friday-rant
Web Services

Rant: The on-demand economy isn't so pretty close up

The on-demand economy is in many ways A Good Thing. The premise is certainly, and at least cosmetically, attractive. On the buy side, you pay for what you want, when you want it on a one-off or subscription basis – pay per sip, pay as you go… you know the drill by now, I’m sure. On the sell side you have a global market for your goods and services – “who wants some of me and what I’ve got?”

Whether it’s the B2C world of rented cars, freelance assistance and borrowing a dog for the day, or the B2B world of cloud computing, adherents of the on-demand world contrast it with the ‘old economy’ of hefty upfront purchasing, annual ‘taxes’ (think enterprise software), squandered spending on products you end up not using and general spikiness.

That’s all true up to a point. For consumers, buying music, books, software, movies and so on has always been a lossy business for the buyer. Formats change so your Bryan Adams vinyl record no longer gets played. Your taste improves so your Bryan Adams CD doesn’t get played. At least with a stream it’s either cheap or free, if you have a Bryan Adams moment, when a virtual madman on your shoulder demands to hear ‘Run to you’.

It’s certainly the case in IT that it’s much cheaper at first to use cloud services. And it’s easier to spin up new projects than was the case when you had to buy datacentre hardware and software.

And if you’re a seller it’s certainly possible to make your stuff and time available to everyone who might be interested.

Criticisms of the on-demand economy are rare indeed, perhaps because sceptics fear being branded as Luddites or medievalists. But the idea that the on-demand approach is all upside and gravy is rubbish.

Let’s look at a few of the demerits.

Cost. It’s true that it’s easy to join an on-demand service and initially the cost will be low. But whether it’s fresh vegetable deliveries or customer relationship management software, the costs escalate over time and as you add features, volume or services.

The Flattening Effect. Having a transparent market sounds great but it has a crushing effect on profitability and price elasticity. If you’re a graphic artist for hire on a freelance site it’s difficult to charge a premium or get anywhere down to the tariff of a person living in a country where cost of living is low. Too often, it’s the brokers who make the money in the freelance, on-demand economy while those offering their services are relegated to something approaching itinerant status.

Quality. Some on-demand services offer superb quality. Others don’t. Take music where streaming seems to have damaged human hearing to the point where that thin sound that’s all treble and no bass has become deemed acceptable.

Integration. A common feature of on-demand services is that they create siloes. In the consumer sector Amazon’s move into groceries is interesting because for once we will have one company that can satisfy most of our shopping. (This, by the way, comes with a risk of lock-in but let that pass for now.) In business IT most companies are only starting out on integrating their various cloud assets.

Wastage. In IT, on-demand cloud services scale up and down with user demand and make it easy to add and subtract users from the system, wherever they are. But in the consumer world services are often kept on for the sake of it, hence the unwanted fancy carrots mouldering in your fridge.

Like most promising developments, the on-demand society is attractive in lots of ways but looks less so when examined close-up.

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Torquemada

Torquemada, not his real name, has been casting a jaundiced eye on the technology world since the Sinclair C5 was causing as much excitement as the driverless car today, a 64K RAM pack could turbocharge performance, and Alan Sugar was the equivalent of Elon Musk.

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