The last time I wrote about this I was taking about Call Centers. American Companies had outsourced phone support to other countries, often India, and the results were so bad due to cultural and communications issues that the USA companies insisted on a call center across the street so the Indian Companies rented office space across the street and hired US Workers.

A month after I wrote that article, Tata consulting opened an office for three hundred technology workers in Minneapolis, Minnesota.

Re-shoring isn’t coming to IT, it’s here, and the same offshore companies that started round one are taking the lead in round two.

The odd thing is, at least according to the Chicago School of Business, this shouldn’t be happening – at least on first blush.

Let me tell you why.

How did this happen?

If the Booth School of Business at the University of Chicago were to come up with a slogan, it would probably involve the idea that efficient markets win.

By efficient markets, I mean markets with lower cost structures.  If you pay 2% per transaction in the stock market, and I pay 1%, over ten years, I’m going to end up with more money, right?  Put another way, if we have to pay a five cent fee on every transaction, and work to lower that amount to four cents, in a way, we made money.

If that were true, then the round-tripping of contracts to India/China/Pakistan and back agan, with its associated communications costs (have you ever tried to set up a conference call to a developing nation?), combined with the sheer overhead of managing a multi-national company, should mean that the best deal would be a local deal.

Simply put: This should not be happening.  It makes no sense.

We did this to ourselves

Thanks to the build/boom/bust cycle of American real estate, office space is available cheap.  Thanks to the layoff/outsource cycle, labor is available cheap too.  Those two efficiencies combine to create just enough cost savings to allow for management overhead and awkwardness.  (Shrinking the distance between doer and client adds efficiency as well.) Yet there is opportunity here.

A local company, with less overhead, could be more efficient. That efficiency could lead to a better contract, with more cost savings for the outsourcer and more profit for the local company.  When I think about local contracts, a few companies come to mind; Menlo Innovations, in Ann Arbor, Michigan, competes for that kind of work. Pillar Technology is a 200-odd person delivery company which had no physical offices for over a decade; the executives and staff all work from home. I once took a call from a Pillar Recruiter, working out of her home in Georgia, to do a software project in West Michigan. In 2012, Pillar opened a software studio near Detroit, but its executives continue to operate with no building, which means no gas bill, no lease, and no maintenance, reception, or jantorial expenses.

One more time: Efficient companies win.

There is an opportunity here for local companies that are efficient.

Where are the small local companies?

David Gewirtz is the author of “How To Save Jobs: Reinventing Business, Reinvigorating Work, and Reawakening the American Dream.”  In that book, he claims that we schooled the entrepreneurship out of our society – that by focusing our culture on getting a good education in order to get a “stable, secure, good” job, we actively turned ourselves away from the idea of creating a business.  When the companies merged and laid off redundant departments (or sent work offshore), those now-laid-off went to the market to look for another “stable, secure, good” job.  Multiply that by a thousand mergers and offshore initiatives, and you have a lot of unemployment and a job market ripe for hiring, but no entrepreneurs to do that hiring.

This idea of entrepreneurship is not entirely gone; companies like Pillar and Menlo are still doing impressive things, and we cover the individual perspective right here on this blog.

What’s next?  I’m not sure.  Mr. Gewirtz has recommendations in his book, both for society (more small business) and for any individual stuck in the “good job”/lay-off trap.  My favorite idea from Gewirtz is to look for other people who have good products, then either partner with them (you take over marketing, logistics, and production, to make the product “real”) or outright purchase the product idea and develop it yourself.

There are many people with ideas; Gewirtz suggests becoming a ‘finisher.’

Lessons

Writing this article has helped me realize two things.

First, that we (myself included) in the US are overly focused on ourselves.  This blog has readers from all over the world; it would interesting to hear from the current IT workers in India, Pakistan, and Vietnam on their perspectives on re-shoring.

Second,  I would like to get Mr. Gewirtz to interview on this blog.

What questions should I ask him?

Last week, my friend RobLimo asked if I would take my ideas for independence, box them up, and do a video interview for Slashdot.  The resulting video got tens of thousands of hits in two days.

Somehow, I think it was less than it could have been.

Rob called the video “secrets of independence” or something like that.  At the time, I didn’t realize that was the goal — it felt more like a simple conversation.  With a title like “secrets of of independence”, I thought it deserved more punch — like the four things you need to know to go independent.

It turns out, I do have a list of four things.

That sounds like a good blog post for today.

It all starts with a lot of financial modeling in Excel.

Requirement #1: Know Your Household Burn Rate

This looks a lot like the family budget, and includes all ongoing expenses: Mortgage, Heat, Electrical, Car Payments, Car Repairs, Gasoline, Telecommunications, Magazines, Food, Entertainment, Clothes, your weekly allowance, a small amount of savings for emergencies.

Once you’ve calculated the burn rate, you’ve got the real problem: Living by it.  Consider dropping just that amount into your checking account, every month, for four months.  (Alternatively, just check your actual spend over that time period, to find out what your actual burn rate is.)

Knowing your burn rate is just smart, even if you don’t go independent.  If you, however, you’ll have new expenses.

Requirement #2: Know Your Business Burn Rate

Before you found your first customer or sent your first invoice, your business will have entire new sets of expenses.  You’ll need to purchase your own hardware, buy your own health insurance, contribute to your own retirement program, purchase software, join a professional association, pay for tax software and possibly small business software (I recommend Quickbooks Pro online).  You will add all these up, then consider how much charitable contributions you would make on top, and the taxes you’d be responsible for if you made that much income.  That is Federal, State, unemployment, social security, and the small business tax.

Putting those two together gives you your survival income rate per year.  Divide it by fifty, and it’s the amount you need to average, every week, to have a viable independent business – be it IT Consulting, Dog Walking, or Yard Maintenance.  Divide that number by twenty, and you’ve got a minimum rate per hour to charge assuming 50% utilization.  (Utilization being a fancy term for how busy you are.)

Requirement #3: Calculate Your Replacement Income

Replacement Income is the worst-case income you get – the money your household can earn if you go independent and the gigs don’t come your way.  This could be from a weekend job as a bank teller or pizza delivery person, but more likely it is the income from another household member, or possibly investment income.

The trick is, replacement income can’t get in the way of you being billable during the work-week.  The ideal replacement income allows you to travel to the client site during the work week, so being an online adjunct instructor at night works, as does creating screencasts to teach Ruby On Rails.

As long as #3 is greater than #1+#2, you can go independent right now.

For the rest of us, it’ll take work.

Requirement #4: Calculate Your Runway

(Burn Rate+Business Burn)-Replacement = Burn Per Month, or BPM.

Savings divided by BPM is your runway — the amount of time your have to find another assignment until you start eating into retirement income to pay the bills.

Once you know your runway, the decision suddenly gets a lot easier.  If you have less than a year of runway, you probably need a job.  I’m sorry.  Go back to step one and get aggressive about expenses; that will mean more money in the bank each month and also build your runway.

If you have more than a year of runway, then you can think about how much runway you’d need to find a day job.  Double that, and that’s your minimum.  If savings dip to that level, you start looking for a day job.  For now, start looking for contracts, and when you get enough to exceed your total burn rate, congratulations — you can quit the day job.

At least, that’s the cold, hard, mathematical considerations about independence.  You’ll notice I have not talked about emotions much, or even the hard process of finding new customers.

More about that next time.

I my previous post I suggested that the workforce is split into three general roles – ‘Labor’, ‘Crew’ and ‘Talent’ — and that it was better to be talent.

In order to be talent, you need to be differentiated somehow from everyone else.  Unique; different.  The classic definition is either a ‘known good quantity’, willing and able to do things others are unwilling, or unable to do — and you’ve got to work gigs, not that day job stuff.

Let’s talk about how to get there.

A Branded Quantity

The straightforward way to do this in IT is to pick one (preferably several) of the following:  Get a PhD in computer science, become a professor at a referencable school, write a book establishing your expertise, then work at a big company with an impressive title.

My model for this is a man named James Whittaker, who yes, earned his PhD from the University of Tennessee, taught at Florida Tech, gave a talk with one of his students that he later turned into a book, How To Break Software.  After Florida Tech, Whittaker left for Microsoft, then did a couple of years at Google, and, as of last February, is now back at Microsoft.

That’s Whit over at right, when he was a director of Test Engineering at Google.

So yes, real people are really able to plan their career in such a way as to do things others have not done, to make their expertise sought-after and desired.  If you are under 25 with no mortgage or serious life commitments, this is an approach.  Right now, my advice is the University of California at Berkeley, MIT, or Carnegie-Mellon University, then on to Google, possibly Microsoft, or Groupon.

But that’s not the only way to do it.

Willing To Do What Others Can Not – Or Will Not – Do

When I click on the “Talent” list for Craigslist, the same listings come up again and again – actors, actresses, and *cough* models doing, well … things on cameras that anyone could do, but that violate the average person’s sense of proprietary.

The easy way to be talent is to simply do things others are unwilling to do.

It doesn’t have to be … adult.  Garbage and Sanitation workers get to work reasonably short hours and command premium pay and benefits relative to their experience.   Mike Rowe, on the discovery channel, has an entire show about this called “dirty jobs.”

In IT, this means carrying a pager or offering support services at midnight.

Consider this business model

There are one hundred and sixty-eight billable hours in a typical 40-hours-per-week month.  If you know your customers well, you might know that they only need, on average, thee to five hours of support – but want time reserved if they need it up to ten hours a month.  So you sell thirty customers up to ten hours of reserved time and get paid for 300 hours a month.  Most of the time it will work – occasionally you will need to call in some help (or just go crazy.)

This is how my brother in law got a very large house.

Or This One

The other end of what people aren’t willing to do is what they aren’t able to do.   So you go out and write your own webserver, or some other component, that is terribly needed to make an open source project really work.  You don’t have to write the whole thing. Zed Shaw, for example, wrote Mongrel, the webserver that made Rails efficient – and gave it away.

Or take David Heinemeier Hansson (“DHH”), the creator of rails. He once had a recruiter ask how many years of Rails Development experience he had.  David replied “ALL OF THEM.”

Neither of those guys is going to have a problem finding a gig anytime soon

The Last Piece

But there’s another element, the toughest element, in becoming talent – moving toward pay-per-event – that most of us avoid out of culture.  We want the “safe” day jobs, which, ironically, means that freelance work becomes  work that few people will do, further increasing the value of that work.

More on that next time.

On September 10th, the story was that an “anonymous hacker”, security lead for the internet group ‘anonymous’  has hacked into GoDaddy, taking down as many as 52 million websites. The New York Times ran the story that Anonymous used a Distributed Denial of service attack by taking over millions of computers, then directing them all to route traffic to GoDaddy sites, creating an influx beyond the capacity of GoDaddy’s servers.

Except, three hours later, the hacker collective Anonymous claimed, through several twitter feeds, that it was not them. and the hacker anonymousown3er was acting alone.

At least, that’s our story so far.  It’s a good story; it’s a credible story, reported by CNN, CNBC, the Register, TechCrunch, and others.

It’s just not true.

Or at least, it might not be true.  We think.  Maybe.

Then things get weird.

The next day, September 11th, 2012, Scott Wagner, the CEO of GoDaddy, made a public post claiming the problem was internal – a corrupt router table – and had nothing to do with hackers, hacktivists, or Anonymous.  Meanwhile, AnonCentral, an incredibly prolific twitter account with one hundred and fifty thousand followers that may be posted by multiple people, was claiming that GoDaddy supported (or had supported) SOPA – the Stop Internet Piracy Act, that advocates argue is so loosely defined that the attorney general can take down nearly any non-us site he does not like.

What is really going on here?

We may never know for sure.

 What we do know

GoDaddy was down for six hours, from 10AM Pacific to 4PM Pacific on September 10th.

Assuming this kind of outage happens once every five years, that would be 99.98% uptime, which sounds nice – but GoDaddy’s Service Level Agreement is an incredibly 99.999%.  For those without a calculator handy, that is about 25 minutes of downtime, total, in five years – or five minutes per year.

That is a huge promise to make.

Famed Internet Blogger Joel Spolsky explained his faith in those sorts of Service Agreements this way:

Internet providers like Peer 1 like to guarantee the uptime of their services in terms of a Service Level Agreement, otherwise known as an SLA. A typical SLA might state something like “99.99% uptime.” When you do the math, let’s see, there are 525,949 minutes in a year (or 525,600 if you are in the cast of Rent), so that allows them 52.59 minutes of downtime per year. If they have any more downtime than that, the SLA usually provides for some kind of penalty, but honestly, it’s often rather trivial… like, you get your money back for the minutes they were down. I remember once getting something like $10 off the bill once from a T1 provider because of a two day outage that cost us thousands of dollars. SLAs can be a little bit meaningless that way, and given how low the penalties are, a lot of network providers just started advertising 100% uptime.

I don’t think the lesson on this site, today, is not about anonymous; it is not about computer security at all.

Instead, it is about trust.

When someone makes a promise that is too good to be true, look for the guarantee; what happens if the promise is broken?

In case of GoDaddy, my personal site, Excelon Development, was down for six hours.  The possible loss to my business is in the five figures — it is, after all, possible that a decision maker, offering a large consulting contract, looked at my website at just the wrong time, saw that it was down, and decided to take his business elsewhere.

The probable loss, of course, is much less.

Black Swans will happen; there will be unexpected things, exactly what SLA’s do not account for.  Router Tables or Hacktivist, it really doesn’t matter.

The question to be prepared for is: How will your business respond when they do happen?

My tiny little business decided to take the risk and live with the downtime.

What about yours?

In my Informations Systems Policy Class in Graduate School (yes, they have classes for that), outsourcing was one of the hot topics of the day.  Specifically, outsourcing of business process. The basic idea was to clearly identify services, then cut cost by moving them to low-wage areas.  We even had impressive, triangle-shaped strategy graphs that talked about what to outsource and how to outsource it.   I ended up doing my master’s capstone work on the subject of outsourcing; it still stands up to scrutiny today.

But I have to admit, when the Washington Post ran an article on Indian Companies setting up call centers in the United States, I was as surprised as the next guy.

There is a lot of confusion going on here; a lot of doubt and mis-understanding.

I’m going to try to clear it up … and let the opportunity show through.

 How Did This Happen?

If you’ve ever called an 800-number for technical support, only to be transferred a dozen times, you probably realize how hard it can be for outsourcers to clearly identify lines of service.  Add a half-dozen time zones, eight layers of management, and a great-annual-review, transfer/promotion/forget_about_yesterday culture to the mix, and you’ve got a prescription for some real trouble.

There are plenty of lessons to be learned from that, but one of them is that keeping the outsourcer close — physically close — to the client company adds incredible value.

So that is exactly what the outsourcers have done.

After complaints about poor service, they looked at the United States (and other developed nations) with our bad economy, large numbers of unemployed workers, large amounts of cheap office space with power everywhere (that works!  All the time!) and said “hey, why don’t we set up shop across the street?”

According to the article, Aegis ignores credentials, uses a competency test, and pays workers who can do the job of repeatable business process outsourcing (mostly phone calls) from $12 to $14 per hour, along with a monthly bonus that might be worth an additional dollar per month.

To a competent high school graduate, it isn’t much, but it beats Taco Bell.

Truth and Consequences

One thing that always struck me about offshore technical work – from low-skill to high – was the sheer number of inefficienies in the process.

First you need a sales person on-site in the developed nation; you need an office to support that sales force.

Then you need the recruiters, trainers, and management overhead in the developing nation, plus, likely, an army of translators and liason-people.  You need to pay taxes, fees, and lots and lots of airfare and hotel expenses.

All this translates to inefficiencies in the system – it makes costs go up.

The Opportunity

A few years ago, an offshore company was offering programmers at $30/hour.  The work wasn’t that complex; it couldn’t be, in order to be offshored.  At the time I thought “A good college intern would accept that rate.  Why, I could get student to drop out of college for a few years, pay them $25/hr, and collect the float.”

I did have a bit of a chicken and an egg problem – I could not get the employees until I had the sales, and vice versa, but the idea was right.  I thought local people of ability could compete directly with offshore work by eliminating complexities in the supply chain. (In English: Cut overhead and work from home.)

I didn’t have the investment cash to pursue this, but it turns out, someone else did.

Today, the outsourcers are setting up shop locally and hiring the talent themselves.

The thing this – they are still saddled by those layers of management, the sales force, the physical office.

With IP telephony and rerouting, someone is going to build a virtual office, enable people to work from home, and lower costs to providers.

The only question is if it will be the developed nations … or the entrepreneurial, scrappy, outsourcers they have come to rely on.

If anyone wants to talk about this — you know where to find me.

Last time, my friend Shawn introduced his premise — that IT Workers are the coal miners of the 21st Century.

This time, Shawn’s back, to explain how the shift from hourly work to exempt has changed the nature of the work itself … and not for the better.

Obviously, Shawn’s comments are an analogy. Certainly, working conditions and employment opportunities looked much more dim for the West Virginia coal miner of 1897.  Where the coal miner risked a collapsed mine, lack of oxygen, and poisoned lungs, an IT worker might face a paper cut, or, perhaps, repetitive stress injury from too much typing.

Still, there are things going on in how IT workers are treated; his ideas may cause you to pause and refect.

Back to you, Shawn …

Back in the “bad old days” before Y2K and the dot.com bust, I worked for a software company that had a mainframe.  They employed “computer operators.” On a legitimate 2nd and 3rd shift schedule.

There was someone behind that console 24 hours a day, schlepping backup tapes, running jobs, confirming the mail servers were still up, reading a magazine, etc. Someone complained: “I saw the operators and they had their feet up, reading a book.”  The operations manager’s response? “Yup, but when you need to have your job loaded at 11pm, or the your printer fed paper, he puts his book down and handles it.”

The point here is, nobody in their right mind would expect the first-shift operators to cover the second shift, unpaid, as part of the company’s IT operations manning, right?  “Hey, Smith, you’re on call for 2nd shift tonight, in case someone needs a tape loaded.  While you’re at it, check the backups, make sure the mail server is up…”

The real problem is, when you know you’re going to wind up working crazy stupid hours anyway, as a rank-and-file worker, where is the motivation to do your darndest to accomplish the mission between 8:30 and 5:30?  No matter how hard you just worked to make things right with the world before quitting time, because you’re also required to cover production of the 2nd shift, you’re still going to be dealing with the aftermath of someone else’s screwup potentially at 9pm instead of watching The Big Bang Theory.

Which is unlike the salaried marketing manager mentioned above, who probably busted her butt after lunch to be sure the latest ad copy left no participle dangling. Sure, maybe she worked an hour past “quitting time” to do so, but due to her diligence there, she’s done for the night and will likely go home at her normal time tomorrow and the day after. The extra hour she put in ensured that the project was done today and out the door to the printer in a way that met the company’s schedule. Thats the purpose and intent of making employees “exempt”: that they work somewhat flexible hours to ensure that the job gets done, whether its extra hours, or a couple less hours.

Now imagine if Wily E. Coyote and Sam the Sheepdog were were “exempt” employees. The whistle would blow and they’d have to go right on kicking the daylights out of each other.  Not nearly as much fun to watch as them punching the time clock and being cordial as they collect their respective lunchpails and walk into the sunset

Did you know that “We’re Sorry You’ve Been Laid Off?” condolences are now a major Hallmark greeting card category?

Perhaps the greatest irony is in IT, where technology really has enabled self-service and productivity, perhaps so much so that we need less IT support per hundred employees, meaning … oh wait.  Ouch.

In the old days, a project management system cost six figures, required a purchase order, a fair amount of hardware, and half a full-time sys admin to support.  Today, Joe the intern uses the corporate card and suddenly the entire department is on basecamp or pivotal.

And no, that is not a hypothetical — one of my largest clients recently signed the whole team up for pivotal, used it for two months (for free), then went to management to get the corporate card to allow them to continue with the tool past the initial offering period.

Meanwhile, IT jobs become harder and harder to come by.

There are lots of reasons for this; one of them is the increase in managed services companies; the kind that took Gartner’s advice and started to offer infrastructure as a service, which allows them to split up on support rep over a large number of companies.

My friend (who I will call Shawn) has spent most of his career in corporate IT; today he works for one of those managed services firms that stole someone else’s job.  I wanted to hear his take on the IT employment situation; here’s what he had to say.

IT jobs are drying up. Why? Managed Services providers like the company I work for are turning IT services that used to be done in-house into contracted situations, that are basically like contracting for building maintenance. As a result, companies are starting to treat IT workers like salaried janitors.

Even if I found a traditional IT job (help desk, server admin, management, etc), it’s likely the job would chafe me and drive me bonkers.  There is too much emphasis on hard skills, “scope dope” situations, cookie-cutter solutions, etc, and not enough on the soft side of things. Business wants $100,000 worth of productivity out of systems they only feel they should spend $1.99 on, and can’t figure out why things still cost money and don’t work: They don’t commit resources (and by resources I mean things like actually allocating some time toward the IT process for employees) or time to IT in the same way as they do for the company picnic, and yet complain loudly when things take time/money/effort/interest (on the part of the leadership/executive management)/resources to actually make work. I swear, I’m gonna throttle the next guy that calls me up and says “We had a girl start yesterday, we need an ID and email for her _RIGHT_NOW_” and then is deeply offended that I can’t just wave my magic keyboard and have a fully functional user ID already whipped up for him that has all the permissions its needs, PC setup and running, printers mapped, etc. You knew the new person was starting, why didn’t you call us last week and ask for this? Your lack of foresight and planning shouldn’t be our emergency.

Example: There is almost no such thing as a business analyst in a lot of IT shops anymore, so businesses are relying more and more on the rank-and-file employees to become IT experts along with being subject matter experts in their functional areas. While there is little wrong with, say, the purchasing manager being the SME on how the purchasing process works at the company, we run into problems with the purchasing manager is also has to be his own business analyst for the ERP. Its when he’s expected to build SQL queries so he can extract reports instead of having a dedicated DBA or reporting person, well, thats when things break down and you get “I extract all of this into an Excel spreadsheet and then manually cut/paste this into a word document and then email it to everybody..” and you just want to pound your head against the table.

Then there’s the actually getting of the job.  A lot of the places I’d like to work/things I’d like to do have either really weird experience requirements & needs (“3-5 years experience with Exchange 2010.” Uhh, what?) or “Bachelors degree required, masters degree preferred.” and then you see the salary range of “$34,500-$43,500 /yr” or something stupid like that. Excuse me?

I could, in theory, be this guy:

Tom from Office Space

Taking the customer requirements and giving it to the engineers.

Cuz I’m a people person, gosh darn it!

Ok, he didn’t say “gosh.”

He did, however, list a very important change in software development.  In our desire to be “Agile”, many companies eliminated the Business Analyst Role, because it sat between the programmers and the true customer … only to hire someone to decide what will actually be built, because the true customer is too busy to decide what will be built.

In the mean time, this creates an opportunity for the tech-savvy general-purpose thinker.

The only problem is, you need to be a company so large or of some specific type to have an IT department … and even larger to have programmers.  There just aren’t enough of these to go around.

More on this, and, perhaps, more from Shawn (if you are interested) — to come.

I’ve been writing about trends in IT Staff — how the traditional role of the full-time staff is giving way to staff augmentation and services outsourcing, and how the more tech savvy crowd is supporting themselves.

Meanwhile, economic trends aren’t in our favor.

Yes, most developed nations are struggling with low employment numbers, but it’s the why of those numbers that is most ominous.  Many large organizations have been choosing to grow through mergers and acquisitions for years.

Why is that so ominous?

Yes, some companies try to merge in order to gain customer lists and cross-sell, or to enter to new markets.  However, in many, if not most cases, one of the compelling factors is cost savings.

If the two companies merge, they will suddenly have redundant HR departments, redundant Purchasing  departments, redundant finance departments, marketing departments … and IT departments.

Hence the term “made redundant”.

On the one hand we have business forces squeezing out the IT department, and on the other, well … business forces squeezing out the IT department.

Eight years ago, I wrote a little article called “After the Coming Bust” for a website called, ironically enough, AngryCoder.com.

As the saying goes: Friend, the party is over.  The long run is here: It’s time to get sober.

It’s time to talk about you.

Four Strategies

* Get really close to your customer. If you work at a large business, you probably service end customer — people who want the printers, and the email, and the Sharepoint server to just work.  The IT literature in the 1980′s and 1990′s was all about insulating the department from those pesky people; by having a helpdesk that took the calls and routing them.  By separating ourselves from the customer, we became a ‘service’, the kind of thing one pays for … and switches  when things aren’t going well.  If you want to keep your job, don’t abstract yourself from the end customer – connect with the end customer.  Be “Bob, the guy who solves my problem.”

* Work for the outsourcer. If you can’t beat ‘em, join ‘em.  ISPs, Hosting Providers, and Domain Registrars need people too.  HP, IBM, Microsoft, Amazon, Yahoo, and other top-flight companies all have data centers, and data centers need IT staff.  Or work for a smaller, local company offering IT services to comparable-sized companies.  Once you figure out how it’s done you can …

* Provide your own managed services. Three of the people in my small circle provide independent IT services.  Instead of working as part of one company, they have three to thirty clients, all of whom only really need part-time IT Services.  One good place to look is startup companies that don’t develop software, just coming off an incubator or just becoming big enough that they need formal help.  Between setting up the website, managing the social media, connecting gmail and google docs to  domain they’ve purchased, and supporting any devices that get flaky, you might just find a niche.  (And yes, you can fill in end-user support too.)

* Chase the niche. It may sounds as if IT jobs are “going away”, and some are, but the reality is much more complex than that.  Large organizations, like banks, insurance companies, and government and military organizations have inertia.  Even if some new online, cheap Software-As-A-Service alternative for payroll magically appears, the State of California would need to extract it’s payroll data in order to convert, and it would be cheap (at least this year) to keep the DBAs, sysadmins, developers, and testers in place on the existing system than to covert — at least this year.  Those same forces will be around next year too.

* Do Project Work. The economy may be ‘hollowing out‘, and companies may be outsourcing and cutting staff.  But have you noticed that there is still work to be done?  Somebody has to keep WebSphere running, and somebody needs to figure out the disaster recovery plan, and somebody has to figure out the backup plan for sharepoint, and routinely apply security patches to the web server.  Some of these things can be defined and done part time; others will be project work.  Companies will continue to need this work done, and smart companies may develop a network for freelancers they turn to in order to get these goals accomplished.

In the end, all of these approaches have one thing in common: In the next ten years, we in the IT field have got to get closer to our customers, or else we risk becoming irrelevant.

I’m putting my money where my pen is:  Four months ago, I went independent, and now I contract directly with companies to solve their problems, not to respond to tickets from a queue.

What about you?

We’ve been dancing around the idea IT staffing, discussing both augmenting with contractors when demand gets high, as well as outsourcing with a model like IS Lite.

Let’s talk a bit more about IS Lite.

Yes, last time I criticized the idea as it was typically practiced.  That’s not a criticism of the idea; it’s one of implementation.

The idea with IS Lite isn’t to shift to managing a bunch of contractors for IT services.  It’s to identify the services that can be provided by the free market, and find partners to provide those services.

With IT Lite, you don’t pay a contractor and a license for MS Exchange; you find a company willing to service and support email.  And internet.  And your login service. And your print service.  Helpdesk.  And Hardware.

No, again, don’t look at me like that.  I’m not saying the company should sign some huge outsourcing agreement with a big vendor, layoff the IT staff, then have the vendor hire the same people back at half the pay — though that has been done before.

No, I’m talking about real services that can actually be outsourced.

That means the services will either need to be very horizontal (“the internet”, “website hosting” and “basic IT support” come to mind), your business better be very simple technologically speaking, or the partner is going to have to get to know you very well.  That might be good for the vendor, but to the hiring company, that might end up looking a whole lot like “vendor lock-in”, which is a fancy way to say that the sourcing partner can hold your company hostage.

This is not kids stuff.  It’s easy to get wrong, hard to get right, and very well might have a direct impact on your career in lots of ways.

But before I take a look at your career, let’s digress.

Personal IT Verses Corporate IT

Consider, for a moment, just how wildly different personal IT is from corporate IT.

In the personal world, if you want an app, if it’s email or a spreadsheet, word processor, invoicing application, billing application, bookeeping or blogging, you can probably go get a free application right now.  At least, it’ll be free for thirty days or so.  Then, bam, you’ve got the software, delivered as a service.

If you don’t like facebook, you can go try GooglePlus.  If you don’t like GooglePlus, switch to twitter, or flikr, or whatever.

I work with one team that did just that.  The company had a standard for project management online  – It came from Microsoft and it’s title was SomethingPoint.  The team decided to sign up for PivotalTracker, which is free for the first sixty days, try it for a month, then ask for the four dollars per person-month to use the application.

It worked.

Now imagine you have to work in “IT” in such an organization, or maybe one where the CEO brings in his shiny new iPad, and if IT won’t support, IT is the one with a problem.

Fight this, and you become irrelevant amazingly quickly.

In fact, some of the Software As A Service vendors have given up on selling to corporate IT entirely, selling directly to the end customer with budget.

Lines like “face it, corporate IT is dead” may be a bit dramatic, but think of it another way:  The SAAS vendors are selling services, in the same vein as IT Lite.

Let’s go beyond pivotal tracker.  Think about the Gen-Y journalist brining in his own iPad to work, who uses his own blogging service, google for email and google docs or Socialtext for collaboration, with basecamp for project management.  How can IT serve that kid?

We’d better find some way to do it.  Because there will be more of him.

To survive, we folks who consider ourselves corporate IT need to either provide some different services, or go work for services companies, or find ways to stich together existing services and sell convenience, or else, perhaps, re-invent our role in some other way.

More to come.

Last time we looked at trends in staffing, and found that they fluctuate.  This causes a problem with hiring, because, well, it takes time to ramp people up, and laying them off is expensive.  As a result, companies that rely on IT with only full-time employees tend to find themselves occasionally understaffed, occasionally overstaffed, or some of both.

One classic answer to this is to use contractors and other temporary help.

No, don’t look at me like that.

Consider Shotz, the Milwaukee Brewery where Laverne and Shirley worked in 1973.  At Shotz, the work itself was broken down into repeatable jobs you can learn in an hour.  If the pace of orders picked up, the company might hire more employees … but if the pace of orders was cyclical, the hire/layoff cycle would become very expensive, in terms of unemployment insurance, severance packages, and damaged relations between the employees, management, and the community.

No, better to hire some temps.  After all, temporary workers can take two-thirds the pay of full-time employees, cost no benefits, no vacation time, and can be let go at will, without any stigma or implied social contract.

Of course, it’s all tradeoffs — you might argue that such a model is bad for society.  But it doesn’t have to be.  Shotz might try hard to find a temporary workforce that is perfectly amenable to this; say, for example, new high school graduates trying to decide if college is right for them, mothers who are considering returning to work, but just a little bit on the fence, starving artists and musicians who are trying to decide who they want to be when they grow up.  Some of these folks might decide to leave the work force in three months; I expect all of them would be grateful for the opportunity to try and decide later, without stigma either way.

I hope you might agree, for a certain type of job of Shlotz, this kind of hiring practice could be done in a way to benefit the workers and the company.  (With low unemployment, it could also be a manipulative scare tactic.  I’m not talking about that.)

The question is:  Does it work for IT?

Whether it works or not, people have been willing to try; perhaps the best example of this is a strategy developed by Gartner known as IS Lite, or sometimes IT Lite.

IS Lite: What is it?

The basic idea of “IS Lite” was that IS performed three essential functions:

* Driving Innovation

* Delivering Solutions

* Managing Services and Sourcing Relations

In the future, IT would perform only the ‘middlin’ bits of the functions, as some functions would be absorbed by outsourcers, and some by the business units.  This idea was ‘captured’ by a drawing something like this:

That said, my experience with IS Lite has been less than stellar.

The right side of the equation, I can understand. Once you have IT set the technology policies, you need content for your websites, product descriptions, graphic designs … the kind of thing done by marketing, sales, and other things traditionally considered “the business.”

Having IT provide the utility, the “Grid”, that independent business units can tap in to — like I said, I get it.

But then you have the left hand side of the equation, and we are back to Laverne and Shirley.

The classic model to do outsourcing, the one we discussed in Part I, is a bit of a staff augmentation model. When your company has needs, you hire temporary workers, which you take away again when the needs go away.

The problem is, predicting those needs is hard to do. Once you can predict the needs, you’ll have to hire staff — and unlike the factory worker in the brewhouse, the job can’t be learned in an hour. So you have to interview.

And interview, and interview. Because, sadly, the folks who are most available, who most desperately want a job, that are willing to take temporary wages … those folks generally don’t have the kind of high-end skills you need to get new projects rolling.

‘Quick’ staff augmentation might work to deal with increased demand on a helpdesk, but for a linux server farm? Forgetaboutit. Your worker is going to need to know plans, policies, procedures, passwords, and, likely, a host of custom systems and commands. (One company I worked with did the math, and came to the conclusion that, once you count search, interview, and training time, anything less than a twelve week contract simply wasn’t worth pursuing.)

The companies I know that have pursued something like a staff-aug IT like generally end up with a professional staff of liason-people — the “systems analysts” who exist to create clear, unambiguous requirements for the outsourced help, and to manage the project. In my experience, the ratio of systems analyst is often as high as one-to-one — that is, you could simply staff the project will full-time employees actually doing the work. And it gets worse.

In these kinds of organizations, when someone is retained in such a staff augmentation role, the relationship isn’t so much temp as it is contractor. In theory, contractors are paid more than employees — one bonus for not getting vacation or time off, another for not getting insurance, and a third bonus for, well, being disposable. That’s all well and good — the problem comes when the company extends the contract for years, then pays a small army of liaison people that wouldn’t need to exist if the contractor were just an employee.

The good news is, this isn’t the only way to do outsourcing — and it certainly isn’t the only way to deal with the problem of fluctuating needs for staff.

More to come.