»IT Employment Hits Another All-time High in July; Bucking Strong Downdraft of General Employment Market.
»How Cloud Computing Is Changing the World.
»IT Brain Drain: Reigniting Interest in IT Careers.
»What bandwidth addiction will cost.
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| IT Employment Hits Another All-time High in July; Bucking Strong Downdraft of General Employment Market. | Top |
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The association reported IT employment reached 3,907,000 in July, a record high. While the July gain was modest (2,800) from the previous month (following a small downward revision in June’s numbers), IT employment has turned in a strong performance over the past year. From July 2007 through the current month, IT employment is up 251,000, or 6.7 percent - far outpacing the general employment market. "While IT has not been immune to the negative macroeconomic trends, it appears that a number of companies in IT and IT employment are outperforming the general economy. This is in stark contrast to the last major economic pullback where IT and IT employment dramatically underperformed the broader economy and job market," commented Mark Roberts, CEO of NACCB.
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 2008 with the publication of the BLS January 2008 employment report, reflecting significant revisions of employment data from the past several years.
ABOUT NACCB
NACCB is the only organization solely devoted to representing IT Staffing and Solutions firms and their employees who are creating a new paradigm for the flexible workforce driving the 21st Century economy. These firms provide IT staff augmentation, IT solutions, IT project management, and IT consulting services to America’s businesses. NACCB represents almost 400 IT services companies serving as the industry voice for public policy. NACCB also supports member companies in efficiently delivering high quality services to their clients. NACCB is headquartered in Alexandria, Virginia.
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| How Cloud Computing Is Changing the World | Top |
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At first, just a handful of employees at Sanmina-SCI began using Google Apps for tasks like e-mail, document creation, and appointment scheduling. Now, just six months later, almost 1,000 employees of the electronics manufacturing company go online to use Google Apps in place of the comparable Microsoft tools. "We have project teams working on a global basis and to help them collaborate effectively, we use Google Apps," says Manesh Patel, chief information officer of Sanmina-SCI, a company with $10.7 billion in annual revenue. In the next three years, the number of Google Apps users may rise to 10,000, or about 25% of the total, Patel estimates. San Jose (Calif.)-based Sanmina and Google are at the forefront of a fundamental shift in the way companies obtain software and computing capacity. A host of providers including Amazon, Salesforce.com, IBM, Oracle, and Microsoft are helping corporate clients use the Internet to tap into everything from extra server space to software that helps manage customer relationships. Assigning these computing tasks to some remote location—rather than, say, a desktop computer, handheld machine, or a company's own servers—is referred to collectively as cloud computing (BusinessWeek, 4/24/08), and it's catching on across Corporate America.
The term "cloud computing" encompasses many areas of tech, including software as a service, a software distribution method pioneered by Salesforce.com about a decade ago. It also includes newer avenues such as hardware as a service, a way to order storage and server capacity on demand from Amazon and others. What all these cloud computing services have in common, though, is that they're all delivered over the Internet, on demand, from massive data centers.
A Sea Change in Computing
Some analysts say cloud computing represents a sea change in the way computing is done in corporations. Merrill Lynch estimates that within the next five years, the annual global market for cloud computing will surge to $95 billion. In a May 2008 report, Merrill Lynch estimated that 12% of the worldwide software market would go to the cloud in that period.
Those vendors that can adjust their product lines to meet the needs of large cloud computing providers stand to profit. Companies like IBM, Dell , and Hewlett-Packard , for instance, are moving aggressively in this direction. On Aug. 1, IBM said it would spend $360 million to build a cloud computing data center in Research Triangle Park, N.C., bringing to nine its total of cloud computing centers worldwide. Dell is also targeting this market. The computer marker supplies products to some of the largest cloud computing providers and Web 2.0 companies, including Facebook, Microsoft, Amazon, and Yahoo. "We created a whole new business just to build custom products for those customers," Dell CEO Michael Dell says.
"Now it's a several-hundred-million-dollar business, and it will be a billion-dollar business in a couple of years—it's on a tear."
One of those customers, Microsoft, has made cloud computing one of five priorities for fiscal 2009, according to a recent memo from CEO Steve Ballmer. Microsoft's version of cloud computing, Software-plus-Services, is designed to let customers choose whether they want traditional software, software services, or a combination of the two. In the memo, Ballmer promised that employees would hear more about the company's cloud computing platform initiatives in the next version of its Live and Online technologies, scheduled to be unveiled in October. About 9% of IT managers who responded in a Goldman Sachs survey said they planned to use Microsoft for software services this year in addition to those they already use.
Reliability Is a Concern
Many chief information officers remain concerned about the reliability and security of cloud-based services. Events like the six-hour outage on July 20 of Amazon's S3 service, designed for developers who want easy access to storage over the Internet, give CIOs reason for pause. "It's hard to turn a big ship very quickly," says Daryl Plummer, managing vice-president of consulting firm Gartner. "You have technologies that are like cement in these businesses—they're hard to change and get rid of." Plummer says that about $8 out of every $10 spent on technology in corporations is for maintaining systems, rather than innovating.
At Sanmina, spurring innovation is one of the main motivations for investment in Google Apps, Patel says. "One of our strategies to be competitive on a global basis is to be innovative in terms of how we work with our different teams, with our customers, and our suppliers," he says, adding that his company operates in an extremely competitive industry. The price doesn't hurt, either. The enterprise version of Google Apps costs $50 per user per year, while a license of Microsoft Office Professional retails for $499.99. True, Google Apps lacks some of Office's features. But Google Apps compensates in that it's more adept at fostering collaboration among employees scattered across the globe, Patel says. "We see [cloud computing] as a very compelling proposition in the long term," he says.
As appealing as the prospect of cloud computing may be, many CIOs, analysts, and even vendors themselves, see it emerging only gradually in the enterprise. "It will be a draining of the pond," says Dave Girouard, president of enterprise for Google. While more than 500,000 organizations of varying sizes use Google Apps, more than half use the free version, according to Girouard. Moving HR Functions to Google Apps
Now that he has let employees dabble in Google Apps, Patel is considering moving applications related to human resources, such as absence reporting and expense reporting, to cloud computing. He is also eyeing Amazon's Web services, which include both storage and server capacity. "Clearly from an enterprise standpoint we're going to take some baby steps first, try out some lower-priority applications to be sure it's a strong platform," Patel says.
In general, CIOs say cloud computing, whether it's software services or additional server or storage capacity, needs to improve a bit before enterprises will adopt on a larger scale. Security and reliability are big challenges. When Amazon's S3 storage service went down, many companies had trouble doing business. For smaller companies, the trade-off between the cost savings of using Amazon's service and the occasional hiccup in reliability is worth it.
"With Amazon, the benefits of easy scalability and low price far outweigh the occasional downtime," says Peter Yared, CEO of iWidgets a small company, who estimates he spends four times less by using Amazon Web services vs. conventional server hosting. Although Yared's Web site worked on July 20, he had trouble for about six hours with some user-generated code that was stored on Amazon's S3 service. Still, larger companies typically require a higher degree of reliability.
Another issue that worries CIOs is the ability to comply with regulations, including Sarbanes-Oxley rules that govern corporate financial reporting, and the Health Insurance Portability & Accountability Act (HIPPA), which sets rules for security and privacy of health records. ITricity, a European provider of cloud computing capacity, couldn't previously offer services to companies that required compliance with financial and health-care regulations. Currently, though, the company is installing what's known as a private cloud using IBM's Blue Cloud software and services, which turns a corporate data center into its own cloud. Since a private corporate cloud is blocked off from the Internet with firewalls, it provides a level of security that will make it possible for iTricity to offer services to the accounting, financial, and health-care markets.
Finding a Middle Way
In the past six and a half months, iTricity has spent more than $779,000 upgrading to IBM's new technology. That technology promises to give iTricity much more agility in offering services to customers. Now, customers who want additional computing capacity must wait a week. IBM's approach will cut that lag time roughly to an hour or less, iTricity says. "Our new slogan with iTricity capacity in the market is power by the hour and power within the hour," says Robert Rosier, founder and CEO of iTricity.
Because companies have such a large investment in existing technology infrastructure, many people think there will be a hybrid approach where companies will do some of their computing internally, possibly in a private cloud, while other tasks will be offloaded to the public cloud. "One of the key challenges for corporate IT departments, in fact, lies in making the right decisions about what to hold onto and what to let go," writes Nicholas Carr in his book, The Big Switch.
Girouard at Google says he is confident more and more companies will get comfortable with letting go. "Over time as larger and larger businesses decide to use Google Apps, there will be an upswing in the revenue," he says. Right now, Google's strategy is to get as many people and companies as possible comfortable using Google Apps. To that end, the company is doing things like providing Google Apps for free to universities. "We're generating millions of users for life," he says.
Patel and a growing number of employees at Sanmina may well be among them.
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| IT Brain Drain: Reigniting Interest in IT Careers | Top |
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Since the dot-com bust eight years ago, the IT products, solutions and services industry has made a strong comeback. The high demand is likely one of the reasons five of the 30 fastest growing occupations from 2006-2016 are in the IT field, according to the Bureau of Labor Statistics. With the exception of health care, no other industry is experiencing such an increase. This is certainly welcome news until you consider the available resources.
The industry – the world, really – is facing a shortage of IT workers. But, what’s even more worrisome is that according to a recent Gartner study, traditional IT skills are not meeting the market’s needs. Gartner Vice President Andy Kyte commented in the February 7, 2008, issue of Computing, “This is a massive and devastating skills shortage, and it is coming when there is a surge in the number of projects that are required from IT.”
Compounding the issue is the declining number of individuals entering the industry. In fact, CIO Insight conducted a survey of top IT executives to determine the most pressing issues of 2008. Seventy-seven percent of respondents said they expect the number of college students in the U.S. majoring in computer science or information systems will continue to drop. As a consequence, 46% said the shortage will cause entry-level IT salaries at their company to increase by 25%.
What gives? Why has the once highly regarded profession fallen to the wayside? Why is it so difficult to find individuals with the right mix of skills? What can IT professional services organizations do to foster the skills needed to succeed and bring back the enthusiasm and excitement for the profession?
Industry experts are providing some answers to these questions. Their insights can only serve to help NACCB members and their clients address the talent shortage.
IT Profession Perceived Poorly; Programs Not Sufficient for Today’s Requirements
The obvious solution to fixing the IT talent crunch would manifest itself in those individuals just entering the workforce, Generation Y, or the Millenials. While they may not be able to make up for the volume of people leaving the workforce, surely a group so used to having technology at their fingertips would naturally gravitate toward technical careers. Not so says Kate Kaiser, an associate professor of IT at Marquette University in the October 23, 2007 Computerworld article, Meet Your Future Employee. "To another generation, IT was cool because no one else knew much about it. This generation is so familiar with technology, they see it as an expected part of life – and therefore not worthy of consideration as a full-time career.”
Besides technology being an assumed way of life, panelists at a roundtable discussion at the 2007 NACCB Annual Conference point to the lack of promotion of IT as a career by high schools, colleges and even parents. Unflattering stereotypes of IT workers and the perception that IT positions are being sent offshore or being filled by individuals from outside the U.S. are fostering the hesitation by educators and parents to give the profession the same clout as careers in medicine and law.
Even if the industry increases the number of people entering computer science/engineering programs, it still doesn’t account for the lack of skills needed today. Few IT programs have moved to a model that goes beyond the technical aspects needed by organizations. Gartner Vice President Diane Morello also commented on their recent research in the February 7, 2008, issue of Computing. “What constitutes ‘qualified people’ will change. The intersection of business models and IT requires people with varied experience, professional versatility, multidiscipline knowledge and technology understanding – a hybrid professional, in other words.”
Opportunities to Increase Interest and the Supply of IT Professionals
Research for this article suggests that the activities to increase interest in the IT profession by IT professional services organizations may only be happening on a small scale. Clearly more initiatives are going to be needed in order to address the supply and demand issue.
A March 2007 report, Choosing Outreach Strategies to Increase Interest in IT Careers, from SRI International, cites research and recommendations from the Chamber of Commerce, National Academies and Microsoft that includes, “offering more scholarships, revamping existing curricula, attracting women and minorities with special programs, attracting foreign talent with visa and immigration reforms, and countering negative impressions of life in technical fields with public relations campaigns.” Outside of those relatively massive undertakings, SRI International suggests smaller companies can make a difference and recommends beginning with initiatives that will fit their needs and abilities.
Here are four simple ideas NACCB members or their clients can initiate to address the skills shortage today:
1. Partner with local high schools and colleges/universities. A 2007 Junior Achievement study found teens choose careers based on a vocation they are passionate about. Create a program that will give you a forum to demonstrate why you are passionate about IT. In turn you will have changed the perception of what it means to have a career in IT.
2. Look outside likely IT candidates. A Virginia Tech study found that high school and college women who express an interest in a computer-related career don’t discuss this career option with a variety of people. Focus on students who are undecided about their career options or even focused on professions outside of IT.
3. Baby boomers remain a valuable, viable option. As baby boomers approach retirement age, many of them are not ready to retire. In fact researchers are finding four out of five want to keep working. This group possesses the confluence of skills IT so desperately needs, but concessions will need to be made including flexible work arrangements and health care provisions to keep them on board. Work with your clients to make adjustments that accommodate the soon-to-be-retirees. Work with local organizations to promote the temporary and consultant profession and demonstrate that the benefits are in line with their demands. Provide continued training to keep current skills sharp and to help workers stay on top of the latest technologies.
4. Pull former IT professionals back in. No one knows how many IT workers left the industry to pursue other fields of interest after the dot-com fallout, or how many have re-entered the industry since then. Yet everyone seems to know someone who used to be in IT. Use your network of contractors to identify former IT professionals. Create a program to entice them back to the industry and provide the necessary training to up-skill their technical skills. Since many have likely acquired solid business acumen over the last several years, they are prime “hybrid professionals.”
5. Quickly evolving consumer expectations and ever-increasing company needs have generated an increased demand for IT products, services and solutions. While the industry celebrates this success, it should also be looking for solutions to address the long-term supply issue resulting from quickly shifting demographics and the lack of interest in IT as a profession. Millenials possess a great deal of knowledge about technology as a result of their daily interactions, but more needs to be done to demonstrate the reward of technology as a profession. Likewise, it will be important to hone the skills of current IT and business professionals to create highly skilled, successful IT professionals for today and tomorrow.
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| What bandwidth addiction will cost. | Top |
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TIM WU
July 30, 2008
(Reprinted with permission from Seattle Post-Intelligencer, copyright 2008)
Americans today spend almost as much on bandwidth – the capacity to move information – as we do on energy. A family of four likely spends several hundred dollars a month on cell phones, cable television and Internet connections, which is about what we spend on gas and heating oil.
Just as the industrial revolution depended on oil and other energy sources, the information revolution is fueled by bandwidth. If we aren't careful, we're going to repeat the history of the oil industry by creating a bandwidth cartel.
Like energy, bandwidth is an essential economic input. You can't run an engine without gas, or a cell phone without bandwidth. Both are also resources controlled by a tight group of producers, whether oil companies and Middle Eastern nations or communications companies like AT&T, Comcast and Vodafone. That's why, as with energy, we need to develop alternative sources of bandwidth.
Wired connections to the home – cable and telephone lines – are the major way that Americans move information. In the United States and in most of the world, a monopoly or duopoly controls the pipes that supply homes with information. These companies, primarily phone and cable companies, have a natural interest in controlling supply to maintain price levels and extract maximum profit from their investments – similar to how OPEC sets production quotas to guarantee high prices.
But just as with oil, there are alternatives. Amsterdam and some cities in Utah have deployed their own fiber to carry bandwidth as a public utility. A future possibility is to buy your own fiber, the way you might buy a solar panel for your home.
Encouraging competition is another path, though not an easy one: Most of the much-hyped competitors from earlier this decade, like businesses that would provide broadband Internet over power lines, are dead or moribund. But alternatives are important. Relying on monopoly producers for the transmission of information is a dangerous path.
After physical wires, the other major way to move information is through the airwaves, a natural resource with enormous potential. But that potential is untapped because of a false scarcity created by bad government policy.
Our current approach is a command and control system dating from the 1920s. The federal government dictates exactly what licensees of the airwaves may do with their part of the spectrum. These Soviet-style rules create waste that is worthy of Brezhnev.
Many "owners" of spectrum either hardly use the stuff or use it in highly inefficient ways. At any given moment, more than 90 percent of the nation's airwaves are empty.
The solution is to relax the overregulation of the airwaves and allow use of the wasted spaces. Anyone, so long as he or she complies with a few basic rules to avoid interference, could try to build a better Wi-Fi and become a broadband billionaire. These wireless entrepreneurs could one day liberate us from wires, cables and rising prices.
Such technologies would not work perfectly right away, but over time clever entrepreneurs would find a way, if we gave them the chance. The Federal Communications Commission promised this kind of reform nearly a decade ago, but it continues to drag its heels.
In an information economy, the supply and price of bandwidth matters, in the way that oil prices matter: not just for gas stations, but for the whole economy.
And that's why there is a pressing need to explore all alternative supplies of bandwidth before it is too late. Americans are as addicted to bandwidth as they are to oil. The first step is facing the problem.