deal architect

The future of the middle class

Charlie Bess of EDS after a discussion with Tom Friedman (The World is Flat fame) writes about the future of the middle class - and likely loss of jobs to offshoring or automation. You can add to that other losses if companies also get serious about business process "angioplasty". In general, what I call utility jobs are at risk - in IT, and most other white collar processes.

But before we  get in to a funk, there are so many contrarian, even encouraging trends

a) Offshoring, according to government data, has not affected as many jobs as is widely thought. If many of the jobs stay at or below 50K a year, offshoring will not hurt them much. (BTW - the US government has a definition for poverty but not "middle class" - but I would think 50K is a reasonable definition in most industries. The SI/Outsourcing industry has not adjusted to that which is why offshoring is more of a threat to that sector)
b) we may actually be entering a phase where the top end of the boomers is retiring - creating need for several transition jobs
c) technology is creating significant opportunities in homes and small businesses. If you could make house calls in my neighborhood one evening a month you would get at least 3 or 4 families each time who need help with WI-FI, spyware clean up, home electronics. This is true of every neighborhood in the country. Wait till cars have more technology as I have written here.
d)  there are a bunch of new corporate projects being funded around these technology innovations
e) Generation G - significant opportunities to help US grow its exports around the world.
f) new talent hubs are opening up around the world
g) new US locations,  full time and part time jobs are opening up.

Yes, the job market is changing radically .. but the flatteners that Friedman talks about and several other demographic trends are also opening up a whole bunch of new opportunities...may not be what our parents considered a career, but they also lived in a round world...

Systems Integration v/s Management complexity

In response to my question why systems integration has not seen the same level of automation as systems management, Bill Higgins of IBM posted this response on Nick Carr's blog

"I think the short answer is because systems integration is a much harder problem than systems management. In the world of systems management we're talking about well-defined concepts like nodes, network addresses, memory, and storage. In the world of systems integration we're talking about amorphous concepts like "what constitutes a customer, an account, an order, etc." across different development teams, different intra-company lines of business, and across enterprises. Throw into this mix older systems whose source code is written in a legacy dialect that not too many people use anymore or has been lost entirely. Throw into this mix the constant desire to enhance or fix the applications that are the end points in the systems integration effort, resulting in an unstable base.

Now I know the normal IBM consultant response to this is "service-oriented architecture" is the answer, and, hype aside, it does help with some of these problems by hiding the underlying nastiness of custom applications behind well-defined service definitions. Now the big unstated assumption in the previous sentence was "well-defined service definition". Quality service definition takes real skill, and this is where you need an experienced designer - whether in Boston or Bangalore - and experienced designers don't grow on trees. If companies think that SOA is the way to go, they'll have to hire a few savvy service designers, whether as a regular employee or as a high-end consultant from firms like IBM Business Consulting Services, Accenture, Thoughtworks, etc.

Re: waiting again for stiffer competition from Bangalore. I don't really agree with your characterization since IBM's made sizable investments in our own services and R&D labs in lower-cost countries like Brazil, China, and India over the past 5-10 years."

My response:

Sorry, Bill, my view is much of systems integration is blocking and tackling. If it was not Accenture would not have grown with pyramids of young programmers or even PwC' that IBM acquired (where I was an SI myself). If you apply the 80/20 rule, with some variations there are reasonably common customer masters, vendor masters, charts of accounts etc. After thousands of SAP, Oracle and verticalized projects if IBM cannot find commonality and automate conversion scripts, test plans, interfaces - again 80% of project artifacts - it never will. The problem partly is the business model. IBM's SI/outsourcing groups do not think like its software group. They want to sell more bodies, not automation. If they allowed the same software team which is working on self-healing systems management to work on SI automation, I would be willing to bet they could develop significant labor saving tools.

As far as its offshore factories - IBM has definitely grown them...but few of their customers have seen the impact in lower pricing (at least in recent SI deals I have helped CIOs review). It has mostly gone to its margins.

So either through automation or through lower cost delivery, IBM can achieve significant SI productivity - the question is IBM (and other SIs) really ready to eat their services children?

IBM on SOA

As I have written before I am much more cautious about SOA than the software industry appears to be. It is useful to read this fairly honest, sometimes contradictory set of opinions from IBM Fellows here. The key question they answer are "Why should you care about SOA, and when is it the right choice and when is it the wrong choice?"

As software vendors craft their SOA strategies be nice if they also focused on the last part of the question. What if it is not the right choice for all my customers? Too many releases are forced down user groups. Then vendors wonder why migrations happen slowly.

Yoga for IT: Self-healing?

BusinessWeek writes about progress around self-healing infrastructure. That's good to see. Be interesting to see how the industry prices it, even as US and offshore vendors start to offer remote infrastructure management services. On a trip to Bangalore a few months ago, I saw HP's impressive offerings around network, storage and other management. That pricing reflects labor arbitrage and shared economics across multiple clients.

It also brings me to another question. If the industry can cannibalize this type of systems management labor, why can it not do so around its own systems integration services? There are so many "low-level" services around testing, data conversion, integration, training and other areas. As I wrote here, every dollar in SAP or Oracle license costs between $ 7.50 and 21 in external labor to implement and maintain. I can see IBM and others not wanting to cannibalize their sizable services revenue (half of IBM's revenues) - but Indian vendors are actually even better at application implementation and maintenance than they are at infrastructure management.

Self-healing, self-realization? Sounds like another famous export from India - Yoga.

Water into Wine

I got an email today from Greg Gianforte, CEO of RightNow Technologies, the on-demand CRM vendor with the title above.

Some of what he says.

"Imagine a car company that got its steel for free.  So, instead of spending its money on costly raw materials, this company could invest in high-value differentiators such as better vehicle design, build-to-order manufacturing, and superb customer service."

"This, in a nutshell, describes the business model of an on demand software vendor using open source technology.  By eliminating the cost of databases, operating systems, and other infrastructure components, open source technology allows an on demand vendor to invest more in development, hosting, and services.  And by providing software as a service, the on demand model frees customers from the valueless, budget-sucking burdens of IT ownership."

"So, while RightNow is not an open source vendor per se, it's hard to name a company that's more effectively taking advantage of the economics of open source"

Greg, my thoughts exactly as I wrote in Killing the Golden Goose?   Open source, global labor, cheap broadband...the raw materials have become so cheap, why not the finished product?

Turning Water into Wine...there is a new religion afoot and the incumbents have reasons to be uneasy. Greg, keep on preaching...

The Incumbent's dilemma

In politics, incumbent candidates have an unfair advantage - so much so that we keep thinking about term limits.  As Mel Brooks would say "It's good to be the king". In technology, in contrast we love to churn our technology incumbents. Remember BUNCH, the Big 5 consultants, Baby Bells? De-throned, deposed.

The restructuring usually happens by sector - telecomm, hardware etc. Never in my two decade long IT career have I seen as I do today so many tech sectors simultaneously in churn  And in many cases, the challengers are not the 6th or 8th market share player in the category but often brand new players out from left field.

Telecomm - threatened by VoIP providers, municipal WIFI, even Google?
Enterprise software - threatened by SaaS, open source, third party maintenance, may be even Google?
Outsourcers/systems integrators - offshore vendors, rural vendors,  amazon- you kidding me?
Hardware - The Chinese, Linux based products

I could go in to sub-sectors but you get the point.

The instinctive reaction of most incumbents (today that would include IBM, Microsoft, SAP, Oracle, EDS, Accenture, Verizon) is to focus on account control, "value sell", spread FUD about start-ups - increase their sales and marketing budgets. Instead, investing more in R&D and cutting prices may be a far better response. Of course, they will worry about what Wall Street thinks of resulting lower gross margins and higher development costs.

More than Wall Street they should worry about Main Street. The average CIO is far less likely to continue to re-up on the golf course like his/her predecessor a decade ago. Not when the CEO is reading about China and India in Friedman's The world is flat and about VoIP in airline magazines and comes back and questions the CIO about it.

Uneasy lies the head that wears a crown.  Shakespeare wrote that over 4 centuries ago.  Still true today. Change Mel's quote to "It's good - but nerve wracking - to be a technology king"

Eyeballs are overrated

Om Malik writes in Business 2.0 about The Return of Monetized Eyeballs

On behalf of other body parts, I wish to lodge a protest. If we had spoken earlier, may be we would not had the eyeball focused bubble in the late 90s.

As my daughter listens to music on MySpace.com, we are convinced Robert Murdoch paid the big bucks for her ears as much as her eyes.

As Cyber Monday kicks off the holiday on-line shopping season, we know our mouse-clicking hands are just an important.

As we digest countless blogs, the poor brain  is working overtime even as the eyes rest.

We let Van Morrison, Willie Nelson, Paul Anka and other stars make a lot of money singing about eyes. Enough. Web 2.0 better share the credit!

Process Angioplasty: Global Logistics

This is one in a series of posts about business processes that are calling for "angioplasty".

See Jeff Nolan's post here on Global Logistics in response to a question raised by Barry Briggs . These are processes where not enough technology has been applied (not even by Jeff's employer SAP), there is probably too much unionized (and therefore expensive) labor, and given the security concerns around such cargo, and the customs requirements probably too much security and compliance "plaque". Definitely an angioplasty prospect.

The Wild, Wild Web

As Tom Clancy fans know you want the character John Clark on your side. Shadowy and lethal, this former Navy Seal ends up heading the counter-terrorist force, Rainbow. But in the book, "Without Remorse" he runs a one-man vigilante operation to clean up the illegal drug industry. The book was set during the Vietnam War. If it was in today's setting I am willing to bet John would be going after the shady parts of the WWW.

As this article in 2001 by Terrence Berg (then in the Michigan Attorney General's office) expresses "Unfortunately, the example of the child predator is only one of many. Because the Internet is as broad as the human psyche, it naturally encompasses all of the darkest manifestations of evil imaginable: every form of denigration of human dignity and antisocial behavior, from racial hatred and white supremacist ideology, to self-mutilation, torture and sado-masochism, to virulent misogynism, to violent extremism and Satanism. Web sites and chat rooms dedicated to glorifying such behaviors—as well as more mundane unlawful conduct such as hacking, credit card fraud, tax evasion and the manufacture of illegal drugs and explosives—are easily located by entering simple search terms into any Internet search engine."

Things have only gotten worse since 2001. In modern democracies we protect freedom of expression and our privacy. But we also need to protect our kids and ourselves from predators and fraudsters. As this CSO article details the criminals have many places to hide.

That means smarter and more computer literate cops to go after them. The tech industry (particularly Microsoft with IE) needs to do so much better about making the Web less vulnerable to spyware, adware, viruses and more. But each of us technologists in our ways need to speak up more, educate our politicians, reason with civil rights groups.

As we excitedly watch the emergence of Web 2.0 and prepare to make our New Year's resoultions, we need to remind ourselves about the shameful aspects of Web 1.0. If we do not collectively do much about it, the John Clarks of the world will.

Technology Innovation and Driving

In his debut book "Digital Fortress", Dan Brown (of Da Vinci Code fame) has a character named Greg Hale who has GPS, voice activated doors, and a bunch of other gadgets in his car. Granted he was a "crypto-geek" in the NSA but the book was written in 1998. In 2005, most of us still rely on printed maps and listen to FM radio in our cars. But technology is coming to make cars - and highways - much smarter.

Give GM credit for having pioneered "telematics" with its  OnStar service since 1997- a combination of GPS and cell phone technology. Remote vehicle diagnostics, auto-notification of air bag deployment, stolen vehicle location, route directions, even remote door unlock, and built in, hands free cell service. GM has been offering  packages of OnStar services free for the first year with many of its models. GM even informs its customers about the diagnostics and suggested maintenance by email

GM has also been experimenting with vehicle-to-vehicle (V2V) technology using wireless technology. It detects the presence of the others and avoids collisions by either alerting the driver of danger or by automatically stopping the vehicle in an emergency.

Of course, not everyone is a GM customer.  Mercedes offers TeleAid and Volvo on Call offers OnStar like features,  this BusinessWeek article talks about 4 technologies you can buy independently: Parrot hands-free calling kit to work with Bluetooth-enabled cell phones; Davis Instruments diagnostic  tool (if I had that I would definitely have challenged my last ticket!); Directed Electronics two-way security system; and finally the increasingly ubiquitous Garmin GPS navigation systems.

This Business 2.0 article describes the coming "media hub" for the car. Live traffic feeds, satellite radio and TV feeds, broadband web access from vendors like Alpine, Sirius, RaySat. With all these distractions the radar feature above may become even more useful!

Of course, established tech vendors do not want to miss our on this potentially huge market. Windows Mobile for Automotive is a scaled down version of Microsoft's attempts to be a player in the auto market.

The technology in cars will soon be matched with technologies in "smart" highways and roads. Most states now offer electronic toll booths like the E-ZPass system. In Florida, where I live 450 miles are covered by the comparable SunPass program. Not only are toll rates cheaper than if you pay cash, the fact that they automatically replenish by charging my credit card makes it really convenient. Many airports are starting to accept it for parking charges.

Highways are emerging which will use sensor based traffic management technology. Of course, with any public works projects, funding is tricky - but the promise of smart cars and smart highways is pretty exciting. Now we just need to make sure we can afford to keep fuel prices reasonable - more about those technologies in a future post.

BusinessWeek has a nice article in its Jan 16, 2006 issue on technologies becoming more of a competitive differentiator in car sales.