If you're unemployed or a consultant, you feel locked out!
If you're one of the few lucky ones with a job, you feel locked in!
There's no question that the entire IT industry--from software and equipment vendors to programmers and business analysts--is suffering. Even IBM itself sees the challenges facing IT as problematic. What can we do?
Back to Business Basics: The ROI Blues
Perhaps the most poignant belief, held by IBM and others, is that the economic downturn that is facing IT can be remedied by getting back to business basics. IBM's business strategy during these bleak times is perhaps the premier example of this philosophy: "Give the customer (or the user) a better value for their dollar, and they will reward you with their business." IBM is currently using this strategy to bolster sales throughout its product line, offering fantastic deals in server consolidation and dusting off its aging Return on Investment (ROI) and Total Cost of Ownership (TCO) statistics. These are the very same strategies that IBM used during the last major IT recession in the late 1980s--particularly in its fledgling AS/400 product line.
And indeed, from a market perspective, an ROI argument was exactly what the late 1980s required to sell AS/400s. At that time, tremendous competition, a proliferation of new PC technologies, and an economy interrupted by war with Iraq were all a part of a business psychology that drove many customers toward the sanctuary of an integrated business system like the AS/400. IBM saw that if a company's investments in hardware, software, and personnel were tallied, IBM could demonstrate that the AS/400 delivered the same services at a reduced cost over the life of the system. That was the heart of an ROI sales cycle, but it was a complex strategy: It leveraged IBM's reputation and required lots of IBM sales support personnel in the field to work with the customer to create cost-benefit analyses.
Yet, on the whole, that ROI strategy worked. Customers who were on the System 38 made the move, and customers on the System 36 begrudgingly opened their purses and began their slow migration. New equipment required new skills, and the demand for those skills helped to spur on IT recruitment and employment.
Many in the IT industry are hoping that this pattern will repeat itself.
However, although ROI and TCO business studies were robust sales techniques, in the late 1980s only IBM could afford the costs required to pull them off. The costs of dedicated sales support personnel nearly bankrupted IBM later, and the resulting historic IBM layoffs caused a massive transfer of skilled personnel from that organization into the general IT marketplace.
Today, even the tools for developing ROI analysis are sadly lacking within corporations themselves. Consider, for instance, a recent study by Ernst & Young reported in Computerworld. This study conducted between May and July of this year demonstrated that the majority of Fortune 1000 IT decision-makers recognize and embrace the concept of financial justification epitomized by ROI analysis. On the surface, this statistic should bolster the use of a "back-to-basics" economic argument. However, this same study showed that, although 79% of these IT decision-makers understood the concept, only 49% were actually conducting any business case analysis on their proposed projects.
New IT Jobs: Waiting for Godot
In other words, ROI is a really important tool that few organizations use today. Why? The authors of the Ernst & Young study surmised that the cause is a "lack of tools, resources, and time to conduct a full-blown ROI on most IT projects." Who could help these organizations build the ROI business cases today? Certainly not IBM, with its fragmented volume channels and its focus on Business Partner franchising. Today, there is no single entity in the marketplace that could repeat what IBM did for its customers in the late 1980s as a part of a sales cycle. Today, computer hardware is a commodity, and packaged systems are sold at volume prices. Who has the time and the money to chase after that level of business? So though there are today many parallels working within the business climate, the scale and the nature of the current economic recession is far worse. If IT is hoping for IBM to save the industry, it's going to be a long, fruitless wait.
Finally, today we're in a global economy in which the outsourcing of IT development is a growing trend. Furthermore, the IT industry has grown accustomed to acquiring new skilled labor through H1-B visas that allow credentialed IT candidates to arrive from a variety of countries. And though the Information Technology Association of America (ITAA) projected a shortfall in personnel in 2002 as late as last May, its latest report shows a weakening hiring demand.
Build It and They Will Come
The other successful strategy employed to spur the industry during the late 1980s was the one that Microsoft, Lotus, and others used: cost-effective technology at bargain-basement prices. Microsoft said--and largely continues to say--forget about complex cost-justification analysis. A 50% solution is better than no solution at all, especially if it's cheap! Tomorrow will bring even better technologies and cheaper solutions! The technology marketplace itself will deliver the ultimate remedy!
And indeed, as a customer motivator, this market strategy reaped tremendous benefits and largely pulled the IT industry out of its doldrums. Unfortunately, however, the IT crash that we are currently experiencing is largely the result of the revolution brought about by cheap, simple technologies that have grown steadily more complex and steadily more expensive. That strategy has stampeded vendors and customers to a race to the bottom, looking for the least expensive way to deliver solutions while simultaneously keeping an eye on the next technology trend. Instead of solving business requirements, IT has wandered into a mire in which it seeks technology for technology's sake, and this mantra has seriously eroded our credibility within the companies where we work. Furthermore, although this "build-it-and-they-will-come" philosophy--riding on the back of technology advancement--still drives the majority of development dollars in the IT marketplace, a growing number of companies in the current recession have become highly skeptical that IT can really deliver any worthwhile solutions at all.
In an article in MC Mag Online last April entitled "Reining in IT Project Failures--The Case for Clearer Business Objectives ," John Knapp writes "large companies by and large had a rather disappointing track record for delivering IT projects that actually met the business needs they were originally intended to address." He goes on to quote a study conducted by the Standish Group: "...even when these projects are completed, many are no more than a mere shadow of their original specification requirements. Projects completed by the largest American companies have only approximately 42% of the originally proposed features and functions."
Is it possible that today's customers have witnessed too many broken promises, too many busted budgets, and too many unresolved complexities to fund further investments? Instead of chanting the mantra "I came, I saw, I conquered," it seems that management has come, has seen, and has left unfulfilled. When one stops to consider IT's disappointing track record, it seems doubtful that the Microsoft strategy of a "cheap 50% solution" will pull the industry out of today's IT recession when, in fact, it has historically delivered only 42% of its promises.
But what is worse, for IT professionals, is that management has lost confidence in IT personnel as a class of employee. Instead of viewing the skills of an IT employee as an asset, it seems to have relegated the entire department as an infrastructural expense. This change in attitude on the part of management is at the heart of the dilemma facing IT personnel who feel "locked in" at their jobs and is the reason so many unemployed and consulting IT professionals feel "locked out" of opportunities.
Measuring IT Professionals
Consider the experiences of two professionals who I recently interviewed.
Joan is employed by an international corporation at a west coast office. She has significant programming experience on multiple operating systems and software platforms. Though she started on the AS/400 in RPG, she's also worked for four years as an application developer in Java and has built substantial workflow systems using Lotus Notes/Domino. Her credentials are impeccable, and her work ethic is commendable. However, though she loves the challenge of programming, her current IT director has pushed her toward business analysis, taking her away from her technical roots. Though she likes her current employer very much--and feels fortunate to even have a job during these hard times--she feels "locked in" by the company's misunderstanding of her skills and feels uncomfortable that her technical skills are eroding. "I'd much rather be programming," she says. "I feel I'm being pulled further and further away from what I really understand and love. But, when I talk to recruiters, they tell me I should stay where I'm at. It's frustrating."
Jim, by contrast, is a professional consultant who has kept himself very profitably employed for the last 12 years. Though, like Joan, he started as an RPG programmer, he quickly determined that he needed to broaden his resume to include newer technologies. He completed many courses in other languages--including C++, Java, and Lotus Notes/Domino--and followed all the course guides to obtain certifications where he believed the industry was heading. Yet, Jim's primary client is a local city government that uses him for maintenance and enhancements on homegrown custom systems in RPG. "I'm really interested in all the talk about WebSphere," he says. "But, like all the other technologies that I've studied, there's no market for it in my area. Why should I invest in obtaining those skills when all my clients really want is a good RPG programming resource? I just hope my current situation lasts for another six years, when I can retire. I'd look for other clients, but I really don't need them now. I've already got too much of a backlog of work."
In both of these interviews, two things stick out. First, both IT professionals have made a substantial effort to keep their technical credentials brightly polished by acquiring significant training and work experience, while keeping an eye out for the "next big technology." Second, neither of these professionals are actually using their hard-won skills in their current environments. Instead, the management of the organizations for which they work have re-interpreted those skills and experiences to address the real needs of the organization--business analysis and legacy programming.
The point is that their real-world work experience in building and maintaining systems is of more value to their organizations than their paper credentials or their technical knowledge of new technologies. And while many of their colleagues at previous jobs--colleagues who had specialized in high-tech languages--are pounding the street, Joan and Jim have used their histories of real IT business success to obtain relatively secure positions. In other words, their legacy of IT success on legacy systems has provided them with a runway by which they can sustain themselves during these hard economic times.
In Joan's case, her role as an IT business analyst fills the niche that enables the company to see the value of new proposed IT projects--projects that may or may not get funded by her employer. In Jim's case, his flexibility to successfully work on legacy code turns him into an asset that is appreciated and funded by his client. In both cases, when IT momentum returns to the industry, the efforts they have taken to keep their skill sets current will probably give them a head start toward furthering their careers.
Projections of IT Recovery: The Days of Wine and Roses
At its recent Symposium/ITxpo 2002 conference in Lake Buena Vista, Florida, the Gartner Group identified nine trends that will enable resurgence in IT.
- Adding bandwidth will become more cost-effective than buying new computers.
- Most major new systems will be inter-enterprise or cross-enterprise systems, and IT managers will have to figure out how to cost-justify investments in such systems.
- Inter-enterprise systems will provide a macroeconomic boost to companies. This will have a clear and recognized effect on productivity.
- The consolidation of vendors will continue in many segments of the IT market. Half of today's software vendors will be gone by 2004.
- Moore's Law will hold true through this decade.
- Banks will become the primary providers of "presence services" by 2007.
- Business activity monitoring will hit the mainstream within five years.
- Business units, not IT, will make most application decisions.
- IT will recentralize activities to cut costs.
If the Gartner projections prove accurate, the IT world of the 1990s--a world driven by an ethic of "technology for technology's sake"--will become a fond memory of a fabled time when the cost of IT systems was no object and the business success of new systems was poorly measured.
Meanwhile, as IT professionals, we must prepare ourselves to be sucked back into the infrastructure of organizations to be employees focused upon the company's bottom line. By emphasizing how our skills have helped organizations in the past, instead of emphasizing burgeoning and arcane technical credentials, our real value to organizations will begin to be appreciated. Perhaps the days of wine and roses is over for IT, or perhaps--for many of us--they never really existed. Regardless, the real business skills that you have developed and that you are currently developing will never be more important than in the months and years ahead.
Thomas M. Stockwell is the Editor in Chief of MC Press, LLC. He has written extensively about program development, project management, IT management, and IT consulting and has been a frequent contributor to many midrange periodicals. He has authored numerous white papers for iSeries solutions providers. His most recent consulting assignments have been as a Senior Industry Analyst working with IBM on the iSeries, on the mid-market, and specifically on WebSphere brand positioning. He welcomes your comments about this or other articles and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..
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