A Brighter Jobs Forecast from the Cloud

Imagine the headlines celebrating Detroit’s comeback if automakers announced 12 to 15 new shifts in their assembly plants across Southeast Michigan by the end of 2015. In a much quieter, but equally impactful way, that’s the scale of job growth occurring right now in Metro Detroit as a result of companies’ adopting cloud computing.

A new study from Microsoft, conducted by the IDC research firm, has found that the cloud is generating new jobs in cities across the nation and around the globe-”jobs not necessarily in the IT department, but in every part of the enterprise. Certainly many businesses are familiar with the cost savings associated with shifting their technology to cloud-based “hosts” that serve up applications, data, storage and networks via the Internet. Instead of buying, maintaining, expanding and constantly upgrading servers, software and network devices in their own facility, businesses can rely on the cloud to handle these routine chores and pay for only the amount of time or space they use.

In fact, the Microsoft study estimates that, worldwide, 75 percent of IT spending is tied up with maintenance of computing systems and routine upgrades. The cloud frees up a large proportion of this budget to invest in IT innovation, allowing IT staff to devote their time to more productive projects that support innovation throughout the business-”and that’s where the generation of new jobs begins. As innovation lowers the costs of IT and business processes and provides tremendous economies of scale, businesses have more revenue available to invest in new products, new markets and new people.

According to the study, increased business revenue from IT innovation enabled by cloud computing could reach $1.1 trillion a year worldwide by 2015. Furthermore, it anticipates that the dollars businesses save from cloud services will have generated nearly 14 million jobs by the end of 2015.

In Metro Detroit, the study indicates that the cloud will have created more than 7,500 new jobs by the end of 2012, and the cumulative figure will rise to 12,500 new jobs by the end of 2015. As companies that embrace the cloud grow, they will hire more people in sales, finance, production, marketing and other units. These departments, in turn, become more innovative with support from the cloud and sustain the generation of new revenue, which further accelerates the cycle. The report from IDC researchers put it this way: “Cloud computing comes with unique economic leverage that means a little money spent up front leads to impressive returns down the line.”

The impact of cloud computing on job creation boosts all segments of the economy. For example, the study determined that the jobs will be split fairly evenly between small-to-midsized companies-”those with fewer than 500 employees-”and large enterprises. Although smaller businesses account for only a third of IT spending worldwide, IDC anticipates that they will adopt cloud services faster than larger companies, evening out the jobs benefits.

As for manufacturing, which still anchors the Detroit area’s economy, the Microsoft study indicated that small businesses around the world will be expanding their use of cloud services significantly, noting:

“The manufacturing sector, even in developed countries, has a high percentage of small businesses, and adoption of cloud-based technologies is a viable way to simplify software management, improve service levels, and reduce capital costs. Thus far, customer relationship management (CRM) and collaboration have been the most popular cloud-based services in this sector. Over time, application development services and storage services will grow as manufacturers deal with infrastructure costs related to the growing use of digital models and virtual product testing. Process manufacturing has a higher percentage of IT spending devoted to IT cloud services today than discrete manufacturing, but that difference will narrow by 2015.”

Cloud computing already has become an essential business process for companies of any size. The new study makes it evident that the cloud also is crucial to job growth in communities like Detroit, where employment is at the top of our agenda. In this regard, the cloud appears to be lighting the way toward a much brighter future in Southeast Michigan.

John Fikany is vice president and general manager of the Heartland Area for Microsoft Corp. and is based in Southfield, Mich. You can find more information on cloud computing at bit.ly/GFnJud.