If you go to a business conference these days, there seems to be no problem that can’t be solved by “the Cloud.”
The Cloud is so trendy that it begets second-order cliches describing it as a “paradigm shift” or the “new normal.” One even sees jaded coders wearing T-shirts that say, “Blah blah Cloud blah.”
But don’t just dismiss the concept because it is over-hyped. You don’t want to end up like Ken Olsen. He was the president of Digital Equipment Corporation in 1977 and became famous for reacting to the personal-computer trend by saying, “There is no reason anyone would want a computer in their home.”
The Cloud refers to the practice of companies getting their computer services from remote providers over the Internet. In the old days, back when Game of Thrones was just a book, if you wanted to start an Internet company you needed lots of expensive stuff. You needed servers, secure cooled rooms to put them in, backup power plants, copies of everything in a disaster-proof location and armies of expensive techies to keep everything going.
Even if you were just a regular company wanting to have the latest business software to make your business more productive, you needed your own servers to operate all that expensive software you had to keep buying every time Silicon Valley released a new version.
The Cloud works differently. Basically, you can rent not just computer time but also the software you need for a huge range of business applications. Instead of buying accounting software and some computer hardware, you just sign up with a Cloud-based accounting website and use your web browser to input, manipulate and extract the information you need. You can host websites, run your human resources department, manage the productivity of your sales force, run your purchasing department and a thousand other things.
Many Yukoners did their taxes on the Cloud this year. Instead of buying a disk and installing it on their computer, they just logged onto a tax return website and typed their info into the screen.
Some people are uncomfortable with so much information residing in the Cloud, even if the Cloud companies spend big bucks keeping your information safe. There is a risk a Russian teen hacker could get your tax information.
On the other hand, the old system had its risks too. How many people have their tax file saved on a computer in their kitchen with a password like “password?”
It sort of depends if you’re more worried about teenage Russian hackers or the people you live with.
One reason the Cloud is a big deal is that it totally changes the economies of scale in technology. Now, even quite small companies can buy reasonably priced access to the latest software platforms. If you come up with a brilliant Internet idea, you don’t need to raise hundreds of millions of dollars from sharp-elbowed venture capitalists to build up the back office you need in order to grow fast. Instead, you can just rent slivers of capacity on giant servers located who-knows-where, and rent more or less as your business grows.
This is great for Yukon businesses. Our market is small, so big lumpy investments in technology can be hard to afford. I recall seeing Taylor Chevrolet’s massive new computer when it arrived in the 1970s, taking up half a room upstairs. You had to sell a lot of Chevy Novas to pay for that kind of thing. Had the Cloud existed then, I’m sure everyone would have been happy to use it.
The Cloud also helps Yukon technology startups. There aren’t a lot of deep-pocketed venture investors in the Yukon, so anything that reduces the need for upfront investment while a business scales up is welcome. The Cloud servers are close to hundreds of millions of customers, including us, so if you come up with a global idea there’s no reason you couldn’t run it from the Yukon.
It also lets you escape from our expensive and unreliable Internet service. Most of the data from your customers would be going from them right to the Cloud servers and would never need to come up the highway and burn through your bandwidth limits. Furthermore, when Fort Nelson backhoe operators get frisky and cut our fibre optic cable, your servers in California or wherever will keep functioning while you take an unplanned day off.
For example, when my new Aurore of the Yukon podcast goes live next month, it will be hosted on a server in the Cloud, not in my basement (and not using my bandwidth – the kids need that for Netflix).
The Cloud is not universally good news, however. Those Internet outages mean you are cut off from core business systems. You have to hope Fort Nelson’s backhoe operators are watching the hockey game if you’ve waited to the last minute to file your taxes.
The Cloud also means that local demand for some business services may go down. If local businesses are using Cloud-based accounting platforms, they may need less computer maintenance and basic accounting services.
Interestingly, they will continue to need the high-value-add advice they currently get from local accounting experts. And local accounting firms may even have an opportunity to generate new business by advising clients on how to use Cloud-based accounting innovations most effectively.
And the Cloud exposes new Internet businesses to even more direct competition. You might have a great business idea that’s easy to scale up with the Cloud. But the people in Prince George and Tallahassee that have the same idea will find it just as easy to put their business online.
The Cloud is here to stay. Looks like the people with the “blah blah Cloud blah” shirts will be busy.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won this year’s Ma Murray award for best columnist. You can follow him on Channel 9’s “Yukonomist” show.