Bojana wrote an article not long ago discussing whether or not cloud computing is eliminating jobs. She concluded, rightly so, that cloud computing is transforming IT positions instead of actually eliminating them. I’d like to ground her conclusions with a real-life case study of cloud ERP (specifically, Software as a Service, or SaaS, ERP)
First, though, a brief look at ERP (Enterprise Resource Planning) so that we’re all on the same page.
Cloud ERP: A Definition
ERP is a specific type of software used by businesses, usually manufacturing businesses. ERP allows the business to operate from one database, instead of each department (accounting, shipping, customer service) having their own. This way customer service can access shipping information in case a customer calls in and wants to know when their product was shipped (for example).
For years the ERP system was hosted on-site. The company using the ERP software launched, maintained and updated the software itself – which required a medium to large IT staff. In today’s world, though, many third-party companies offer ERP solutions in the form of SaaS. This allows a manufacturing company to outsource not just the database but the database maintenance and upgrades as well. Consequently, companies are cutting their IT staff.
For example, an article by CIO reports that recruitment firm Hudson cut its IT staff from 50 to 15 between 2009 and 2012. One of the reasons the company gives for its shrinking IT staff is the company’s move to the cloud. The United State Bureau of Labor Statistics (BLS), however, shows that this doesn’t mean jobs are disappearing.
Job Growth Statistics
The BLS expects an 18 percent job growth for computer and information system managers between 2010 and 2020; a 22 percent job growth for information security analysts, web developers and computer network architects between 2010 and 2020; and a 28 percent job growth for network and computer systems administrators between 2010 and 2020. If these professionals aren’t staying at their current organizations, where are they going?
Third party companies. Specifically Managed Service Providers and, more specific still, SaaS companies. Gartner projects that the SaaS industry will reach $14.5 billion in revenue by the end of 2012, representing a 17.9 percent increase from 2011.
Obviously, a growing SaaS industry means more Managed Service Providers, which requires more information technology professionals to fill those positions.
How Does This Relate to ERP?
Cloud ERP is one of the many SaaS forms out there. Backbone magazine reports that cloud ERP went from a 6 percent market share of the ERP industry to 16 percent just in the year 2011 alone. Web-based ERP company QAD reports that 39 percent of companies were willing to deploy cloud ERP in 2010, as opposed to just 23 percent in 2009. This number continues to grow every year. And as companies implement cloud ERP, they cut their staff because they no longer need to manage ERP on-site. These IT professionals, then, are shifting to companies that offer cloud ERP as a SaaS.
Clearly Bojana is right. SaaS and the cloud aren’t eliminating jobs; they’re simply shifting to a different model.
About Guest Author: Vanessa James is a business technology consultant specializing in database management. She has a passion for sharing her knowledge with individuals and companies alike. She currently writes for web based ERP company, qad.com.