Economic Downturn: Who’s walking and who’s wounded…early views

It maybe too early to ‘post mortem’ the spate of job losses over the past few months, especially since it is not clear whether we’ve ‘hit bottom’ but it is possible to discern some general trends. Chief among these is the perception that ‘Generation Y’ (generally considered to be those born in the 1980’s and 1990’s) is going to have a tougher time than most.

A recent survey, conducted by the Young Emerging Professionals Initiative (YEP) of Spectrum Knowledge and the University of California Fullerton, showed that the Boomer and X generations have some very negative perceptions about the performance of Y’s in the workplace. These include:

 

    • Members of Generation Y are looking for instant gratification and therefore struggle to stick with projects over the long term.

 

    • Members of Generation Y feel entitled to job benefits that they have not yet earned.

 

  • Members of Generation Y are unwilling to ‘pay their dues’ in the workplace
    (The full text of the ‘Gen Y Perceptions Study’ can be downloaded here)

 

It should be stressed that these points are perceptions and that most Generation Y workers would probably disagree. However, perceptions can create realities and we are starting to see something that is looking suspiciously like revenge!

Several Australian newspapers are reporting that Y’s are being targeted for redundancy ahead of their Boomer and X’er counterparts. It is difficult to determine, beyond anecdotal evidence, whether this is really the case but it does raise interesting issues about how perceptions can actually have ‘real life’ consequences in the workplace. It is clear that at least some managers are thinking about using the current uncertainty to have a go at Generation Y’s perceived lack of commitment and loyalty. This is clearly borne out in the some of the articles discussing the issue. Business Day minces no words with its headline “Less Loyal gen Ys in firing line!” An interviewee in The Australian weighs in with: “…an employer isn’t going to make a commitment to you in tough times if you weren’t prepared to make a commitment to the employer in good times.”

The trend (if it is indeed what it is) towards the reaffirmation of ‘traditional’ business values could have interesting implications in the field of change management. This also raises questions regarding recruitment practices, and workforce planning. It is perhaps up to every manager to decide whether this is a good thing, but it seems that the move towards the much heralded ‘Brave New World of Business’ supposedly spearheaded by Generation Y is not going to happen without at least some resistance.

 

Perhaps that new office design with the beanbags and foosball table should go on hold…at least for this quarter!

Benchmarking Australia’s IT Use

Australia is ranked 7th and 14th in two recent reports on its effective use of information technology.

Consistently in front of Australia in both reports are the US, Sweden, Switzerland and Finland. Some note was made of the Nordic countries and Korea for their recent efforts.

The domestically perceived weakness of the broadband infrastructure, the associated industry haggles in telecommunications and the ongoing concerns over the quality of secondary and tertiary education may be impediments to moving up the scale.

The two published reports, one from the London School of Economics(i) and the other by the World Economic Forum(ii), assess countries according to their ‘connectivity’, i.e. the extent to which a country’s effective use of ICT is set in relation to its overall economic performance.

Of emerging interest is a ranking of how IT equipment is being dealt with after the end of its useful life. Our next news item profiles on one aspect of Green IT, how IT Equipment is being disposed of globally and how Australia ranks in this regard.

(i) Call to arms for governments worldwide to improve connectivity / Sandra Rossi. – In: Computerworld. – 1 February 2008.

(ii) UK relegated from ICT premier league / David Meyer. – In: ZDNet Australia. – 11 April 2008.

No More Technology in IT Department

Gartner looks into the future, or tries to define it, again. In “Traditional IT department to disappear in radical five year transition”, Gartner proposes that successful IT organisations will divide into at least two parts with one focused on technology sourcing and delivery while the other will focus on architecture and change. Their names may change from IT departments to process or innovation departments.

Previously we pointed to an article on Gartner’s vision of the future of organisational IT, which speculated that in five years time, commoditisation of products and services will lead to the demise of the technical functions of that unit of the business. Its focus will turn towards processes and innovation instead. Google sees the need for IT personnel to embrace this development or end up being pushed into obsolescence. According to Google, the responsibility of the company’s IT people will be “coaching users as to the best tools to choose to enhance their performance on the job”. Sounds something like “governance”?

Following on from the above, at Gartner’s ITXPO, advice was that the consumerisation of IT is now to “cause significant disruption in the technology sector”. The response to that was to be found in encouraging corporate IT to become innovative (“The IT Revolution Needs You”,2007). Subsequently, it was speculated that commoditisation of products and services threatens the subsistence of the entirely technical functions of corporate IT (see above). More precisely, Gartner has now identified 14 delivery models that have to be taken into consideration, which will transform the IT industry. In effect, these will, in many areas, supplant the traditional lifecycle of systems and applications, where the user “owned” at least part of the infrastructure, and retained “risk and responsibility for the overall design and management”. These “alternative” delivery models are meant to bypass the corporate IT function, and soon may be mainstream.

Dispute Over Extent of IT Legal Disputes

A new survey into the scope and frequency of legal disputes over IT-related contracts in Australia has raised some debate, with Gartner contradicting the findings and recommendations in the Australian IT of 25 September 2007.

The survey in question had been launched jointly by the Australian Computer Society (ACS), the Project Management Institute (PMI), and The Institute of Arbitrators and Mediators Australia (IAMA) mid last year. Furthermore, the investigation was backed up by a host of other concerned industry groups: Australian Corporate Lawyers’ Association (ACLA), Australian Information Industry Association (AIIA), Software Queensland, Multimedia Victoria (MMV) and The Australian Telecommunications Users Group (ATUG), and has apparently been seconded by the Commonwealth Minister for Communications, Information Technology and the Arts.

IAMA is promoting Alternative Dispute Resolution for the ICT industry and its clients through a special interest group. Some results of that survey have been published in the first newsletter of this IAMA SIG earlier this year. According to the Australian IT of 27 September an “Alternative Dispute Resolution (ADR) strategy aimed at the ICT industry jointly developed by the ACS and IAMA” has been launched last week. The strategy’s desirability was stressed by an IAMA representative pointing out that arbitration was more common, for example, in the UK and the US, where mediators had also statutory powers. The survey had been responded to by 400 companies, reporting 1,200 contracts out of which half resulted in some dispute. The proportion of those conflicts that escalated to formal arbitration was considered very high by the IAMA, especially since in one third of those cases the legal costs exceeded half a million dollars. Both poor project management and insufficient contracts are to be blamed for the severity of these quarrels.

Gartner’s view on the matter was entirely different, despite its research having looked at a different sample, i.e. companies from the Asia-Pacific region, and a different scope, i.e. technology sourcing. They said that only 3 per cent of contracts ended up in legal disputes, and that this was mainly due to alleged breach of software licence agreements. And of course, arbitration had been recommended by Gartner to their clients for ages already.

Disputes over intellectual property violations in relation to software seem to be rather rare. In contrast, Information Professionals’ own litigation support experience is that cases generally result from a combination of poor project management and/or insufficient contracts, consistent with the IAMA findings.

Heresy From Olde World of Banking

Technology in the financial industry would normally bring about thinking of mainframe computers, large projects, Basel II and well structured governance, however, that is being challenged. At the Technology & Innovation – the Future of Banking & Financial Services Conference in October, new Suncorp CIO, Jeff Smith outlined his view of IT governance. He believes that, applied to projects, it is overemphasised and hence in the end counterproductive. Structuring projects in a linear fashion with phases, gateways and sign-offs should be abandoned. Instead, by applying what is called agile methods, smaller teams should be working within short timeframes, undisturbed during that period. At the end of a month the work would be reviewed, corrections applied, or possibly cancelled if its value cannot be demonstrated. He also claimed that banks were becoming “more agile organisations” conducting more and more projects of six months duration only. These limited projects would aim to retain as much intellectual capital as possible in the company, strictly minimising outsourcing or offshoring of development and functions. As could be expected, the title of his keynote speech began with the words “Transformational change …”.

Innovation, Organisations and IT – New Views

Most organisations are continuously challenged, seeking to stay ahead through innovation. In his new book, the “The future of management”, Gary Hamel says that 20th century management thinking and practices are no longer appropriate for modern day challenges. He declares that the problem of management in the 19th and 20th centuries, efficiency, has been resolved for the most part. Efficiency is based on conformity and compliance with standards, guidelines and protocols, and as such may not generate innovation. Hamel holds that wealth is being created through innovation. Innovation requires “diversity in thought and action” rather than executing processes in a uniform fashion over and over again. In this sense, Hamel defines the task of management as amplifying individual capabilities, and aggregating them for accomplishing complex undertakings. Thus, managers are called to foster adaptability—build systems that change by themselves; innovation—bring forth the resourcefulness of people; and engagement—sustain conditions under which people can bring their capabilities to bear. Hamel thinks that information technologies, especially the communicative and collaborative applications labeled as web 2.0 will be instrumental and crucial in this context. Nonetheless, he blames the IT functions in enterprises to be obstacles to utilising technology for innovation; many IT managers are unwilling to change priorities and respond due to work overload, and changes are always put under the rigid and mandated requirements of security and controls.

Carried by similar considerations, but aiming at adaptability or agility in government, are the arguments put forward by the Victorian State Services authority in cooperation with a UK think tank. Here, the authors have become critical with the efficiency drive of the recent government reform wave of the New Public Management. They propose, similar to Hamel, to reshape organisations by “reducing hierarchy, increasing autonomy and encouraging diversity” for establishing the conditions for agility. Agility for government is made up of an outward-oriented culture, alignment of systems and policy, an adaptable workforce, timely and effective decision-making, and productive information use. The proponents of agile government are however critical regarding the function of ICT. They acknowledge the peril of information overload on the one hand, while decisions will often have to be based on incomplete information, on the other. The authors emphasise that government is inherently different from private business. Hence, agility needs to be seen within the constraints of their political-administrative environment. Governments are accountable, need to consider results across agencies and beyond, retain stability during change, and have to determine when to act and how.

Against these broad deliberations, advice given to IT managers by a company called Intelligent Business Research Services (IBRS), pales through its rather conservative view of affairs. Though the report cautions against the assumption that IT administrative systems will not bring strategic advantage, it does not seem to encourage variety and novelty. The ten exemplary features of CIOs highlighted in the report are: “focusing on core business and IT issues, having strong execution skills, attaining business intimacy, taking a long-term view, being cautiously experimental, discouraging unnecessary technology diversity, being product and service-oriented, building strong teams, using strategic vendors and scoring vendors’ performance”.

Is Gary Hamel right in his verdict of the IT organisation, or is it futile to expect visionaries and engineers to find common ground?

Gartner Symposium ITxpo – November 2007

Gartner Symposium ITxpo (Sydney 20-23 November 2007), held annually is touted as “the single most trusted source of knowledge and advice in the technology world”. Press coverage posted diverse views. We summarise some key points here.

Disruptive discontinuities and altered identities
According to Gartner, dramatic shifts will occur in the near future (up to 2011) which have been termed “Disruptive Discontinuities”, driving new ways for acquiring and overseeing information technology. They are likely to question the business models of suppliers, as well as the ways in which technology is used by their clients. In particular:

  • Software as a service (SaaS) allows business units to detach themselves from the central IT department
  • Web 2.0 proposes new ways of communication and collaboration, and may change ways of doing business
  • “Global-class systems”, i.e., massive platforms that deploy applications well beyond the enterprise
  • Consumerisation means that experiences from the private and leisure use of information technology are being transferred into the enterprise, along with corresponding demands and expectations on IT departments.
  • Open source software underpins each of the other four discontinuities.

These discontinuities should be integrated into the enterprise by:

  • The central IT function not be catering for the organisation entirely; due to the availability of services over the internet, policies and governance principles should be reassessed.
  • Senior IT staff should forget about their affiliation with technology and identify themselves with their vertical industry.
  • Adopting web 2.0 technologies into the organisation for experimenting with new forms of communication and value creation.
  • Empowering users to explore web-based applications for potential innovation
    Differentiating users according to their responsibilities and requirements to amplify their individual effectiveness.
  • The IT unit to focus on its core capabilities, while users assume responsibility for applications accessed over the web. IT managers should follow this direction, or face obliteration.

Economy and government
Gartner analysts branched into economics and policy advice, firstly with the view that APAC (Asia-Pacific), is supposed to sustain its momentum of economic growth, unaffected by developments to the contrary in the United States and Europe. IT budgets in Asia are to increase during the next three years at a rate of nine per cent per annum. On the other hand, Australia’s prospects for growth are forecast to deteriorate, since it is based on the resources boom and not on productivity and innovation.Secondly, Gartner recommended that whole-of-government CIOs in Australia have the same status as in the United States. This would make government CIOs affiliated with the government in office, comparable to secretaries, and in case of a change of government would have to move on. Gartner proposes that government CIOs should become CIO 2.0. This encompasses diverse roles, such as “venture capitalist, economist and political visionary”. Instead of being a manager of supporting infrastructure, the CIO would mediate the department’s requirements with external suppliers, while projects would not be owned by the IT function, but by the business units within a department. The CIO 2.0 might also have been devised as a remedy for procurement challenges. In the past governments have been regarded as homogenous, while they actually are an assemblage of vertical industries leading to departments adopting applications that did not fit them. This has lead to Gartner predicting that “70 percent of whole-of-government integrations will fail by 2010”.
Web 2.0 and Security 3.0
Analysts warned IT managers not to prevent users from accessing web 2.0 applications. Applying zero tolerance on security, meant foregoing opportunities to new ways of operating and resulting in high costs protecting against threats that are not of material consequence. Nowadays, security should be understood by business units rather than IT, and viewed as a managed risk. The alternative approach is now labelled as Security 3.0. Security delivered against any potential threat is difficult and costly yet this is typical. Security 3.0 entails determining acceptable risks and looking beyond the current state by anticipating future threats. It is suggested that this would allow security professionals to stay further ahead in the security “arms race”, where each time a defence has been implemented this is soon being cancelled out by a new means of attack.
TaaS and software prices
Companies’ budgets are said to be under attack by software providers with shrewd licensing and discounting tactics. Veiled behind the offer of a considerable discount on the initial purchase price, usage rights are vague, which may affect licensing costs adversely for the client. Then, companies may be locked into paying ongoing maintenance and support fees, as well as mandatory upgrade cycles with additional charges. However, conditions are supposedly to change for the better within the next ten years. Stronger bargaining positions for the purchaser emerge from business process outsourcing, software-as-a-service, open source software, and the supply of maintenance by third parties, plus competition by new companies from India, China and Brazil. By 2011, a significant portion of IT products is predicted to be sold as a service. This mode of delivery, re-badged by Gartner as technology as a service (TaaS), will upset present market conditions.
Take away
Other themes touched on were Green IT, the emergence and impact of the virtual generation, or Generation V, in particular communication and consumption patterns, as well as the agendas of CIOs for the next three years. This included joining the Business Intelligence bandwagon, which recently attracted attention through acquisition by major developers. So, in summary, what did attendees receive? Firstly, new or altered “terms”, such as ‘TaaS’ instead of SaaS, and the category of ‘global class systems’! Secondly, there was some ‘vendor’ bashing. Thirdly, a name for self promotion, the ‘Government CIO 2.0’, which has been borrowed from a briefing by Deloitte. ‘Security 3.0’ appears to be a daring proposition, and it remains to be seen whether it will gain acceptance. Still, with all this versioning going on—Web 2.0, CIO 2.0, Security 3.0—presenters failed to mention the big one: Bubble 2.0.