Long live the CIO, but kiss the IT dept. goodbye

Long live the CIO, but kiss the IT dept. goodbye

Summary: Have you seen that headline before? I have.  I wrote it almost three years ago in a column where I said:I predict that this decade will be marked by a giant shift in the information technology mindset.


Have you seen that headline before? I have.  I wrote it almost three years ago in a column where I said:

I predict that this decade will be marked by a giant shift in the information technology mindset. By 2010, the majority of IT will be outsourced and the companies that outsource their IT will have a skeleton staff of IT and project management professionals whose job it will be to keep their consultancies' efforts closely synched up to the business size and objectives. Depending on the size of the company, there may only be one or two of these people....If you're keen on being one of these people, you need to start developing a solid track record in outsourcing management now. If, like me, you prefer to tinker with the technology, press buttons, and watch the lights blink, you should set your sights on one of the consultancies.

I was reminded of that prediction by a story that was published yesterday on InfoWorld.com.  The headline reads Gartner: IT groups shrinking, changing.  In a bout of deja vu, the report attributes the following statement to a Gartner report:

Through 2010, 30 percent of IT workers will migrate to vendors or service providers

..and quotes Gartner analyst Diane Morello as saying

By 2010, IT organizations in midsize and large companies will be 30 percent smaller than they were this year, predicts Gartner. Ten percent to 15 percent of IT workers today will fully drop out of the IT occupation in the same time frame, choosing to become teachers or take on work in government.

Thirty percent seems a bit conservative to me. Especially given the fuzzy math.  If 30 percent of IT workers are migrating to vendors or service providers and 10 to 15 percent of IT workers are dropping out altogether,....  OK, even if the fuzzy math is right,  I'll see Gartner's 30 percent and raise it another 20 to 50 percent.  And like my first analysis of the situation three years ago, that prediction comes at a bit of a discount to what Gartner normally charges for it's timely advice.

Topic: CXO

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  • Is this a contradiction?

    This piece concerns the outsourcing of so much of IT that few employees will be left at their desks.

    But haven't you also been advocating the use of internet based software? Is that another of the co-ordination jobs?

    And if all the employees have disappeared, who will be adapting open source code? Or is that what's going to be out-sourced?

    Not disagreeing, yet. I want to understand your complete scenario for the large corporation of the future.

    I assume smaller corporations won't have elaborate out-sourcing, as long as Microsoft is on the job. :-)

    By the way, a number of programmers I've encountered were former teachers who thought programming a more rewarding career. Are you anticipating they'll be shipped back?

    And, much off topic:
    I heard the Beethoven Septet, Op 20, for the first time today, I admit. One of his most popular pieces in his lifetimne, but, as Beethoven said, more natural spirits than art.

    In the 4th movement, one of the variations sounds very much like the re-use of the 1st movement theme in the 3rd movement of the 5th symphony.

    I checked it on the web and didn't find any reference to a connection. I'm working on the clips with Mp3DirectCut. No real purpose, take another Beethoven fan to care.

    I mention it because you said you enjoyed Beethoven.
    Anton Philidor
    • Contradictions? On ZDNet?!

      IT departments will be shrinking, but wait! Open document formats are coming that will give an in to second-string office apps that are sure to require more staff for support and integration.

      Web services are coming that will lead to vendor-hosted applications, but wait! Microsoft is in the midst of their biggest server/desktop product rollout in their history.

      Linux is coming on strong, but wait! Novell is collapsing and Microsoft's share of market in the server room is growing.

      So many stories fly out of ZDNet, so fast, it would be surprising if there weren't contradictions. Lots of them. It's about page views, not careful analysis. I come here to hear about stuff going on in the IT world, not to find wisdom.
    • How many IT people does it take to ....

      ... run salesforce.com for your company? Using Internet-based services is the same as outsourcing. Plus, the more you move to internet based services, the less burdnesome desktop support should get. Although it's just a thick client in a different place, I think Citrix's success has long proven the value in making the network the computer and lowering costs on the client side. The desire is there. The architecture and flexibility are improving.

      • Further clarifying.

        You wrote:
        Using Internet-based services is the same as outsourcing.

        Doesn't outsourcing often involve writing code?

        Would salesforce be producing company-specific applications? Or even reports and other outputs devised for the needs of a single client?

        As for desktop support, how much of that is based on using applications? And will salesforce be answering user questions and solving problems at a single desk (at the same cheaper rate)?

        And you're mentioning both Citrix and salesforce. If you're mixing independent outside suppliers without direct co-ordination, I start wondering about how well the two will work together.

        And then there's the issue about whether companies will have the capability of benefitting from open source, which is supposed to make it easier for staff to make coding changes and adaptations, and to add to what's supplied.

        I'm sure you do have a vision of what the coming IT section will look like. But how all the different themes come together is confusing.
        Thanks for making this clearer.
        Anton Philidor
        • What appears to be happening is this:

          You (a company or subset of a company) need IT services, you call something like Taos (or several other similar companies) and they send over someone to fill your IT needs. The problem is: how do you quantify what an IT department does on your financial statements (quarterly, yearly, etc.), much less what they do. If you have support needs, you can use contractors, thus not having to deal with health benefits, etc.

          With these ASPs (Salesforce, as an example), they are automating the process that was formerly done by people but could be automated and run 24/7 without sick days, maternity leave, vacations, or any other financial overhead. Do you really need many people to do tasks that can be automated? Same holds true for any other tasks that have been quantifiable and automated. I say this as one who has contracted to Salesforce and a few other ASPs in various markets.

          Helpdesk tasks can be automated, as can be many systems administration tasks (autonomic systems administration, autonomic network administration, autonomic database administration) can be done more efficiently and predictable via proper configuration and methodologies. Various products are designed to reduce the need for technical staff, these include areas like CRM, ERP, MRP, Helpdesk, Asset management and knowledge management.

          Think of it this way: in the early days, we had typing pools. Along came word processing machines that could reduce your need for said typing pools, then came general purpose PC's and Office suites (WordStar, Word Perfect, MS Word, Star Office, Open Office, etc.) that further reduced the need for staff to do the jobs that were formerly given to less skilled staff. As technology and methodologies evolve, less people are needed as more can be done by automated processes or be outsources (thus allowing a company to focus on what makes them money rather than operations).

          Desktop Support can be handled by companies that specialize in supporting desktops, you can set policies (Network policies, typically controlled by a central server) that can constrain or automate the processes that are done n the network nodes (Windows PC's) and this only has to be set up once. You can centrally manage software deployment, thus reducing the need for IT staff to go from desktop to desktop, thus reducing the need for IT staff again.

          With the proper configuration, 1 CIO can run the IT needs for a large company. Everything else is automated or outsourced.
          • If a task is a minor part of a job...

            ... then automating that task by itself would not reduce staffing. Filling out records for customer relations, for example, is part of a workload, and I expect that those preparing the entries would not describe that job as the best, most valuable part.

            When automation replaces a manual system or use of a different application for the purpose (Outlook, for example), then that's a larger workload for IT, not a smaller one.

            And remember the major project failure rate. Are those failures more from poor design and coding, a lack of management, or an inability to connect the project with the user? Okay, all of the above.
            But even if you removed some coding problems by use of a package, the job is far from complete.

            I'm sure you know from your experience that having software, particularly software from a third party, is not the end of issues.
            And, to put it briefly, systems aren't modular.

            Even OEMs find difficulty when they outsource the Help Desk. Though that function is undervalued in general, I'd be surprised that anyone would think a specific enterprise has an easier challenge responding to users than, say, Dell.

            If users weren't as you know them to be and if an organization's needs were generic, I'd be more in agreement with your points.

            [I dont agree with your history of the reduction in the need for typists. That to me was more the result of policy changes, the photocopier, and spell check than automation. But that's not your main point.]

            By the way, ironic that Mr. Berlind says the CIO is safe when 2/3(?) are afraid for their jobs, and non-IT people are being appointed to the position in a number of places. Part of the reason is to assure appropriate response to users and management.
            Anton Philidor
      • It's not just about the tech, it's about the business

        I've said it before (http://www.zdnet.com/5208-10532-0.html?forumID=1&threadID=15011&messageID=300113&start=-1) and I'll say it again: outsourcing your critical business processes is a bad idea.

        Citrix is not a 100% Bad Thing because (unless you like to punch yourself in the head waiting for screens to refresh, not to mention the bandwidth bills) you're going to be keeping everything in-house and on-premise. Outsourcing things like your CRM system, supply line management, etc. is a Bad Thing.

        To summarize the things that go wrong with doing this:

        * Privacy
        * Security
        * Vendor dependence
        * Problems with third party vendors
        * Broken SLAs
        * Hidden costs

        WalMart's "secret sauce" has supply chain management as a main ingredient. Sure, they could have let a TPV handle this. But then they would have been dependent upon that company to discover and implement any improvements. If that vendor was meeting SLA, I guarantee you that they wouldn't bother to make it better, unless it enabled them to make more money from it.

        The same goes for outsourced software. The vendor has no motivation to improve if they are meeting the contractual obligations. It's not just about whether or not the technology is improving, or if it's there, it's about proactive motivation. A TPV won't do you any favors for free. Would you hire an employee if they won't "go the extra mile" without being given a bonus first? Absolutely not. So why contractually tie yourself to another company who will do just that?

        Justin James
  • I heard the same back in 1987

    Went to my guidance counselor and told her I wanted to go into computers. She immediately told me "No! by the time you graduate (in 1991) the computer market will be saturated and they won't need you."

    Happily an IT person since 1992.
  • Outsourcing is a Disaster

    I've had quite a bit of experience working on both sides of the outsourcing equation and in every case I have seen its been a disaster. Some examples:

    1. In the military there was no longer a local IT person I could go to for desktop help. I had to call San Diego (not where I was) then get referred arround for a couple of hours, then wait a couple of weeks, before the contractor would send someone to actually help. I saw co-workers get their motherboards replaced because their Outlook wasn't working properly. On and on and on...

    2. After leaving the military, I worked for a consultancy that had a goverernment contract to design, implement and maintain a large scale intranet. I was responsible for making sure the web servers for the intranet were available 24x7. The catch? The servers were in a server room and operation, maintenance and access control to that room fell under a different contractor who did not have 24x7 support in their contract. So there was no-one who could let me into that room after hours or on weekends. See any problems there?

    3. Now I work for a large company that has outsourced its desktop support. My machine is completely locked down so even though I am capable of fixing everything myself, I'm not allowed to do so. I have to submit a ticket on-line. Even under their service level agreement, they get three business days to respond!!!! Thats a long time if your desktop is inoperative. But...last time I submitted a ticket, I had not had any contact fr three weeks even after escalating to the director level.

    I could go on and on - but my experience with outsourcing has been universally disasterous.

    You could say that the problem lies with poorly written contracts, poor project management, and poor enforcement of SLA's. But no matter how I look at it, its been a failure.
    • Even in ideal circumstances...

      ... without all the day to day failures you describe, the best that can be achieved is that a top down, inflexible, restricted, limited system endures.

      This model is very distant from complying with the advice that IT should respond to the business of which it's a part. That means knowing the processes and requirements, responding to users and corporate goals.
      If a policy has a substantial negative impact on users, then it will be perceived as a failure.

      The view you're criticizing can be considered a new version of the old error that IT belongs to the IT staff, and the employer must accept what IT provides.

      There have been articles here on ZDNet urging companies to change their businesses processes to work within a structure created by IT. That's not the role of a support function, a cost center.
      Anton Philidor
    • Diasterous outsourcing

      I probably worked for the company that held the military contract...it was so frustrating, a five minute fix that I knew how to do (e.g., push the "install" button) had to be escalated, the software re-pushed and hopefully successfully installed...the client had to wait 2 days for his travel software, rather than 5 minutes...plus roaming profiles on the same network as data...a reboot of win2k took 10 minutes (while the lead was looking over your shoulder "it's been 11 minutes on this call, are you on a path to resolution?").

      If IT jobs in the US mainly de-volve into working for outsourcing firms, then I guess I will be moving on at that time, as I can't tolerate crappy customer service and SLA's written by people who haven't been in the trenches, thus unrealistic expectations of service time, call time, etc.

      And of course system/network designed with cost, rather than function, as the main determinate...

      Been there, done that, ain't going back ever. And with the dismiss salary growth in IT for those who prefer and excel at "IT", not management...soon Starbucks wage will approach average IT levels...

      just my 2 cents
      • Not In my contract...

        The other disasterous result is that even if you do everything perfectly, business needs change. And lets hope they don't change in-between contract negotiations becuase if they do, the response you get from your outsourcing company is "sorry, but thats not in my contract. Of course for a small fee we can...". You know the rest.
  • unskilled companies trying out a possible cost saver

    The more a company outsources the more it loses control. It loses control of its product. It loses control of the cost. It loses control of the quality.
    Remember that this can be change positive or negative.

    I've heard of companies recently that are pulling back the IT workers because the outsource experience was effecting their control, costs and image - ultimately the business as a whole.

    Outsourcing is yet another level of skill in the hierarchy - another complication, and obviously an additional layer of cost.

    It is hard to say where things will go - but I know there will be substantial costs/wastes, far exceeding current costs of IT, of unskilled companies trying out a possible cost saver.
    zdnet reader
  • Good luck

    Perhaps we'll find a way to manage this properly.

    But in one multi-billion dollar company I'm aware of, they
    already follow this model. There are a handful of systems
    integrators, one gets the bulk of the work, the others get
    signifcant projects spread around various business units. These
    projects are usually millions to tens of millions of dollars, with
    lifespans ranging from 4 months to 12 months. Corporate IT is
    a skeleton staff, mostly of managers.

    The result? Corporate IT's hands are tied by the systems
    integrators. They are blinded by massaged numbers and can't
    get at the real facts. Quality problems are rampant. Cost
    overruns are tremendous. All of the projects are tremendously
    overstaffed -- one egregious case had 90 junior people on it for
    9 months, when the amount of work required was the equivalent
    of 2 senior people for 4 months.

    Corporate IT pushes for cost reduciton, productivity
    improvement, etc. but these are all against the interests of the
    system integrators. They want to bill MORE bodies that have a
    lower salary base. And given the knowledge entrenchment the
    encumbent SI's have, there's little to no way to move away from
    them or switch to a competitor.

    Now there are remendous cash flow issues, requiring the CEO
    had to mandate massive cost restrictions. Is this an example of
    a mismanaged business? Or is it just the reality of outsourcing
    to a provider who has tremendous lock-in, high switching costs,
    and whose economic interest is to charge you MORE? The
    outsourcing equation makes little sense, unless the switching
    costs can be drastically reduced, by a factor of 10! Perhaps
    software as a service will be workable, assuming the WS-* and
    related standards mature....