Anna’s Blog: An Outsourcing & Offshoring Journal

CA/Silicon Valley Lessons: CIOs Share their Wisdom

Tue, 30 Jun 2009 16:35:10 +0000

My IT leadership tour of the country has continued into summer, and the most recent stop was on June 23rd in Mountain View, CA. In Silicon Valley, at the center of the Tech World, a panel of four, and 50 CIO/IT Executives gathered to discuss leadership, strategy, technology challenges and opportunities of greatest importance in these unique economic times.

From the very moment we began the discussion with the panel, I was impressed and thrilled by the intensity at the panelists’ table and the engaged atmosphere throughout the room.

Recent news reports have been somewhat optimistic about a pending economic turnaround. However, the CIO attendees aren’t banking on a quick recovery. The discussion focused on new ways to operate and innovate going forward. These leaders discussed the need for their teams to embrace increasing levels of individual responsibility with flat or reduced staff.
Below, I’ve summarized valuable wisdom from the event for IT excellence from California-based IT leaders.

5 Key Points

Be Strategic in Your Pursuit of Efficiency.
All of the Silicon Valley CIO panelists were not surprised that cost efficiency was the number one priority as reported by the Harvey Nash-PA Consulting IT Leadership Survey. Panelists also agreed with the survey that increasing efficiency ranked equally high in the list of initiatives.

The panel’s counsel was to look at efficiency and spending strategically.

For example, the goal is not to merely reduce spending, but to ensure the value gained from investments is clearly measurable. It’s not about the spend, explained one of the CIO panelists, it’s about the ROI. True efficiency, according to this panel, is gained by ensuring your investments and spending can always be tied to business performance and results.

Encourage and Fuel Innovation.
As CIOs interacting closely with structured Hi-Tech R&D and Engineering departments, these leaders were adamant that IT needs to also be methodical in their pursuit of innovation. One leader highlighted the reverse engineering process commonly used by their Engineering counterparts as an example of how to generate ideas and foster ingenuity in IT.

Another panelist discussed building an innovation/vision team from within the IT department and giving it the mission of gathering, analyzing and delivering innovative ideas to the broader organization. It was also suggested that IT leaders train themselves to act as Chief “Innovation” Officers whose mission it is to deliver technology solutions that translate into business success and enhanced organizational performance. And while there were many other suggestions offered for nurturing innovation, the central point remained: pursue innovation with dedication, structure, methodology and an open mind.

Be Proactive, Not Reactive.
CIOs and IT leaders should not wait for directives from the business. Instead IT leaders need to be at the decision-making table helping business leaders tackle business goals and issues with technology. According to the panel, one important way for IT leaders to become more proactive is to strengthen their knowledge of the business and relationships with business leaders. The better insight a CIO has into business operations and challenges, the more effective he/she will be in enabling the business to overcome obstacles and seize new opportunities.

Do More with the Same.
The IT leaders in this panel were certain that a new era of strategic hiring within IT is upon us. While the panel advised the audience that smaller IT teams were likely the way of the future, it also placed much emphasis on the importance of hiring techno-functional professionals who are highly business savvy. One panelist validated this evolution, by citing the increased number of MBAs on their team. In summary, extensive knowledge of business operations will be essential for IT leaders and teams in the years ahead.

Outsource: Master and Manage.
Outsourcing and efficiency often go together, but not always. The California CIOs counseled the audience to remember that outsourcing and offshoring are not always the right solution for a business challenge. In fact, the panel shared examples of when outsourcing is the wrong option, especially if your team hasn’t already mastered the function internally. To manage an outsourcing engagement effectively, your team should have performed the function successfully, otherwise it will be difficult to properly manage an outsourcing vendor. While the panelists encouraged smart outsourcing strategies, the challenge is to remember that outsourcing is only one of many options that must be weighed as the business seeks greater efficiency, working with the same or fewer resources.

I want to thank the four engaging CIOs who joined Harvey Nash and PA Consulting for this intense and thoughtful look at IT leadership and strategies for success. These insights from our tenured Silicon Valley panelists proved to be highly beneficial for those in attendance.

CA/Silicon Valley CIO Panel
Debra Martucci, CIO, Synopsys
Glenn Noga, CIO, Polycom
Mike Vedda, CIO, Affymetrix
Tom Bakewell, CIO, Riverbed Technology

IT Innovation: Like a Cake without Frosting

Tue, 16 Jun 2009 17:17:44 +0000

I don’t know about you, but I think the best part about a delicious, moist cake is a rich and creamy frosting. Without it — the cake in my mind is incomplete. Similarly, IT innovation is an exciting and thought-provoking concept. It gives companies permission to think out-of-the-box, brainstorm great ideas to overcome challenges and gain competitive advantage. But, without budget to support IT innovation — it’s just like a cake without frosting.

I recently had the chance to present to approximately 50 technology leaders from around the country the findings from the Harvey Nash Strategic Insights Survey: A U.S. IT Leadership Perspective, during a Webinar hosted on June 9. Though the survey has a number of key findings, my presentation focused on three important areas: IT innovation, IT influence and efficiency.

Even during what many are calling a time of crisis, innovation appears to be a direct factor on IT influence and efficiency. What’s striking to me, however, is that while IT innovation is being chalked up as a go-to solution, it’s like the concept is sitting on a pedestal without the support needed to finish the job. The top three challenges of innovation that immediately come to mind for those of us in the IT hot seat include:

• Limited or frozen IT budgets
• Lack of structure around IT innovation
• Difficulty proving ROI

In view of the fact that a majority of Webinar attendees expressed achieving competitive advantage through innovation as one of their top priorities and business goals today, it’s an area that demands definition. Furthermore, only 23% of survey participants felt their IT innovations were “very successful.” That is a disappointing percentage given the expressed importance of innovation.

So, the question becomes, how can IT move from innovation ideation to innovative execution? IT is under tremendous financial pressure — yet it’s the key ingredient for improvement. It’s time to put innovation ideas into action. Here are six ideas that I believe will aid in moving IT innovation to a spot of influence and overcome at least some of the challenges:

1. Create a culture that supports IT innovation. Companies can talk about being supportive of innovation until they’re blue in the face. But actually implementing tools and techniques to foster sustainable innovation from the top down is absolutely necessary for IT innovation success.

2. Become a business leader first, technology leader second. CIOs must act as change agents and the drivers of IT innovation. In order to be respected as such, CIOs need to influence business strategy—identifying new opportunities for revenue expansion and cost reduction at the same time. This is a shift we’ve all likely seen over the years, but now more than ever IT leaders need to be business centric with “polished” leadership styles while incorporating sustainable IT innovation.

3. Don’t be tempted to cut strategic planning for IT when thinking about innovation. The current economic climate makes it appealing to skip this important step and jump right into how IT can achieve operational cost savings. IT innovation should not be focused on process improvements; but rather on a structure for strategies that are going to leap an organization forward.

4. Be creative with IT spend. I was asked during the Webinar if there’s any IT spending going on in 2009. That’s the $64 million question! While we are seeing some spend across the board, it’s certainly limited and nowhere near what we’ve seen in recent years. However, what we are seeing are creative ways to spend. Companies are looking at projects that can be eliminated and shifting that budget to other projects, freeing up resources for execution of IT innovation.

5. Collaborate with outside companies. This is the one area that I believe reaps the fastest and most effective rewards of innovation. More and more businesses are working together to maximize the limited funds being assigned to IT. Companies are figuring out fundamentally different ways to achieve more with less. Offshoring is a key strategy to accomplish that. It provides a way to drive cost-savings, while better meeting the needs of the business. Business collaboration and offshoring specifically allows companies greater room for negotiation and access to resources that result in efficiencies and performance excellence at the same time.

6. Establish metrics specific to your business for innovation. ROI continues to be difficult to prove with innovation spend. Part of the reason is that defining the right metrics can be tricky. The reality, however, is that IT spend is being closely monitored and to justify investments in innovation, companies need to make sense of strategies to measure its effectiveness.

This is a uniquely important time for IT. We have a chance to make a fresh footprint by enabling true business change unlike ever before. I challenge each of you to create ways to frost the cake that is IT innovation.

Please join me in the next Harvey Nash Webinar series scheduled for July 23 at 11 a.m. EDT where we’ll discuss Workforce Management Optimization.

Recession Opportunities: Notes from Chicago’s CIOs

Wed, 22 Apr 2009 17:16:12 +0000

On April 16, Harvey Nash hosted a CIO Forum and panel discussion in Chicago, Illinois. The panel tackled a number of big IT issues but the recession, not surprisingly, headlined the evening. However, the words of both the executive panel and the audience of IT leaders were not words of recession doom and gloom.

What did I hear from these IT leaders? I heard that the recession is “a terrible thing to waste.” I heard that a recession offers a chance to really “get to know your business.” I heard senior IT executives recasting today’s challenges as opportunities to improve business operations and market position. Here are just a few ways they plan to do it:

Through Innovation
The panel and audience agreed that innovation is an important way for a company to defy the recession odds and succeed today. The challenge, however, is achieving true innovation. As one panelist put it, an innovation is “not a slight improvement, but a dynamic shift.”

In order to promote and increase innovation and innovative thinking, panelists discussed the importance of introducing new ideas and perspectives across the organization. For example, one leader described promoting innovative thinking through role switching. For example, the CEO might take on the CIO’s role for a period of time in order to see firsthand the challenges and requirements of the leadership position. The results are often a strong infusion of new ideas as well as greater collaboration among departments and business leaders.

By Taking Action & Competing
Both the panel and audience agreed that businesses should take advantage of the circumstances in the market. It’s the perfect moment to build your organization because many competitors will be frozen by recession fears or choosing to wait out the hard times. Smart businesses can convert a downturn into a significant growth opportunity by making strategic sales, business development and marketing choices when other businesses are stalled or shrinking.

One piece of advice to the audience was to look at the businesses in the marketplace today that are succeeding and study what they are doing. Wherever you can, embrace winning tactics, shed the losing strategies and—above all—do not become dormant or timid. Innovation, greatness and remarkable growth will never come from the safe, middle ground.

Another important point made was that recessions are a good time to hire. The market is flooded with job seekers, which makes it easier to bring on top-caliber talent and even easier to woo outstanding professionals who are employed elsewhere but open to moving to a company determined to grow, innovate and lead despite the recession.

Focusing on External Clients
IT departments can fall into the trap of focusing on their internal clients: “This is what the marketing department needs.” “This is how the CEO wants to see it done.” The focus should instead be on the external clients whose purchases and loyalty keep your company in business. CIOs should be looking at the wide range of projects their teams are managing and analyzing how that work is helping to address, support and advance the needs of the business’ customers.

Executing a Smart Sourcing Strategy
Finally, the CIOs agree that IT sourcing must be a strategic effort led by IT leaders. Today’s CIOs should be designing and executing overarching sourcing strategies that deliver both technology and business value.

Rather than simply offshoring to achieve cost-cutting goals or outsourcing to access hard-to-find skills, strategic IT sourcing is a long-term way for the technology department to achieve a range of business goals and enduring efficiencies, such as: improved IT service levels, reduced IT costs, expanded technology skill sets and increased ability to scale to business and market demands. CIOs should be front and center, driving successful sourcing strategies.

Moreover, CIOs should not be tempted to turn this central role over to the CEO. Implementing smart IT sourcing is one of the CIO’s most important jobs today. In fact, the panelists warned, a CIO whose sourcing strategy is coming from somewhere else should be worried about his/her job security.

With more CIO Forums and events ahead for Harvey Nash across the U.S., I am looking forward to gathering more business, technology and recession lessons from IT leaders nationwide.

App Dev Productivity Measures: Can We Do More?

Mon, 16 Mar 2009 14:41:59 +0000

This week I had the pleasure and the challenge of hosting a Webinar on how businesses can set themselves up for success in an offshore engagement. If you know this blog, you know I love to talk about offshoring so my satisfaction in the event is easy to understand. The challenges came from the audience, a group of smart business leaders and professionals, who peppered me with thoughtful, tough questions.

I hate to pick favorites but one question from the event has stuck with me this week: What metrics/models can be used to accurately measure productivity of offshore/outsourced application development? I have worked in application outsourcing and offshoring so long that this struggle for clear development measures is nothing new in my world. Software development has long been famous for the inaccuracy in estimating time and costs, which has resulted in the adoption of numerous measurement tools, cost models and sizing standards. I immediately launched into an explanation of some of the many tools and processes Harvey Nash Offshore uses to measure and report on productivity across the software development life cycle:

• Development Metrics—Measuring developer output in various ways, such as the number and quality of lines of code produced each day
• QA Metrics—Measuring tester output by analyzing the number of errors found on a daily basis
• Process Quality Assurance Team—A team in our offshore development centers in Vietnam 100% dedicated to tracking, measuring and improving the process adherence and excellence of our application development teams
• Accreditation—Maintaining third-party accreditation of industry-recognized standards of excellence, such as CMMI Level 5, ISO 27001 and BS7799

However, that didn’t end the discussion and I am glad. The questionnaire challenged if measures like daily code output were truly accurate in revealing the cost of output. After all, the idea behind object-oriented programming is to reuse units of programming logic. It was a fantastic, technology-smart pushback on efficiency.

We in the offshore industry pride ourselves on delivering efficiency, and here’s a place where measurement is extremely hard. We have come up with many ways of estimating time and cost on a project (Story Points, Use Case Points, etc.) However, once we move beyond estimates and into the actual work, can we actually measure the effort and innovation of the application development process in code and bugs alone?

No we cannot—which is exactly the idea behind the Harvey Nash Process Quality Assurance Team. These senior technologists on our offshore team spend 100% of their time monitoring all software development projects, streamlining processes and reducing any and all inefficiencies they come across. They work with teams and individual developers and testers to constantly improve their work and results. It’s a continuous effort by Harvey Nash to infuse best practices and push productivity higher by working with our teams to improve their daily, even hourly, work.

It’s also the idea behind our apprenticeship program in which any new developer or tester on the Harvey Nash Vietnam team spend approximately 18 months learning. They don’t work directly on client projects until they are experts in the methodologies and processes that have made our 4,500 strong offshore team an engine of highly efficient IT innovators for our clients worldwide.

But do those two efforts to maximize individual and team productivity give me a simple productivity metric to hand over? A chart I can give to clients to say this number right here shows you exactly how much innovation, knowledge, efficiency and revenue you gained this month as a result of the efficiency practices and knowledge management of our offshore team? It doesn’t yet and here’s my argument as to why. Productivity in the end is a measure that must always be tied to that fourth important measurement factor: revenue.

Revenue realized as a result of the offshore investment is a key aspect of the productivity equation, and I believe one that will receive greater attention from the offshore industry in the years ahead. It actually underscores the importance of ensuring your offshore provider is a strategic partner—not just a service provider. Just as the “IT department” has had to learn how to measure its productivity in relation to business revenue, we in offshore are working to find measurements that are truly reflective of “bottom-line productivity.” There’s not a quick, easy remedy here, but that’s not going to keep me from working on it. Like I said, I love a big challenge.

On Tuesday, March 10, Harvey Nash's VP of Technology Solutions, Anna Frazzetto—an IT industry veteran and frequent presenter at SIMposium and HDI—hosted a Webinar for CIOs, CTOs and senior leaders of IT. During her presentation she shared the practical steps to help build a business case for offshoring, what to look for in an offshore location and the top five keys to offshoring success. The presentation concluded with a Q&A session, and following is a transcript of the questions and answers posed by participants.

What are some key things we need to look at from a contract perspective?
From a contractual perspective, you need to lock it in under U.S. currency. From the get-go you need to know that it’s a U.S. contract enforceable in the U.S., and you need to know the pricing structure associated with it. Doing it this way ensures the currency exchange becomes the vendor’s responsibility and not your responsibility.

Another item to look at related to contracts is the types of increases that should be factored in. For example, a country’s inflation rate could be 30-40%, but you want to cap a cost of living increase at 10%. Again, this is something that becomes the vendor’s issues. I think that’s where most of the challenges have been—in not locking the cost of living increase in and the vendor going back to client and requiring them to pay an extra 25-30% to keep their team in place.

Have you seen a correlation between high turnover rates and the maturity of the outsourced vendor and countries?
Yes and no. I answer it this way because I do think there is another component and that’s what is accepted culturally. For example, although India has been in business for many years and does have a level of maturity, it’s culturally accepted to migrate from job to job for a better career opportunity. In China and India, people view themselves as their own career agent and that’s socially accepted. In Vietnam and Singapore, it’s not socially or culturally accepted. I can speak specifically to Vietnam, and know that the employer is their career agent. It’s a lot like how the U.S. was 15 years ago. You trusted your employer to present you with opportunities for career advancement. That’s obviously changed in the U.S. and we can talk about the Gen Y population and where they’ve taken ownership of their own careers. So, that’s why I answer the question yes and no because I do think that culture has a big role in turnover.

What are the most critical issues overlooked or underestimated when considering offshoring?
In my opinion, it’s cost and time. There’s no such thing as being able to take this little nugget and throw it over the fence and the offshore team being able to deliver on it. It doesn’t work like that.

You have to invest the time. Think about if you were setting up a new group in your environment in the U.S. and hired a group of people. If you just expected them to learn it on their own and came back to them in three months asking if the project was complete, the answer is most likely going to be “no.” Now obviously I’m exaggerating a bit for effect, but if the offshore team is 10,000 miles away, you need to invest the time in training them and getting them up-to-speed on the project.

It’s also essential that you have a communication methodology in place. It doesn’t have to be a phone call in every instance—it can be Instant Messaging, Skype, video conferencing—but you really need to be investing in the communication effort.

Finally, I would say you also need to evaluate the cost savings you’re really going to get from an offshore solution.

Does Harvey Nash offer offshore project management and QA as well as software development work?
Yes, we do. We offer what I like to refer to as the “application umbrella.” Project management, ongoing maintenance and support, QA, testing, design, architecture, development. We also do BPO and on that side it is traditionally digitizing transaction-heavy processes that we can help automate.

How would you compare Vietnam to some of the other countries you mentioned such as Thailand and India?
I think the comparison is best said in the words of our clients.

We have one client that’s in the Chicago area, a leading edge technology firm and we were working with their senior architect. The gentleman came back from Vietnam and was going through all checks of the work we were producing. He said to me, “I am truly humbled. I was expecting challenges with the deliverables, the code, the quality. But I am truly humbled at the work you’ve done and so impressed with the team.”

It’s what I keep saying about Vietnam. It’s truly the hidden treasure of Southeast Asia. The technology capabilities, the quality of the students and the technical talent is truly high-end. Now it doesn’t compare to the number of graduates in India and/or the number of people.

Something you also want to factor when you compare India to Vietnam, let’s say, is the cost from a turnover and quality perspective. Some of the quality from India has suffered because of the challenge retaining talent.

I think Thailand will be a strong contender. Singapore will also be a strong contender. They have great technical capability, but it’s a really small country so I’m not sure they will have scalability.

What are your recommendations for managing a multi-vendor scenario?
I would limit the number of vendors you use. I believe Gartner is recommending that you should have a top three list of offshoring providers. This allows you to better control and manage the providers and their efforts. I would recommend that you look at balancing geography, so not having them all in same geographical location as we discussed in today’s presentation. You should also look at their area of expertise. That’s an easy, natural way to divide the work. Finally, I would make sure your vendor has a single point of contact for you and if that person is not available, a single person for escalation.

Can you share your perspective on the situation with Satyam and India?
I think the situation highlights some of the key points we made today. I think the risk factors that we highlighted and Satyam being a family owned business—there is a risk factor associated with that. You want to make sure you understand the financial stability of the company.

If you have a multi-vendor arrangement you do mitigate your risks. If something happens, you already have the processes in place and can move to another vendor with minimal consequences.

It’s an unfortunate situation, and I think it gives offshoring a bad name. Particularly because shortly after, the announcement came out about WIPRO and World Bank. I think it’s left a lot of people asking what’s next?

(You can read more of Anna’s perspective in her blog, Big Integrity Hits for Indian Outsourcing.)

How do you recommend the transfer of knowledge be tackled?
I think that’s a great question to conclude today’s Webinar. Most people I talk to think the knowledge transfer happens at the beginning and end of the project. But it should actually be done through the evolution of the project.

Obviously the offshore team gains domain knowledge up front. This is done through online training, in person training with either you going to the offshore location to train the team, or a portion of the team coming to the U.S. and getting trained, and then returning to train the rest of the team.

It’s important to have a process in place as you go through each milestone and deliverable so you never feel like you’ve lost control of what’s going on. You must have the right process in place to exchange knowledge throughout the engagement.

For more information about Harvey Nash Offshore Development Services, please contact Anna Frazzetto at anna.frazzetto@harveynash.com.

Big Integrity Hits for Indian Outsourcing

Fri, 23 Jan 2009 20:06:58 +0000

The outsourcing industry has been rocked by the news of financial scandal at Satyam Computer Services Ltd, the massive India-based IT services provider. In the days since Satyam’s chairman admitted to falsifying financial statements and overstating company assets by more than a billion dollars, I have received several invitations to urgent Webinars and meetings to discuss how this will affect BPO and IT services buyers, businesses, customers and investors.

This week, the World Bank banned Wipro, another leading Indian IT service provider, from its contacts for the next four years. While debates rage over whether the World Bank has overreacted and whether Wipro was unethical in offering company shares to World Bank employees during its IPO several years ago, damage is done. Customers are worried. India’s shiny veneer as the world’s leading offshore destination is cracking.

I think the frustration I feel as an IT outsourcing industry professional is the same felt by anyone who works in an industry marred by fraud. At its very core, outsourcing is about trust—trusting an outside provider to take over a function or project and manage it with the greatest of skill, efficiency and integrity. The industry has taken a terrible integrity hit this January 2009.

In the short term, I believe some businesses will pull their outsourcing business from Satyam—just as Merrill Lynch quickly decided to end its advisory role with the company. The taint is too large and the distrust too strong. Wipro customers may worry and maybe a few will leave. The question for the industry is how far back will customers pull? To other outsourcing providers or all the way back in house?

In this economy, the fear factor is high but so is the need to maintain highly efficient operations. I believe businesses want to and should continue outsourcing IT services; they will just need more information and to bring greater scrutiny to the selection and oversight processes.

What businesses also need to do is diversify geographies. There are competent outsourcing firms and viable locations the world over. Working with more than one outsourcing provider in more than one location can be a strength in a world of unpredictable events and challenges.

I regularly give talks on how businesses should go about selecting their outsourcing providers, and I believe the process should always be an intensive one. For businesses eager to increase outsourcing geographies, take time to explore outsourcing integrity issues with potential providers. Below is a mini integrity cheat sheet—a list of the issues to delve into intensely with any potential outsourcing provider, near-shore or offshore.

Make Sure You Understand…

Confidentiality practices
Data management
Intellectual property protections
Security systems and processes
Strategies for managing security breeches and compliance failures
Strategies for managing service continuity and backup plans when disruptions occur
Performance measurement and reporting

For outsourcing providers, now is an important time to reach out to your own clientele and remind them of the performance, integrity and service your organization is providing. Go ahead and spell out the results you’ve delivered in numbers and milestones. Many of today’s worried customers need to be reminded that their local team is taking good care of their needs and that outsourcing is delivering bottom-line value.

Harvey Nash: We’re Beating the Serious Players

Fri, 14 Nov 2008 20:23:07 +0000

Harvey Nash’s outsourcing and offshoring division is now “beating some really serious players at their own game.” Those aren’t my words. They belong to technology industry analyst Anthony Miller in this blog entry inspired by Harvey Nash’s newly minted $65 million deal with Alcatel-Lucent.

This deal, which you can read about in full in our press release here, marks our largest IT services contract to date and will expand our network to include world-class wireless technology R&D capability. For many of us working on the solutions side of Harvey Nash’s service offering, it feels like graduation day. Beating out global outsourcing powerhouses for this large-scale deal at a blue-chip account is a loud and confident confirmation of our global strategy to deliver IT services excellence, innovation and efficiency on any shore.

By no means has Harvey Nash been toiling in obscurity to meet its clients’ offshore and outsourced IT services needs. Industry leaders like MSNBC.COM, Honda, IBM and Citibank have all sung our praises. However, size and scale matter in the world of outsourcing, and as Miller notes, we have “struck on the right formula, delivering IT services from a low-cost, offshore location (Vietnam).”

I invite you to learn more about our winning outsourcing and offshoring formula, how we are expanding and what this means for our business by reading our full press release or checking out industry analyst Anthony Miller’s blog entry on the landmark deal. Read and see for yourself how Harvey Nash is able to compete for and—much more importantly—deliver outstanding returns on large, strategic and innovative outsourcing solutions.

Wine with your Turmoil? Insights from our CIO Dinner

Wed, 12 Nov 2008 17:10:24 +0000

Talking to IT leaders over the past several years, I often heard recurring concerns about driving down costs and increasing efficiency. And why not? IT needs to operate as effectively as any area of the business. But today, as the economy continues its steep downturn, we have gone far beyond a tough quarter or tightening the belt. These are extraordinarily tough times presenting once-in-a-lifetime scale challenges for businesses, their leaders and the workforce.

So how do you begin to tackle tough times for the IT industry? We started with dinner. Together with PA Consulting, Harvey Nash hosted a CIO Dinner in Chicago on November 5, 2008, to address the critical challenges CIOs and their businesses face. Over 30 area IT executives joined us to discuss what they are doing to maximize results during these unprecedented economic times.

I cannot tell you we found the magic bullet that will make your workplace and marketplace challenges disappear. But we did walk away with valuable business insights and the knowledge that most CIOs are not slashing IT budgets or cutting projects. In fact, we learned that many businesses are depending on IT to continue "full steam ahead" with an altered mission: to find ways to increase savings and re-invest those savings back into IT initiatives. Despite the tough times we are facing, it seems that many businesses are offering their IT organizations an important opportunity to demonstrate bottom-line business value.

To share the knowledge I gained from these savvy CIOs, I would like to outline a few of the key topics I heard again and again from my individual discussions with IT leaders and during the main discussion.

1. Application and Infrastructure Rationalization:
IT organizations use rationalization as a way to continuously streamline applications and processes to ensure they are meeting business needs. From mergers and acquisitions to changes in business or technical strategy, IT application portfolios and processes can quickly become outdated, redundant, non-essential or poor-performing. Regular reviews (or IT rationalization) allow enterprises to keep resources focused on key business objectives, which reduces operating costs, increases performance and ensures budgets are supporting strategic initiatives. One participant at the dinner saved millions on server costs through the rationalization process.

2. Social Media Initiatives:
Nearly everyone was investing in innovative technology that would promote collaboration. Whether it was through wikis, social networking communities, open source applications or organically grown sites, portals or groups, these technologies were talked about as some of the best solutions for promoting efficiency and cost savings enterprise wide. Providing reliability, flexibility, transparency of processes, and often less dependency on certain vendors, these efforts touch and support the entire business providing a cost effective way to survive and even thrive in the downturned economy.

3. Rationalizing Outsourcing:
Organizations are looking closely at the roles and functions they outsource. One CIO explained that his/her organization saw up to a 15% cost savings by pulling certain infrastructure back in-house.

The group agreed that now is an important time to assess outsourcing and offshoring operations. Outsourcing solutions are marketed and designed to deliver tremendous savings and value. If an outsourcing solution is not reducing costs while expanding resources, many leaders said that now is the time to make a smart move to a new provider, a new location or new approach. Some considered moving their offshore operations back while others were considering rightshore models—the blend of onshore and offshore resources.

4. Performance Management:
I was proud to be an IT industry insider when the discussion turned to teams and talent. IT leaders did not talk about layoffs and cuts but instead focused on ways to encourage outstanding performance. Many IT leaders discussed the importance of developing successful training and retention strategies. The idea of performance management programs suggested as a way to mitigate immediate pain related to the economy and to establish stronger internal processes and a culture of hard work. Discussion throughout the CIO Dinner highlighted the fact that companies are closely assessing staff in all areas (not just in IT) and looking at the programs they already have in place to ensure they are measuring the right elements of job performance and that they are tied to key business objectives.

It was inspiring to hear the optimism as well as the effort and innovation these IT leaders have already undertaken to enhance their organization’s agility and capability to meet business requirements in today’s changing economy. We will be continuing to provide more thoughts and solutions from future dinners and events, including our Strategic IT Leadership Survey with results released in early 2009. Be sure to stay tuned and, in the meantime, share your ideas here by adding a comment or sending me a note!

Implementation Euphoria: It’s an Offshore Thing

Tue, 21 Oct 2008 18:17:46 +0000

Outsourcing and offshoring can sometimes get a bum rap in the marketplace, especially when the economy is in turmoil. Why shouldn’t opportunities stay local rather than being “shipped overseas?” Is long distance a hindrance rather than a value?

As someone who designs, manages and sells BPO and offshore IT services, I love getting those questions. Why? Because the answers are good and the solutions we deliver are making businesses more innovative, successful and better equipped to grow. I get to see clients revel in satisfaction when a tough, resource-draining project is sent offshore to our Centers of Excellence in Vietnam and comes back soaring high above all expectations.

The best way to look at the advantage of outsourcing and offshoring is through an example. Microsoft® Office SharePoint® Server upgrades/migrations provide an excellent illustration of the incredible advantage outsourced resources offer. Many clients will argue that the institutional and operational knowledge their IT teams bring to any upgrade outstrips the knowledge and value outside resources have to offer. However, a feature- and function-rich solution like SharePoint can stop those arguments in their tracks.

It is difficult to find a company able to confidently say that they have been able to leverage all of SharePoint’s capabilities to maximum advantage. It’s easy to see why. Just look at the Microsoft Office SharePoint Server 2007 feature comparison document Microsoft provides on its SharePoint Service home page. The Excel document takes up nine sheets and rows and rows of charted functions to explain the core capabilities the technology offers.

From collaboration, portal and content management capabilities to business processes, search and business intelligence, SharePoint Server 2007 is not just a server solution: it’s a way to transform business processes and workplace efficiency. Extensive SharePoint expertise is required to implement the solution in a strategic and comprehensive method that ensures businesses can realize the full value of the technology.

But what’s a business to do? Should a company tie up a handful of its key technology resources so they can learn the intricacies of SharePoint in order to manage the one-time implementation or upgrade? The answer is an easy no. SharePoint skills are invaluable for the upgrade/migration, but after that their purpose is fulfilled. Why transform your IT team’s skill set and lose substantial manpower for a one-off solution? Investments in talent training should produce skills that will advance efficiency and innovation over the long term.

Now this point is where many skeptics will say, "You talk about SharePoint expertise, but what about the expertise of an internal operation? To implement or upgrade a rich technology solution well, knowledge of the environment is equally critical." And what do I say to that? Absolutely right. That is the reason why Harvey Nash advocates the “rightshore” approach for companywide technology implementations and upgrades.

An on-shore and/or in-house team is needed in a SharePoint solution to assess current state, map the environment and plan the upgrade from start to finish. In no way can you underestimate the value of comprehensive knowledge of the business and the technology environment; and that level of understanding has to be achieved directly.

In my experience, companies often bring in an outside organization to conduct the critical assessment phase. The outside perspective is needed to serve as an unbiased and critical inventory taker that can better spot areas of weakness, overlap, pitfalls, gaps in processes, etc. Additionally, the outside organization brings in the added SharePoint expertise needed to see where existing processes and operations can be greatly enhanced by the new technology. This is the onshore part of the optimum SharePoint upgrade. The onshore team comes in to conduct a world-class current state assessment and then builds a detailed road map for implementation.

After that, the work can leap continents to less expensive IT teams whose SharePoint implementation expertise equals any U.S.-based provider. Offshore teams can also rapidly, and at little cost, ramp up staff to meet tough deadlines, making implementation timeframes short and very sweet. Teams can also expand to include very specific areas of expertise or to focus on precise technical or business process challenges. Knowledge transfer back to the in-house IT team is quite simple through Webinars, documentation and conference calls. If needed, an onshore team can go to a client’s location to perform the knowledge transfer in person

The best part of the onshore-offshore model for most clients is that the implementation seems to be happening right in front of them—updates are constant, milestones are quickly being reached and achieved—and it’s happening without the stress and worry. I call it implementation euphoria. You feel fantastic because you know the SharePoint investment you made is going to pay off, and you didn’t have to retrain teams, lose critical manpower or sacrifice the technology’s full capabilities in order to achieve it.

Offshore Reforms: Increase Rewards, Avoid Excess

Sat, 27 Sep 2008 20:16:30 +0000

Well, it looks like I have some very formidable competition when it comes to doling out offshoring insights. Geraldine Fox and Nigel Hughes of Compass share this fantastic piece on “The Seven Sins of Offshore Outsourcing” this month in Baseline Magazine. Aligning the common mistakes companies make when they offshore to the Seven Deadly Sins, the two authors and business executives have developed an excellent guide for how to avoid major offshore outsourcing pitfalls.

The article begins by pointing out the fact the businesses “that properly plan and operate offshore initiatives can reap substantially higher rewards” than the standard 15-20% offshore savings. At Harvey Nash, we consistently see our clients cost savings in the 25-30% range, and it’s because we ensure clients have the knowledge and support needed to avoid “offshore sins,” such as foregoing due diligence and rushing to offshore too much too fast. In fact, our offshore introduction model is founded on the pilot approach: we introduce the client to Harvey Nash offshoring through a small development pilot project. From there, the engagement grows to meet the client’s IT, operational and bottom-line goals.

The Baseline article lists pride, lack of due diligence prior to offshoring, as the first offshore sin. I would add that this has become the least of the sins as fewer and fewer organizations today are guilty of it. I find that so many businesses have heard the horror stories of poor planning that most have become very good at taking time to research and plan up front or look to providers for support in those areas.

Fox and Hughes also explain the sin of offshore greed as businesses that fail to show concern for the offshoring organization and location (the people and resources doing the work offshore). I have seen first hand in our work in Vietnam how nurturing offshore teams with training, career resources and opportunities builds loyalty and greater performance (just as it does in any workplace).

A company should never view offshore outsourcing as a staffing solution 10K miles away. Instead, it must be looked at as a solution requiring the team to be trained and mentored in the same way an onshore team would be. If the offshore team is not nurtured, a company risks devastating turnover challenges, especially in offshore destinations with staggering turnover. For example India and China suffer turnover rates often soaring over 40% while Vietnam’s turnover hovers around 5% and the Philippines sees rates around 10%.

For me, one of the strongest points of the article was the reminder to not throw problems at offshore providers and hope for the best—the article refers to this sin as lust/extravagance. Sending your problems overseas will not make them better, only more costly. Offshoring should be used to accomplish carefully outlined projects and functions with clear milestones and goals. The problems and challenges a business has internally should be fixed at home and close to the source so it can, as the article says, “reap” the true benefits of offshoring: lower salaries, greater efficiency, increased resources and expanded expertise.

Offshore Quality in Question? I'd Say It Measures Up.

Thu, 18 Sep 2008 21:14:26 +0000

Quality is of utmost importance in every industry. And quality of work and the level of talent are even more scrutinized when the work is done offshore. Afterall, offshoring is still a fairly new concept for many companies leery to send work overseas for fear that quality will suffer.

Will skilled labor in another country meet standards of excellence? What measures are in place to ensure quality? Offshoring feels like a serious risk to companies new to the process. Because it’s unfamiliar, their level of attention to the quality of work is in overdrive as the offshore partner works to prove its worth. New research from Forrester Research, Inc., underscores this point with companies that have not yet taken the offshore plunge admitting that their biggest concern is the quality of work being done.

From my experience in Vietnam, the level of skilled professionals and the number of those eager to learn and meet quality standards is impressive. As I shared in a recent blog, Vietnam has an outstanding and flush IT talent market. The government there continues to be fully committed to the effort to develop a skilled, highly technical workforce for the future of Vietnam. Coupled with the determination of the people—75 percent of whom are under age 35—to make Vietnam a prevailing player in the IT offshore market, quality of work is an absolute priority. Developing a competent workforce is the first step to ensure quality work.

Once the team is secured, a key to success in terms of quality is managing the talent and communicating expectations again and again and again. In addition, the following five tips will also help to ensure top-notch quality from your offshore provider:

1. Gain buy-in on-shore from all team members – from the C-level all the way to the technical teams
2. Set expectations early on and in writing
3. Overcommunicate goals, deliverables and concerns
4. Insist on an on-shore liaison who is always available and dedicated to your needs
5. Get to know your offshore team. Making offshore professionals a part of your team success wins their enthusiasm and dedication to the project

When it comes to the offshore talent pool, Vietnam continues to grow as an offshore destination of choice, but it still does not compare to India or China. Recent statistics point to Vietnam’s IT labor pool sitting at about 80,000, with that figure increasing by 9,000 per year. Comparatively, China and India are graduating about 2.5 million students per year. From a quality of work standpoint, though, Vietnam shines. Why? Our experience at Harvey Nash over the past decade points to the mix of low wages, improving English-language skills, less frequent job-hopping compared to other offshore destinations, and technical proficiency. In fact, these reasons secured Hanoi the number 12 spot among 50 emerging outsourcing destinations in a report published about a year ago by Global Services.

What’s really going to be interesting to watch is how quality of work shares some of the focus that price and location have had as more companies decide to take the plunge and give offshore markets a try. According to an article in Sourcing Magazine, IT work makes up about 65 percent of the current offshore market. Yet, the Forrester research found that a small nine percent of firms use offshore IT labor "wherever and whenever possible," and 14 percent are "ramping up" use; 19 percent are piloting offshore projects; and 22 percent are not currently using offshore labor but are "actively tracking developments.” Furthermore, according to the 2007/2008 Harvey Nash CIO Survey, 48 percent of respondents noted that offshoring work to skilled professionals elsewhere fills the skills gap in the U.S.

So, what all of this tells me is that while we’ve seen tremendous development in the offshore market, I think the best is yet to come from an access standpoint, a production standpoint and, most importantly, a quality standpoint.

Tough Market Favors Vietnam Offshoring over India

Tue, 26 Aug 2008 21:35:20 +0000

You can't feel bad for the Indian offshore market. The country has defined and led the global IT offshore industry for more than 10 years. Since the beginning of this decade, India’s IT and outsourcing companies have seen record growth and profitability.

But now the market, as markets tend to do, is shifting. Times are tough and inflation is very high the world over. India's long-term dominance has now made it a higher-cost offshore destination. This recent Wall Street Journal article, “For India's Tech Titans, Growth Is Waning,” underscores the growth in salaries alone by looking at the country’s biggest IT and outsourcing success story, Infosys. According to author Niraj Sheth, the company’s “average salaries are rising 12% a year, and increasingly high turnover is forcing the company to spend more on training.”

It is low-cost countries that pose the biggest threat to India’s offshore dominance, and I am going to argue, again, that Vietnam is the contender of choice. First, there is the cost factor. Vietnam salaries fall significantly below those across the Indian market.

Second, there is the talent factor. Vietnam continues to produce thousands of highly skilled technical professionals every year. The government is firmly behind the effort to build a skilled, high-tech workforce for today and tomorrow, which has resulted in an outstanding and flush IT talent market.

Investment, while slowing in India, continues to boom in Vietnam. From high-tech leaders like Microsoft to investment firms like Franklin Templeton, the business world has recognized Vietnam as an important emerging market and have committed to its growth through investment. The Vietnamese government has responded by creating a business-friendly policy of economic restructuring.

Vietnam, like India and all countries worldwide, is experiencing the challenge of inflation and dealing with the reality of higher oil prices. However, the commitment of the entire country—from the business community and government to its citizens—to become a modern, prosperous nation coupled with the impressive youth of the country (80 million people with almost 75% under the age of 35), will continue to make Vietnam an important player in today's IT services market.

RFP Extinction? New Techniques for Vendor Selection

Tue, 12 Aug 2008 14:09:39 +0000

I recently went to the World BPO Forum where one of the discussion topics in the Outsourcing 2.0 session was quite provocative: Should you do an RFP or not when selecting an outsourcing vendor? There were two distinct perspectives:

1) You should select a group of vendors/partners you want to work with first and get them all to agree to the terms of doing business with your company. Then, you should select which partners from the selected group work on which projects based on their specific competencies.

2) You should prepare your scope of work and distribute in an RFP format to a wide range of potential companies to make sure all vendors are competing fairly.

Not conduct an RFP? I first found the suggestion startling. I have been in IT for about 20 years, and the RFP methodology has been deeply ingrained into our industry’s vendor selection process. That said, I felt myself quickly agreeing that it is time for a change. Businesses, both vendors and clients, are losing too much time and money in complicated, long RFP rituals.

A better, faster way is needed for both clients and vendors and here is one of the best practices I have seen in vendor selection today. Just recently Harvey Nash began work for a Fortune 100 investment firm in New York that has set up an internal storefront for all vendors. Every company must go through the online storefront in order to become a vendor, and the storefront process includes signing terms and condition agreements, pricing terms, as well as completing a capability matrix that highlights core competencies. Once a vendor has successfully completed the online entry process the pricing structure is disclosed to the hiring managers.

The nice thing about this approach is the efficiency. A hiring manager simply goes to the Web site, picks the top three vendors of choice and can then narrow down the selection process from there. They have eliminated the time-consuming 40-50 page RFP response, which rarely gives an accurate depiction of a business’ capabilities. How can 40-50 pages be wrong? Many organizations use external consultants to prepare their RFPs. These consultants tend to feel that the larger the RFP, the better it is at representing the organization. This assumption too often means lots of information containing only small amounts of valuable substance related to the specific RFP need. The result is a system in which companies are judged by the number of trees they have killed in building their RFP rather than by their competency and experience.

During the discussion at the Forum, it was also suggested that the maturity of the company seeking an outsourcing vendor is a key determinant in whether an alternative vendor selection process will succeed. If the company is experienced in outsourcing, then an alternate route is easy to implement. But, it was said, companies with little outsourcing experience need a formal RFP process to level the playing field.

Here I must strongly disagree. Experience in outsourcing does not dictate vendor selection competence. An RFP, or any other selection process, requires due diligence and research, no matter how rich the company’s outsourcing background is. Any company going through a selection process should carefully interview vendors and speak to their references. These two simple practices usually tell you far more than any RFP response, no matter how long it is.

Life Versus Business Outsourcing -- It's Not So Different

Thu, 31 Jul 2008 17:37:52 +0000

On the "What Is Noise" blog, David Fisher contemplates personal outsourcing in a post called "Outsourcing My Life." He looks at chores like laundry, housecleaning and even researches and considers whether it is more beneficial to hire out these traditionally personal tasks or do them himself.

Isn't it true? Many people do outsource more and more life activities. From cleaning and ironing to dog walking, gardening and car washing, outsourcing housework and errands is no longer a privilege reserved for the extremely wealthy. It's a way for all of us to win more time to focus on what we love and the things we do well.

How do we make personal outsourcing choices? We look at what we want to spend our time on (what we consider core to our happiness, earning potential, career goals, family needs) and outsource the activities that are non-core. For example, I weigh the time and cost it takes me to clean the house versus outsourcing it to a service. It's a personal outsourcing no brainer. I can work on the things I want to work on in the house and then have professionals handle the rest.

What's interesting is that this personal decision making process is the same one businesses use when it comes to outsourcing. As individuals, we balance cost, quality of service and timeline to determine the net benefit of outsourcing. It's the same for any business. What I find shocking is that there are still significant numbers of large organizations that choose to handle many of their non-core tasks (mail rooms, data center management, etc.) in-house while smaller more agile companies use outsourcing as a source for increased productivity, greater return on investment and increased position for revenue.

To me, the difference is focus. Many of these smaller and mid-size companies are able to dedicate more time and talent to what they do best, leaving a lot of administration and maintenance to trusted professionals. I am a big fan of all the "trusted professionals" in both my personal and professional worlds of outsourcing. Life would be very messy without them!

Two Ships Passing on the Way to Vietnam

Tue, 08 Jul 2008 21:36:28 +0000

While Vietnamese Prime Minister Nguyen Tan Dung was here in the U.S. to discuss issues like trade, the environment and inflation, I was making my very first visit to Ho Chi Minh City. I have spent lots of time in Hanoi in recent years and was very excited to get to know a new Vietnamese city.

What struck me on this trip were the tremendous cultural and economic advances that continue to push Vietnam into the global spotlight. Businesses are cropping up everywhere, landscapes are changing rapidly. The integration of Vietnam into Western culture is astounding. For example, Vietnam is hosting the Miss Universe pageant this summer. The contest kicked off in Ho Chi Minh City and will include several events in Hanoi. The pageant itself will take place in Nha Trang this July. Just this one event, global and iconic in nature, has changed the very streets of Vietnam. There are more Western tourists filling the roads and the souvenir shops are selling apparel geared to the event and new audiences.

While in Vietnam I was watching the country transform and meeting IT teams, Prime Minister Nguyen Tan Dung met with President Bush and Secretary of Defense Robert M. Gates. They agreed to increase dialogue on both sides when it comes to politics, national defense, security, the environment, sciences and technology. Their meetings are another signal of the important role Vietnam is working to play in today's global marketplace.

And the news of the two leaders meeting was not only front and center here in the U.S. It dominated the Vietnamese news cycle every day that I was in Ho Chi Minh City. Vietnam is very eager to deepen and broaden their relationship with the U.S. From what I have seen in Vietnam and the people I have met, it is clear to me that the U.S. can be an excellent guide to this rapidly developing country as it works to become a more responsible, competitive and progressive global citizen. My hope is that despite explosive growth Vietnam can still retain its strong heritage and avoid the cultural losses that many of today’s large, economically booming countries have suffered. I very much hope Vietnam remains the Asian Pearl -- rich in culture, sincerity and tradition.

Are there Any Bargains Left?

Tue, 24 Jun 2008 21:09:59 +0000