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When a burgeoning cloud means a skills drought

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As we enter the middle of the 2010 decade, new IT projects are increasingly being designed for the public cloud instead of local IT systems.

Gartner figures that by the end of 2016 we'll be through the looking glass, with more money spent on "cloud" applications and services than traditional delivery mechanisms. Soon thereafter, it seems, "cloud" applications are set to become "public cloud" applications and down the rabbit hole we go.

New businesses and greenfield departments within existing organisations are the obvious candidates for such a shift. New ventures are already risky enough; it's understandable that folks in charge wouldn't want to invest in the upfront capital costs of owning your own equipment.

From a risk management perspective – especially early on - renting your IT as you go makes a sort of sense, even if the total cost if well above that of owning the gear yourself. How many businesses start off by buying the building they'll use as an office outright? It's never quite so straightforward.

Think of the children

In our brave new cloudy world, the rental economy for private housing is a good educational tool. It's a choice we can all relate to, and the repercussions of that choice are of similar magnitude, especially when "boom" turns into "bust."

Consider the following: the Joint Center for Housing Studies at the University of Harvard has released a study on America's post-recession housing market that has some alarming results.

Banks won't hand out mortgages if the Total Debt Servicing (TDS) ratio (your total debt obligations including housing costs, loans, lines of credit, car payments, and credit card bills) is more than 40 per cent of your gross monthly income. They far prefer that it be 30 per cent or less.

Renting? Many of you are unlikely to ever own your own home...

The Harvard study found that more than half of all American renters were spending 30 per cent of income for housing alone, and a quarter of all American renters were spending over 50 per cent! Suffice it to say that with all the other monthly subscriptions, fees and so forth that people need just to participate in modern society today they don't get much of a chance to save up for a down payment.

For many, once you're in the rental economy, you aren't getting back out.

In time, an entire generation of IT practitioners will have been raised to think this is perfectly normal. Think for a moment about those poor people just coming out of post-secondary training today. They've never known a world where they really own anything.

They've been dubbed "generation jobless". The Cheapest Generation; an entire generation of individuals whom we've thoroughly indoctrinated into rental culture. Ownership of big ticket items that were considered rites of passage to previous generations – cars, houses, etc – can actually bear a social stigma. Ownership has attracted a distinct "uncoolness" that is tied to this younger generation's radically different economic and even ecological views.

Even those few willing to be counterculture rebels amongst their own age group and cling to the past by trying to obtain – and retain – major life assets find that they just can't afford them. Instead, these youth are increasingly trapped in a credit-card fueled debt spiral that may have no exit save bankruptcy.

But… The basic economics of ownership haven't changed with time. It still makes just as much sense to own vehicles, houses, and even your own IT infrastructure today as it did for our parents, and their parents before them.

For houses the economics are pretty simple: you'll spend more renting in a lifetime than it would take to pay a mortgage, and when retirement comes around the fellow with the paid off mortgage has a house to live in rent-free. The lifelong renter will continue to spend the majority of his retirement income on rent for the rest of his life.

You don't really get to make the "retirement" argument with relation to IT. We will all of us see many generations of gear come and go in our lives, so why buy?

The simple answer is that when the economy goes titsup.com, those folks that own their IT won't suddenly find themselves without the equipment necessary to run their business.

For those folks who rent their IT, as soon as there's a hiccup in revenue, they're screwed. If you can't pay the bills, "your" IT no longer works. If "your" IT no longer works, you can't serve your customers. If you can't serve your customers you stop getting income. You then have two choices: bust out the credit card and pray you don't end up in a corporate debt spiral; or go out of business.

Pray that you pay for only what you need

The younger, hipper crew around these parts will point to the "burstable" nature of the cloud as the "obvious" flaw in my argument. "You only pay for what you need" will be the triumphant retort of cloud evangelists. Clearly, I don't understand this new economy. I should make sure that I put my teeth back in before heading out to the porch to yell at the dang kids on my lawn.

If you own your own IT then when you need less you can switch stuff off. If you own your own IT then when you need more you need to go make an expensive capital acquisition and you will inevitably buy more than you need to get the job done because modern IT comes with a single granularity: "overkill".

If you use the public cloud then you spin up only what you need. When you don't need it you simply destroy the cloudy instances and life is good. This Trevor guy hasn't a clue what he's prattling on about and we should all go do something more interesting like code yet another mobile app knockoff and dream of riches.

Well, those uppity youngsters are both right and wrong all at once. Public cloud computing seems to engage in a little bit of Schrödinger's economics. You pay for what you need, except for those cases where you're locked into contracts, or you pay extra per month not to be in a contract. Adding users and capacity scales pretty linearly – except when it doesn't – but scaling back is rarely so easy.

Terms of service can change at any time. What they are today is not necessarily what they'll be when the public cloud vendor sees half their revenue evaporate overnight as all the businesses using it respond to an economic downturn by cutting back on commit. How relevant a dip in income that forced you to go into debt is to the grand scheme of things depends on a number of factors ranging from the length of the downturn to the interest rate at the time.

In short, the cloud is both more flexible than owning your own IT and it isn't, all at once. It exists in a superposition of states whose true impact upon your business can't be judged until the next time the economy collapses.

Beginner's guide to SSL certificates

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