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The economic crisis has a lot of people panicked—and with good reason. This recession is no small downturn and may turn out to be one for the record books. Economists are uncertain. Wall Street, along with the entire financial sector, is frightened and on edge. Congress is angry, perplexed. Business owners are worried and losing confidence.
It’s as if everyone is distraught and…wait a minute…what is that? There seems to be a strange sense of calm coming from somewhere ... ah ha! It’s the IT department. It appears to be a kind of oasis from the economic storm raging outside. What could be giving technology leaders and teams such composure at such a time? The answer is simple: extensive experience owing to the dot-com disaster nine years ago.
Poise Comes from Practice
They named the dot-com bubble well. When it burst in March of 2000, barely anything was left of the gold-rush style business strategies that so many dot-com companies embraced. And only a handful of dot-coms, such as Amazon and eBay, would survive the catastrophic crash ahead.
Technology professionals, from senior executives to technical specialists and entrepreneurs, earned a collective doctorate in marketplace hard knocks as technology companies lost $5 trillion in market value from March 2000 to October 2002. Companies that had promised employees priceless stock options and a rich retirement before 40 were suddenly gone. Layoffs were constant. People who had been working in dream jobs were on the desperate hunt for any job. It was the end of a reckless era of unbridled growth, a scary time to be a technology professional and a difficult but essential education for the entire IT industry.
The State of IT Today
IT is nowhere near immune from the affects of today’s global recession. IT leaders and professionals have plenty of tough challenges to confront as a significant slowdown in spending ripples across the industry. However, IT as a whole learned many of its dot-com fallout lessons well, which is one of the main reasons that the industry is not in dire straits when several sectors are in fear of collapse.
Despite market conditions, Forrester Research Inc. has predicted a 2 -3 percent growth in tech spending in 2008 and an increase of up to 10 percent in 2009. Recent Bureau of Labor Statistics numbers put unemployment for technology professionals at around 3.5 percent, which at the time was approximately half of the national unemployment rate. Those are not remarkable numbers, but more than acceptable when compared with the market in general.
Five Invaluable Dot-com Lessons
In part, IT’s comparative resilience today can be attributed to the cost-cutting and business alignment strategies technology teams embraced in the wake of the dot-com bust. To regain the trust of their organizations and the marketplace as a whole, IT departments had to restore their ability to deliver measurable value and contribute to business growth and innovation. While the dot-com fallout has much to teach, the following five overarching lessons have played a pivotal role in making IT a stronger, leaner and higher performing business sector:
Lesson 1: Don’t Forget the Substance
The dot-com frenzy was an era when investors dumped millions into Internet startups with business plans sketched out on cocktail napkins. Business models evolved as quickly as new online ventures were formed. Marketing flash was second to none but what was being sold was often more image than substance.
Today IT businesses, leaders and departments know well the importance of bringing substance (analysis, detailed plans and careful projections of ROI) to the projects and opportunities put on the table. No IT leader expects the words “innovation” and “leading-edge” to earn a project immediate and unquestioned acceptance. While work will always need to move at a rapid clip in the technology world, IT learned in the dot-com era the importance of deliberate substance-rich decision-making.
Lesson 2: Operate Lean
Remember when Internet start-ups couldn’t hire IT talent fast enough and signing bonuses (big ones) were standard? In the race to dominate the dot-com space, many startups started at over-capacity in terms of talent. The result was big, expensive teams highly susceptible to layoffs should the market turn bad, which it did.
Today IT teams are built conservatively and there is greater reliance on contractor talent. The result is organizations that can grow and adapt to demand with speed without sacrificing their access to topnotch resources.
Lesson 3: Increase Your Business Smarts
There was a time when current technology skills were enough to get an IT professional several top job offers. Today IT departments and organizations expect more business knowledge from their technology teams. The better IT understands the business the more it can impact the entire company in positive, measurable ways.
Today, the most successful IT teams and professionals are those with a deep understanding of the challenging business environment. Those technology leaders and professionals are looking at ways IT can help businesses weather today’s destructive economic storm. Whether reducing spending through virtualization or software as a services (SaaS) opportunities, increasing efficiency through offshore solutions or eliminating redundancies through technology consolidation efforts, IT offers important resources and knowledge in the struggle to remain highly efficient.
Lesson 4: Budget and Schedule, Rigorously
The dot-com area was also an area of budget and schedule busting. Investors were copious and their deep pockets seemed endless. To go over budget or schedule was the standard rather than the exception.
Today project schedules and budgets for IT teams are closer to laws rather than guidelines. By reversing budget excess and timeline failings, IT teams have rebuilt substantial amounts of trust lost when the dot-com market crashed.
Lesson 5: Be Sure to Maintain the Wonder Factor
It’s important to remember that the inspiration and hope of the dot-com era were not toxic. It was the lack of strategy, research and planning along with the prevalence of aggressive speculation that ended the viability of so many dot-com businesses.
As IT leaders look at the market today and focus on maintaining their calm, strategic approach, they must not abandon innovation efforts. History shows again and again that technology can transform and inspire. With its seasoned understanding of devastating market meltdowns, the IT sector can ensure that smart technology innovation plays a central and inspiring role in reviving the global marketplace.
After peaking in November with over 4 million jobs, IT employment has shed approximately 150,000 jobs or 3.7%. Despite this drop, it was not until this past month that IT employment entered negative territory in a meaningful way on year-over-year basis declining 1.79% since March 2008. While small consolation for those adversely affected, IT employment continued to outperform the general workforce which has shed almost 4.8 million jobs (-3.48%) within the last twelve months.
"Given that employment has historically been a lagging indicator of an economic rebound, the continued decline in national IT employment is not surprising," observed Mark Roberts, CEO of NACCB. "While unemployment rates in many IT skill sets remain well below the national unemployment rate of 8.5%, there is very little to cheer about in March’s numbers,” commented Roberts.
The IT employment index is published by the National Association of Computer Consultant Businesses (NACCB), the national trade association representing IT staffing and solutions firms.
Technical note: NACCB’s IT Employment Index is the first specific measurement of IT employment. This unique measurement of total IT employment is created monthly by studying the ongoing staffing patterns of a dozen IT and computer related occupations in 16 industries and industry sectors employing significant numbers of IT workers including the manufacturing, wholesale and retail trade, financial, information services, business and professional services, and education and health industries. The monthly IT Employment Index is based on U.S. Bureau of Labor Statistics (BLS) data, which is subject to monthly revisions, with concomitant revisions to the Index. The IT Employment Index is also subject to annual revisions of BLS data. The IT Index was rebenchmarked in February 2009 with the publication of the BLS January 2009 employment report, reflecting significant revisions of employment data from the past several years.
NACCB 1420 King Street Alexandria, VA 22314 703.838.2050 http://www.naccb.org
Alexandria, VA – The National Association of Computer Consultant Businesses (NACCB), founded in 1987 for information technology (IT) services companies, announced today a new name, TechServe Alliance. The name and accompanying strategic shift is the culmination of a two-year review undertaken by the association’s Board of Directors and extensive efforts by the staff. In conjunction with the new brand, TechServe Alliance launched its new Web site (www.techservealliance.org) today as well.
Formed out of an initial gathering of 11 IT services firms in 1987, TechServe Alliance now offers an extensive portfolio of proprietary products and services that are built upon the collective knowledge, buying power and action of hundreds of companies and tens of thousands of affiliated professionals, enhancing efficiency and supporting member companies in their delivery of best-in-class IT services to clients nationwide. Today’s brand shift reflects that the continued evolution of the group’s mission is best achieved through collaborative efforts of IT services firms as well as their clients, consultants and suppliers with the overarching goal of advancing excellence and ethics within the IT services industry.
From the premier industry conference, robust listservs, the industry’s most comprehensive annual benchmarking report, cost conscious business insurance, ready access to industry data, business trends and legal and legislative developments to an extensive online library of industry-specific model contracts and white papers, TechServe Alliance supports the efficient delivery of best-in-class IT services for clients and exceptional professional opportunities for consultants. TechServe Alliance also continues to serve as the voice of the industry before the policymakers and the national and trade press.
“We are excited about the launch of our new name and brand today. Building upon the foundation of service to the industry for the past 22 years, the new brand reflects TechServe Alliance’s commitment to collaborative efforts among all industry stakeholders. While our name has changed and the way we go about pursuing our core mission has evolved, we remain committed to advancing excellence and high ethical standards within the industry,” said TechServe Alliance CEO Mark Roberts.
In addition to its wide-ranging portfolio of proprietary products and services available to IT services firms, TechServe Alliance serves the client and consultant communities through:
TechServe Alliance enhances efficiency and supports IT services companies in their delivery of best-in-class IT services by providing access to an exclusive portfolio of industry information and best practices derived from peer-to-peer knowledge sharing and subject-matter experts. TechServe Alliance also keeps members regularly informed of critical industry data, business trends, legal and legislative developments, and provides an extensive library of industry-specific model contracts and white papers.
Headquartered just outside the nation’s Capitol in Alexandria, Virginia, TechServe Alliance represents the interests of the industry before the U.S. Congress and other policymakers. For more information about TechServe Alliance, please visit www.techservealliance.org.
Reprinted with permission from wsj.com
In America today, there are almost as many people making their living as bloggers as there are lawyers. Already more Americans are making their primary income from posting their opinions than Americans working as computer programmers or firefighters.
Paid bloggers fit just about every definition of a microtrend: Their ranks have grown dramatically over the years, blogging is an important social and cultural movement that people care passionately about, and the number of people doing it for at least some income is approaching 1% of American adults.
The best studies we can find say we are a nation of over 20 million bloggers, with 1.7 million profiting from the work, and 452,000 of those using blogging as their primary source of income. That's almost 2 million Americans getting paid by the word, the post, or the click -- whether on their site or someone else's. And that's nearly half a million of whom it can be said, as Bob Dylan did of Hurricane Carter: "It's my work he'd say, I do it for pay."
This could make us the most noisily opinionated nation on earth. The Information Age has spawned many new professions, but blogging could well be the one with the most profound effect on our culture. If journalists were the Fourth Estate, bloggers are becoming the Fifth Estate.
What started as a discussion forum for progressive politics and new technologies has now been applied to motherhood, health care, the arts, fashion, dentistry -- and just about every other imaginable area of life. What started as a hobby and an outlet for volunteers is becoming big business for newly emerging sites, for companies that now depend upon their reviews and for the people who work in this new industry.
All this fits with the trend toward Opinion TV. Less and less of our information flow is devoted to gathering facts, and more and more is going toward popularizing opinion. Twenty-four-hour news channels have been replaced by 24-hour opinion channels. The chatter is the story.
Demographically, bloggers are extremely well educated: three out of every four are college graduates. Most are white males reporting above-average incomes. One out of three young people reports blogging, but bloggers who do it for a living successfully are 2% of bloggers overall. It takes about 100,000 unique visitors a month to generate an income of $75,000 a year. Bloggers can get $75 to $200 for a good post, and some even serve as "spokesbloggers" -- paid by advertisers to blog about products. As a job with zero commuting, blogging could be one of the most environmentally friendly jobs around -- but it can also be quite profitable. For sites at the top, the returns can be substantial. At some point the value of the Huffington Post will no doubt pass the value of the Washington Post.
The barriers to entry couldn't be lower. Most bloggers for hire pay $80 to get started, do it for about 35 months, and make a few hundred dollars. But a subgroup of these bloggers are the true professionals who work at corporations, serve as highly paid blogging consultants or write for sites with substantial traffic.
Pros who work for companies are typically paid $45,000 to $90,000 a year for their blogging. One percent make over $200,000. And they report long hours -- 50 to 60 hours a week.
As bloggers have increased in numbers, the number of journalists has significantly declined. In Washington alone, there are now 79% fewer DC-based employees of major newspapers than there were just few years ago. At the same time, Washington is easily the most blogged-about city in America, if not the world.
Almost no blogging is by subscription; rather, it owes it economic model to on-line advertising. Bloggers make money if their consumers click the ads on their sites. Some sites even pay writers by the click, which is of course a system that promotes sensationalism, or doing whatever it takes to get noticed.
The United Kingdom has just had a major scandal in which an official at 10 Downing Street had planned to leak to a friendly blogger all sorts of lurid stories about the Conservatives, complete with descriptions of secret sex tapes. But all of it was to be made up, and the friendly blogger who was going to post it all thought it was an "absolutely brilliant" idea. Someone blew the whistle, but had the plot gone through, this blogstorm could have played a major role in the upcoming election.
As a political pollster, I always observed that the poll that often got the most coverage was the one that was different from the others, regardless of whether it was right, or whether the pollster had any track record. This is true with opinions, too: those on the extreme right or left, or those that are the most titillating, seem to drive the most traffic through their sites. The center doesn't seem to have either the edge or the passion to grab the same kind of traffic.
The implications of bloggers for hire are substantial. While many bloggers probably support unionization in general, they have no union of their own. Most have no benefits, yet they work long hours in front of computer screens which could cause a variety of health ailments. And the owners of the big sites most often pay their bloggers as freelancers, avoiding all of those taxes and benefits that newspapers have to pay for their writers.
For now, bloggers say they are overwhelmingly happy in their work, reporting high job satisfaction. But what happens if they, too, lose work; are they covered by unemployment insurance if tastes change and their sites go under? Are they considered journalists under shield laws? Are they subject to libel suits? Are there any limits to the opinions they churn out, or any standards to rein them in? Is there someone to complain to about false blogs or hidden conflicts? At the recent Consumer Electronics Show, Panasonic outfitted bloggers with free Panasonic equipment; did that affect their opinions about the companies they wrote about? There are more questions than answers about America's Newest Profession.
It is hard to think of another job category that has grown so quickly and become such a force in society without having any tests, degrees, or regulation of virtually any kind. Courses on blogging are now cropping up, and we can't be far away from the Columbia School of Bloggerism. There is a lot of interest now in Twittering and Facebooking -- but those venues don't offer the career opportunities of blogging. Not since eBay opened its doors have so many been able to sit at their computer screens and make some money, or even make a whole living.
And with millions of human-hours now going into writing and recording opinion, we have to wonder whether being the blogging capital of the world will help America compete in the global economy. Maybe all this self-criticism will propel us forward by putting us on the right track and helping us choose the right products. Maybe it will create a resurgence in the art of writing and writing courses. Or serve as a safety net for out of work professionals in the crisis. But for how long can nearly 500,000 people who are gradually replacing whole swaths of journalists survive with no worker protections, no enforced ethics codes, limited standards, and, for most , no formal training? Even the "Wild West" eventually became just the "West."
Reprinted by permission from Harvard Business Journal
Information technology budgets can seem so complicated, so essential to core operations, and so integral to key change efforts that they often remain remarkably impervious to cutbacks, even in economic downturns. Nevertheless, they do need to be rigorously scrutinized, because waste is built into them.
In general, companies overspend on IT because they are unwilling to say no to frontline managers. Instead, executives—and their IT and division leaders—need to face some truths about what drives up IT costs. I have identified seven such truths from my 30 years of experience in IT, through interviews I conducted at six companies, and by analyzing the points of view expressed in “Does IT Matter? An HBR Debate” (web exclusive, June 2003).
Managing these truths is tricky. IT can’t do it alone, because simply saying no to business partners harms relationships with them. Your IT people need support from above. The only path to real progress involves requiring senior IT and division leaders to examine how—not whether—the seven truths apply to your organization and to confront them head-on.
The discipline you develop now will pay off in a big way later. A downturn may prompt you to start managing IT more deliberately, but making better investments and leveraging invested capital never goes out of style.
The Seven Truths
1. Enhancements often don’t deliver results commensurate with their costs.