How Will Cloud Computing Change the Way we Work? Work Anywhere, Anytime

More and more companies are shifting to cloud computing, where services such as information storage, computing capacity, and software applications do not depend on in-house data centres. With cloud computing, companies can outsource data storage and other services to cloud providers. ZEW researcher Dr. Jörg Ohnemus talks about the influence of cloud computing on business and work.

Dr. Jörg Ohnemus is a member of ZEW’s research department of Information and Communication Technologies. His doctoral dissertation (Humboldt-Universität zu Berlin) analysed the outsourcing of information technology and IT-intensive business processes and its effects on firm success. His research concentrates on the adoption and effects of (new) information and communication technologies on firm productivity.

Why is it worthwhile for companies to use cloud computing for IT applications instead of keeping them on site?

First and foremost, cloud computing can save companies money. Especially for services and processes needed only occasionally investments in in-house IT systems that have to match peak-demands rarely pay off. By deploying services “in the cloud”, companies can forgo expensive investments. IT costs thus become variable depending on usage. Cloud computing also increases company flexibility, as services can be quickly adapted to one’s needs, regardless of scale.

Which businesses profit most from cloud computing services?

Small and mid-sized firms probably profit most from cloud computing, since they do not have to buy, for example, expensive and only temporarily needed software licences. Cloud Computing allows them to use those services flexible on request and in the required scope. Furthermore, startups and young companies that have not yet established their own IT infrastructure benefit from cloud computing services.

What are the risks faced by the users of external IT services?

When you elect to use cloud services, you become of course to some extent dependent on your cloud service providers, which undercuts some of your direct control. This is not unique to cloud computing, however; it happens every time a service is outsourced. The important thing is that the companies agree on the exact requirements and performance qualities of cloud services with their future cloud service provider. Yet despite service level agreements like these, technical problems with the provider can lead to interruptions in services. There have already been some cases where this has happened, triggering heated discussions about the reliability of cloud computing.

What challenges does cloud computing still face?

Many companies are very reluctant to use public cloud computing due to legal uncertainties. In Germany, for instance, data privacy laws require that companies maintain strict control over client data at all times. This is not always guaranteed when client data are stored on a public cloud server, especially when the data centre is located in the United States. To date, German companies have been able to store client data within Europe without encountering legal trouble. This has led some cloud service providers to create special data centres in Europe, although most of the cloud infrastructure is located in North America.

At least in part, cloud services free companies from having to invest in hardware, software, and in-house IT support. Will this lead to large IT department layoffs?

This is unlikely. Of course, some IT jobs will be lost, but new personnel will be needed for other positions due to the increasing digitalization of overall business operations. Mid- and large-size companies are currently trending toward hybrid cloud solutions – a mixture of internal cloud services which further require in-house IT personnel and public cloud applications. Furthermore, service providers have a large and growing need for IT specialists.

Will cloud computing turn our working environment upside down?

Cloud computing will not totally change our working environment overnight. The requirements placed on cloud services by companies are too individual for that. Together with the mobile internet trend, however, cloud computing will eventually allow us to work anywhere in the world at any time. This will certainly affect how we organize our business processes and how we manage our working and free time in the future.