With these and many other questions in mind, I attended IBM PartnerWorld 2004. I went with a troubled mind, hoping to hear an IBM perspective about this new, global employment marketplace, and to learn--as leaders in the industry--where IBM believes things are going. It was an interesting trip.

Las Vegas Is On Demand

First of all, let me tell you that IBM PartnerWorld was held in Las Vegas in the Mandalay Bay Convention Center this year. To me, "Lost Wages" seemed an ironic location to hold this annual convention of IBM Business Partners. It's a place where the odds of winning at the slots and tables are mathematically stacked against you, but where so many opportunities for striking it rich are ostentatiously advertised. However, in many ways, Las Vegas is the epitome of "On Demand" environments. In Las Vegas, almost anything can be purchased for the right price, when you need it, as you want it: on demand.

The question I most wanted to ask at PartnerWorld was "How will On Demand impact IT jobs?" The tram taking us to the convention center was jammed with hundreds of Business Partners who seemed to be asking that same question to each other. The world is coming out of the recession; how has IT changed from before? Where will we find business to feed our organizations?

Palmisano Talks Up On Demand

IBM's opening session was held in a large stadium-like theatre where buxom women rode Segues around the stage and muscular, tight-clad gymnasts swung from lines hung from the ceiling. IBM's GM for Business Partners, Michael Foreman, rode onto the stage on the back of a Segue and claimed it was the hardest part of his job. Then he introduced Chairman and CEO Sam Palmisano to the 5,500 business partners in attendance.

Palmisano gave an informative report on the On Demand global strategy that has been winning IBM increased market share. Palmisano said, "Analysts keep looking for the next big thing that's going to stimulate the market. But let me tell you all: There is no 'Next Thing'! The direction of the economy and the industry continues to call for the On Demand computing."

The World of IT Has Changed

Palmisano went on to describe how the business world has changed. In the 1990s, customers bought shrink-wrapped applications from one vendor and hardware from another. The business model was such that companies could quickly integrate these various pieces of technology on-site to build highly effective and competitive solutions to their business needs. But proprietary technologies, a lack of standards, and increasing complexity proved to be very costly. Palmisano pointed out, "This model has failed." "This is not to say that there aren't many great products built by many great companies," he added. But, as an integrating strategy to increase overall productivity for the enterprise at a reasonable cost, this strategy has run out of gas. In a global economy, the model doesn't scale.

The New Infrastructure: On Demand

From IBM's perspective, pervasive computing and globally scaling solutions require a different infrastructure composed of technologies and services that easily integrate, are available when required, and whose structure allows companies to purchase only the capacity that is needed at the time of use. This is a model for "utility computing" similar to how customers purchase electricity, water, and gas.

Building such an infrastructure requires innovation in a slew of areas, but, most important, in the way that that software and hardware is built. They need to be built modularly and to international standards. Without standardization, the pieces of the infrastructure cannot be plugged in to provide services.

IBM's Investments

According to Palmisano, IBM's initiatives in J2EE, Linux, autonomic computing, and grid infrastructure computing are key examples of IBM's commitment to this strategy. Using these pieces of the puzzle, IBM sees a future global infrastructure that enables a level of pervasive IT services that has never been achieved. It sees this model of computing as not only a model for enterprise IT, but also as a business transformation model for companies themselves. IBM believes that On Demand helps organizations to focus on their core business strengths, allowing them to offload the complexity of computing to the On Demand infrastructure.

Change for Local IT

For local IT, On Demand is the harbinger of radical change. Most small-to-medium business enterprises cannot afford the levels of investment in hardware and software services that larger enterprises are contracting today. So, in an interesting turnabout, these organizations are using the global Internet infrastructure--the infrastructure that allows a knowledge worker to work from nearly any place on earth--to create relationships with outsourcing offshore organizations that replace basic IT and programming services themselves. Their rates are less expensive than local consulting rates, and there are often tax advantages to shipping these jobs out of the country.

This change by many smaller organizations has meant fewer in-house development jobs, fewer IT support positions, fewer consulting contracts for local consultants, and the scaling down of the kinds of services that in-house IT provides. Sometimes, it causes the offshore outsourcing of the entire IT department itself, though no U.S. statistics are currently available to document this trend.

Is On Demand the Same as Outsourcing?

IBM does not see the outsourcing trend as resulting from On Demand computing, and judges it as neither good nor bad, but merely as one more indication that the On Demand infrastructure that it is building is a better solution to the needs of business. IBM is not competing with IT; it is building infrastructure for IT. (For instance, IBM claims it has no interest in building applications, but is focusing on middleware pieces.)

IBM itself has recently outsourced a significant number of jobs to developing countries, but it has done so with a different goal in mind from saving money: to recoup its human resource pool.

IBM's Experience with Outsourcing

In a recent press release, IBM announced that it was moving thousands of IT support positions to India. However, IBM says that every employee whose job was moved has been offered a new job within IBM where they can accomplish new critical tasks. In fact, key to IBM's On Demand initiative is an explicit strategy to "free up" human resources to take on new jobs. In IBM's world, any On Demand strategy presupposes a significant investment in retraining.

This is the key difference between basic offshore outsourcing and IBM's On Demand initiative: The money saved by consolidation should be plowed back into training and education to free talent to attack new business-critical projects within the organization.

The purpose of On Demand according to IBM is to break down silos of authority within a company so that better collaboration between departments can be fostered. This increased collaboration requires new skill-sets that are created by retraining and re-education. IBM claims that every job lost to outsourcing has resulted in new jobs within its organization. In other words, the primary purpose of On Demand is to realign personnel resources toward greater productivity--not to merely cut costs to improve the bottom line.

Is IBM's On Demand Relevant to Struggling Companies?

Of course, all this is well and good if you're working for a successful technology company, but not particularly germane if you're working in a brick and mortar industry that is struggling to compete. In companies that are struggling to compete, cutting costs is the only way many of have the ability to survive in a global economy.Yet IBM counters that only by turning itself into an On Demand organization could it resurrect itself from its near financial ruin of the early 1990s. Yes, it had to let significant numbers of employees go, but it kept those who were most important to its strategic goals and retrained its entire organization to transform itself into the enterprise it is today. Transformation to an On Demand business was the key to its success, according to IBM execs.

IBM and IT Careers

But if, as IBM believes, the world of IT is moving toward On Demand, how can individual programmers, systems operators, IT consultants, and IT executives position themselves to play in this new global environment? That is the basic question that each of us is asking. How do we move our skills from the silos of the old IT world into the On Demand marketplace where competition is global and our old talents in programming, operating machines, and managing technical resources have suddenly become commodities in a worldwide marketplace? Learning new programming languages is not enough! Obtaining new certification is not enough! Searching for "The Next Big Thing" is not enough!

The Riddle of the Sphinx

Outside the Luxor Hotel in Las Vegas, on my way back from the executive sessions, I found myself more confused than ever, standing in front of the great Sphinx that squats before the hotel pyramid. Was this the riddle that the Sphinx had set before us in IT? Was PartnerWorld--and its flashy displays for the future--merely an ironic tease to those of us who are IT professionals? Where do we, as experienced IT personnel, go from here?In my next column, I'll focus on the potential answers that I've uncovered. To survive and flourish in this new economy, IT as we know it will fade away. But the talents and the skills that we have fostered through the 1990s can be transformed to take advantage of new opportunities, just as IBM has found new ways to position itself toward an On Demand global marketplace.

Thomas M. Stockwell is Editor in Chief of MC Press, LP.

Thomas M. Stockwell is an independent IT analyst and writer. He is the former Editor in Chief of MC Press Online and Midrange Computing magazine and has over 20 years of experience as a programmer, systems engineer, IT director, industry analyst, author, speaker, consultant, and editor.  

 

Tom works from his home in the Napa Valley in California. He can be reached at ITincendiary.com.

 

 

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