IT Outsourcing

“IT executives increasingly implement marketing initiatives to improve the communications with their business customers. But these efforts often focus solely on the brand aspects of the services under the IT’s control without understanding the business’ perception of IT. To maximize the success, IT must add business satisfaction assessments to its tool kit. Understanding business satisfaction requires qualitative and quantitative data that capture customer expectations and perceptions through different types of interactions such as interviews, panels, focus groups, complaint systems, and surveys. This report provides best-practice recommendations, survey templates, and questions to guide IT executives through the deployment of a business satisfaction assessment. It applies Forrester’s deep expertise in external customer satisfaction to the interface between business customers and their internal IT suppliers.” says a new Forrester report.

I have served on countless business application development teams within several organizations in the Southwest Ohio and Cincinnati Information Technology community, one thing I can say is that most IT organizations do not gauge business satisfaction with IT business solutions.  I have served in only a couple of organizations where the business serves on the IT governance committee.  An organization does not have to be “big” to have an IT governance committee.  No matter what the size of the organization decisions are made as to priorities in IT work.  IT governance does not have to be a long drawn out process or take great time commitment from the business or IT executives, but business involvement in IT governance goes a long way in gaining business buy-in as you roll out the IT business solutions to the business.

Involvement in IT governance is just one way that many organizations in the Greater Cincinnati area can improve the IT-business relationship.  The Forrester report goes into ways to solicit and gauge business satisfaction with IT business solutions.  Doing so should affect decisions concerning not only IT business solution delivery but also IT Infrastructure and IT outsourcing initiatives.

 

Seems like it has been a while since I have had a chance to do a post.  For the last 3 weeks things have been absolutely crazy in our IT consulting world, but in a good way.  We had a chance to go to the Techserve Alliance national conference in Las Vegas.  I have heard all the jokes, including the one about it staying in Vegas.   We did learn that just because you are pre-checked with the airline, does not mean that your bags are.   We got our bags checked with literally a minute to spare and fortunately all made it back to Cincinnati.

Upon return, we signed a support contract for a new customer.  They trust us enough to outsource their entire IT applications support to us.  We have a real life example of an IT Strategy that was discussed at the conference (See #3).  Not only was IT strategy discussed but business strategy as well.  Here are some highlights:

1. Market Differentiation - customers have lots of choices, how will you stand out?

2. Improve Systems and methodology for delivering service- excellence, efficiency, depth of service.

3. Outsource what you can-eliminate the busy work that does not add strategic value.

4. Deal with the economy being slow to recover till 2012, spend your money wisely, hire wisely, fire quickly, and refine what is working, stop what is not.           

5. Build Alliances with like minded providers in different industries and sell collaboratively to serve the customers' need.

My favorite of these five is number four.  Said another way, its takin’ the basset hound to the farm.  I’ll expand more on that in my next post.

• Network security specialist: A person familiar with intrusion detection systems.
• Penetration testers: Someone who can assess a system's potential vulnerabilities.
• Incident handlers: People who understand attack methodology and can apply critical thinking skills to respond to incidents.
• Forensics Analyst: The person who looks for evidence after an attack.
• Research Analyst: The person to keep abreast technological advances in incident response activities.
• Team Leader: Leads the team through crises and communicates to the business incident activities and cost to the business.

• Preparation and Training: for both prevention and incident response.
• Identification: fast identification of an occurring attack and its impact on the IT infrastructure can help in minimizing the duration and cost of clean-up.
• Containment: Once an attack has been identified, steps must be taken to minimize the effects of the attack.
• Recovery and Analysis: The recovery period allows analysis and lessons learned of What happened? Why did it happened? Was the response effective?

With the economic news being what it is and it being Friday, I decided to lighten it up a bit. We application development types are known for our twisted, not-so-mainstream places on the Internet. Back in the day there was "Foamy the Squirrel" (not for work consumption), and "Homestar Runner". YouTube has somewhat replaced the flash sites for interesting content, with "Chad Vader", "Ask A Ninja", and "Harry Potter Puppet Pals". My new favorite on YouTube is "B&J Supers Squad". It shot as a PSA with guys dressed up as Batman and the Joker performing tasks like how to properly ride a bike and lifting heavy objects. For application development types who are NOT squeamish, I recommend "Klaus the Forklift Driver" on YouTube. It’s in German with English subtitles. It is both disturbing and very funny. So I showed you mine, what crazy clip, flash site, or Geek underground item do you have for me?

I read today that unemployment has risen to 7.6%.  Yes, its official – we are in a recession.  However, that does not mean there isn’t opportunity because there is.  If everyone believed everything the press is saying our economy does not have a chance and the United States is going to cease to exist.

I also read today that the U.S. government is going to re-visit its parameters for H-1B Visas because they are being used by recruiting body shops rather than giving foreign nationals the real opportunity that they seek.  This means that application developers and specialist are going to be able to make up ground that they have lost to foreign nationals in the past.

My suggestion is for developers to increase their skill-set now before the economy begins to get worse.  Information technology consulting has never been a steady business it always has had peaks and valleys.  When the economy is good projects are plentiful.  When it starts to decline projects usually come to a grinding halt.  But is you have multiple skills it decrease your odds of becoming a statistic.

Organizations try to do more and more internally rather than outsource it when the economy begins to falter.  The more skills a person has the better chances one has to stay employed.  This holds true for IT staffing, development and consulting.  Additionally, when a developer or infrastructure architect can show an organization how to safe time, investment and people through the implementation of their solution they will endear themselves to that particular organization.

Good information technology strategy can more than pay for itself in this economy.  Organizations everywhere are dependent on technology and they need processes to become dynamically automated so they can accomplish more with less while the move towards models of efficiency that will contribute to the productivity of the organization.

Make it your mission to learn more applications and methodologies that can greatly increase the productivity of any company.  To do this is to build value for the organization and you by ensuring there will always be a job for those that are willing to innovate and create a better way.  

This is your opportunity.  Make it happen!

There is trouble in the near future for talent needs and it is coming in various flavors:
 

• According to the Bureau of Labor statistics, in 2010 over 10M jobs in the United States will go unfilled – in 2022 it will be 30M jobs

• College graduation rates are down to 54% and 75% of new jobs will require a college degree

• Making the wild assumption that Baby Boomers (44 – 62 years old) will leave the workforce when they are retirement eligible (is that at 55 or 65?) – there isn’t enough Gen X (28 – 43 years old) to replace them (78M Boomers versus 40M Gen Xers). Gen Y (7 – 27 years old) is big (70M), but still lacks the experience (hello…most haven’t even graduated) to make an immediate impact

• The average time in a company for Gen X is four years; for Gen Y it’s more like two and while the Boomers have been pretty loyal in the past, but the technology market hasn’t exactly rewarded them for that loyalty.

• According to an AARP survey of Boomers - 31% of mature workers became responsible for a dependent parent; 23% had an adult child move back home; and 16% were providing child care or day care for grandchild.  50 to 80 hour work weeks, while tolerated by Boomers and some Gen Xers, won’t be tolerated by Gen Y and won’t be of interest to Boomers as they ‘mature’ in their careers and many take on the care of family members. So, since everyone knows that a 40 hour work week for technology professionals is a joke – who’s going to be doing all the work?

Well, I was thinking there are a couple of answers here but those answers will involve a major paradigm shift in the way we think about our workforce today. 

Baby Boomers are learning very quickly that retirement will have to be postponed because of our current economic conditions.  This wealth of knowledge can be instrumental in assisting those organizations that are struggling with Information Technology Staffing because these folks are going to be around a little longer than they planned!
 
Information technology departments will have to create a hybrid workforce model that will be made up of Baby Boomers, Gen Xers and Gen Yers.  Still another approach is to work closer with IT outsourcing partners to ensure you have the talent that you need.  My organization, STAR BASE, Inc. makes finding superior IT talent for IT jobs a fulltime pursuit.

Finally, another emerging model that will be downsized IT department with only mission critical personnel and several part-timers that will be used from time-to-time.  This model will be subsidized from time-to-time by outsourced to information technology staffing partners that can assist in bridging the gap.

The global economy is tanking, layoffs are everywhere but organizations need to remain positive and work through these difficult times.  Information technology is no exception to this statement.  Often times when companies decide to cut budgets the information technology department is a prime target to be cut.

So, what can a prudent CIO do to address budget cuts while still operating his/her organization at a competitive advantage?   Here are some suggestions that may help:

• Ratios - Look at your ratio of onsite permanent IT employees.  Perhaps you could reduce the number of permanent employees to only those that are essential to the mission.  Outsourcing the rest of the work to a local firm often times is far more cost effective than permanent employees.

• Time-to-Market – If products and applications can be delivered faster, though a combination of in house personnel and outsourced talent then companies will reap the benefits sooner.  Work closer with your outsourcing partners to save time, investment and even the dreaded budgets cuts.

• Revisit your Processes – By working closely with your outsourcing partner.  If your team can find how to deliver applications an automated process with fewer touches and less defects there will be less time and money spent on re-works.  IT departments must leverage knowledge, experience and tools to gain a competitive advantage while decreasing cost.

• Productivity Improvements – Your internal and your external outsourcing IT partner must embrace being able to accomplish more in less time and at a lower investment.  The true business value of IT will be felt across the enterprise.

• Negotiate Your Rates – Any true business partner or business technology consulting firm, will be open to rate reductions if you are willing to negotiate a long term partnership.  Dedicated consultants are looking for long-term business partnerships.  If you are willing to commit to a set amount of hours they will br eilling to negotiate rates with you.

Application development outsourcing and IT staffing outsourcing can have many benefits in these times of economic challenge.  Your organization still needs to operate on a day-to-day basis.  Re-think your approach for the mutual benefit of your organization and your outsourcing partner.
 

Many organizations that are a part of IT outsourcing and business transformation outsourcing (BTO) are slightly concerned about the economy in 2009.  However, IT outsourcing was important before Bear Stearns, Lehman Brothers, Freddie and Fannie, AIG, and the big three automotive manufacturers. These events have underscored the importance of outsourcing because companies believe that transformational outsourcing can help them to service the economic downturn.

According to the International Outsourcing Forum (IOF), "the global outsourcing and off shoring market is expected to grow from approximately $10bn today, to between $50bn and $60bn by 2009". This dramatic market growth will create an additional three million jobs worldwide by 2009. While one million jobs are likely to remain ‘near shore’, the remaining two million will be relocated based on the price performance of location."

I believe here in the United States that when it comes to technology and the value it can bring, organizations realize that it is a vital lifeline for their very existence.  More and more organizations are also coming to the realization that they do not have to do everything internally but can partner with the right trusted technology consultant to handle many of their IT needs.  The economic downturn events of the past couple of months have made organizations come to terms with their vulnerability and question what they will need to survive in the coming years.

IT Outsourcing will remain a viable business in the year 2009.  As companies seek to reduce payroll while increasing productivity there is going to be a need for IT talent.  Where will organizations look for this talent?  The answer is quite simply where ever they have to.  More organizations are going to increase their working relationships with those trusted partners that can help manage their risks and provide IT talent on demand.

I predict that IT outsourcing and technology consulting will have a “busy year” next year for three reasons:

1. The slowdown in the world economy
2. The Presidential election is over and some level of stability will occur
3. Organizations realize that technology can make a huge difference in productivity and profitability and will seek out trusted advisors to assist them in making a difference

Those are my thoughts, what say you?

The recent economic challenges that the United States and the rest of the world is facing has effected more than the loss of jobs.  Organizations that were dependent on Indian community out sourcing are now faced with a new dilemma, inferior talent.

About 60% of India’s IT outsourcing business comes from the United States and 40% of the work is in the banking, insurance and financial service sectors.  To ensure that they can maintain or at least keep pace with the downturn, these firms are taking steps to protect themselves from the problem.  One of the first steps they are taking comes in the form of reduced hiring of entry-level engineers and looking at second-tier cities with lower labor costs.  The Washington Post recently published an article on the effects of the economic downturn and the steps that the Indian community it taking to combat the downturn.

The outsourcing of IT has been driven by the insatiable appetite of the United States that will continue to drive the practice in hopes of reducing headcount.  A word of caution would be advisable for the future.  If outsourcing means getting second and third-tier resources what will that do for an organization that is seeking a competitive advantage?  Clearly it will be hard to justify the economic benefits of untested staffers.

My organization, STAR BASE Consulting, Inc., tests and pre-screens every candidate that we place.  We believe that a poor candidate is a reflection on our firm.  My suggestion is that regardless of which firm your organization uses to produce IT staffing, do not choose a firm that does not test and who does not pre-screen.  In this day and age of identity theft it appears easy for a person to represent themselves as someone they are not. 

Do you want to risk the success of your projects and the reputation of your IT department to an organization that promises more with less?

In a recent Computerworld article, there were plans by ACS, an IT outsourcing services firm, of starting off shoring business analysts and project managers. While I believe that many enterprises might want to remove them for cost savings, these people represent your core business. They are the balance of your business and technical expertise. They translate your business plans to your IT development team members, and answers questions form both IT and the business units. If your BAs and PMs can be replaced, then the best cost savings would be from CEOs. On average, they make 435 dollars per hour more than the average worker.

Outsourcing does make sense when clear specifications are in place and clear expectations are set. These processes are typically managed by your business analysts and project managers. If they are replaced, who is looking after your best interest? If you are going to replace your IT development team, at least look at consulting firms like STAR BASE Inc. We have the business and technical acumen to handle your project, we are price competitive, and we are local. Additionally, the new president is looking to curb off shoring. You might want to help your business, bottom line and support your local area.

It's been several years now, that IBM has been talking about On Demand computing.  They have had several go-rounds using various technologies.  The theory is that business is changing so fast, you must have an IT strategy that lets you change as fast.  This is getting played out in a IT infrastructure world in several ways.  One of the ways the rest of the industry has come to know this is cloud computing.

Cloud computing is in its infancy, still today.  It’s certainly a viable IT strategy for some companies.  Cloud computing can be viewed as another IT outsourcing model.   Start ups and small companies are embracing it, but larger companies have not, yet.  Companies such as VMware and Citrix are closing the gap between the data center and the desktop.  This is giving large companies that have a large investment in the data center hope that they can simplify their desktop support.  It will be interesting to see if companies like VMware can deliver on the “virtual desktop”.

I had lunch yesterday with a person that I had not talked to for a couple of years.  One of the first questions he asked me was “How are things in the IBM world?”  I sort of bristled at the question, because my friend’s perception was that we only work with companies that had IBM.  The reality is, we are an IT consulting company and do a lot of work in the application development space.  While it's true, we are an IBM software partner, most of our application development takes place on other platforms. 

During part of the lunch we talked about some of the other areas of IT that we deal with.  That includes IT business solutions, IT outsourcing and IT staffing.   The problem is that people do not react to reality; they react to their perception of it. Therefore if you control how they perceive reality, which is easier than controlling reality, you control how they will react.

It also sometimes is said to point out to people that it's not enough to make something so for people to act like it is so; you have to make them know it too.  Hopefully our marketing will start changing perception. Click here for a reality check.

Leaders of many organizations fully understand that the IT department must contribute as a partner to offer value to the enterprise.  However, too many organizations still look at IT as nonstrategic service provider or as a cost center.

So how can any IT organization change this perception?

• Change your focus.  I would suggest that IT leaders need to change their culture and speak in terms of strategic growth rather than bare minimum maintenance.
• IT directors should not try and create vision in vacuum. Instead, solicit a select group of IT leaders that have vision and encourage them to brainstorm everything from IT infrastructure, to application development, to IT outsourcing services.
• This vision could be a detailed five year plan, along with a list of specific actions to engage others in meeting the groups’ targeted goals. To do this, break your chosen leaders into groups.  One group could be responsible for the ways to improves success and progress of maintenance projects.  Another could be to drive the effectiveness of the PMO, and still another could create metrics to gauge success by along with value demonstrations.  A fourth group could be tasked with eliminating the bottlenecks of process redesign.
• Build business-oriented IT managers.  Ensure that your senior managers have good business sensibility. Today, careers are not just about upward mobility, but about getting experiences across the enterprise.
  Having the entire team to contribute will give any organization a more comprehensive plan.  Furthermore, it will assist in building teamwork and focus for the individuals on the team in realizing that they are helping to change the culture while adding value to the entire organization.
• Perhaps one of the most obvious values of IT is to help drive cash to any organization's bottom line.  This can be done either directly or indirectly through IT optimization, IT automation, or business process automation. 

Each of these areas drives business value for the IT department.  If an organization is product focused IT capital investment can align itself directly to new product development.

Is your organization doing all it can to make sure IT is seen as vales rather than a cost center?

Have you ever read article that described your very behavior to a tee?  I just did.  Before I get into the article, let me give you some background.   We are a Cincinnati information technology consulting company that provides business technology consulting, IT strategy and IT staffing.  We do a great job for our customers and one of the things I struggle with is how often to contact them.   There is nothing worse than being bothered when you're in the middle of something.  It has always been my belief that customers would remember us and call us if they need our IT services again.  WRONG!!!!

Below is an excerpt from this article by John Doerr.  You can substitute STAR BASE, Inc. for Smith & Jones.
John Doerr: I am calling for Smith & Jones. Bill Smith did some work for you in the past and I am looking to find out the best ways for him to keep in touch with you in order to stay top of mind.  
Client of my Client: How is Bill? I remember the work he did for us. Oh gee, it's been over a year now. How time flies. His approach was so unlike anything we usually get. He was thoughtful, asked great questions, and actually changed what we were looking for. In the end, his suggestions made a huge difference for us.
John Doerr: Bill is doing great.
Client of my Client: Good to hear that. You know, I had forgotten about how good his work was. Too bad you didn't call last week. I just awarded a major assignment that was right up Bill's alley. I am so busy right now. I have trouble remembering things from last week, let alone last year. The assignment came up and I called who I met with most recently. They were in two weeks ago. Too bad for both of us, Bill probably would have been a great choice. Tell him to give me a call soon.

We just sent our monthly email blast earlier this week.  (To subscribe to our monthly musings, click here.)  (To see the September edition, click here.)  I got an e-mail reply that was very much like the excerpt above.  I looked in our CRM system and I last contacted him in September of 2007, almost a year ago.  The good news is that the client wants to talk with us about IT outsourcing.  So we might have lost the battle that we didn't know we were in, but hopefully, we will win the war.