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Disruption at the core: How the cloud will commoditize the upper middle-class

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A combination of the rise of software as a service and the increasingly complex analytics available to companies will commoditize an increasing number of white-collar jobs. In the first post on this topic, we examined how several upper middle-class jobs within ‘outer functions’ such as HR, sales, and marketing would be eliminated by the growth and adoption of cloud technologies. In this article, we assess how the cloud could automate roles within “core” functions such as such as product management, IT, and R&D. We also examine the overall effect this commoditization will have on middle management roles.

Transformation of product managers into design experts

A product manager’s primary responsibility is to interact with customers, and distill their requirements into a set of prioritized features for R&D to build out. A product manager is seen as the ultimate owner of the product roadmap, and consequently, sets the schedule of when important functionality should be built.

While product managers perform their functions for hardware and software products, many hardware products are commoditized due to efficient and automated manufacturing techniques. As more software moves to the cloud, the infrastructure components of these cloud applications are standardized with the only difference being the UI. Consequently, the only value a product manager can add in differentiating such products from its competition is in designing superior user interaction functionality. Look for more product managers to transition into UX-designer roles and use in-built analytics within cloud applications to generate heat maps that aid in their decision-making.

As for product management’s role as the ultimate owner of the roadmap, this is where R&D’s role itself changes to take on these additional responsibilities.

R&D becomes full-fledged product owners

Part of owning a product roadmap involves product management spending a lot of time in ensuring that developers commit to their schedules. However, cloud-based project management tools are making it incredibly easy for developers to manage schedules and deadlines themselves. In fact, some of these tools even include functionality that allows developers to start client projects and invite them into a collaborative discussion, sharing documents, files, mockups, and other content. In this manner, developers can do many of the customer-facing functions performed by product management in a more efficient manner.

But won’t interacting with customers leave less time for developers to do the actual coding? Not quite. Some of these project management tools include several code integration features that help developers be more efficient with their time.

As it stands, because of the highly specialized nature of R&D, and the depth of cognitive abilities needed, even vast advances in cloud functionality will not be able to automate the work of developers, scientists, engineers, and researchers.

IT moves “up the stack”

IT departments ensure that all technology deployed within an organization helps employees collaborate better, and that valuable data is protected. IT departments have several functions including custom application development, system administration, database provisioning, integration and middleware, security, and application deployment.

With the increasing adoption of cloud infrastructure-as-a-service offerings, IT System Administrators will need to move higher up the stack to add value to their employers. On the database side, relational databases will eventually give way to cloud-based databases. There lies a huge opportunity for database administrators to help with the migration of data from on-premise relational databases into the cloud, and also learn new skills with other competing database technologies such as NoSQL and Hadoop.

IT personnel involved in custom application development, security, middleware, and in deploying new cloud applications will have much broader roles, thanks to the plethora of new cloud offerings in their organizations, and will not have to worry about their jobs being commoditized.

Implications for the future – the elimination of middle management

With several upper middle-class roles at risk of being completely eliminated by cloud technologies, the very existence of the middle-management functions that oversee their work is also threatened. Recently, Virgin Media slashed 600 of its top and middle management positions, citing the need to be more “agile and efficient” in its business operations. Haier, the Chinese appliance-maker completely eliminated its middle management, and reorganized its individual contributors into self-managed teams, each responsible for their own profit and loss.

Employees, customers, and suppliers voted upon new ideas, and the sponsor of the winning idea became the leader of that project. The future of the cloud-empowered upper middle-class workforce will increasingly consist of highly qualified R&D personnel, designers, and product marketers working in self-managed teams. Their daily operations would receive direct visibility from executive management, and redefined roles within legal, IT, HR, and finance departments would provide support when needed.

With the flattening of management hierarchies, individual contributors will certainly face some chaos in the short term as competition intensifies for funding projects. However, this short-term chaos will eventually give way to long term stability. Future advancements in Big Data technologies will result in a metrics-oriented approach towards assessing the probability of success of any particular project. These deep data insights coupled with a democratic work culture that allows employees to vote on their choice of projects will automatically result in the best projects being funded, and individual contributors choosing which projects to participate in.

Ashwin Viswanath does product marketing at Informatica, within the cloud business unit. The opinions expressed in this article are his own and do not represent those of his current or past employers. You can follow Ashwin on Twitter at Ash__V.

12 Responses to “Disruption at the core: How the cloud will commoditize the upper middle-class”

  1. Bob Ewald

    It seems this article has mistaken product management for one component of the product lifecycle – product development. The role of product management extends well beyond collecting requirements: it includes interactions with sales, customers, customer support, marketing, and a deep understanding of industry trends and their implications. It begins with a concept and ends when a product is removed from the market. In between there are hundreds of decisions and thousands of interactions about that product that must be managed in light of the products role in the overall company portfolio and company priorities.

    In addition, this article makes a huge leap when stating that a combination of deep data insights and a democratic work culture will “automatically result in the best projects being funded.” While some projects are “no-brainers” most require champions. Not democratic masses, but leaders willing to make tough decisions and live with the consequences. Individuals are accountable, groups are not.

    • realist50

      Bob makes good points. The notion of eliminating all middle managers in favor of self-managed teams strikes me as naive non-sense. Fewer managers is not the same as no managers. For certain types of projects and companies, decisive choices simply have to be made in a quick

      As for Haier’s concept that “employees, customers, and suppliers voted upon new ideas, and the sponsor of the winning idea became the leader of that project”, that sounds a lot like the notion of making something that’s designed by a committee, which is not typically a compliment.

    • Ashwin V.

      Bob, if you click on that link about Haier’s, you’ll see that “If ambitious employees spot an opportunity, they are free to propose an idea for a new product or service. A vote, which can include not just employees but suppliers and customers, decides which project goes ahead. The winner also becomes the project’s leader.”

      Thus, there is accountability in this model. What’s more, because there are multiple competing project leaders, each will need to work hard to retain his team members. The model you suggest is more appropriate for extremely complex products with long lead times from concept to launch (e.g. a Boeing jet).

  2. Sharda Parthasarathy

    True. As access to data becomes commoditized (and it will & should eventually- thanks to big data technologies) the role of the commoditized IT team has to change. Learning new skill sets is always a challenge. There are companies that are transitioning technologically and training legacy teams simultaneously- making them ready for the next chapter of IT.

  3. “IT personnel involved in custom application development, … will not have to worry about their jobs being commoditized.”

    I suspect that this is incorrect. Not only has it already happened, due to outsourcing, but it is likely to accelerate in the near future, due to startups making traditional custom application development processes obsolete.

    For example, Appeos enables Enterprise clients to empower their business people to build complex applications themselves, without the normal need for developers, etc. Not only does this save costs, but it is vastly more efficient, so time to market is greatly reduced.

    I’m not claiming that all developer jobs are in jeopardy, but for any company that relies on bespoke line of business applications, an attractive and compelling alternative will soon be available.

    • Ashwin V.

      Outsourcing is a symptom of currency differences between countries – it doesn’t mean that the jobs disappeared – they were simply moved from a high cost area to a low cost area. If all countries had a universal currency, then outsourcing wouldn’t even happen.

      • “If all countries had a universal currency, then outsourcing wouldn’t even happen.”

        You are correct to say that the jobs didn’t disappear, rather they moved from high cost to low cost area. However, outsourcing is nothing to do with currencies or exchange rates, as you suggest. It is all about saving costs, especially fixed costs of full-time employees.

        What I’m talking about will make the jobs disappear though, as businesses will learn that they can build what they need themselves and start using it, quicker than they document their requirements for a team of developers, whether they be on-site or outsourced.

  4. MArc Weiss

    Wrong conclusion. By commoditizing IT, IT consumers are eliminating a Tax levied on them by IBM, Microsoft, Oracle, etc This will lead to more middle class jobs as IT consumers can invest in new apps, new products, new services instead of paying maintenance fees of legacy architectures just to keep them running. Since when does increased productivity lead to less prosperity?

    • That’s pretty much what I was talking about, in that new, vastly more efficient ways of working will empower businesses to do things that just weren’t possible previously.

      How many business units must have a need for a bespoke application, but can’t get budget, or can’t get it built in time to be effective, in particular as their budget is swallowed up by vast, creaking projects that cost millions, go severely over budget, arrive late, then disappoint, only to be scrapped and the whole process starts again. This is a common issue I have seen over 30 years as a consultant to numerous enterprise clients.

    • Ashwin V.

      The IT “consumers” are essentially the various different lines of businesses who seek IT services to keep their business operations running. With the gradual replacement of legacy on-premise servers and databases, you won’t need as many sys admins and database admins to run your datacenter. Instead, you can achieve massive scale across the enterprise with IaaS and cloud database offerings without linearly scaling your workforce.