Services Safari

New HR Frontiers

            The Softer Side of IT, Outsourcing, Services and HR

Let's take a look at the people side of IT, services and consulting. Here's a quick recap of articles I spotted recently:

First, eWeek examined where IT shops are recruiting new talent for their firms. A big part of their story included observations by Forrester. IT shops need to quit over-fishing the usual sources of talent and look to new sources like college students, academics, superusers, and more. (see www.eweek.com, "Competing for IT Talent" 7/23/2007)

Second, Computerworld identified the hottest IT careers one can get (see www.computerworld.com 8/06/07, "Irresistible IT Skills"). These skills included: Machine Learning, Embedded Security, Human-Computer Interface and more.

Third, Business 2.0 (see Jan/Feb 2007 -"Taking on the the Recruiting Monster") highlighted a changing way that candidates can be sourced: Referrals. This articles focused on Jobster although I think the power behind social networking sites like LinkedIn and Spoke may prove even more powerful.

Fourth, Global Services did a piece called "HR: No Longer a Career Graveyard" (see: www.globalservicesmedia.com August 2007). They showed a chart (see below) that really defines HR's impact on the executive suite.

Fifth, Human Resource Executive has a related piece called "The Talent Drought" (see 6/16/2007 issue). It describes how a talent shortage is possibly affecting the HR Outsourcing industry. This is an interesting issue as really talented HR professionals are scarce to begin with and fewer still exist in the HR outsourcing space. This issue is delicious as the people responsible for managing other firm's employees are having trouble managing their own.

Sixth, stories are emanating from India that outsourcers there are leaning more and more on software instead of employees to deliver value. Software, it appears, doesn't leave the company or request ever higher pay raises. (see www.informationweek.com "Indian Firms Turn to Software As Talent Crunch Takes Toll" 6/4/2007)

Seventh, look at the Baseline piece "Efficiently Managing A Human Supply Chain" (www.baselinemag.com, April 2007). It tells the story of how CUNA Mutual Group got a better handle on using and sourcing in contingent workforce.

Lastly, look at Global Service's piece "Offshore HR, What Can Customers Do?" (www.globalservicesmedia.com May 2007). This piece has a couple of good case studies involving Wachovia and a Fortune 100 firm and how they get better long-term results from their offshore partners.

What Do Clients Want/Like

                       Bain's Look at Selected Services

On the heels of that last post, here's another bit of data to digest. A very interesting graphic from consultancy Bain & Co. appeared recently in Global Services magazine (see: "More Satisfaction: Outsourcing or Offshoring?" in May 2007, www.globalservicesmedia.com). In the context of the article, this graphic shows that offshoring is more satisfactory to executives than outsourcing while the latter is used more frequently.

I thought the graphic Bain came up with told a far more interesting story for services and managment consultants. It showed a number of consulting offerings and the degree with which clients used them and how satisfied they were with them.

My take-away from this 2X2 graphic was that some initiatives (lower left quadrant) are best left to specialists who can target their marketing efforts to those firms who'll want those services and can deliver a bang-up job of exceeding client expectations. The top-right quadrant identifies initiatives every consultancy should offer and do well. I thought Mergers & Acquisitions looked a little lonely in the bottom right quadrant. However, with M&A, just because most firms don't do a lot of deals, the ones that do are often frequent, serial deal-making machines.

More consultancies should survey their client base like Bain did if only to find out what clients want and how well their services are satisfying clients.

Stats on Outsourcing

                    Great Outsourcing Data From CIO Insight

CIOInsight, like its sister publication Baseline, does some really nice research. I dare say that some of it beats the stuff coming from some of the analyst firms.

In the 03.2007 issue, they ran a piece titled "Expect the Unexpected" (see: www.cioinsight.com). I will not add any editorial comment to their stats. I will just identify some of the interesting factoids they presented in their research on IT outsourcing.

• 67% of executives say domestic outsourcing costs as much as in-house work. 43% of executives believe offshore outsourcing costs as much as in-house work.
• Half or more of executives say outsourcing projects have been successful regardless of whether they were completed via on-shore or offshore resources
• the percentage of IT budget spent on outsourcing varied from  18-30% depending on company size
• the number of companies planning to outsource continues to rise with 40% expected to do so this year
• simultaneously, in-sourcing is also on the rise
• 68% of survey respondents believe that outsourcing is over-rated as an IT cost-cutting strategy
• 53% of respondents use outsourcing to free up staff time to work on other initiatives

This document is several pages long and warrants a review by anyone selling or exploring the use of outsourcers.

Job well done CIO Insight.

Building Moats Around Service Firms

                            Wide-Moat Service Firms

Yesterday's Chicago Tribune had a nice story on a strategy companies can use to better protect their market share, revenues and margins from inroads by competitors (see: "Firms Made Impregnable" by Andrew Leckey http://www.chicagotribune.com/business/yourmoney/chi-ym-moats-0819-cpaug19,0,1506389.story).

Leckey makes a great case for why companies need to develop a wide moat. The moats are made when companies create durable competitive advantages that are hard to breach. Think of the buying scale Wal-Mart can utilize that its competitors can't. Think of those firms with huge patent inventories. Think of firms with phenomenal brands. Think of companies with favorable government licenses (e.g., gambling permits).

Service firms are notably absent in my mind when it comes to developing moats. It's a rare consultancy or systems integrator who actually creates and brands unique intellectual property. Service firms are more often known for fast following of someone else's ideas. In fact, fast followers are experts at breaching someone else's moat.

When you do see moat building in professional service firms, it often takes the shape of trying to ingratiate oneself to a client and keeping out other service firms via fawning and client entertainment. That approach is quite passe today. Clients are smarter and want maximum value from their consultants. They don't want generalists anymore.

Today's best advisors are those who really specialize and build their brand around that specialty. I've done that before and I'm repeating a second time in my career. For example, I've now got a huge database of almost 4000 tech buyers globally who are identified by their proclivity to be Innovators, Early Adopters, Early Majority, Late Majority or Laggard buyers of tech. That's what prospective clients get the most excited about: something no other tech strategy and marketing strategy firm has. Are you building a wide moat or still trying to build better seige engines to breach other firms' moats?

New Tech: Personal Performance Coach

                      Crutch or Real Improvement Tool

               My Thoughts on Improving Consulting Sales

Check this one out: http://money.cnn.com/magazines/business2/business2_archive/2007/07/01/100117049/index.htm

Accenture has developed a technology that provides real-time feedback to persons via a Bluetooth headset and a Windows-based smart phone. The software can do things like tell a salesperson that he or she is talking too much and not listening to the client. As discussed in this Business 2.0 article, the 'coach' will bug you if you're not getting enough exercise, hitting too many fast food joints, etc.

Let me opine on this for a moment:

• Using this tool for training purposes may have some merit. Whether a sales person should use this in front of real client prospects though could be really off-putting to those prospects though. If some sales person is yakking away at me, then stops abruptly to receive a coaching message from his/her phone earpiece, I'd toss them out.
• Using this tool to nag people to live better seems intrusive and counter-productive. This is what we all have family members and doctors for, isn't it?

Someday we'll have a special channel on cable television just for consultants to shop at. Maybe, when that day comes, consultants could buy devices that do the following:

• Bullshit detectors - When a consultant or IT salesperson exceeds a pre-determined quota of three-letter acronyms, buzzwords or 2-by-2 matrices, then prospects get a huge text message on their cell phones demanding they leave the meeting for some important consultation with a colleague. Now, consultants will never ever hear their prospects shout "Oooow my aching paradigm!"
• Muting technology - When salespeople want to show you another 500 exciting functions and features in their product, no one can hear the salesperson; however, to the salesperson, everyone seems to look like they're engaged.
• Powerpoint blanketing technology - This tool does not permit the use of any sort of Powerpoint viewer or software in specific areas of a building. Can't you just imagine how quickly a sales call would conclude if they couldn't get to use their Powerpoint apps?
• Instantaneous electro-shock therapy for sales people who ask those stupid strategic selling questions - Wouldn't it be great that every time a salesperson asks you "So, what are the top 3 things keeping you awake at night?" that they get a good 120 volts fired right into their lazy body? I'd even make an advanced version that ups the amperage every time an additional dumb, time-wasting question (e.g., So, tell me again, what exactly is it you do???") is asked.
• The Consultant in a Mirror - This is billion dollar software program that's integrated with a consultant's home mirror and may soon find its way into hotels worldwide. This product would provide instant feedback to consultants advising them on what not to wear to a client site. One version of this tool would automatically remind Harvard B-School grads to leave their school tie and rings at home. We'll hear you graduated from there at least 6 times this week.
• The Disconnector - This tool painlessly removes a consultant from his firm's voice mail, email and instant messaging systems for up to 3 hours at a time so that they can concentrate on just your needs during a sales call. A more robust product version will allow consultants to check out entire days at a time so that they can focus 100% of their energies on your firm (or let the consultant enjoy their honeymoon).
• Chart De-Complexinator - Did you ever see a chart your consultant prepared that no one, save for the genius who prepared it, can make sense of it? This is where the chart de-complexinator comes in. It slices, dices, streamlines and distills the very essence out of any obfuscated, overdone masterpiece. Get one now as no consultant should be without one.
• Automatic Overcommitment/Promise Counter - Don't you wish your conference room had a counter to add up all of the things your prospective consultant says they can do? It's amazing that there's nothing you can throw at these super-beings and they still claim they can do it. They've got people with 20 years of experience in a brand-new Web 2.0 technology! They can repair jet aircraft engines! They can run your data center while polishing your shoes!
• Bid Change Analyzer - This tool examines proposals from consultants and monitors each subsequent revision to see how the consultant will both lower cost and apparently reduce scope. Because your firm will still pay the full amount for the work eventually, it's fun to see how the consultant hides these future scope bombs in latter proposal documents.
• The Box of Whys - Every time a consultant doesn't understand something you tell him/her, the consultant can open up a fresh box of "Whys". See how many "Whys" you can collect as you try to explain your processes, requirements and more to clueless consultant sales people.
• Staff Multiplexor - This tool lets consulting sales people promise the only real value adding member of their firm to every client proposal the firm will craft for the next five years
• Work-life imbalance beam - This tool automatically cancels every training course, holiday and vacation scheduled for a staff person if there's even a hint of them being staffed on a new project.

I hope you VCs out there are reading this and will get some funding moving right away on these guaranteed winners. If Silicon Valley can knock out the above, then the next technologies I'd like to see for consultants would include:

• The really clean rental car!
• The out of town virtual spouse/family

Update re: DOJ Kickback Allegations

                         PWC/IBM Settle With DOJ

Recently, I wrote about how alliances between systems integrators, hardware and software providers impact independence and objectivity. I also told the story of the U.S. Government going after some prominent firms for alleged kickback schemes that were part of their alliance programs.

ComputerWorld this week has reported that IBM and PWC have settled with the Department of Justice (DOJ) to the tune of $5.3 million. (see: http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9031042&intsrc=hm_list)

Transparency in this post SarbOx era requires even alliance details be fully disclosed to prospective clients. While there may be significant benefits an integrator can derive from bundling their services and intellectual property with another firm's hardware or software, the benefits must pass through to the client and not remain with integrator or its alliance partners. If you're going to keep or reuse these savings, you need to fully disclose this information.

Furthermore, if you have alliances and you have chosen not to disclose material aspects of same to your sales professionals, you're probably doing something the government would frown upon.

This case with the DOJ is not over yet. Additional tech firms are still in the cross-hairs. This one should be interesting to watch.

Wherefore Goeth Computer Science? Hopefully not where it's already been!

            Interesting Thoughts on Careers in Computer Science

There's an interesting interview of Hal Abelson in the August 6, 2007 Computerworld.  The most interesting comment to me was the following quote:

"Why are fewer and fewer people, especially women, going into computer science?  Part of the issue is jobs not paying enough.  There is also the thing I spoke about earlier, of computer science not being expansive enough -- this notion that the computer scientist will be sitting in a box writing Java code or something.  That's just not where the interesting stuff is."

I couldn't agree with Abelson more.  I remember early in my career seeing people hunched over key-to- disc machines all day long.  I even remember in college seeing people hunched over card punch machines for hours on end.  But this, my friends, is not what computer science is all about. It wasn't then and it isn't now.

In fact, computer science is not just limited to internal transaction data.  Computer science doesn't stop at the four walls of your company and its transaction systems or web site. No, computer science doesn't even limit itself just to accounting transactions.  Oh, I can see it now the shock and horror of people going "Brian that can't be true".  But it is.  No, computer science is supposed to solve and research problems that extraordinarily powerful fast machines are well-suited to completing.

Here are some rules we need to explode for those of us who deal with business-related information systems:

We need to develop technologies that help businesses understand and serve other constituencies.  We need systems that give us long term insights into customers and their experiences with a company's products and services.  This is not what CRM solutions are about today.  No, CRM solutions are about prospecting for new customers and don't give two hoots about the customers a company already has.  There are countless other constituencies who have been bypassed or under-served with technology today.  Boards of directors have limited or no systems.  External auditors still lack many basic tools to analyze a company's information.  Procurement professionals still lack econometric, currency data, commodity pricing and other external data to make wise purchasing decisions.

We need to develop technologies that focus on soft side knowledge.  We might be able to tell you that the average retail customer of a given chain is a 17-year-old teenage woman, mostly white or Hispanic,of middle class and upper middle class background.  These are demographics they are not psychographics.  Psychographics tell us more about what's going through the mind of a customer, shopper, supplier or other constituent that businesses deal with.  But honestly, can any of your systems do anything even remotely connected to understanding why your customers to what they do?  Now, if you're like most firms, you're lucky if you can even pay your suppliers on time let alone understand what's going through your customer's mind.

If you could understand your customer you might learn some incredible things.  Things like the recent they won't pay you are recent bill is because they are so fed up and dissatisfied with your terrible customer service.  Knowing and understanding your customer is critical and it's not an area of computer science that is woefully lacking today.  They aren't in a number of systems that haven't even been imagined let alone built and that is the real opportunity for computer science today

So let's see if we can advance the thinking and move computer science out of the room full of coders and marry it up with some the other sciences to solve some real problems businesses need solutions for today.

Services, Hardware and a Different Kind of TCO

                    Realized TCO

InformationWeek reported that Dell is making an acquisition of ASAP (see "Dell Beats the Services Drum With $340 Million ASAP acquisition" 8/6/07 www.informationweek.com). That deal prompted me to reflect on firms who integrate hardware, software and services and whether clients are getting what they hope they'll receive.

This transaction is interesting because it adds additional service capabilities to Dell's hardware competencies.  This transaction is on top of deals Dell has already completed for ACS and Silverback Technologies. 

The most interesting paragraph in the article was the following quote:

"One of founder Michael Dell's priorities since retaking the reins of the company as CEO in January has been to add products and services that produce revenue beyond the initial PC or server sale, notes Brian Alexander, an analyst with investment bank Raymond James.  "They can create greater customer stickiness and get greater share of wallet," Alexander says."

This is part of the story I find problematic and so do executives in many businesses.  When companies acquire computer software or hardware, they do so with an eye towards reducing their operating costs and increasing value for shareholders.  They are told these solutions will lower (or have a lower) TCO and they want to believe this. They do not, and I repeat do not, make these purchases as a way of wealth creating strategy for hardware software and services providers.

Look at ERP packages.  If if a package can be purchased for a given price, why should the implementation cost five to 15 times more than the software purchase price?  Worse, for owners and managers of small to mid sized firms, these companies can't seem to find quality service personnel who can actually implement products successfully.  One firm that I frequently advise, has had over four service firms who claim to be competent resellers try to implement an ERP software suite.  I can tell you that none of these people possess the requisite business skills, product knowledge or project disciplines required to actually deliver real value to clients.

What do I mean by real value to clients?  If a service organization cannot deliver on time, on schedule and on budget, they are not doing something right.  Instead, the work ethic in some service firms seems to be quite the contrary.  They view software buyers as annuity customers.  To these service firms, customers do not deserve to have their total cost of ownership expectations met.  Instead, the sale of hardware that does not do what it's intended to do without material tweaking or software which does not work out of the box or as configured is not part of their total cost of ownership. Succinctly, the TCO world of vendors and service providers is like some Bizarro world (a la Superman comics). Clients say give me low TCO and these people do the opposite.

In this perverse thinking, bad integrators and resellers disregard TCO after the sale has been booked.  This is inexcusable unprofessional and unconscionable.

What clients should demand of service firms, particularly those who resell or install hardware and/or software, is an absolute guarantee of a realized total cost of ownership.  The customer doesn't care which monies are used to buy hardware, software or services.  What they care about is that all three together come at or below the estimated total cost

When hardware companies see services as a opportunity for increasing top-line growth, what they sometimes are intimating is that top-line growth will occur without regard to its impact on destroying total cost of ownership expectations of customers.  This is how great brands get destroyed.  When companies put their growth, revenue goals, and other self interests above those of their customers, they will surely run afoul of their own customer and prospect base.  Once they develop a reputation for being a selfish and self interested firm, nothing can be done to help their services personnel drive increased sales.

Many years ago, I spoke with a very wise professor at Dartmouth.  He told me that consultants, integrators and other service professionals cannot be objective if they have more than one person working in their firm.  He believes this because once you have the responsibility of keeping all of those other employees staffed and paid, service firms will begin to accept  and extend the work that meets their payroll and other internal interests first.  When a service organization puts its interest ahead of its clientele, their objectivity and fairness are gone.

We need to see a different kind of TCO discussed and offered by technology solution providers.  We need firms with the courage to tell clients unequivocally that their solutions will deliver to a specific, firm, realized TCO.  Not the kind of TCO that sounds good in the heat of a sales call but the TCO that clients can take to the bank. This is the kind of TCO that makes systems work and continue to work long after the deal has been closed and the consultants have gone away.

I hope Dell uses these acquisitions to find ways of making hardware ownership easier and not more complicated. I hope they use these deals as ways of eliminating the need for services and not vice versa. I'd be more impressed with Dell and their management if they did.

Finding the Right IT Talent

More Great Hiring Questions

Computerworld’s July 30, 2007 issue has an article titled “Why Should I Hire You?”  This article identifies a number of CIOs and asked each of them their favorite job interview questions for IT hires.

 

These questions included:

-          Why should I hire you?

-          Describe your toughest assignment so far.

-          What will you do if you don’t get this job?

-          Have you ever had to terminate someone?

-          What book is currently on your nightstand?

-          Tell me about a problem your company had and how you used technology to solve it.

I have a particular interest in finding out the true nature and abilities of any candidate for a job.  I like to ask situational questions so that I can ascertain their future performance.  For example, asking people how they dealt with another individual’s performance issues is a clear indicator of how they would do so in your organization.  But sometimes it’s even more interesting to ask them a follow-up question regarding what they would do differently today. All of us learn on the job.  We also make mistakes.  I believe it’s far better for us to acquire the worker that learns than the one who keeps making the same mistakes over and over. When we hire great people we make ourselves and our employers better. 

 

But before we can ask clever recruiting questions we still have to find out where the great applicants are in the first place. In the same issue of Computerworld, there’s an article titled “The Recruit/Retain Shuffle”.  That article had some at depressing news about how the recruiting process works.  It starts off telling a story about how Hewlett-Packard recruiters tried to interview potential job candidates through a Web 2.0 technology called Second Life.  The results were dismal. What was even sadder was to find out in a Computerworld survey of 233 IT professionals:

“none used Second Life for recruiting. A scant 4% said they used blogs or social networking sites like Facebook to engage potential IT job candidates. And only 15% reported using professional networking sites such as LinkedIn.  Moreover, 52% of the respondents said they don’t use any Web 2.0 tools for recruiting.”

 

I have used sites like LinkedIn for recruiting.  The site does a phenomenal job of identifying potential candidates.  However, recruiters have to be willing to reach out to these individuals to bring them into the pipeline.  Passively waiting for job prospects to submit resumes is the wrong approach that too many recruiters make.  It stands to reason that the best possible job candidates are the ones who are gainfully employed and will remain gainfully employed with their current employers.  These prospects should be at the top of the prospect list for any recruiter.  When recruiters view workers as simply plug compatible interchangeable drones, they’re willing to accept just about anything to fill a slot.  That’s really sad.  Great recruiters find great talent and bring it into the fold. 

 

Technology is not going to change the success rate or lack thereof in IT recruiting efforts.  What will fundamentally help is a change of attitude, work practices and a willingness to get ahead of the competition.  When recruiters show imagination and originality in their approach to sourcing new talent, only then will they look for appropriate technologies to solve a business problem. 

Data Point: Maturation of Outsourcing Firms

Finally, It’s Becoming a Global World

Fortune magazine in the August 6, 2007 issue has a small article titled “Indian Call Center Lands in Ohio” (www.fortune.com). The article describes Tata’s outsourcing center in Reno, Nevada.  Tata’s decision had similarities to business decisions other outsourcers have made.  The article indicates how the travel service Expedia needed workers with intimate knowledge of United States destinations. They used a U.S. call center. Some insourcers need workers with a more entrepreneurial attitude in their work.  Some firms need workers with a familiar accent that no amount of training from half-way around the world can replicate.

In the sidebar to this article, other new developments within the United States are being planned by Chinese, Indian and Mexican firms.  Whether these include the opening of domestic manufacturing plants or the creation of talent development arrangements with US-based universities, it’s becoming very clear that outsourcing is no longer just a low-cost country source decision/solution.   

 

The decision as to whether any business function, plant or asset should be located domestically or abroad is a more complex business question than one of simple economics.  In the highly interrelated business world that exists today, businesses have done remarkably well at shrinking boundaries.  Telecommunications capabilities today dwarf those of just 10 years ago.  And telecommunications capabilities 10 years ago dwarfed those of the preceding fifty years.  But the physical shipping of items like automobiles, produce, electronics, etc. requires movement, fuel, logistics, planning, government approvals, etc. These things take time and energy. While collaboration technologies, communications and access to improved decision-making information are abundant today, they still cannot shorten physical limitations like port delays, transportation times, distance and fuel costs. 

 

What we are seeing now, is a smarter kind of outsourcing.  This is an outsourcing where many factors are considered other than just landed cost.  What we’re seeing now is how business leaders are looking at individual customer and market niches to devise solutions that make sense for every segment and constituency.  These are solutions that look at numerous factors such as customer satisfaction, delivery dates, intellectual property protection, and more. 

 

Outsourcing is growing up.  It’s also getting more refined.  Companies like Tata are starting to look less like an Indian-based outsourcer and more like every other well managed multinational or global manufacturer.  This is a good change for the world economy.