هو إستراتيجية

Also, read my other blog Globalization of Labor.

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In the eWeek.com article IT Workers Second-Guess Career Choice, Deborah Perelman reports a disturbing trend where the IT workers in the US see a bleak future for their career and are discouraging their kids to not pursue IT career. 

Outsourcing, Offshoring, H1B Employees, Commoditization of IT work force are all here to stay, but they are all signs of a dynamic IT industry. Granted older software development skills become less relevant in a hurry. But, is this a new occurrence? Much sought after experts in VB and ASP in late 1990s are now a relic. The employees have always understood that they need to retrain themselves in new emerging technologies constantly.  That’s the occupational hazard in IT Industry. Now, what has changed is the nature of new skills that are relevant. ‘Soft’ skills are becoming more important.  

Businesses are no longer interested in making sure that the tactical aspect of IT is running smoothly. They don’t want to know if their IT infrastructure scales, if their data is secure. They expect it to happen anyway, just as you expect the lights to go on when you flip on the switch. That’s where the IT is getting “commoditized”. If your skill set is in those areas, you need to get out fast. But, increased globalization has made corporations more vulnerable to competition. The impetus to change and look for the new markets quickly is of highest priority now. Thus, I believe IT now is more relevant to the corporations than before. When organizations talk of ‘agility’, it’s the IT organization that can enable the corporations to be agile. How can you be agile when you do not have ways to make your business processes agile? Throwing the IT project over to the IT department and expect it to meet the business needs is no longer viable today. At the same time IT department cannot go into seclusion and work on a project for few months at a given time. The hypercompetitive environment will make your IT project irrelevant during that time. IT workers now need to collaborate with the other business organizations. This new reality calls for new generation of IT workers. The ‘soft’ skills that are more relevant now are -

1. Comprehend Company’s Business Strategy
2. Understand how the company differentiates its products or services vis-à-vis competition
3. Articulate technical jargon to non IT business people
4. Understand TCO (Total Cost of Ownership) and ROI of a project
5. Ability to negotiate and influence others

I know these new skills can be intimidating to a ‘techie’. The above mentioned skill sets do not limit itself to IT personnel but need to be expanded in other Knowledge Industries like product engineering, R/D etc. Most of us are uncomfortable to collaborate, communicate, influence and negotiate and hence we choose safer ‘engineering’ jobs. ‘We can just do our jobs and go home… Who wants to get involved in company politics…’ that’s the conventional wisdom in the ‘techie’ world. Guess what… we are now in the middle of corporate universe and we need to be like ‘them’.

I believe, now is the exciting time for knowledge workers. We can influence the Business Strategy and be relevant to the core of the organization. What other job function would be that exciting? It’s a self fulfilling prophecy when we send out wrong messages to the younger generation to stay away from these fields. America will surely loose competitive edge with this kind of attitude.

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Wall Street Journal tech blog, How to Do IT on the Cheap is about the IT strategy at Virgin America. If you have paid access to Wall Street Journal’s Web Site then you can also read about Virgin America flies new IT path. Both these articles discuss how Virgin America is breaking new ground when it comes to IT infrastructure. They are planning on reducing their IT related costs by mainly outsourcing everything including customer support. Instead of mainframes that is used by the other airlines, they are using Linux based servers. Both the articles talk positively about the Virgin America’s IT initiatives.

Before we applaud this move as ‘out of the box’ thinking, let’s evaluate this from the company’s strategic perspective. According to Micheal Porter there are 2 types of competitive advantage which a company can utilize to build ‘economic moat’.

1. Cost Advantage

2. Differentiation Advantage

If Virgin America is planning on using Cost Advantage strategy then they are setting themselves to fail. Guess what; in the overcrowded airline industry especially in the

US there is cutthroat competition for being the low cost carrier. Southwest has a proven successful model and it is difficult to beat them on the merits of cost advantage by itself. Many airlines have tried in the past and have failed. Jet blue might be the only exception. I will write more about Jet Blue’s IT strategy in my later blog.

But based on other Virgin products, personally I would like bet that Virgin America is planning on using Differentiation strategy. To start off they have a well known brand ‘Virgin’ that is widely recognized in US. They also intend on using ‘plush’ features on their airplane (like leather seats, entertain system etc.) to make the in-flight experience comfortable. I believe providing superior ‘flying experience’ is the only way they are going to survive this airline industry.

Crowded airports/ runway and long lines at security is making travelers long for a comfortable flying experience and may be willing to pay higher for that experience. Who are these customers? This is where gathering customer related information becomes very vital. Ferreting out intelligence from that information is equally critical. In my opinion Virgin America needs to start investing in CRM, Data Warehousing and BI tools to identify the right customers. They can get away by outsourcing initially. But as the data grows, depending on an outsourced company to provide the infrastructure to gather the intelligence from information is extremely risky proposition. Never outsource your core competency!

Buried in the WSJ blog they do talk about Virgin America’s homemade software (no details available). If that homemade software is specific to Virgin America’s business strategy, they are doing everything right. If the customized software is only about cost savings and nothing to do with understanding ‘customer life time value’, then sorry to say, in a few years they will be Southwest look alike.

SaaS or On-Demand application delivery as a disruptive delivery model is challenging traditional

Enterprise applications. Adoption rate is the fastest in the SME (Small and Medium Enterprises) space. But, large multinational organizations are slow to embrace the on-demand delivery model.

SaaS has both pros and cons as explained in my previous blog. But, its not the cons of the On-Demand delivery model that is holding back the CIO’s of the large organization from joining the SaaS bandwagon. But, believe it or not, its one of the advantages of SaaS that is stirring up a political problem for the CIO. The main advantage of the SaaS delivery model is that it needs a smaller IT team. No need for large IT resource to integrate and sustain the traditional

Enterprise application. Smaller IT department is great for reducing IT costs, but it creates the illusion of loss of power for the CIO. Typically, larger the department the more perceived power the executive possesses.

CIOs pretend that they need complex application, so that they can justify bigger budget and larger IT resource. If the enterprise application is outsourced (SaaS is a unique way of outsourcing) then suddenly there is no justification of a large organization. This development, in the tribal world of executives, leads to diminished power for the CIO (because he now has a smaller army).

In my view CIO should not fear the reduction of size of IT department. If the software systems that support tactical and non core businesses is outsourced then it frees up the resource to focus on the strategic aspect of the business. Identifying and implementing software systems that enables core competency of the organization will make the role of CIO more relevant to corporation.

Making a major impact on the business strategy the CIO can thus showcase real power in the boardroom even with a small organization.