October 18, 2010
Experture
Executive Technology Strategies
ETS 10-10-12
HCM Strategies 2010-2020 (Part 3)
/RFG
…experts on demand
This series of articles explains the HCM strategy for small- to midsized firms for the years 2010-2020.
It outlines preparedness strategies for staffing and sourcing and the various IT scenarios
for dealing with current and trending business needs. It contains projections of/for the
hiring marketplace during this period.
Strategic Mixes of IT Employees
1.1 By Company Lifecycle
Workforce management (workforce.com) presents a 2010 report showing how many IT
employees companies have on staff. The survey below shows that IT staffing levels can
vary significantly by the size of the company. For example, the typical IT staffing ratio
(the number of employees supported by each IT worker) is 1:27 among all companies
included in the survey. However, companies with 500 or fewer employees typically have
an IT staffing ratio of about 1:18, while companies with 10,000 or more employees have
a ratio of about 1:40.
1.2 By Business Model (Products v. Services)
In this recent “OnStartups” article the author articulates the differences between products
and services firms. http://blog.startupprofessionals.com/2010/09/products-vs-servicescritical-success.html Essentially companies start as services firms because of lower
capital costs then realize they can gain higher, passive revenue through licensing and reuse.
What’s relevant is where he goes into team selection and how you must either transition
existing employees to the new business model or hire new ones. Yes, but that’s much
easier said than done. Here’s the author’s reasoning (and summary) regarding the risks v.
rewards of products v. services firms’ w.r.t. employees.
Team Selection Is Different: Chances are, if you built up a software services company,
you hired people that would be good at doing custom programming jobs. Sure, you’ll
hire good programmers (doesn’t everyone?) but often they are different programmers
than the one’s you’d hire for a products company. Since the risk is so much higher for a
products company, it’s life-threatening to hire programmers that can’t create working
software and meet a release date. In the services business, hiring mistakes are painful, but
not always fatal.
Summary: It would seem that writing software should be a relatively consistent process
(hire great people, use workable methods, etc.) regardless of whether you’re building it
for a services company or a products company. But, a software services business is very
different from a software products business. Different team, different financing, different
decisions, and different goals. It shouldn’t be that surprising that few companies can
make the transition from services to products.
Copyright © 2004-2010 Experture, Robert Frances Group all rights reserved
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October 18, 2010
Executive Technology Strategies
ETS 10-10-12
Now of course in the decade ahead these factors aren’t going to change. What matters is
how and how much many high tech companies will continue to do this. Basically to start
a products company (HW, SW or bio-pharma) you need funding and much more so on
the HW side of things. It’s more prevalent in SW to start services firms first then morph
into a products firm.
For the period in question what can change is VC funding. If its high, expect SW firms to
start or try starting as services firms and make the transition to products firms. For HW
and bio-pharma of course they’ll have to start as product firms by the very nature of what
they produce.
1.3
By Market Sector
1.3.1 High-tech
The report that most directly addresses this is Computer Economic’s IT Spending and
Staffing Benchmarks 2010/2011: IT Ratios and IT Cost/Budget Metrics by Industry
Sector and Organization Size
http://www.computereconomics.com/page.cfm?name=IT%20Spending%20and%20Staffi
ng%20Study
The (free) Executive Summary and does contain historical summary charts for IT
spending of past 4-5 years. Not surprisingly the past 2-3 years IT spend has been flat to
negative. The exec summary is helpful, but for our needs is missing key details that are in
body of report.
A McKinsey 2003 report http://mkqpreview1.qdweb.net/article_page.aspx?ar=1352 has
some key statements about process innovation and creating sustainable differentiation. It
tries to address the changing economic times just post the 1990’s boom era, something
which is relevant again today.
A good article is “A CIO’s Tough Love Approach to IT Transformation”
http://searchcio.techtarget.com/news/1506849/A-CIOs-tough-love-approach-to-ITtransformation The article explains how CIO Rich Adduci introduced changes to Boston
Scientific’s the 730-person IT. For example it nicely goes into some of the HCM issues
in such large IT organizations “…had more senior managers than junior managers and in
some cases more junior managers than staff, and two-thirds of those managers were
ranked "above average," according to their annual reviews, he said.” Overall it gives five
big changes that were made, which I’ll summarize here –
Resetting the mission role: He used the company mission to inspire the ranks to
participate in an IT transformation: IT systems were there to help the business's mission
of saving lives. Employees who were not interested in doing that were strongly
encouraged to leave
Focusing on people: … before Adduci reorganized, he took to the road, talking and
listening to people at the 42 locations where Boston Scientific operates to ascertain where
Copyright © 2004-2010 Experture, Robert Frances Group all rights reserved
20 Crooked Mile Road, Westport, CT. 06880; (203) 557 0856;
http://www.experture.com/; Contact: [email protected]
October 18, 2010
Executive Technology Strategies
ETS 10-10-12
things stood. He also told employees where the IT organization was headed and how the
perception of IT was going to change. "I told them, we are not going to be in the spotlight
just because we screwed up," he said.
Cleaning up your own backyard: … Many of the basics were lacking: The SAP
system, for example, ran on 12-year-old database technology. The organization had no
roadmap, no global IT methodology, no processes. Adduci streamlined and eliminated
redundant IT systems. The first year he was there, the major IT project was a database
overhaul so that SAP could work properly. Three years later, in 2009, IT staff completed
23 major projects for the business.
Banishing shadow IT: Four years ago the IT organization at Boston Scientific was
highly decentralized. Only 20% of the IT workforce reported to Adduci. "I thought,
'Where are all the people?'" he said. The majority were reporting into the business. "The
dreaded shadows were all over the place," he added. "I have a very strong opinion on this.
I think the shadows are the enemy. They're the enemy because they are taking resources
and doing things with very little control or guidance, and oftentimes they get us into
trouble." Adduci went after the shadows and today oversees all 730 IT people.
Fixing IT governance: Putting control in the hands of the business: … "Four years
ago, the business didn't know how to get my attention," he said. "The business wanted IT
in the game, but they felt like they had no vote. IT made decisions on its own, we spent
whatever we wanted and the business had no idea how to impact what we worked on," he
added. In fact, business leaders would go to his predecessor, money in hand, and offer up
their own people to get projects done, only to get no response, Adduci recounted. The
new IT board meets once a month, looks at all IT needs and sets the agenda. "It is no
longer just my problem" to prioritize projects, he said. In fact, the business "is more than
willing to do whatever is needed to make IT a partner," he added.
1.3.2 Bio-tech
In Bio-tech, Alynlam is a fairly typical bio-tech company even though they’ve had recent
layoffs of up to 30% of their workforce. If their employee break-down is examined it is
seen they (before the recent RIF) had this
a. 180 or so total head count
b. 160 FTE
c. 25 consultant (their classification)
d. 20 contractor (their classification)
This was then broken down by roles as
a. 130 technical/clinical
b. 10 PM
c. 30 G&A
d. 14 Executive, VP and above
Now Alnylam is a mid-sized, middle-aged bio-tech company There’s no expectation this
mix will change, Bio-tech doesn’t change to that degree. These statistics should serve as a
Copyright © 2004-2010 Experture, Robert Frances Group all rights reserved
20 Crooked Mile Road, Westport, CT. 06880; (203) 557 0856;
http://www.experture.com/; Contact: [email protected]
October 18, 2010
Executive Technology Strategies
ETS 10-10-12
good indicator of what Biotech, Bio-Pharma firms look like today and for the foreseeable
future.
1.3.3 Consulting
A Forrester report
“The Coming Upheaval in Tech Services”
http://www.forrester.com/rb/Research/coming_upheaval_in_tech_services/q/id/56279/t/2
?src=RSS_2&cm_mmc=Forrester-_-RSS-_-Document-_-17
Talks
about
transformational change that is coming. For example, It says the transformation will "call
into question traditional business models." And “Traditional delivery models will
be undermined by cloud computing and software as a service says Forrester.”
Report Summary: "As a result of these dynamics, the resulting changes will be much
more severe and disruptive than we've seen over the past 10 years in terms of service
lines offered, buying habits, key stakeholders, pricing, and delivery models. It is believed
that new offerings and models will eclipse traditional services. Specifically, technology
services will be recast as follows:
1. More money and budget will go to services.
2. The operating model will shift from fixed to circulating capital.
3. The commoditization of traditional services will accelerate.
4. Demand and growth will shift to new services with higher margins."
1.3.4 Financial Services
Financial Services firms fall into the large category even considering just the IT
departments. As such they epitomize mature organizations with formal practices, e.g.
they are as much policy based as they are technology based. They are fairly evenly split
between the PM (Project Management) functions and the Technology based roles. They
are also fairly evenly split between FTE’s and contract employees.
Fidelity is fairly typical of the financial services sector in the northeast. For one thing it is
moving jobs to lower cost regions of the US. In 2008 it had a $3B overall IT budget with
a stated goal of reducing that by 20% through 2011 and growing it at rate of inflation
thereafter.
It’s also common practice that contractors fill any role up to mid-level (manager’s level).
Roles above that, e.g. Directory, VP are reserved for FTEs only.
These are large, mature firms. They also don’t tend to change very easily or very fast. As
well as it’s a highly regulated environment. Another point of inertia is all the redundancy,
checks-and-balances built into their IT systems. From an IT HCM perspective these
firms move very slowly and deliberately. Looking ahead they will very much have the
same IT mix they have today – 50% FTE, 50% contract workers. And those roles will be
evenly divided between technologists and project managers. It is only expected that some
of the more tactical work will be done offshore; at least for the non-sensitive, nonsecurity projects. Those that have any sensitivity concerns will be done onshore in a
lower cost locale.
Copyright © 2004-2010 Experture, Robert Frances Group all rights reserved
20 Crooked Mile Road, Westport, CT. 06880; (203) 557 0856;
http://www.experture.com/; Contact: [email protected]
October 18, 2010
Executive Technology Strategies
ETS 10-10-12
1.4 Virtual Company Staffing
http://www.pr.com/press-release/48819
Another staffing alternative is to have virtual employees. This can mean FTEs (and
contractors) working from home or out of ad-hoc office space, formally leased or
obtained in any number of ways. This is prevalent with startups to save on office costs
and where decisions such as location or hire of key employees haven’t yet been made.
Often this is referred to as an “Apache” or distributed organization. There are even
staffing firms
This HR Management article “The Future of HR – How to Achieve the 2020 Workplace
Today”
http://www.hrmreport.com/article/The-Future-of-HR--How-to-Achieve-the-2020Workplace-Today/ goes into what employees will look like. It encompasses all
employees but clearly and correctly predicts we’re all becoming much more virtual as
employees. This has two meanings; a) FTEs and contractors working in a virtual way,
e.g. from a virtual space, in virtual time (their own hours). The second meaning is those
employees become more transient, e.g. working independently for one or more
companies.
The blog tends to be wordy, but it’s germane. The relevant points are extracted and
bulletized where it works better, and to help retention
Copyright © 2004-2010 Experture, Robert Frances Group all rights reserved
20 Crooked Mile Road, Westport, CT. 06880; (203) 557 0856;
http://www.experture.com/; Contact: [email protected]
October 18, 2010
Executive Technology Strategies
ETS 10-10-12
Looking back helps us forecast the future.
Looking at the technology today:
What was forecast 15 years ago? It was said:
 Those employees would use multi-functional, wireless technology to do their jobs
from virtually anywhere.
 Computers would be faster, smaller, lighter, more powerful and functional.
 Business should expect major advances in voice recognition, wireless technology,
real-time video conferencing.
 Smart Phones will really be handheld computers that store massive amounts of
information, music, phone numbers and will access the internet.
 Mobile Workforce will depend on HR assistants to act as ground control ensuring
a smooth flow of information.
 HR will take on activities such as internet research, desktop publishing, web page
development, help desk and computer training.
These things are a reality today.
Forecasting the future is tracking the patterns that lead to change.
Tracking the future, figuring out what’s going to happen; and when it’s going to happen
is as much art as science. Futurists are trackers of mass amounts of information just as a
tracker would use his information to track something in the wilderness. From the large
signs to the smallest almost missed signs.
 The future office will be “Core Teams” who will manage employee/contractor
teams working around the globe; from home offices; to business café’s.

The 2020 Professional will possess a combination of technical and interpersonal
skills, who can also adapt to quick changes, who thinks with an Entrepreneurial
mind.

The 2020 Professionals who are able to create new products and services and
identify more efficient ways to work will be among the most marketable as
innovation drives business.
The 2020 workplace can be seen right now!
Emerging Technologies will allow off-site working with greater ease. More and more
people working from home in the last couple of years.
The virtual office environment is here and soon will have the “plug and play” offices that
go anywhere. Going to the office is redefining itself now because wireless tools that are
being utilized by companies today see substantial savings in overhead expenses.
Virtual interaction replaces face-to-face meetings; it is being developed. Internet video
technology is changing how we communicate. Video conferencing, telecommuting is
already here large corporations have been using and experimenting with it for a couple of
years now.
Copyright © 2004-2010 Experture, Robert Frances Group all rights reserved
20 Crooked Mile Road, Westport, CT. 06880; (203) 557 0856;
http://www.experture.com/; Contact: [email protected]
October 18, 2010
Executive Technology Strategies
ETS 10-10-12
More than a 100 million people will telecommute to work by 2015. Most will work from
home, and tap into the organizations Intranet to gather the information they need to work
on their assigned team project.
The number of full-time employees will decline as contract workers increase. There is
evidence of this in today’s marketplace. Assembled “work groups” based on talent,
experience and expertise will work with many companies.
The technology may not mean that fewer hours are worked, but that it will be expected to
stay more connected with the team even on vacation.
Companies supporting flexible work arraignments today have a 3.5% higher market value
than companies that do not, according to Watson Wyatt Worldwide. Hewlett Packard
went to a compressed flexible 4-day workweek and has had a 50% reduction in overtime
and nearly doubled productivity by 200%.
Wireless everywhere is almost here. Interactive Offices like embedded sensors in your
chair that can sense stress and give a massage or set the lights the way you like it.
Verbally communicate with your computer, it will perform the functions for you; voice
technology is becoming more sophisticated.
Collaboration software will speed up and streamline, for all the teams that need access to
documents from their different locations means you won’t email it, you prepare the
document and the system automatically lets the team know it’s ready to view.
The next part of this continuing series addresses the Evolution of the Employee-Employer
Contract.
Specifically:
 Comp plan design
 Comp plan tangibles
 Comp plan intangibles
 What the employee expects to provide
 What the employer expects the employee to provide
 Career and Career Path Considerations
Copyright © 2004-2010 Experture, Robert Frances Group all rights reserved
20 Crooked Mile Road, Westport, CT. 06880; (203) 557 0856;
http://www.experture.com/; Contact: [email protected]