What cloud computing means for companies

Technology has been accused of making many a job disappear, on the production line or in the accounting office. And it is not done yet.

A company often resembles its communication and technology system. In the era of cloud computing that the tech industry is moving into, that seems to suggest that companies will have smaller departments, quickly analysing data and endlessly experimenting.

That means change is on the horizon at the many companies that will adopt cloud computing over the next few years. Middle managers: This is not good news for you.

“Technology shapes styles of work,” said Professor Ed Lazowska, who holds a chair in computer science and engineering at the University of Washington. “One critical advantage of the cloud is that sharing becomes dramatically easier.” He foresees more collaboration and outsourcing of work, and more specialisation into whatever a worker, team or company does well.

A corporate organisational chart from 100 years ago looks like a factory, with little workers at the base like parts, assembled by managers into units that interact with or fit into larger parts. Layers of white-collar jobs died in the “corporate re-engineering” boom 20 years ago, after email and networking replaced middle managers carrying plans among departments. Outsourcing and offshoring happened once the dot-com bubble put lots of fibre-optic cable under the ocean.

In cloud computing, computer servers are pooled through management software. Power is dialled up or down depending on the workload, and the system is continually reconfigured, based on data about the next workload. To see how this changes a workplace, look at the structure of the biggest cloud companies around.

“You learn to harness feedback,” said Mr David Campbell, the head of engineering at Microsoft Azure, the name of Microsoft’s cloud. Azure makes engineering changes by moving parts of its customers’ traffic into the new stuff, seeing if that works as predicted and then building up. Checking expectations and hypotheses in real time, Mr Campbell said, “takes hours, instead of months and years in the legacy world”.

During the previous quarter, Azure delivered a new feature or service every three days, he said.

“Over this quarter, it feels like it will be every two days,” Mr Campbell said. That’s not unthinkable; two weeks ago, Amazon announced that so far in 2014, its cloud division had created 60 per cent more new products than it did in all of 2013.

Google also works in a data-fixated culture. Every meeting seems to be full of young engineers scrambling to amass the most compelling facts, trying to create something else they can watch customers use, then build on that. The big loser in this model may be the managers in charge of scheduling things, since it is all happening too fast.

It is not clear that any of the big companies have nailed this new style of work. Even so, they all say that their non-tech customers are urging them to determine how they can break into smaller customer-focused teams, loosely collaborating and intent on moving information faster. The survivors will be good at collaboration, good at statistics and good at figuring out what the company needs to build next.