Blog Host: David Foote - cofounder, president and chief research officer, Foote Partners READ ENTIRE BIO

Service-oriented architecture (SOA) and business applications (SOAB)
Consider the dilemma of businesses that have for years built traditional "monolithic" applications made up of individual business functions that were designed, developed and deployed to operate only in that particular application. As these businesses have grown, acquired other businesses, added new delivery channels and products, created complex supply chains, and on and on -- all developed by different teams with their own views and habits -- opportunities for inefficiency and kluge have skyrocketed. Add in the growing number of digital interconnections with customers, suppliers and other business partners, large packaged applications systems such as ERP and CRM and, well, you get the picture. Enterprise applications integration (EAI) efforts haven't been able to provide enough relief because of the very nature of their inflexible, hardwired solutions.

Perhaps the most maddening limitation of business software is the seeming inability of applications to accurately embody the strategy and everyday processes of the business and to keep pace with business-process changes.

The goal of SOA is to fix this growing problem. Applications built using SOA will support the same business processes that applications have always supported, but with some important distinctions. SOA's goal is to design and develop all the business functions that go into an application as independent "services," which can then be strung together in several different ways to complete whatever business processes the business requires. And since different applications often share a single service, that service can be used and reused as often as needed. The result: greater consistency across business processes and more agility in dealing with business change -- with the added benefit of more efficient use of IT assets. The promise of SOA is lower costs, less redundancy among IT resources and fewer people doing the same work.

This next generation of software is built on a service-oriented architecture and incorporates middleware, storage and Web services standards, such as Business Process Execution Language, Simple Object Access Protocol and Web Services Description Language. Savvy adopters are using SOA to integrate applications, shed unnecessary and redundant systems, begin to retire costly legacy systems and tighten partner relationships.

SOA is no panacea. Serious SOA applications will be rolling out in 2006, still mostly in the grasp of the more sophisticated IT organizations. Overhauling the application systems of a large organization in order to employ SOA is a complex, multiyear journey. Companies that began that journey several years ago are now testing the limits of SOA. While the technology is in place to share services over the Internet with external business partners, few organizations feel security is reliable enough to do so with anyone other than those they most trust. The tenets of SOA contain an inherent simplicity and rational design that many, if not most, application portfolios sorely lack.

Still, I'm bullish on SOA and SOAB for 2006. The emergence of enterprise architect and business architect professions gives me that confidence, as does the proliferation of architecture steering committees with both IT and business professionals reviewing projects to ensure they comply both with the enterprise architecture and business plans. As SOA becomes more established, more IT managers will be taking a serious look at its cultural impact across an organization.

The train is out of the station and barreling down the track: 32% of 248 U.S. companies with more than 1,000 employees revealed that they plan to deploy SOA in 2006, and 21% are already there, according to a Foote Partners' 2005 CIO/IT Executive Survey. Moreover, its potential to improve efficiency and lower costs has an increasing number of enterprise IT shops looking at SOA, with big dollars to be spent on SOA-related technologies in the next few years: IDC estimates that SOA-driven software spending worldwide will reach nearly $9 billion by the end of 2009.

Virtualization
When it comes to infrastructure efficiency, IT virtualization is one of the best ways to increase server utilization and optimize storage. Virtualization pools the resources of different machines so that computing power shifts to the areas experiencing highest demand. Virtualization technology enables this capability among multiple machines or among partitions of one machine, which can run different operating systems at the same time. By increasing server utilization rates, virtualization allows fewer machines to do more work. In fact, IDC reports that in the period between the second quarter of 2004 and the second quarter of 2005, server shipments declined by almost 3%.

Virtualization not only reduces costs, it aids in simplifying customer environments and it helps customers more easily respond to changes in their businesses.

Virtualization is hot, and vendors are lining up to offer it: market leader VMware, Microsoft, IBM, Hewlett-Packard, Cisco and BMC Software, plus many startups launching or acquiring virtualization technology.

Among IT managers who have deployed server virtualization in a recent IDC survey (420 participants), more than half are using it in production environments to run business-critical applications such as databases, decision support and business processing. Web applications are most commonly virtualized on Linux servers. In this same survey there was an even split between IT managers who were virtualizing x86 servers and those virtualizing non-x86 server environments. 89% percent of the IT managers virtualizing their servers are primarily doing it to save costs. The second-most cited factor for virtualization was to ease management and maintenance of servers -- nearly 34% of IT managers surveyed said that this was a primary motivator. Rack-mounted servers were the servers that were most often virtualized -- 63% of the servers virtualized were of this type.

The survey also found that a quarter of the respondents did not find any hurdles to implementing virtualization. Surveys indicate that nearly nine out of 10 users are setting up their own virtualized environments and fully supporting them. The main hurdles are institutional resistance, costs and lack of technical expertise, but those factors haven't been big problems.

Virtualized servers in 2005 represented 2.7% of the physical servers sold; it is expected that this will increase to 11.2% of the servers sold in 2009, for a compound annual growth rate of 47.7% (IDC). The market will shift rapidly from the low-level virtualization technology to management, so the focus should be on choosing management tools and automation, not on choosing the basic commoditized tech components.

A development that makes 2006 a key year for deploying x86 server virtualization in particular is movement among the independent software vendors to make licensing in a virtual environment more user-friendly. Microsoft is one example. In addition, as the x86 platform itself becomes more powerful, customers should find a growing list of applications appropriate for a virtualized environment. In the last couple of years, systems vendors stepped up the performance of their low-end systems with dual-core processors and 64-bit support. This year will bring servers with virtualization technology built into the silicon, a huge step for the x86 platform that is possible already with software from VMware, Microsoft and some others.

IT organizations that have delayed virtualizing their x86-based servers for fear the technology remains unproved should put that project at the top of their to-do lists for 2006, as the market for virtualizing the low-volume systems heats up.

Linux
Linux isn't making much headway as a desktop operating system, but it is certainly becoming reliable enough for many applications and gaining popularity as a leading server operating system: 72% of respondents to a recent CIOInsight Magazine poll are using it on servers versus 3% on the desktop. Moreover, 60% in the same survey have replaced legacy systems with Linux or will within two years, nudging out Windows, Unix and Solaris.

You can bet this wouldn't be happening if it weren't for the software establishment (IBM, Oracle, Red Hat, et al.) providing the strong support that corporate Linux users want.

2006 is the year that Linux's evolution into an enterprise-application server platform will take hold. It has quickly moved from low-end e-mail deployed on individual desktops or small boxes to Web servers running business-critical corporate applications. Now those who use Linux say the time is right for the operating system to be running key corporate-software packages, including large databases, financials, sales, medical records and a host of other business-critical systems. Some companies are expanding Linux's role to running their data centers, hosting core Oracle financials systems and ERP and database applications with outside vendors' assistance.

It takes a certain amount of convincing of executives that it is safe to move back-office business applications to Linux from long-used, stable Unix platforms. Be careful about using IT jargon like "open source" and instead trumpet the flexibility advantages of Linux (e.g., running active/active disaster-recovery setups) and even long-term costs and performance benefits.

Business intelligence (BI)
Of all the technologies described here, I think this one is the "no brainer" in the bunch when it comes to the elusive issue of IT/business alignment in 2006. Get this one right -- which I will define as making business better instead of simply better informed -- and respect from your business units will not be far behind. Identifying new revenue opportunities via analyzing customer data is critical to keeping customers happy and an important step to attaining and maintaining competitiveness.

BI typically encompasses a data warehouse as well as data-scrubbing and analytic software. In analytics, Business Objects, Cognos and Microsoft are the Big Three vendors, offering a high level of sophistication. For small and medium-sized companies (generally those with less than 5,000 employees), Microsoft Excel may still be the dominant BI tool, so opportunities abound there.

Business intelligence is firmly entrenched as a strategic technology, with a penetration rate of mid-level managers and planning staff using BI tools at roughly six of 10 companies. More companies will adopt BI technology to stay competitive, and those that already have it will broaden its use. Not only will they attempt more kinds of analysis, but more employees and managers will make use of these systems -- particularly to measure performance, analyze data and track problems, but also to identify desirable customers and new business and market opportunities. But the extent to which this enormous potential is met will depend on how well the BI system connects to strategy and user needs, including the need to make these systems easier to use.

Overall, BI accounted for $5.8 billion in sales in 2005, but the number of business intelligence users will swell in 2006 with an estimated 9% growth rate. It ranked first place in our 2005 CIO/IT Executive Survey for our question, "What technologies and technology strategies will be making the most significant contributions to furthering business strategies in 2006?"

There will be attempts to rope in average corporate knowledge workers, supply chain partners and customers. Helping to move BI beyond the power users and lure more mainstream users will be less-complicated querying techniques and basic, but creative, ways of presenting information gleaned from once-intimidating BI and data warehousing tools, which will also do more in the way of customer self-service via customer portals.

BI in 2006 will continue to emerge from its traditional confines of historical reports used by statisticians or business analysts. Instead, BI will deliver real-time or near-real-time data that employees at all levels of the enterprise can use to make daily decisions. Many bleeding-edge companies began to tentatively explore this notion of "operational BI" in 2005. But many more can be expected to move toward this new level of BI this year by shortening the time it takes to get data from transactional systems to a data warehouse and by linking BI with business process management (BPM) tools so they can send fresh data to front-line employees and executives.

BI vendors began forging close alliances with enterprise information integration vendors in 2005 to help users get a single point of access across disparate systems for speeding warehouse feeds, and this trend will continue in 2006.

Wireless
Wireless mobility is more than talking on cell phones, sending e-mail and working in a hotel lobby. Mobile phones, laptops and PDAs have emerged from their beginnings as personal communication and productivity devices to become tools for improving business efficiency and customer service.

Lower costs, the wide acceptance of mobile technologies by consumers and the ability to access corporate data with mobile devices make it possible for strategy-minded companies to obtain business benefits that go beyond improved communication. These benefits include enabling workers to analyze data more effectively, reduce cycle time and improve invoicing and inventory management. In 2006 and beyond, companies will give more workers access to wireless capabilities and will install more applications on mobile devices to support business functions, like customer relationship management, logistics, field service and sales.

I like the latter in particular…the idea of enabling road warriors to access a trusted network anytime, anywhere, to instantly access information on a handheld device that will help close a sale on the spot. It's about independence and being able to stay out in the field longer to do their job. This trend will strengthen as wireless networks get faster and as more municipalities deploy Wi-Fi that blankets entire regions.

Convergence will continue to be a big story in 2006, as private companies and the public sector ramp up more voice over IP along with their data networks. Yeah, security is a problem, but large organizations will nonetheless continue to selectively adopt IP telephony while also maintaining legacy circuit-switched voice technology. The common interface over IP will continue to affect wireless communications as well, since IP offers a means for providing interoperability across proprietary networks.

Regarding wireless technology, Cisco will release its Internet Protocol Interoperability and Collaboration Systems (IPICS) technology, offering interoperability between fire and police radios and other emergency systems using IP. As a result, thousands of emergency jurisdictions won't need to buy new radios; the hurdle will remain for municipalities and states to overcome politics and work together. IPICS could also mean better productivity at private companies, especially in large shipping or transportation operations with multiple networks.

2006 will be an alphabet-soup year for wireless, with 802.11i and 802.11n moving ahead. The 802.11i standard improves Wi-Fi security; it was approved in 2004, but more products will incorporate it this year. The 100Mbit/sec Wi-Fi standard 802.11n faced a fractious year in 2005 among members of the IEEE standards body, but the high-speed standard will eventually gain acceptance, supplanting 802.11a, b and g.

WiMax will also gain ground, possibly reaching beyond consumers to include home-based workers who want to replace Digital Subscriber Line or cable modems.

For every CIO who's pushing through a wireless project in 2006, there's one holding back. It's undeniable that there are barriers to wireless computing growth, even though I'm bullish on the technology's adoption rate this year and going forward.

The term wireless covers a lot of technology, but the usual suspects are security, manageability, standards and, more recently, perceived shortcomings of Wi-Fi. Security is the biggest inhibitor, even though larger enterprises that are more security-conscious are beginning to adopt wireless faster.

For a wireless application to be successful, three types of security -- access, link and device -- have to be in place. The Wi-Fi standard includes specifications for link security to help establish a secure connection between wireless devices and the wireless LAN, but access security through firewalls and device security in cell phones and PDAs requires additional software. Access security has yet to be solved, and it gets worse when you have more connections from outside the firewall.

Looking ahead, even though the WiMax broadband wireless linking standard is beginning to supplant Wi-Fi as the most talked-about wireless LAN technology, Wi-Fi continues to be a concern. In addition to the same security and management issues that crop up with wireless in general, users are leery of Wi-Fi's constraints on distance and scalability. It will continue to impede its adoption and prevent companies from feeling comfortable with the technology, at least until IT managers get a better grasp of what Wi-Fi does well and work with vendors to iron things out.

Notwithstanding these hurdles, I think resistance will slowly be broken down because of the business advantages offered by wireless. The promise of wireless will simply be kept in check by the fact that its benefits won't be reaped as easily.

Storage Area Networks
The mainstream popularity of SANS have been mis-forecast before, but consider why SANs' time may have finally come: Digital data keeps growing, and SAN prices keep coming down. Traditional direct-attached storage has become by contract expensive and hard to do, given its complexity.

A SAN is a high-speed network that routes data to storage devices according to customized rules. This setup overcomes geographic limitations (the devices can be located anywhere) and offers other benefits. For example, a SAN that funnels backup to a remote site can satisfy one requirement of a disaster recovery plan.

Prices are reasonable right now. Vendors are offering basic SAN infrastructures -- essentially starter kits -- for less than $5,000. SANs that use IP networks rather than older Fibre channel technology make deployment much easier.

All this evidence points to growing adoption among enterprises with limited IT resources.

[Note: I'd planned on including a few more technologies in this blog entry, among them intrusion prevention systems and RFID, but a big snow storm has knocked out power in our area and I've come to the end of my laptop battery's life.]
Posted by David Foote To make the case for IT spending, brush up on information value-add and knowledge capital
10 JAN 2006 00:00 EST (05:00, GMT)
IT organizations and IT professionals are on the cusp of some big, rapid changes courtesy of a short list of technologies and tech strategies I'll explore in my next blog. It's just a question of how many companies will have the courage to embrace change on a fast track versus the slow and steady pace traditionally adopted by the majority. I suspect that accelerating competitive forces will compel many to advance more quickly than their level of comfort dictates.

Will this mean more IT spending? Definitely. Will there be continuing pressure by skeptical senior business executives leaders to limit IT spending? Yes. Everything depends on how effectively IT leaders can correlate their spending to sustainable profitability and communicate it effectively.

Are you familiar with Paul Strassmann? He's the renowned former CIO (Xerox, General Foods, Kraft, Department of Defense, NASA), academician (West Point, George Mason University), White House counselor and author of numerous articles and books arguing with vivid statistics that there is no correlation between IT spending and profitability. However, there is correlation in other areas that are controllable.

He speaks about entropy (chaos, lack of organization) as the nature of the universe and that organizations, whether societies or corporations, tend toward dissipation and disintegration unless they are properly structured to grow and thrive. Part of what inhibits such organizing and structuring in his mind is the generally poor attempts that are continually made by IT executives in trying to demonstrate a positive correlation between money spent on IT and profits. He points out the pitfalls, offers a number of interesting analyses and suggests improvements in a 2004 article entitled Six Rules for Finding IT Value.

Paul created and trademarked the concepts of information value-added and information productivity. This is brilliant work that posits that value is a direct product of aligning IT with business, and failure to make the value argument is why IT lags behind the expectations and, in many cases, the basic requirements of business.

His information value-added concept equates to profit minus the cost of capital invested by shareholders. Think about a few of the components of profit -- labor, inventory and customers. Without critical information about those components, it's unlikely you'll have a profit. Given that fact, information value-added derives from profits after taxes, tossing out preferred dividends, one-time charges and other adjustments. Then, profit is lowered to account for the returns owners expect on the invested net assets. When that expectation is exceeded, you get value-added.

Information productivity is his idea that takes the information value-added figure and divides it by the costs of information transactions. These are the company's selling, administrative and general expenses, of which information-technology spending accounts for 10% to 35%. The message: Managing information is your edge.

And knowledge, too. Paul has written extensively on the value of knowledge, or knowledge capital, which he defines as a company's financial value minus market value. He believes that by failing to show the true value of accumulated knowledge of employees, of software, of databases, of organizational capabilities and of customer relationships, CIOs are letting accountants measure the value many IT-enabled benefits as intangible and intangible benefits, which make up only 20% of the shareholder worth of profitable firms. Consequently, much of the potential of IT is lost when projects that would increase knowledge capital are said to contribute only to "intangible benefits." In order to demonstrate IT value, Strassmann believes project proposals must be allowed to transcend the limits of conventional accounting, as defined by accounting rules, and include gains in knowledge capital.

IT budgets will be under more scrutiny this year as exciting new technologies and tech strategies roar into focus. We'll look at some of these next. But unless the IT value proposition is adroitly made, I don't think many IT leaders stand a chance of getting the dollars they need for human and technical resources necessary to fully capitalize on their promise. Or when they do, it will be too late: Competitors will already be there. That will be a tragedy of lost opportunity.
Posted by David Foote Hot IT jobs for 2006: Offshore-resistant best bets
09 JAN 2006 21:48 EST (02:48, GMT)
"Hot jobs" in IT used to be synonymous with high salaries, BMWs as sign-on bonuses and software engineers with enough sex appeal to be played by Sandra Bullock in feature films (is "The Net" out on DVD?). But times have changed, and now I think any job that is resistant to the offshoring drain might rightfully be given this label. There are a lot of reasons why a job might end up as such.

We divide such jobs into three categories:

Enabler Jobs

• Architects (enterprise, business)
• Business analysts
• Business technologists
• Business process modelers (BPM/BPR, BPA, BAM)
• Project managers

• Applications developers (EAI, .Net, Java, Web applications, ERP, CRM)
• Web apps programmers
• Data warehousing/BI specialists
• ERP/CRM professionals
• DBAs, database developers
• Help desk specialists

• Security (forensics, analysts, senior managers)
• Data modelers (enterprise data mgmt.)
• Network managers, engineers,
• Wireless engineers, administrators,
• Software engineers
• Disaster recovery specialist
• System auditors
• Integrators (Enterprise Applications Integration, systems)
• Storage/SAN administrators

The concept of enterprise architecture is old, but the position of an enterprise architect who conceives, designs and oversees the implementation of a company's systems development is fairly new. It's become more relevant with the emergence of Web services and the move toward service-oriented architectures that enable IT components to be used in multiple applications. The enterprise architect is responsible for ensuring that each and every one of a company's IT decisions is made with its impact on the entire organization kept firmly in mind. Working with business architects, their job is to look for common business processes throughout an organization so that the services IT creates can be reused and to guarantee that they can be used by every business unit that touches upon a product or service. The sort of inside knowledge required do these jobs obviously helps ensure their insourceability.

Business analysts and business technologists comfortably move between business and techno logy and are key to consistently deriving value from IT investments. A typical candidate has worked on the business side of a company for at least several years, developed intimate knowledge about operations and has an affinity for technology. They act as liaisons between the IT department and the business-user community, to match technical specifications with business requirements and to serve as that crucial link to project success.

Business process modelers have the ability to quickly model and automate business processes, an absolute necessity for IT organizations looking to build competitive advantage.

By now most of you understand the role of expert project managers and PMOs (project management offices) in battling overblown budgets and missed deadlines that have plagued IT projects for years. Large employers such as IBM hold these positions in such high esteem that they have comprehensive global professions programs devoted to worldwide standards, skill certification, professional development and career development of PMs.

Customer-facing jobs are back in a big way, as employers began shifting resources in 2005 from infrastructure-centric regulatory initiatives to new products and services and customer support systems, and began tackling a backlog of projects. That, and tremendous growth of online business models in the last decade, has placed created an acute demand for a number of AD jobs that will continue this year and next. Many of these backlogged projects incorporate novel technologies, such as Web services (SOAP, XML, .NET, Java and WebSphere), Linux and business intelligence tools, and require appropriately skilled IT workers. Customer requirements have boosted the popularity of data warehousing and data mining, ERP and CRM applications, as well as development of integration components, user interfaces and reusable components. Approximately two-thirds of the large organizations we survey are adopting some form of agile programming processes and need workers with hands-on experience. And it doesn't stop there: Many employers are demanding specific industry experience.

Why not just offshore/outsource this stuff? Low-level coding jobs maybe, but it's obvious that this work increasingly requires customer and industry-savvy workers and sometimes familiarity with company culture. Tough to find that in Bangalore, India, and even when you can, offshoring development is proving to be far more difficult than anticipated to manage. Costs may be reduced, but scheduling and project completion timelines are less predictable. For more on this, revisit my first blog installment.

Infrastructure jobs, especially those supporting the proliferation of online computing systems, continue to show strong demand. Plus, there is still a lot of spending on security- and compliance-related requirements for building bulletproof IT infrastructures, systems and processes. Hiring in network and security engineering, administration and management, especially wireless, have shown strength, as have security analysts and managers, systems software engineers and integrators of every stripe.

We added storage/SAN administrators to this years hot job list, despite the overly-optimistic forecasts regarding storage area networks (SANs) in prior years. I think SANs' time has come: runaway growth of digital information is driving the SAN market and putting downward pressure on prices. Vendors such as QLogic offer basic SAN infrastructures--essentially starter kits--for less than $5,000, and fully redundant configurations start at roughly $7,000. By contrast, traditional direct-attached storage is hard, expensive and just plain dumb given its cost and complexity. The beneficiaries are SAN admin specialists.

What about offshoring this stuff? Maybe some of it, sure, but I think Web-enabled business models are locked in for the long haul at most companies. Now even a little bit of downtime on these systems can have a big impact on revenues and shake customer confidence.

Remember from my first blog that risk avoidance is now a prime directive, and "no surprises" is the managerial mantra. Failure to understand this can mean loss of jobs. Kind of makes one think twice about putting too many of your key computing assets in the hands of vendors. Once you have your "A team" in place internally, both on the technical and project management sides, then you can outsource with some confidence. This stimulated a lot of hiring, skills pay and retention programs in 2005 that will carry forward in 2006, but on a less aggressive path.
Posted by David Foote IT executives' priorities for 2006
06 JAN 2006 20:38 EST (01:38, GMT)
(This is the last week to submit your on-topic questions. All will be given comprehensive, informative and thoughtful online responses and posted online. You may also email me directly, if you require privacy.)

Remember when "aligning IT with the business" was THE big mantra for IT executives? Before the Internet elbowed its way into the mainstream and actually became "the business"? The world has changed for sure, but the majority of CIOs still bang their heads against walls battling CXO resistance to the notion that investment in IT should match the legitimate strategic advantage technology can provide…if you're good with it, that is.

Still, in my firm's 2005 CIO/IT Exec Survey, "Increasing business efficiency, flexibility and agility through IT-enabled process improvement" was the number two-ranked answer to a question about which business priorities are attracting the most CIO involvement. Number one? You guessed it: "aligning IT and business goals and needs." This was also the top-ranked answer to our query about strategies that IT departments would be most actively pursuing in 2006.

Not too surprising following years of Sarbanes-Oxley Act compliance activities. Many CFOs took the opportunity to reclaim their power and prestige that had shifted to CIOs during the wild spending Internet bubble years. But that's another blog.

(Note: The 2005 CIO/IT Exec Survey involved 430 to 698 participants, depending on the specific question, and was conducted via interviews and online questionnaires conducted from July 2005 to September 2005.)

SURVEY FINDINGS

1. Here were the results of our survey questions about top 2006 business and technology priorities, in order from highest to lowest.

   Business priorities attracting the most CIO involvement:

   • Aligning IT and business goals/needs
   • Increasing business efficiency, flexibility and agility through IT-enabled process improvement
   • Improving internal customer satisfaction and external customer service
   • Ensuring security and business continuity
   • Reducing the cost of doing business
   • Developing strategies that leverage new technology
   • Improving the quality of company's products and services
   • Helping to launch new products and services
   • Helping company to become more innovative
   • Selling and operating globally

   Technology management priorities attracting the most CIO involvement:

   • Improving project management discipline
   • Redesigning and rationalizing the IT architecture
   • Recruiting, developing and retaining staff/leadership/business skills within IT
   • Installing a major new system or IT architecture
   • Controlling (reducing) IT costs
   • Ensuring systems uptime
   • Uncovering new technologies with high potential and implementing them (e.g., Web services, RFID)
   • Instituting internal performance metrics and benchmarking; communicating bottom-line impact from IT
   • Outsourcing/offshoring IT activities and systems
   • Scaling IT globally
   • Ensuring regulatory compliance
   • Ensuring privacy and integrity of customer and employee data

2. The following were the results of our questions to IT executives about 2006 business priorities that will have the most impact on their IT organizations, as well as IT strategies their organizations would be most actively pursuing (from highest to lowest).

   Business priorities that will have the most impact on your IT organization:

   • Delivering greater customer service
   • Improving workforce productivity
   • Supporting revenue growth strategies
   • Cutting costs
   • Coming up with innovative new products/services to create competitive advantage
   • Enabling real-time decisions and change
   • Integrating your processes with third parties
   • Ensuring regulatory compliance
   • Enabling/enhancing knowledge management and leveraging intellectual assets
   • Supporting mergers and acquisitions
   • Improving quality
   • Selling and operating globally

   IT strategies your IT department will most actively be pursuing:

   • Improving alignment with business
   • External customer service and relationship management
   • Integrating/enhancing systems and processes
   • Standardizing/consolidating IT infrastructure
   • Automating/optimizing the supply chain
   • Project offices and practice centers
   • In-house customization of packaged applications
   • Performance management
   • Centralizing IT organization management
   • In-house development of proprietary applications
   • Implement mechanisms for IT governance, portfolio management, etc.
   • Outsourcing of IT functions and projects

3. Here were the results of our questions about technologies and technology strategies that will be making the most significant contributions to furthering business strategies in 2006 (from highest to lowest).

   Most significant that were consistent across all industries:

   • Business process management
   • Business intelligence/data mining
   • Data integration
   • Network security
   • Web services

   Mixed significance (i.e., somewhat industry-dependent):

   • Customer relationship management
   • ERP
   • Collaboration
   • Service-oriented architecture
   • Knowledge management
   • Disaster recovery/business continuity
   • Wireless networking (WLANs, Wi-Fi, etc.)
   • VoIP
   • Storage systems
   • Mobility (devices)
   • Self-service technologies
   • Corporate performance management
   • Corporate portals
   • Content management/digital asset management
   • Supply-chain management

4. 2006 IT spending increases -- IT executives told us that they are increasing spending on these this year (from highest to lowest).
   • Security software
   • Storage systems
   • Computer hardware
   • Data networking equipment
   • Infrastructure software
   • Telecommunications equipment
   • e-Business applications software
   • Outsourced IT services

5. 2005 surprises -- IT budgets were increased for these initiatives and technologies in 2005 over 2004 (from highest to lowest, ranging from 17% to 4% spending increases).
   • ERP
   • Disaster recovery/business continuity
   • Business process management
   • Wireless networking/mobility
   • Security/digital ID management
   • Data integration
   • Corporate portal
   • Business intelligence
   • Customer relationship management
   • Storage systems
   • Collaboration
   • E-commerce
   • Security software
   • Regulatory compliance
   • Web services
   • Content management
   • Middleware/applications integration tools
   • Corporate performance management
   • IT governance and asset management
   • Knowledge management
   • Databases/applications development tools
   • Packaged applications software for servers, networks
   • Networking hardware and infrastructure
   • Packaged applications software for clients
   • Telecommunications hardware, software, and services

Business intelligence software and data mining systems are being embraced by corporations in a big way. There are many reasons for this, but I think it all comes down to improving IT/business alignment. What better way to:

• Investigate and select new products and services that will create competitive advantage;
• Discover what will maximize customer service delivery and optimize the supply chain
• Reduce the risk of poor decision making
• Enrich knowledge management systems and keep them current.

The technology, which encompasses all sorts of data reporting and analysis tools, isn't new, but its popularity is clearly growing, judging from our executive and management surveys. This is the sort of IT-enabled initiative that builds credibility with senior business execs.

We believe that companies using or planning to use business intelligence software will spend up to 10% of their software budgets on these tools. Moreover, a recent survey by the publication CIO Insight found that 4 out of 5 companies using business intelligence software say it's had a measurable, positive impact on their bottom line.

Mobile computing is another IT confidence builder. Wireless networking and mobility devices represent several rungs in importance in our latest executive survey. Companies are now deploying cell phones that double as data processing devices. The market for "converged mobile devices" -- handheld units with both voice and data capabilities -- was up nearly 14% in 2005.

One reason for this rise in mobile computing's popularity is that companies are looking for faster, more accurate information on which to make decisions. The popularity of wireless networks is burgeoning, allowing staffers to operate where physical networking is impossible or cost-prohibitive, including point of sale. Worldwide shipments of wireless hardware have more than tripled in the past three years. But wireless systems are even more vulnerable to attack than their tethered counterparts. It's no wonder that network security made the short list in our survey of technologies and strategies making the most significant contributions to furthering business strategies, and that 2005 budgets for all things related exceeded plan according to our findings.

Speaking of security, our quarterly IT compensation surveys (discussed in a prior blog in this space) indicate the continued strength of infosec and internetworking skills pay and demand in 2005, in particular security and networking certifications that occupy several positions in our list of highest paying certifications. Moreover, salaries for information security professionals grew 8.5% to 15.2% from 2003 to 2005, well above the average 5.9% growth in base pay for IT workers overall in this period.

Which responses in this year's Foote Partners IT executive survey differed from last year? Ranking higher in priority in 2006 compared to last year for IT departments were:

• Helping to launch new products and services
• Improving project management discipline
• Recruiting, developing and retaining staff/leadership/business skills within IT
• Improving workforce productivity
• Supporting revenue growth strategies
• Integrating your processes with third parties
• External customer service and relationship management
• Automating/optimizing the supply chain
• Project offices and practice centers
• In-house customization of packaged applications
• ERP
• Service-oriented architecture
• Wireless networking (WLANs, Wi-Fi, etc.)
• VoIP
• Storage systems
• Mobility (devices)

• Cutting costs
• Ensuring regulatory compliance
• Performance management
• Centralizing IT organization management
• Implement mechanisms for IT governance, portfolio management, etc.
• Knowledge management
• Self-service technologies
• Corporate portals

75% of IT departments represented in our survey are actively involved in corporate innovation efforts aimed at introducing new products or services. Among these efforts: providing new ways to deliver products and services; providing knowledge management and collaboration tools beyond e-mail; supporting market research and customer analysis; supporting basic research; developing embedded software used in products or services; and developing systems used in product engineering and manufacturing.

84% of these IT departments are actively involved in corporate innovation efforts aimed at business process improvements. Represented in these innovation efforts are: identifying business processes that may be improved via technology; developing systems used to improve or replace current processes; buying/licensing systems used to improve or replace current processes; leading business process improvement efforts; and managing outsourced systems and services used to improve or replace current processes.

Before I'm finished with my stint in the Expert Answer Center I will do a blog on key technologies and industry trends shaping IT management and workforce development this year and into the future. It will build on what we've covered in this blog and the first three blogs in capturing a flavor for what's ahead this year in IT management initiatives, practices and trends.

(Remember to submit your on-topic questions. All will be given comprehensive, informative and thoughtful online responses and posted online. You may also e-mail me directly, if you require privacy.)
Posted by David Foote Hot skills for 2006: Finally out of the SOX box
05 JAN 2006 22:49 EST (03:49, GMT)
The next two blogs will be featuring our research and analysis on in-demand jobs and skills for the next 12 months. These are topics that deserve a lot of attention and have so many strategic and tactical angles that their content could -- and does, at my firm -- each easily fill a two-day briefing. We'll do a partial overview in this blog, starting with skills performance in 2005 and then going into our projections for 2006.

Premium pay tied specifically to certified and non-certified information technology skills grew overall by an average of 8% to 10%, respectively, in 2005, signaling a willingness of employers to ensure competitive pay for their workers. But, more importantly, employers are once again investing selectively in tech skills that will help build revenues and market share, not just meet regulatory compliance laws. In other words, the Sarbanes-Oxley anchor that had been dragging on IT budgets (especially at small and medium-sized public companies) has officially been lightened.

Roughly 70% of public companies in the U.S. operate on a calendar fiscal year. Even though the SOX compliance date mandated for late 2004 was extended by one year, most companies couldn't wait to get "back to business"; they kept on schedule for Q1 2005 compliance. So in 2005, our research indicated an abrupt shift of resources beginning in the first half of the year, to investing in skills and experience that will move the business forward and not simply protect it from crooked executives and various and often vague asset threats.

Tech skills are by no means the Holy Grail for IT professionals in the current staffing environment, not with everything else employers are expecting from their IT departments in helping them execute on business strategies. But it's clear from our quarterly compensation survey research that while employers remain nervous about hiring full-timers and taking on their escalating health care costs -- among other steep employment-related overhead expenses -- they are investing in IT skills in a very big way.

Probably the biggest change I've noticed from a year or so ago is that CIOs are again focusing on innovation and creating new products and services. This has translated into more demand -- in fact, pent up demand -- for applications development skills relative to infrastructure skills, for example. But I can report that spending for infrastructure skills is still pretty healthy.

In the big picture, technology has never played a bigger role in revenue generation, whether you're talking data mining and business intelligence, Web-enabled delivery mechanisms, business process management, customer relationship management or anything else that can contribute to ensuring a company's competitiveness and profitability. You've got to attract and retain the best talent to do this, and shame on any employer who can't retain their best people due to pay issues.

And as I discussed in a previous blog, risk aversion has become a prime directive for IT leaders. In this business environment it may be more important to produce predictable results even if it may cost more to do so. If you're head-to-head with a competitor, or if a revenue window of opportunity with a customer is starting to close, any misstep could mean your job. In that situation most managers will more likely go with their best in-house applications systems development talent, for example, supplemented by consultants and contractors. They will seek out IT workers with industry- and solution-specific experience to go with the tech skills mastery, even if it means rehiring people who had been downsized. Skills pay is being used to both attract and retain the talent required, and we're learning that the skills premium is often being rolled right into their base salary as an adjustment, which is significant.

Let's look at our findings a little bit more closely.

2005 Technical Skills Pay Premium Performance

Overall premium pay for 94 non-certified skills surveyed in the Quarterly Hot Technical Skills and Certifications Pay Index (50,000 IT professionals surveyed in 1,820 North American employers) grew a hefty 10% in value in 2005, to an average 7.1% of base salary in median premium paid. Pay for 95 certified tech skills also rose, by 8% overall in the past year, to an average 8.3% of base salary.

One of the biggest findings in our latest survey has been applications development-related skills. That category is up 17.6% in pay for the year for non-certified skills and 13.2% for certified skills. These are monster numbers for software developers, but for those of us who closely track IT workforce developments, this doesn't come as a surprise. Part of this increase is due to post-SOX compliance spending behavior, but also to the fact that companies are insourcing applications development that might have been outsourced 12 to 18 months ago. They've wised up to the risks of offshoring, at how difficult it is to do it well.

By the way, what is technical skills and certifications pay skills premium pay? For more information, click here.

NONCERTIFIED TECHNICAL SKILLS

Overall median average pay for 94 non-certified skills surveyed grew 10% in 2005, to an average 7.1% of base pay. Over the past four years, which includes the economic recession, pay for such skills has declined nearly 20%, the kind of numbers we saw in 2005 show a healthy recovery.

What non-certified tech skills have been growing in value?

You'll excuse me if I provide trending data here instead of the actual skill premium pay data behind the trends. Our proprietary research model tracking 50,000 professionals is labor-intensive, and depends on survey sales to be self-sustaining. We hope you're already one of our customers, or will become one, so that you can see the pay rates themselves.

Premium pay by skills category, in order of most growth (12 months):

• Applications Development Tools/Languages (+17.6% in premium skills pay value)
• Operating Systems (+17.8%)
• Enterprise Applications Development (+10.3%)
• Networking/Internetworking (+7.8%)
• Database (+7.7%)
• Web/e-Commerce Development (+5.2%)

• Active Server Pages
• Microsoft NT Server
• Java
• Visual J++
• SQL Server
• ABAP/SAP
• Microsoft .NET
• SQL Windows
• WebSphere

• Project-level security
• RAD/Extreme Programming
• VoIP
• Storage/SAN
• Gigabit Ethernet
• WebSphere
• RFID
• Oracle DB and Apps
• Microsoft SQL Windows
• SQL Server

• XML
• Novell
• Lotus Notes/Domino

• ATM
• COBOL
• SMTP
• CGI
• Cold Fusion
• HTTP
• Lawson
• Perl
• Powerbuilder
• SNA
• Siebel

• Project-level security skills pay is typically connected to approved project budgets, providing a level of independence for security workers that protects them from enterprise-level compensation policies that may limit performance rewards and salary adjustments.

• Experience in IBM WebSphere and Gigabit Ethernet skills remains strong due to the popularity of developing and implementing Web services solutions, plus IBM's aggressive marketing and support of the WebSphere platform. Many employers cite technical and industry experience over certification as more important to their WebSphere staffing decisions.

• Storage/SAN skills pay has been showing strength since late 2004 as companies grapple with increasing data management and storage requirements that must be flexible and cost-effective.

• SQL technology skills have long been an in-demand, perennial favorite despite the abundant supply of IT workers experienced in these longstanding skills and the level of maturity of legacy systems based on SQL solutions.

• The supply of Linux skilled IT professionals has caught up to demand, driving down their value in 2005. For the first time, Microsoft Windows was the leading operating system in new servers in the third quarter of 2005, as the overall worldwide server market grew a robust 8.1%. Sales of Windows systems accounted for 36.9% of all server revenue in the quarter, versus 31.7% for Unix and 11.5% for Linux. Enterprises increasingly are using Windows-based servers for applications such as ERP in addition to traditional uses such as e-mail and Web hosting. Migration from Windows NT to newer versions of Windows also is driving sales.

• The value of VoIP skills has been boosted by the strong market for VoIP solutions in primarily small and medium-sized companies. We expect pay for these skills to crest in 2005 and begin a gradual decline as the market matures.

Overall median average pay for 95 certified skills surveyed grew 7.9% for 2005, to an average 8.3% of base pay -- more than a full percentage point greater than non-certified skills. Over the prior four years, pay for such skills has declined far less than noncertified skills, only 4.5%. Certifications held their value far better during the recession, which did not surprise us.

What certified skills have been growing in value?

By certifications category, in order of most growth:

• Applications development/programming languages (+13.2% in premium skills pay value)
• Webmaster/I-net, project management (+7.8%)
• Project management (+7.7%)
• Database (+6.7%)
• Networking (+3.7%)
• System admin and engineering/NOS (+1.1%)
• Security (+0.9%)

• Sun Certified Programmer for Java 2 Platform
• Prosoft Master CIW Web Site Manager
• Sun Certified Developer for Java 2 Platform
• Sun Certified Enterprise Architect for Java 2 Platform
• Certified Information Systems Auditor
• CompTIA Network Technician
• Sun Certified Systems Administrator/Solaris

• Certified Information Systems Auditor (CISA)
• Project Management Professional(PMP)
• Certified Information Systems Security Professional (CISSP)
• Cisco Certified Internetwork Expert (CCIE)
• Cisco Certified Voice Professional (CCVP)
• Cisco Certified Design Professional (CCDP)
• Cisco Certified Enterprise Administrator (CCEA)
• Cisco Certified Internetwork Professional
• Cisco Certified Security Professional (CCSP)
• Cisco IP Telephony Design Specialist
• Cisco IP Telephony Operations Specialist
• SANS/GIAC Security Expert (GSE)
• SANS/GIAC Certified Forensic Analyst (GCFA)
• SANS/GIAC Certified Windows Security Administrator (GCWN)
• HP/Compaq Master Accredited Systems Engineer (MASE)
• IBM Certified Solutions Developer: WebSphere
• Oracle DBA Certified Master Professional (OCM DBA)
• Oracle Certified Professional (OCP DBA)
• Teradata Certified Master
• Citrix Certified Enterprise Administrator
• IBM Certified Solutions Developer

"Cooling" certifications (losing value in last 12 mos.):

• Citrix Certified Administrator
• Cisco Certified Network Professional; Certified Security Professional
• IBM Certified Advanced Application Developer – Lotus
• Microsoft Certified Desktop Support Technician(MCDST)
• Novell Certified Directory Engineer; Certified Network Administrator

• Beginner certs (MCP, CCP, A+)
• SANS/GIAC Security Essential
• Microsoft Computing Professional+Internet
• Prosoft CIW Administrator
• Siebel Certified Consultant
• Siebel Customer Certified Consultant
• SANS/GIAC Firewall Analyst

• The contrasting slide in pay performance for certified skills in the first six months of 2005 compared non-certified skills (one-third the growth rate, or +1.3% versus +3.8% respectively) was being driven principally by the premiums employers are now willing to pay workers for on-the-job industry and solutions experience. Still, most employers favor both experience and credentialing in a job candidate whenever possible. To meet this challenge, certification programs have taken steps to include components that provide participants with hands-on experience. Examples include CompTIA's National Information Technology Apprenticeship System (NITAS); Microsoft's recently added performance-based certifications tests; and Cisco, Novell, Red Hat and other certifiers' lab exams, which offer their certification candidates direct interactions with professional environments. The trend is for more and more credentialing organizations working with employers and developing new testing methods to give certificants practical experience, which will increase their marketability in the labor pool.

• Pay for auditing certifications such as the Certified Information Systems Auditor (CISA) will continue to be boosted by stiff compliance requirements and independent auditor control provisions stipulated by government regulations such as the Sarbanes-Oxley Act and Gramm-Leach-Bliley.

• The decline in pay for information security certifications in the past 12 months should not be interpreted as diminished demand. It is instead the result of a flood of IT professionals into the InfoSec field in search of job security and attractive pay, driving down pay for many popular beginner and intermediate certifications. Expanding corporate governance and terrorism regulations will continue to boost security spending and hiring and feed the current growth trend in secondary school security curricula and degree programs. We expect the supply of qualified infosecurity workers will level off somewhat against demand over the next 12 months as SOX-related spending slows, with security certification pay likely being driven upward by:
  1. the frequency and intensity of security breaches
  2. senior management's acceptance of higher security expenditures as routine costs of doing business in order to remain competitive
  3. customers/partners demanding more assurances that sufficient security measures are in place to protect their hard and soft assets
  4. continued growth of global projects and sourcing that require more complex security solutions.

This can be confusing, as there are skills, jobs and job skills. Below are our findings on what skills we believe will be either rising in value or paying above average wages in 2006.

In-demand technical skills in the next 12 months

Customer-facing

• Applications Development/Database (MCSD, SQL, Java, .Net, ASP, SQL Windows, Oracle)
• RAD/Extreme Programming
• Web-enabled analytics, management apps (e.g. MAPICS)
• Database (SQL Server, Oracle)
• RFID/location-aware services

• Networking (Cisco, VoIP, wireless, net management)
• Wireless (WLAN, Cisco WLSE/CWSP/CWNP/CWNA, Structured Wireless Aware Network)
• Security (Cisco, CISA, CISSP, CISM, GIAC)
• Systems (HP/Compaq SE, Citrix)
• Web services/SOA (WebSphere, .Net, MCSD/.Net, SOAP)
• Storage/SAN (EMC, Veritas, IBM, CA)
• Messaging (MCSE and MCSA Messaging specialization)

• Project planning, budgeting, scheduling, management/leadership (PMP)
• Business process design, re-engineering
• Open Source/Linux

These are the so-called "soft" skills that employers are willing to pay to attract and retain. If tech skills are important to success in IT, these skills are considered critical to IT's contribution to the business. An IT professional must have both tech and some of these soft skills to have a future in the profession.

• Communicating effectively
• Strategic thinking, planning
• Ability to lead and motivate
• Project management, esp. global
• Specific business process/operations knowledge
• Enabling analytical skills (business technology)
• Industry knowledge
• Negotiation skills
• Collaboration, team building

It's no secret that IT organizations have been instrumental in helping companies sell more products, promote brands and deliver better business value to their customers. What may be new information for many is that there are now more IT professionals than ever who are capable of making a difference in their employers' fortunes. I'm not referring to just the ones at or near the top, but to those farther down the chain of command making $60K to $80K annual salaries. Keeping them happily employed and moving forward in their careers is paramount.

In short, if you don't have a worker retention problem at your company, just give it a little more time. Your best people are vulnerable to better offers, and you'll have to fight to keep them. It is clear that the costs to an employer of losing its best people have increased dramatically, and that this presents a level of risk that many organizations are simply not prepared to take right now.

The good news is that outside of a few hot industries like IT consulting services, hiring hasn't roared back after the economic recession. And with skyrocketing health care costs driving up employee overhead, hiring may not be the panacea for the foreseeable future. But the "A" list players are always in demand.

Turnover is the single largest controllable cost of doing business. Employee loyalty (or the absence of turnover) is the single highest factor correlated with customer satisfaction, according to our surveys over the past five years.

It's clear that competitive pay, perks, the latest technologies to play with, interesting work, promotions, professional development, paid time-off, flexible schedules and work/life balance are all things the lead to on-the-job contentment. But they don't necessarily inspire trust and loyalty, which are really the core issues in retention matters.

There is a whole lot that goes into creating trust and loyalty in an IT workforce. Compensation and benefits are a priority, but a stimulating work environment tends to be just as important. Hedge your bets by keeping jobs challenging and giving your employees additional opportunities and challenges. Remember that, with IT workers, autonomy is often more highly valued than overall compensation.

Recognition programs that offer instant and immediate feedback are both cheap and effective. Everybody should be developing programs that give high-performing workers the "psychic income" that they crave, in the form of tangible and intangible expressions of acknowledgment and appreciation.

Younger workers want a choice of rewards for their hard work. Our studies point to travel rewards and learning opportunities such as cooking school, rock climbing and other activities that appeal to work hard/play hard attitudes that separate them from their baby-boomer generation colleagues.

In fact, wise employers are developing and executing internally branded total rewards strategies that offer a variety of incentives tuned to corporate culture, organizational goals and performance philosophies. These strategies typically marry work/life balance, base compensation, non-monetary and recognition elements into an overall retention program.

A recent study by Foote Partners involving 164 North American and European employers and more than 500 hours of interviews with top executives and managers reveals that employers are indeed becoming more creative with retention strategies for keeping critical IT talent on board. New-generation professions programs have been extraordinarily effective for companies interested in a long-term retention solution. They're especially timely given that IT workers are looking for career advancement and development.

Professions programs have been around in one form or another for some time, in particular at IT professional services firms and other companies that place a high asset value on labor as a revenue source. They are terrific at neutralizing the influence that a good executive recruiter can have in convincing talented IT professionals to considering looking elsewhere. Well-run professions programs help lock in those who are ambitious about their career direction and professional development -- exactly the kind of workers that recruiters target most.

What are professions programs? They can be as simple as well-organized communities of interest (sometimes called communities of professions) that promote networking and cross-learning for IT professionals who want to aggressively manage their careers, continually innovate career-wise and enhance their value to their employers. Or at their most robust, they integrate career models and paths, learning programs, knowledge management, performance management systems and compensation with business strategies, market development and customers. They offer well-organized, structured certifications processes and lots of tools and methods to grow professionally. They are almost always voluntary: Participants usually want to accelerate their "promotibility" in a single career track or jump to another job or career path apart from where they now are.

Professions programs are organized around broad roles, such as consulting, architecture, project management and various IT specializations (e.g., software engineering, solutions architects, security, service management, Linux, storage technology and many more).

If you want to know more about professions programs and companies that have good ones, contact me directly.
Posted by David Foote Framing the issues: What's ahead in 2006's first expert blog?
03 JAN 2006 12:01 EST (17:01, GMT)
Happy new year! If you think I'm going to begin my two-week run of blogs and Q&As with a sappy list of resolutions for managing IT in the new year, think again.

We have a running conversation going with close to 50,000 working IT executives and professionals at Foote Partners. It forms the basis of our empirical and statistical research about life in the working world of information technology and fuels the publication of more than 70 industry workforce trend reports each calendar quarter. I will pull from this research a number of observations and analyses and hopefully get the Expert Answer Center off to a rousing start in 2006.

Let me begin by framing the landscape a little bit and tell you why I think we have a leadership problem in the IT world. Part of the problem is that it's really hard to manage in this exceptionally tough post-recession, regulation-heavy, highly competitive, global business environment unless you have the right instincts and experience. You don't learn that stuff without making a lot of mistakes and then learning from them.

Which brings me to one of the key prime directives right now for IT: risk avoidance and risk management. There are always a lot of ways to lose your job, but I can't remember when taking risks and failing could have such dire consequences on an IT executive's employment in particular. It's about not making mistakes that will disappoint customers, fail to help your company capitalize on revenue or market share opportunities that have limited windows, create security vulnerabilities and on and on. Perform your work well, bring your projects in on time and be able to repeat this in a predictable fashion, and you won't be replaced even if it costs a little more money than anticipated to get it done. Cost savings are still a big part of what IT will be tasked with this year, as last year, but it is very much about "no surprises." It's no wonder that project management skills continue to place high on our annual list of in-demand IT skills. I'll be doing a blog on this list citing research my firm does compiling detailed market pay data and demand analyses for nearly 200 certified and noncertified IT skills.

IT budgets have been in a transition as SOX-related spending has slowed from its highs in 2003 and 2004, and money is again flowing to create new products and services, build customer facing sales and support systems, and fight the trenches of the competitive wars. Agility, speed-to-market and business enabling on both local and global scales are once more dominating IT agendas. It's having a huge impact on every aspect of the IT workforce development, which we'll explore further in these blogs.

Speaking of workforce development…there has been a renaissance in IT roles and a redefinition of IT jobs so pervasive that traditional job titles are becoming increasingly meaningless. But overhauling job titles is an enormous undertaking because both pay and career paths are normally tied to them. The simpler solution is to differentiate workers with common job titles by recognizing technical, industry and "soft" skills fundamental to their jobs, putting a market value on those skills and adjusting base pay accordingly. We'll talk more about that, too, especially in the context of retention and re-emerging talent wars, which are two of the hottest issues right now weighing heavily on the minds of IT leaders and managers with significant project backlogs, fueled in part by pent-up demand (another residue of all the attention diverted to regulatory compliance directives over the past few years). Foote Partners published an interesting and very comprehensive study on retention in 2005, with some provocative findings.

Back to risk aversion for a moment. Offshore outsourcing has proven to be far riskier and tougher to succeed at than had been anticipated. Although its continued popularity and growth is assured, IT decision makers have become somewhat less inclined to play the offshoring or outsourcing card when under pressure. They're looking instead for ways to keep go-to "A team" players involved in key strategic initiatives from jumping ship. Moreover, hiring by IT services firms well-positioned to satisfy outsourcing market demand has been accelerating for the past 12 months, driving up skills pay for consultants with niche skills, according to our research.

Niche skills are hot everywhere, in fact. A proliferation of jobs with stricter employer requirements for specialized experience and skills is a trend worth exploring by blog or in your questions (by the way, keep them coming by emailing me directly or by posing your question on the Expert Answer Center; your questions, comments and other input are welcome.)

It may not be enough these days to simply have a solid technical background, reasonable interpersonal skills and a respectable track record to get a good IT job. Job interviewers are grilling candidates for experience in a specific vertical industry developing specific solutions with specific technologies for specific customers, and they expect top-notch process skills and an unblemished performance record. This has caused a lot of confusion for IT workers as they plan their careers and heartache for unemployed workers who are now back in the hunt for jobs. Employers are scrambling to retool their career development programs and professional development practices, as much to stem the tide of defections within the ranks as to optimize their labor forces to keep them aligned with business strategies.

A related and very important trend we've been tracking is the proliferation of "hybrid" jobs blending internally focused (technology systems) and externally focused (operations, customer) job responsibilities. These jobs have been most common in industries with high ratios of IT spending (production, transactions) as a percent of business process spending (customer support, marketing), such as in the banking, retail, insurance, financial services, healthcare and education sectors. But now we're seeing them in other industries, not simply at the IT executive level where you might expect it, but among lower-level works in the $50K to $70K salary level. If you don't see the immediate significance of this trend for IT employment and management going forward, tune in to an upcoming blog that I'll use to summarize some intensive research we've recently completed on the subject of hot jobs in IT for the next year and for several years after that.

Finally, why are only one quarter of IT execs in most surveys saying they are planning to increase staff in 2006? And why are many of them insisting they will be hiring part-timers instead of full-timers? It has a lot to do with the cost of overhead. We'll discuss further.

There's a lot happening in the IT management space. This will get us started, maybe stimulate your questions and start two weeks of spirited conversation, courtesy of TechTarget. Within the limits of space and time, I'll try to address both executive and rank-and-file issues, provide perspective on industry, business and technology forces shaping the IT workforce, and net out short-range strategies and recommendations.

Thanks for coming along.

-- David
Posted by David Foote