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Modelling the Cloud

Cloud computingIf you use an online email provider, work together on an internet-based document or save your music collection in a virtual folder, you are already using cloud computing. Organisations too are increasing their use of online software and storage in a more comprehensive way, changing the whole nature of work.

The LSE report Modelling the Cloud|, commissioned by Microsoft via LSE Enterprise, has found that the development of cloud computing will promote economic growth, increase productivity and shift the type of jobs and skills required by businesses.

The study, by Jonathan Liebenau, Patrik Karrberg, Alexander Grous and Daniel Castro, looked at the projected economic impact of cloud computing on the aerospace and smartphone services industries in the UK, USA, Germany and Italy from 2010-2014. Unsurprisingly, the cloud has a much greater effect on the fast-growing and web-centred smartphone services industry than traditional high tech manufacturing. 

The study found that investing in cloud computing contributes to growth and job creation in both the fast-growing, hi-tech smartphone services industry as well as the longstanding and slow-growth aerospace sector. In addition, it is directly creating employment through the construction, staffing and supply of data centres, which will host the cloud. Using cloud computing enables businesses of all sizes to be more productive by freeing managerial staff and skilled employees to concentrate on more profitable areas of work.

It also showed that there is little risk of unemployment from investing in the cloud, as companies are more likely to move and re-train current staff, and hire new staff with the skills to use virtual data-handling systems.

Of the countries analysed in the study, the US is leading the way in terms of cloud job creation. US cloud-related jobs in the smartphone sector are set to grow to 54,500 in 2014. This is compared to a projected 4,040 equivalent jobs in the UK. This can be attributed, in part, to lower electricity costs and less restrictive labour regulation in the US, compared to Europe.

But there is little standing in the way of Europe catching up with the US.European policy makers need to consider the provision of improved education and re-training in 'eSkills'; energy pricing and ensuring that data transfer policies, such as privacy rights protection, do not impede the development of cloud services.

'Cloud computing and the explosion in access to technology is impacting the character of work across industries, generating new skills demands, employment and growth opportunities,' says John Vassallo, Vice President EU Affairs at Microsoft. 

'LSE's study underscores these phenomena using rigorous economic analysis that forecasts growth as a result of the transition to cloud technologies in two major industrial sectors - aerospace and smart phones. The findings highlight that Europe has real opportunity to capture the Cloud's potential, with particular benefit to SME's as well as new business creation through emerging Cloud services.'

Read the report|