The Death of Distance – The Sequel

Call me a techie, something of a science-minded Skeptic who looks upon the ever-growing shelf of self-help titles for the executive set (and aspiring cadre) with a mixture of some bewilderment, little amusement-cum-disdain, and lots of professional jealousy. How come “they” have it and “we in IT” don’t? Meaning the inspired and adapted learnings of history’s greats to better one’s management skills. Just imagine our very own reading list: “Metternich on Winning Over Business Owners,” “George Smith Patton III, the Gatling Gun, and the Importance of IT,” or “À la Bonaparte – Supreme Power to the Little Guy” …

Nothing, however, beats management by Sun Tzu, his 6th century BC The Art of War a timeless classic on military strategy and thought. This enduring treatise which is, of course, shockingly contemporary in parts, stresses the importance of deception, cunning, and spying on others; not doing what you say you’re going to do emerges as the leitmotif, while it offers helpful advice on how to turn spies, punish turncoats, poison wells, and generally deal away with modern-day peasants in feudal lands, speak voiceless underlings. Self-proclaimed Machiavellian corporate strivers and intriguers may be strangely drawn to Il Principe, short enough of a posthumous Renaissance political essay to be digested between cafeteria lunches, where readers will be instructed in the method of acquiring necessary ends by any means, even if they are cruel. Supply chain management (SCM) types will find well-founded solace in being the rightful heirs to no other than Gaius Julius Caesar, partly-Consul and mostly-Dictator of the Roman Republic, his only regret when crossing the Rubicon not having had the SAP BI Platform to help track the dwindling corn supplies which would cripple his Gallic campaign. And finally, if you’ve been too successful a manager, beaten the competition to a pulp, and even your grinning shareholders are worried about your Emotional Intelligence (EI) score, there’s always Hildegard of Bingen to help you get back in touch with your inner Medieval Benedictine abbess, herbalist, poet, and channeller (the lesson there: don’t be afraid of your own success!).

But no, we (in IT) shall have none of that! We prefer such solemn encouragement as “attitude is a little thing that makes a big difference” from noted statesman, gifted orator, and arguably one of the greatest 20th century task masters in a distributed environment, The Right Honourable Sir Winston Churchill. Churchill managed one of the largest physically distributed field operations of his days by a set of rules that are prescriptive for any remote IT engagement:

  • Plan (vigorously);
  • Communicate (constantly);
  • Collaborate (and get the best out of others);
  • Be proactive (and always visible);
  • Govern (keep and refine metrics of success);
  • And, of course, persist (never, never, never give up – remember this is the man who said: “If you’re going through hell, keep going.”).

To optimize outcomes, Churchill was fond of running alternative scenarios, a quick A vs. B “hypothesis testing” for every decision he made. I’ve applied the same method, including some probing questions, for helping us determine an optimal approach for setting up a remote resourcing environment:

  • Captive vs. Non-Captive:
    The benefits of a captive offshore operation are obvious (dedicated resources, significant cost savings after start-up costs are recouped / no middleman, full control / security, quality imprint, in-house culture / communication, in-market sales presence, etc.); but some of the drawbacks may be less obvious (static resourcing / difficulties with right-skilling and load-balancing, dependence on single geography / economy / labor market can mean wage inflation / talent shortage / staff attrition, bench- and lead-time challenges responding to user demand, etc.). What criteria would you use to weigh the benefits/drawbacks of a captive vs. a non-captive offshore operation?
  • “DIY” vs. Managing Vendor:
    Faced with the task of setting up and managing a portfolio of multiple, sequential vendor relations, what ‘value equation’ would persuade you to outsource vs. in-house the management of that portfolio? (E.g., managing-vendor expertise, economies of scale associated with managing the costs of (sequential) vendor discovery, setup, transition, and ongoing coordination, etc.)?
  • Single Partner- vs. Multi-Vendor:
    When considering a non-captive offshore operation, what decision criteria would you use to establish a partner-based vs. a vendor-based approach? (E.g., cost- / risk-sharing, price breaks based on volume, other commitments from a single partner vs. “best-of-breed” every time / breadth and depth, flexibility / no single point of dependence when sourcing from multiple vendors, etc.)
  • Tier-1 vs. Tier-2:
    What is your experience working with tier-1 vs. tier-2 vendors? (E.g., professionalism, process maturity / CMM:5 vs. entrepreneurship, “working with heroes,” etc.). Can you relate to the statement “quality is not a function of size”?
  • Offshore Success – Inhibitors vs. Enablers:
    In your experience, what are some of the key inhibitors (e.g., potential lack of capital, scale, reach, process maturity, ‘hidden costs of offshoring,’ etc.) and enablers (e.g., people, process, technology) to offshoring success? Do effective Service Level Agreements (SLAs) increase the chances of success?
  • India vs. ‘The Rest of the World’:
    Have you had experience resourcing from some of the “other” offshore regions: South America (e.g., Argentina, Brazil), Eastern Europe (e.g., Romania, Ukraine), North Africa/Egypt, Southeast Asia (e.g., Vietnam), China? How would you relate this to your ‘India experience,’ if any, in terms of critical success factors (e.g., quality, flexibility, cost – i.e., is India – with its ~30% staff turnover and ~20% wage inflation – trending after Ireland which priced itself out of the call-center business in the 90s?)?
  • Synchronous vs. Asynchronous:
    What are the key drivers for you to insist on time zone overlap to enable synchronous (e.g., U.S. / South America) vs. asynchronous collaboration (e.g., U.S. / India)? What experience have you had, if any, with more advanced “follow-the-sun” and multiple-shift 24×7 development / support models?
  • Standalone vs. Distributed:
    Have you noticed an increase in complexity managing remote resources as part of a distributed (onsite-offsite) team vs. managing them on a standalone basis?
  • The “Impossible Triangle” of Quality, Flexibility (Availability), and Cost – Tradeoff vs. Optimal:
    Trying to optimize all three dimensions (quality/flexibility/cost – or for project-based work: scope/schedule/cost), how would you prioritize them in order to further drive profitable growth? Furthermore, how important is the “4th” dimension (control)? Does the (relative) importance of control (project management / outcomes ownership) influence your structuring of offshoring engagements: staff augmentation vs. project outsourcing, Time & Materials (T&M) vs. Fixed-Price Contracts?
  • Today vs. Tomorrow:
    Is the impending shortfall in workers and skills (“Talent Shortage/War For Talent”) due to demographics / macroeconomics already impacting your firm? Or, impacting your future resource planning? And, given how technology and globalization are re-shaping both the workplace and the workforce, are you looking at alternate strategies for sourcing and deploying talent (globally, virtually)?
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The Death of Distance

His capacity for industrial-strength enlightenment and satirical polemicism (against both church dogma and state institutions) never in doubt, Voltaire nonetheless could be a bit of wuss: “It is dangerous to be right in matters on which the established authorities are wrong.” Now, who would say such a thing in IT? Of course, if you were a prolific pamphletist and public intellectual in mid-18th century France, and an outspoken supporter of social reform and free trade and other revolutionary vices, you’d be hedging your prose and poetry, too, sufficient to make the chief-topiarian of Versailles blush. Think of some of the more benignly erroneous misproclamations by established authorities in the field of technology:

  • “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” – Western Union internal memo, 1876
  • “The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?” – David Sarnoff’s associates (obviously prior to pioneering American commercial radio) in the 1920s
  • “I think there is a world market for maybe five computers.” – Thomas Watson of IBM, 1943
  • “Computers in the future may weigh no more than 1.5 tons.” – Popular Mechanics on the relentless march of computer science, 1949
  • “I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won’t last out the year.” – Prentice Hall editor-in-chief, 1957
  • “640K ought to be enough for anybody.” – Bill Gates, 1981

We get the point. Though I feel compelled for the purpose of this blog to add one more mispronouncement, this one from John Doe, Chief Information Officer at DJI, Inc. in the mid-1990s: “Getting IT done means everybody must sit in the same office.” And, truth be told, this one is perhaps the hardest myth to debunk, even with the relative passage of time that saw “India Inc.” vaulting onto the world stage a decade ago as the remote fix-it destination for all-things-Y2K (and without whose legions of highly skilled coders and bug-fixers, even mighty Microsoft’s Windows 2000 may have only shipped in the second quarter of 1901).

Let us first settle on some familiar terminology. The notion that you, as an IT manager sitting in an office in say Bloomington, Indiana could be working with a programmer sitting in an office in say Bangalore, India, I call (for the sake of simplicity) “remote staff augmentation.” This programmer could be working for your firm’s Indian subsidiary or for an Indian software house, or he or she could be a freelancer – what matters is that you will be managing and collaborating with that particular resource as if he or she was sitting in the cubicle down the hall with you in Bloomington. The only difference between another local, Bloomington-based colleague (the employment mode set aside) is, and as the blog title would imply, “distance.”

There’s an immediate, important distinction between this form of remote staff augmentation and (to use the catch-all phrase) ‘outsourcing.’ When you outsource an IT project (and to simplify greatly), you write up requirements for what needs to be done, and you give these requirements to somebody else, typically a professional IT Services firm, and then this firm “goes off and does it” and only comes back to you when the job is done to deliver the finished project. Where these outsourcers go to do the work is really up to them, but they could be staying on your premises, they could be driving back to their head office in Indianapolis, or – like most do – they could be “shipping” the work to their own colleagues in India. Again, what matters is not where the work is executed, but that you, the client, has asked a services provider to do it for you. Now ironically, although outsourcing is in everyday parlance and popular opinion inextricably linked with the concept of ‘offshoring’ (thank you, Lou Dobbs!), outsourcing a project, even if the project is executed for the most part offshore, has little to do with “working remotely.” If you wish to successfully outsource a project, you must understand vendor management; if you wish to successfully engage remote staff, you must be able to work with another human being who is in a different physical location than you.

Managing across distances – including geographic, time-zone, and cultural ones – can at first be thorny and outright costly for the uninitiated. The catchy phrase “Death of Distance” used to express the industry’s conviction that ever-falling telecom prices and the whole-sale commoditization of the communications sector would level the playing field for the global world of work. If the cost of pipes (or rather fiber optic cable) was cheap and the price of piping bits from place A to place B nominal, then surely, and voilà, moving work to people, as opposed to moving people to work, was feasible now that distance had succumbed to high-speed fiber.

However, even though communication infrastructure is essentially no longer an explicit cost item in the “remote working” equation, other key factors constitute ‘implicit’ cost items (also sometimes referred to as the “hidden costs of offshoring”). These steps in the engagement process or links in the sourcing chain are: counter-party discovery (individual / facility), HR and system setup, knowledge and work transition, as well as resource and project coordination. Since these are components that take up – at a minimum, that is to say if nothing goes wrong – time and know-how (in other words: money), we can now fathom a ‘true cost’ equation for what it costs an IT manager at place A (e.g., Bloomington, Indiana) to engage a programmer at place B (e.g., Bangalore, India), namely:

  • Programmer’s wage at place B + discovery cost + setup cost + transition cost + coordination cost.

As a commonsensical look at the above ‘cost stack’ would reveal, these implicit costs – in the absence of significant process capabilities and/or efficiencies of scale – might render an otherwise inexpensive (say offshore) resource as, if not more expensive than say an onshore IT worker. Common sense (and believe me, ten years of experience) would also suggest that you might want to seek a process expert or a volume aggregator to help ‘squash down’ each of the cost stack items  so as to optimize the value of remote (and often onshore-offshore) staff augmentation. Ah, but then common sense, as Voltaire used to observe, may just not be so common.

In my next blog I shall introduce two additional variables that will impact the overall cost of engaging a remote staff: first, whether the collaboration is synchronous vs. asynchronous (i.e., whether there is meaningful time-zone overlap or not), and second, whether the remote resources are being managed ‘stand-alone’ vs. as part of an onsite-offsite distributed team.