Friday, February 22, 2013

Why IT Will Outsource Itself In 20 years

The Golden Rule (of IT):  If you can't rule, you might as well have the gold...

When you read the following post, understand that it is an opinion piece, not a scientific study!


As a CIO I have read numerous publications about my position.  Some deal with how to be successful, others focus on how to get a "seat at the table".  The latter point refers to how CIOs who are part of the senior leadership teams of companies and/or report to the CEO will get more say in the strategic direction and thus be seen as more powerful within the corporate structure.  Having been a CIO and direct report to multiple CEOs I cannot dispute that there are rewards to be had under that structure.  Typically the compensation is higher and the company as a whole tends to be more deferential to me as a person.  But authority is a different thing altogether.  When is the last time in your company that a CIO overruled another C-Level Officer? 

To understand what I am saying above it is important to look at how the "C-Level" roles came to be.  If you looked at the management structures of companies, dating from the dawn of time through about 1980, what you'd find is that companies were run by people holding the title of "President" or something equivalent.  Of course there were other positions of power below that level, typically called by titles like "Boss", "General Manager", and eventually a plain "Vice President" moniker.  When positions started to specialize more under the true corporate structure, we started to see roles like "CFO" and "COO", and "General Counsel" emerge.  The purpose of these titles emerging was most likely to give more status and clarification to certain specialized roles.  The CFO was the top person responsible for the finances of the organization.  The COO was in total charge of the operations, bottom to top.  All of these roles were developed while companies were still operating with pencil and paper.

In the middle 1990s through 2000 (remember Y2K?) companies quickly began to rely on technology.  Those that embraced computers and productivity software were getting a major competitive boost over those that didn't.  This was the advent first of the title of "VP - Information Systems/Technology" and when that was no longer sufficed in larger companies, the role of CIO emerged.  The problem is that the CIO function came late to the party by about 25-35 years.  Couple that with the fact that the industrial revolution made it easy for everyone to understand the roles of CEO/CFO/COO, very few could understand what a CIO was actually supposed to do.  With so much new technology emerging in such a short time, the type of person required in that role was often confused by companies.  While today the candidates being sought are rounded out with both business and technology backgrounds, in the beginning they were almost pure "tekkies".  Put another way, they were people who we would today most likely refer to as "nerds", incapable of building relationships or understanding business strategy.  (I know some people who still have their pocket protectors hidden away somewhere in their houses).

The dotcom boom helped advance the role of CIO into many companies but it did almost nothing to give it prestige equal to other C-level roles.  Fast forward to modern times, CIOs have purviews of their companies that are typically found only in the CEO roles.  Yet they are typically not reporting to the CEO, are not involved in the strategic decisions of their companies, and receive some of the lowest compensation packages.  Their tenures are also the shortest - a five year stint in the role is considered long by many.

What is the point of taking so long to get to the heart of the article?

There are symptoms that IT is not a popular field for younger workers, especially Generation Y.  After all, why pick a field that is typically less respected than others where the end of the career path does not usually end with a seat at the table?  There are a few reasons some might pick IT as a career choice, one being the exceptionally low level of unemployment.  But with competition from third world countries, outsourcing, and a career path that tops out lower than other disciplines, what is the allure?

If you have been in IT, basically any role, for over five years there is a curious awareness that develops.  IT organizations are always employing contractors.  In my experience and that of many others, it is very uncommon to see a per/hour rate of less than $75 and more often it is common to see that rate go between $125-$200/hour.  Working for the Big Four (Deloitte, Accenture, PWC, KPMG) or equivalent firms (IBM, McKinsey) these rates can go in the three and four hundred dollar per hour range.  Keep in mind that there is ALWAYS contract work because companies are willing to pay those rates because the skills the contractors bring are critical and necessary.

Now say that you are an IT employee making between $70,000 and $140,000 per year, benefits included.  Which path might you take if you could do the same work inside a company for that salary or work as a consultant for, say, $125 per hour.  As a consultant you would not have the same type of structure or "stability" as an internal employee, but on a year of 2080 work hours you would be making 2x to 3x more!  As a CIO, if you were making $200,000/year (a decent salary) and you could work for $200/hr or more, what would you do?  One could argue that you chase the money, which might be what's leading to such short CIO tenures.  Alternatively, you could work towards greater responsibility and thus more reward within the company structure.  It's harder to make a determination for those at the CIO level versus those below.

There is no immediate answer that would cover the choices that everyone would make.  But consider that pensions are a thing of the past as is job security and 401Ks are really a bad investment these days. I personally see more and more people opting to become consultants.  There may not be a change overnight or even in the next 5-10 years.  However, with globalization and the ability to work all over the world, the 30+ year old crowd is guaranteed to have this subject on their minds.  Those between ages 20-30 are opting for consulting or companies like Rackspace, Google, Yahoo, Microsoft, Amazon, etc that are corporations but focused on the business of IT itself. 

The Brick-and-Mortar companies may be looking at IT facilitators in the future rather than IT departments.  The internal IT functions of the companies of the future may be more about coordinating the work of external entities than actually performing that work on their own.

Given that the IT of today is still not considered strategic - look at the websites of many mid-sized companies and see if you can locate a CIO - the move of technology workers may be that of an inexorable shift towards working from the outside...

Thursday, February 14, 2013

When Gen X (+) GenY = ERROR

Many of us go to our jobs everyday, nod to our co-workers, and get to it.  Very few of us stop to think about the people around us in terms of what I refer to as the "Picasso View".  It makes sense that each of us is a product of the sum of our experiences.  If each of us were constructed of the exact same DNA, essentially clones of each other, we would still all be unique individuals.  It's what we see and do that defines us, not our flesh and blood.

I like the term Picasso View because of the way the artist himself created paintings.  Take a look at the one titled "Guernica" at this link: http://www.pablopicasso.org/guernica.jsp    If you look at it you'll probably see what I see - a number of (seemingly) independent images that make up the whole.  People are just like that.

Why is that important and how does that relate to IT?

Currently within almost every workspace there are three generations co-existing: Baby Boomers, Generation X, and Generation Y.  Here is quick rundown on the dates associated with each**:
  • Baby Boomers; 1946-1964
  • Generation X (the Busters); 1965-1983
  • Generation Y (the Millennials); 1984-2002
If you read the source descriptions on each one you'll see that the whole grouping of people, not just the individuals, had much different cultural experiences than the others.

The Baby Boomers were taught to question authority and to break down the traditions of their parents, who were born between 1910-1945 (sometimes called "The Greatest Generation).  At the same time, Boomers were taught that if they worked hard and fit in, they would live the good life, which included a nice retirement.  Generation X had a much different experience.  They were/are the first generation of "latch-key" kids - a term given to a household with either one parent or both parents working.  X'ers by nature are a suspicious lot not given to much respect for authority, sensitivity, or a sense of belonging.  To quote the preeminent sociologist Tammy Erickson, "Generation X workers begin looking for work the day they start their new job." 

This now brings us to Generation Y - the Millennials.  This special group is a product of both the previous generations - Boomers AND X'ers.  Not only are Gen Y'ers the first group to inherit the era modern computers, Google, Facebook, and instant communication, they are also what I refer to "Mulligan" or "Do-Over Vicarians".  Neither the late Boomers or early-middle X'ers were satisfied with the lack of personal relationships that their parents had with them.  It was too formal, rigid, and impersonal.  So along came Dr. (Benjamin) Spock and others who paved the way for the self-esteem revolution.  Gen Y'ers have always been taught that they are all special, everybody is a winner, and that their feelings should be of paramount importance to others.

Remember back to the definition of Generation X?

Baby Boomers tend to interact the best with Gen Y'ers because they paved the road for them to be the way they are.  In many cases with the poor economy, you may even find Gen Y'ers still living with their Boomer parents.  However, Gen X'ers have inexorably been moving into the key management of companies for a little over 10 years now.  As a rule, Gen X'ers are skeptical and self-reliant, uncaring about whether someone is looking out for their feelings.  Gen Y'ers are just the opposite.  They are very clannish and need constant reassurance that they are special and that what they think matters.

We are just now starting to see the clash between Gen X and Gen Y and in many cases it's not pretty.  By comparative size, Generation X is a smaller population of people than Gen Y and the Boomers, although, retiring, still remain a fairly large fraction of workforces.  I've seen many clashes between Gen X and Gen Y employees over the past few years, mostly X'ers in positions of authority over Y's.

What is the consequences for both groups and the companies they serve?  While it's still hard to quantify, for the next 15 years companies may start to (a) experience greater turnover than ever before and/or (b) be unable to attract younger workers.  From personal experience I have seen the amount of 20-something employees willing to work in IT shrink year over year.

What's to be done?  For now, Gen X'ers must learn to understand that Y'ers need much more support and encouragement than other employees.  To an extent, X'ers must learn to "babysit/parent" in the workplace as much as manage.  Gen Y's on the other hand must be willing to accept that learning requires failure.  And also that failure can occur but that it does not invalidate their whole worth and value as a human being.

Can both Gen X & Y come to detente?  The next five years will answer that question.

**Source: http://askville.amazon.com/cut-birth-dates-generations-baby-boomers-gen-Gen-generation/AnswerViewer.do?requestId=9298486

Tuesday, February 5, 2013

E-Books: Cut out the Middleman

If many of you are like me, your habits on reading books have migrated away from paper to some mobile device.  There are all sorts - iPad, iPad Mini (cool), Nook, Kindle, etc.  While not "tactile", they are certainly more convenient than the older paper versions.  In a recent move from one location to another, I counted 50 boxes of books in my own personal collection.  Having all that knowledge on a 1/2 pound device is just so much more convenient.  Of course, there are exceptions such as my grandmother's yearbook from 1926 and a rare "Steamboat Mickey" book, but you get the point. 

One thing that has always bothered me are the limits imposed by the major content providers.  If the books I want are not on iBooks (Apple) or the Amazon site they are essentially not available.  I can't tell you how many times I've been frustrated because I couldn't download the books I wanted.  I also have no interest in the sites that steal the books and offer them on locations similar to the recently closed (and criminal) "Mega Upload" website.  Up until recently I did not know that there are other options which are completely different/separate from the two major providers.  In fact, there are many smaller/other sources that allow you to purchase and download otherwise non-purchasable books and then put them into your iBook or Kindle libraries.

So what to do?

The first and best step is to go directly to the publisher's website.  I happen to like science fiction so I go regularly to Baen Publishing (www.baenebooks.com).  There are similar sites for many publishers that offer sales and downloads of their libraries as well.  There are some cases where you will not be able to get the titles you'd like (sorry Wheel of Time fans) but you'll genuinely be surprised at what you can find.  Also, you will be quite surprised at how the sites "walk" you through the downloading process to get the books into your favorite format: iBooks, Kindle, Google Books, Open Docs, etc.

Since all of us are moving to the tablet world sooner or later, mostly sooner, it's important to know how many options are available to find the books we want.  Don't think for a minute that just because the major content providers don't have what you want, you're out of luck.  You just have to be a little more resourceful about where to look.

**As a side note, if you are an Apple owner (iPad), go check out iTunes U.  It will blow your mind to know how many prestigious colleges have posted whole course curriculums to this app.**

Friday, February 1, 2013

Blackberry RIMs out while Apple goes for the rebound

I am a reformed (retired?) basketball player.  In my younger days I would swoop and glide over the court.  Although I donated my right ACL to the University of Idaho, to this day I'd still be playing the game if I could.  But you didn't come here to read about my adventures with the roundball.  That being said, there is that story about how I dropped 41 points on....never mind.

Staying with basketball for just a moment, there is a term from the game called "Rimmed Out".  This happens when a shooter fires up a great shot that appears to go in for a score.  However, at the last minute the ball spins around inside the rim of the basket and comes flying back out.  In other words, the shooter is getting ready to head back down the court with 2 or 3 more points to their stats only to see a "make" turn into a "miss" at the last second.

Now that you have the analogy, let's take a look at the big event in technology this week.  RIM, the maker of the venerable Blackberry phone did four major things all at once.  To recap:
  • RIM changed its name permanently to Blackberry
  • Blackberry introduced its new phone, the Blackberry 10/Z10
  • Blackberry introduced a brand new operating system called "Flow"
  • Blackberry announced that they would be rolling out their own app store and has signed contracts with major content providers to make movies, games, and songs available in their new environment

Well, that's all well and good.  Or is it?  To answer that question we have to look at two of the biggest reasons why Blackberries still exist in the phone lexicon in this day and age.  First, people are and have always been extremely loyal to the physical, tactile keyboard.  Both Apple and Samsung (Android) phones have migrated to virtual keyboards.  To many Blackberry loyalists, nothing could beat the feeling of typing on actual keys.  From a personal note, I have watched more than one 45+ year old executive typing at least 70 words per minute on a Blackberry.  I kid you not.  The second reason people carried Blackberries so religiously was for their amazing battery life.  Unlike an iPhone or Android unit where both models have batteries that barely last a day, a person could take a Blackberry and throw it into a briefcase or backpack and come back 3-4 days later and still have at least a half charge remaining.

So what is new with the Blackberry 10?  To start, the tactile keyboard is gone only to be replaced by a virtualized one.  What??  The new Blackberry now looks suspiciously like an iPhone.  Upon testing, the Blackberry 10 is extremely fast.  At this time it has a 1.5 Ghz dual core processor.  Sounds pretty impressive but I never heard anyone complaining about the processing power of Blackberry before.  Given the speed, the battery life of the new Blackberry can now be measured in hours, not days.  THAT sounds surprisingly like the Android-based Samsung Galaxy 3.

Given the facts listed just above, it appears to this author that Blackberry has positioned itself to the anti-Apple, anti-Android iPhone/Galaxy.  Sounds like a losing strategy both to me and the folks around the office here who were hoping for something so much more.  Given the convergence of tablets and smartphones and the fact that Blackberry has nothing like that in the works, I would not be too sanguine on their prospects.  Investors sure aren't - before the Blackberry 10 announcement, RIM's stock was trading above $18/share.  In just four days it's back down to around $13/share.

On another note, Apple just announced both record sales numbers for iPhones and record profits for the company as a whole.  Why then did the Apple stock drop more than $100/share (!!!) directly afterwards?  There are surprising correlations, in my opinion, to Blackberry.  Unlike RIM who actually failed to impress, people are much more concerned about what Apple can do to impress in the future, especially with the iPhone.  Since 2010 Apple has trickled out various perks on each version of the iPhone including better cameras, faster processors, a cooler iOS (ahem), a bigger screen, and FINALLY access to the LTE/4G network.  The huge question for Apple, given the expectations upon it each quarter, is what it can do next.  More memory, faster processors, and different form factors aren't going to cut it this time.

Blackberry is getting pummeled and will probably fade away because they failed to do much other than copy technology from its competition circa 2011.  Apple is getting punished because nobody has a good idea of what they can or will do in order to "wow" consumers.  Will it go in an entirely new direction with an iPhone 6 or serve up another disappointing "S" version of the iPhone 5?  Because of Blackberry's stumble, if Apple boxes out correctly (another basketball term) it will be in a prime position to rebound with authority.