Go cloud, young man

Go cloud, young man

Summary: The Web has become an effective platform for automating most forms of administrative and professional work. We're just at the beginning of a white-collar shake-out that is going to transform professions and work prospects, for good or ill.

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Several times recently, I've advised personal acquaintances who find themselves between jobs to investigate any opportunities to put their skills to work online. The rationale is simple. In an economic recession, everyone is looking for ways to save money, and therefore the growth sectors are those that help people and businesses do more with less — low-cost supermarkets and fast-food outlets, second-hand and discount traders, and the subject of this article: any online service that strips out excess costs through automation and remote access to administrative and professional expertise.

By and large, online is cheaper because it eliminates all the time frittered away moving information from one place to the next and moving people from one meeting to another. Imagine how much time is saved when a customer looks up data for themselves and then enters new information directly on an online form, instead of having to phone up and ask questions, then fill out a paper form and have someone re-enter that data on receipt. Think how many more people an adviser can deal with if instead of handling physical paper and attending face-to-face meetings, they can just pick up the phone to their client and discuss documents and data they're both viewing online.

That time saved is a huge salary cost that an online provider no longer has to bear. It's a cost burden that keeps prices high at conventional operators. Businesses that transfer custom from their old providers to go online no longer have to pay those inflated prices, so they save money. The online providers still make a profit on their lower operating costs, and as they grow they make even more money. Those cost savings and profits come at the expense of the people who are no longer employed on those wasteful, time-intensive manual processes and face-to-face meetings at the conventional providers. Jobs and profits move from the old providers to the new, which is why I say to my friends, look online for opportunities.

Nowhere is this more true than in the kind of professional work in which most of my personal acquaintances have made their careers — banking, insurance, law, accountancy, sales and marketing, journalism and so on. Yet despite this, most of the people to whom I give this advice completely ignore it, either because they don't get it or they don't want to believe it.

What they don't understand (or refuse to accept) is that the Web has reached a point of maturity where it has now become an effective platform for automating most forms of administrative and professional work. We're just at the beginning of a white-collar shake-out that is going to transform professions and will ultimately reshape our cities as office-based work becomes more mobile and dispersed. It's going to be a scary, disruptive transformation — more on that below — but resistance is futile. This change is as inevitable as the industrial revolution, and the only way to survive and thrive is to understand and embrace it.

The accounting profession provides a useful case study. AICPA, the professional body for chartered public accountants in the US, has been encouraging its members to wise up the Web for several years, and a few months ago it endorsed online accounting vendor Intacct (disclosure: a recent client) as a provider of services to its members through its CPA2Biz subsidiary. Dan Druker, Intacct's SVP of marketing and business development, explained how this changes the way accountants work in a posting to Enterprise Irregular Vinnie Mirchandani's blog:

"Since the cloud makes physical location meaningless, accounting firms can for the first time align labor supply with client demand. They can apply labor from less expensive geographies and can bring talented, part-time professionals back into the workforce. Because they can serve clients anywhere, it is much easier to specialize, providing better career paths for their people and higher value for their clients ... Because the cloud is always on and always connected, both the accountant and their client always share the same financial information in real-time. This allows accountants to become proactive advisors — they are no longer looking at a QuickBooks file at the end of the month or a shoebox of receipts at the end of the year ... For the average mid-sized accounting firm, the business impact of moving to the cloud is, give or take, a 50% increase in productivity."

The posting highlights the beneficial impact of embracing the Web. The computers take over the drudgery, accountants graduate from mere bean counters to become business advisors, specialists can make the most of their expertise, qualified professionals bringing up children or living in unemployment blackspots can rejoin the workforce. And that 50% productivity boost? That's someone's job on the line, either because the firm slims its own workforce or because it wins business from a rival.

In a recent ZDNet blog posting, Tom Foremski encapsulated that productivity effect in this chilling phrase: The Internet devalues everything it touches. In many industries (and accountancy is probably one of them), a 50% productivity gain is barely scratching the surface of what's achievable when this really gets going. Foremski talks in terms of "Internet-based disruptive business technologies" that are "at least 10 times more effective at one-tenth the cost," citing the impact of online classified ads site Craigslist on print classified advertising as the most dramatic among more than a dozen different examples:

"Craigslist's use of Internet technologies has managed to transmute $10 billion in value into $100 million. It's the opposite of the dreams of alchemists — Craigslist has managed to transmute gold into lead. That's what the Internet provides — the means to dramatically devalue an existing industry."

It's a depressing existence these days if your job is selling ads on a newspaper. At my bank, staff at the local branch are error-prone, listless and officious, whereas when I call the online call center, they're sparky, pleasant and efficient. It's going to get more and more dispiriting for people in jobs on the raw end of this trend. That's why my advice to younger neighbours and relatives is to seek their opportunities in the cloud. At least some of my compatriots are taking the advice, according to the BBC.

Some may find it scary, though, as the Web makes it possible to contract work by the hour or minute, eviscerating established notions of job security. In a keynote presentation at SaaS Summit earlier this year, Maynard Webb, CEO of on-demand contact center service LiveOps, talked about what struck me as a brutally Darwinian competition for survival among operators working in the cloud:

"Picture being able to get as good or better results from the cloud as you could from an employee in the cubicle next door. And when your business spikes — or your world melts down — it just bursts up and down. And the poor performers don't get fired, they just fade away."

Webb explained that his workers prefer it that way (for more on the model, read this NYTimes write-up). But it's a huge turnaround from the expectation of a job-for-life that became the norm for my parents' generation in the second half of the last century:

"What we see happening in LiveOps today is that people want to work differently than ever before," said Webb, explaining that they get to decide what hours they work. "They have to be good, but they get to be in control of their destiny, maybe for the first time in their lives."

As this upheaval works its way through society over the coming years, few people are going to feel truly in control of their destiny. Those determined to succeed by embracing the cloud and the Web will have the best chances. In contrast to earlier waves of automation, I suspect those who do physical work will find themselves least affected. People will still be needed to drive trucks and buses, repair homes and automobiles, care for the sick, the elderly and the young. The most affected will be those who shuffle paper, sit in meetings, transmit information and apply knowledge. Their jobs are going to change beyond recognition, if not disappear altogether.

Topics: Browser, CXO, Cloud, IT Employment

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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13 comments
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  • Go Cloud...Indeed

    Phil,

    Great post today. I can't recall how many times I have advised friends who are unemployed to make the move to online occupations. I have a dear friend who has been in traditional advertising for 20+ years, who recently lost his job. I can't find another poster child industry that is being transformed by online, and yet needs the same strategic thinking, great messaging, great creative, as traditional advertising. New online industries are often created by folks who need the adult supervision of veterans with traditional experiences who can help them get prospects comfortable with making the move.

    Perhaps as more people jump into online occupations we will see a new wave of productivity gains in this country.

    Bill

    billode
  • RE: Go cloud, young man

    What is society going to do with under performers? In nature they are killed or die with out offspring. I am not sure I would want to live in a world were just because I don't post blogs faster than someone else I would be killed or sterilized.

    If you look at the current job market in countries where outsourcing has already become normal, you find more knowledge workers. Outsource that and you are left with the doctors, lawyers, politicians, soldier, prison guards, law enforcers, and possibly the trash men.

    What do you do with the people to smart to be garbage people but don't happen to fall into the super upper alpha level? The high functioning betas so to speak?

    May be 20 % of the worlds population will do the work and the other 80% will focus on artistic endeavors. Like in science fiction stories.

    As a side note, sales will always have some face time. I have never sealed a real deal with out meeting the players in person. You can't really tell who you are doing business with unless you meet them. I get all kinds of unconscious information about other people in person that I don't get from the Internet or a phone call.
    mr1972
  • Excellent points...

    This does overlook the question of who are those behind the scenes in the cloud, e.g. where are the sysadmins running the datacenters of the cloud, the developers and testers improving Saas software offerings as I imagine these will need various improvements over time giving some bureaucratic changes like SOX or HIPAA as well as changes in various business rules in realms like ERP or CRM.

    Just a thought for a future post,
    JB
    JB King
    • Great Points JB..I Was Thinking The Same

      At what point do we allow total strangers to keep our data and back it up at the risk of them becoming compromised? Are we going to store our HR, medical, or worse yet, even credit data in some cloud data center in India or Thailand that has shoddy security?

      Cloud computing has its merits but at some point you have to draw the line.
      itanalyst2@...
  • My thoughts . . .

    I'm not certain it's necesarily the "cloud" or the Internet that makes it possible as much as it is the concepts of synchronization and electronic documents. You don't necesarily need HTML or fancy words like "cloud" to do it with.

    I think it's been a work in progress for decades. This is not necessarily anything new, just in a different form.

    . . . and what's up with the word "cloud" anyways? It's just a synonym for the server/client architecture that has been around for ages. I'm not a big fan of making concepts more fuzzy.
    CobraA1
  • Armageddon Cometh

    The whole economy will collapse!

    Just look at what happened when a couple of million Americans couldn't repay their mortgages.

    What will happen when 8/10 people can't repay their loans?

    The next "Great Financial Collapse" will make the Great Depression look like an accounting error in a corner deli.

    lehnerus2000
    lehnerus2000
  • RE: Go cloud, young man

    It really irks me when people seem to 'big-up' SaaS when it involves transferring all your companies most confidential documents along with all sensitive data to cloud services such as Google, Microsoft and Amazon EC2. Shocks me even more to think David Cameron wants to transfer all UK health records over to Google, and is precisely why I will not be voting Conservative.

    By putting any document on someone elses server you lose control of what happens to it. First, you give the company you are transferring your document to the right to duplicate, then perform, open and destroy the document. Google isn't immune to bad staff. No company is and because you've given them the right to do all that with your document there is no reason why a Google employee with the threat of beeing laid off (Or someone overly confident) can't open your document and ask your competition is they want a copy for an undisclosed sum, all, completely transparent to the company who put it there.

    It's a million times cheaper, but it's up to the company you're giving your data to to keep it safe, protect it at all costs, keep their service online at all times (Something no cloud service has guaranteed, and something all of them have suffered: Downtime, and it's catastrophic too, and if you're Google, give a mediocre excuse for it) and make sure your company and all your staff can access documents at all times without problems.

    If your manager says they want to go cloud, and host documents on Google, Microsoft or Amazon's EC2/S3, then tell them all the risks and make them fully aware that they have all suffered downtime, and very lengthy downtimes too. Could your company do without access to all it's data? Could your company do with all your confidential information being fully readable by Google/Microsoft/Amazon employees, and if a security hole is found, everyone else as well as your competition too?

    If you're going to go SaaS, train your IT staff (Or get consultants in), upgrade your equipment and use your own apps such as Citrix XenDesktop/XenApp, Sharepoint, or even go right ahead and build your own cloud infrastructure with your apps sitting atop it if you've got the money. This way you, as IT staff and CEO/Managers/Governors stay in control of your information, and who has access to it, and you've got the experts right there in your company to deal with issues the minute they happen, rather than waiting for Google/Microsoft/Amazon to notice!

    Amazon S3 is useful as a CDN (Test and in production), and EC2 as a test base for applications, just like Azure and Google Engine, but NEVER as a production system.
    PinkFloydYoshi
    • low cost alternative


      XenDesktop is too expensive. There are cheaper alternatives such as NoMachine and ThinServer XP

      http://www.nomachine.com
      http://www.aikotech.com/thinserver.htm
      ThinkFairer
  • Some warnings

    1. The average human can remember 10 ssn's a day.
    2. Data and identity theft is doubling every 3 years.
    3. Humans like to control things. Especially when law suits are involved.
    4. I.T. resources over the cloud will not be American. Those jobs will be lost to China and India.
    5. Offsite I.T. resources from foreign countries offer horrible quality for anything but maintenance.
    Final Point
    6. Every company wants everything customized...Quite a problem if they do not have control!
    FireThorn
  • Experiencing the upside of this on a daily basis

    Great article, Phil. I run an interactive marketing agency, and we've seen the positive side of the cloud. The ability to bring in great talent from around the world, at very short notice when needed. I've found the single biggest influencer for working with someone is 1. language, 2. time zone. After that, it's down to the usual issue of skill, personality, etc.
    doug@...
  • RE: Go cloud, young man

    Hey Phil, This piece raises lots of interesting issues as you can see from all the Talkback entries. Have you ever covered Crowdsourcing as a service and what's going on there? I believe Amazon Mechanical Turk may have been the first to raise attention to this concept and now there are a number of companies bringing some very interesting business models and SaaS apps to bear.

    Companies like Dolores Labs, eLance, 99designs, and others are bringing a new level of sophistication and enterprise capabilities to serve business markets.

    This could be among the next "big" things in SaaS, on the Internet.

    Look forward to seeing your take one of these days.
    stingray1
  • I partially agree, but...

    There are a few issues with this.

    First and formost, there are so many WORK FROM HOME! scams that unless legitimate businesses advertise these telecommuting opportunities very well, people won't know what's real and what isn't.

    Second, sometimes it's just a whole lot easier to have a coworker on the side of you helping out than through a wire, so unless you allow access to your computer all the time, this can be an issue

    Third, you will be completely removint the person-to-person physical interaction, turning everyone into hermits. The flip side is that more people go out to feed their social appetite which will in turn increase other businesses, but the socially awrkward or shy will now have more reason to stay in, it would be accepted socially as the norm.
    KBot
  • RE: Go cloud, young man

    Let's be honest the "cloud" has been out there for a long time. Virtual servers with the ability to scale and deploy quickly has been available for many years. New services allowing the use of these virtual servers on a pay by the drink usage and all managed/provisioned through and easy to use gui has also been available. There are some new advances in the ability to utilize "cloud" servers with the addition of stronger security capabilities and other great advances. The OpSource Cloud offering is really tailored at providing ease of use with the type of security, performance and control that you don't really find in other cloud offerings...at least not without a lot of work to setup. check it out (www.opsourcecloud.net use promo code dmc01 for 20% off first month).
    TechMac87