well-advised to pick a career that requires high-level abstract thinking and creativity.
    • RE: Cloud computing's real creative destruction may be the IT workforce

      @paul613 I think the high-level abstract thinking and creativity will be automated and computerized as well and probably faster than other IT jobs. I mean a computer can run through a thousand abstract models drawing for dozens of data streams of structured and unstructured data and present a thousand different forecasts in the time it takes a creative thinker to power on their laptop. .
  • RE: Cloud computing's real creative destruction may be the IT workforce

    It's high time that IT was broken back into it's 5 component parts. The Computer Services section, which is where all the benefit lies, is suppressed in an IT organization. Farm out the other 4 pieces, and keep the help your people need to be efficient!
    Tony Burzio
  • RE: Cloud computing's real creative destruction may be the IT workforce

    Unfortunately we are in a situation where there are more people in the world than there are jobs. Technology is a wonderful thing, but less labor needed for the same output is one of the inevitable results.
    sissy sue
  • RE: Cloud computing's real creative destruction may be the IT workforce

    And who repairs, builds and runs the robots in the Auto industry? Why does the Auto industry outsource so many parts?
    While we transition from Big Platforms to Medium Platforms back to Big Platforms, the workforce will go though plenty of changes but if you've been in this industry long enough, you should be used to it by now.
  • RE: Cloud computing's real creative destruction may be the IT workforce

    This is a distinct possibility but only if you look at Cloud Computing in a vacuum. It's not the only thing that's evolving. The security issues related to computing are evolving let alone cloud computing. We're on the heals of RIM's outage which is only one of several high profile outages in the last two years that highlight the flaw in the "1 to many relationship" of successful api and cloud hosted services. Especially when some of these outages can be days long. The other issue impeding the cloud at least US clouds are some of the laws of our government vs. European laws and their businesses and citizens caught in between. As international cloud usage increases and global businesses work to satisfy the increasing sophistication of emerging markets and their requirements, this will be yet more reason to thoroughly evaluate the cost and exposure that comes with a global cloud presence. This is of course as more small to medium businesses take on staff in other markets and regulated zones.

    Finally I have every belief that the stuxnet discussion currently going on is only the beginning of the kind of virus writing and even political hacktivism, we're going to be seeing and while in today's corporate culture, they are sensitive to what their spokespersons and other talent may be doing, they will eventually be a lot more sensitive to which corporate entities they are sharing resources with and even partnered with.

    Besides whether virtualized and remote or in-house, its all going to come down to uptime, accessibility and the potential losses associated with the failure of either. Smaller companies may not mind sitting and waiting on emails from their provider explaining that their still looking into the outage along with the requisite promises, but larger and established corporations typically like control and the appearance of accountability and I don't see them not wanting to be able to call some guy up out of the basement so they can see him sweat and bypass the email you get from a provider.
  • RE: Cloud computing's real creative destruction may be the IT workforce

    The hardest part of IT will always be understanding the business problem to be solved and then coming up with a workable solution. It doesn't matter if you move the raw materials into a cloud or put it on a mainframe, a desktop, a phone, and it doesn't matter what you call it or if it is centered in the US, India, or Helena Montana. Until there is AI that can handle the actual creation of an application, the fundamental nature of the business is the same.
  • RE: Cloud computing's real creative destruction may be the IT workforce

    We could look at it in a more positive way ... it certainly opens the door to what The Venus Project has been advocating. That we have created so much technology, which we've supposedly done to make our lives easier, no? Then why not allow it to do so and make it so that people do not have to slave over a hot computer 10 - 14 hours a day?
  • Young people should dump IT altogether

    .... learn a Trade. Electricians, Plumbers, Utility workers.... you can't outsource a Plumber to China, and when the pipe is leaking or the toilet is plugged, you can name your price.
    • RE: Cloud computing's real creative destruction may be the IT workforce

      @croberts That's ok, I think I'll stay in IT.
  • RE: Cloud computing's real creative destruction may be the IT workforce

    BS - clouds will be and still are ther own worst enemies. I'll neve understant why people think handing stratefic or secret data over to strangers is the rght thing to do! It is wrong, wrong, wrong!