The changing face of commerce

It's been a while since I posted anything of significance out here, so I was inspired after reading...ahem...listening to the book "The World Is Flat: A brief history of the twenty first century" by Thomas Friedman on the way home tonight. From Tom's website: "The World Is Flat is an account of the great changes taking place in our time, as lightning-swift advances in technology and communications put people all over the globe in touch as never before...creating an explosion of wealth in India and China, and challenging the rest of us to run even faster just to stay in place."

Aw, yea baby. Technology, commerce, society, the human condition and how they are all evolving before our eyes -- right up my alley.

I heard about this book from my uncle Tony, who's (shall we say) an accomplished entrepreneur (he's the one on the left), so I took his advice seriously and was intrigued when he brought it up over a beer at a recent family gathering. "Outsourcing isn't always going to be limited to call-centers for credit card companies and customer service help lines. Right now, technology is already creating a flat model of globalization on such a scale that small, previously inconspicuous tiny foreign companies can now become big players in cities and countries that were once economically and socially isolated from the rest of the global economy. The playing field is being leveled." he said. That got me chewing on the title of the book "The World is Flat", even before I even set eyes on the cover. Can you judge a book by its title? I wondered, and was eager to dig in.

I don't want to regurgitate the book with a review; just Google the title and you'll find plenty of other professional and amateur reviews out there. This is the reason why I'm writing now, only a few chapters into it, in order to avoid that sort of thing. Globalization is forefront in my mind as an IT contractor who sells my ideas and consultation by the hour to enormous global companies. Why is it forefront in my mind? Any company, especially large companies, are eternally looking to maximize efficiency both in their dynamic processes and certainly financially. This means that as technology advances and connectivity and collaboration pipelines continue to expand it makes sense to outsource the grunt work inherent in any hardware and/or software solutions. India is the epicenter of this outsourcing swell, mainly because workers there are willing to handle this basic grunt work not only at telephone help desk call centers but also behind the curtain hammering code and data mining to keep the big "one-stop-shop" ERP systems that handle all aspects of the supply chain humming along steadily. This grunt work is critical. A big part of technology happens by turning wrenches and spending time under the hood.

I saw this "under the hood" emphasis a long time ago when I formally entered the world of IT after being transferred by Heineken to New York to join the team responsible for swapping out seven separate standalone software programs that handled everything from planning of raw material procurement to sales ordering to financial reporting (and so on) to one technology solution -- SAP. A lot of muscle in the form of manpower was being applied to the hard coding and programming of the new solution (wrench turning), and at first I wondered what I was doing there? I understood what technology could do, but how to make it happen...? Well, that was a bit less clear to me. Like mud, actually. I asked Hans, the project manager "why me?" and he said something I'll never forget. He told me in his thick Dutch accent that they already have enough valuable people from IBM, Deloitte, and Accenture to set up the system technically, which is an absolute necessity, but they need me to give them a ground level, hands on perspective. I was formerly part of the sales organization, and at the end of the day my livelihood depended on selling more beer to our distributors, not streamlining a line of code somewhere in the bowels of a computer system. I knew the business, and because of this I knew what the final picture with the new computer system should look and feel like. But again, I came back to the same question -- why me? There are thousands of other employees to choose from, what's so special about me? Hans told me I was chosen because I "get" technology. A lot of people are well versed in the language and concepts of business, a lot more around the world are well versed in the language of technology, but not as many "get" both which costs a lot of lost synergy between the two on any big project, especially those based in technology. Without a mediator/translator/diplomat/referee, negotiations wither. Anyone who's sat in on a meeting between the business at one side of the table and the IT department at the other understands what I mean about the discussion being a negotiation, rather than a collaboration. Both sides often "need" it done their way, all or nothing, come hell or high water, and without a voice of reason empathizing and finding common ground fists will fly, metaphorically speaking, and no forward progress will be made. Bill Clinton used to say it best when trying to mediate between two sides -- "I feel your pain." That simple approach, when sincere, can go a long way to bridging gaps between the two sides and finding that all elusive happy medium.

So back to my point, globalization is forefront in my mind. I know people whose job prospects are drying up as I type this because they have focused everything they know and do "under the hood". I distinctly remember talking to friends in the late nineties, pre dot.com boom, that were highly critical of my reluctance to put all my eggs into the basket of wrench turning in the IT field, since "...THAT'S where the gravy is!". As they lit their cigars with hundred dollar bills, I explained that I wasn't going out getting my various IT certifications because I had a hunch that in the future the market will be saturated with "mechanics" but no "drivers" which sounded ridiculous at the time, since everyone thought we were on the verge of IT solutions being built by certified professional programmers for the clueless masses and brainless business entities. My friends felt they were entitled to a lifetime of employment building the systems that would be supported by the businesses; they'd take the medicine they were given and change their processes to make it work. Why? Because the company had no other choice. Why in the world would you need any intermediate "liaison" that is a bit more mile-wide-inch-deep in their business and tech knowledge? What's the use? We build it, they'll run it. If it doesn't match their business model, then that model should be adjusted to meet the voracious appetites and peculiarities of the system. In those days they were right, that's how it worked. As long as technology stopped advancing ("...which it has!"), things would be fine. Sure, the internet would load faster, computer screens would refresh more brightly, and palm pilots would continue to shrink, but nothing would fundamentally change. The overall vibe was that there was nothing else to invent, nothing else to think freshly about. We had the world at our feet. "What could go wrong?" they asked. It was a tough question, because I didn't have all the answers. All I knew was that I just wanted to be involved with technology, because it was not only a piece of the company's framework, but rather was rapidly becoming the very foundation of evertything we would do. It would not only touch every aspect of the business, I thought, it would be woven into it as seamlessly as the glass of the windows we peered out of from our offices, the chairs we sat in and the mission statement we lived, ate and breathed by. I was viewed by my counterparts with a pitying shake of the head as rebellious and misguided because saw the technology supporting the business someday, not the other way around. I still see it that way today.

Put another way, I believed back then that technology would soon become less of an unsightly but vitally important mechanical appendage hanging off the side of an otherwise cleanly shaved and smooth face of the business model and would soon morph into the very skin itself, to carry on the analogy.

At the time I honestly didn't fully grasp the whole big picture that the digital, technical, mechanical (if you will) work could potentially be shipped ten thousand miles away with the click of a button, and apparently neither did my cigar smoking cube-mates with the BMW's and big screen TV's -- I just had a hunch that immersing myself in the raw nuts and bolts of IT was the wrong direction to take. The feeling then was that sure -- there may be a smattering of outsourcing to contend with, but fuggeddaboutit! No one could touch America's rich and plentiful soil of available programmers. Even back then that sounded familiar to me. I remembered the lessons of history about how Asia pinned the American economy when I was a kid with cheap and reliable consumer electronics, clothing, and automobiles. At that time, everyone collectively put their feet up because no one in the world could ever touch America's rich, plentiful soil of organized labor and high quality products. Today, as we watch the behemoth General Motors, the world's largest corporation rust and slowly crumble to less and less of the fiercly proud American company it once was, we see the bitter fruits of what I like to call "entitlement thinking". As American workers and stockholders we were entitled to make more money by doing less work than our foreign competitors because, well, we were American. The Japanese saw the Achilles heel of this thinking and took advantage of it to such an extent the once dominant GM is now scrambling to catch up to the likes of Toyota, Honda, Hyundai and Kia. Today the gathering storm of Chinese auto manufacturing looms ominously in GM's rear view, poised to overtake the giant at the next turn maybe not in raw sales numbers but certainly in the hearts and minds of global, not just American consumers. Living in a flat world means we Americans can no longer swing lazily in our hammock on our island separated from the rest of the globe by the limitless depth of our domesic economy and resources. In more and more industries every day we're now competing with everyone from small Mom and Pop operations in Bangalore to multinational giants headquartered in Western Europe who have not only accepted the flatenning of the world but have embraced it.

As technology continues to advance, the world will indeed continue to flatten. Friedman talks about how outsourcing isn't limited to computer or ERP system programming. One of the latest developments is tax preparation for Americans by people in India. In the old days, most accountants were by and large more of a one man band concept. Once a year customers brought in their W-2's, 1099's, and stock statements to their accountant's office for processing. At other times those customers set appointments to discuss their investments and strategies on saving for the future. Tax preparation was a necessary evil for accountants, tolerated only because it was the meat and potatoes piece of the business. But the dessert, if you will, was financial strategizing and planning for clients. That's what gets a lot of accountants out of bed. Today, more and more accountants and accounting firms are choosing to outsource their tax prep work for just this reason. Big broadband intranet connectivity pipelines allowing high speed data transfers are a big part of this. Since it's illegal in the U.S. to send tax documents such as W-2's and 1099's outside the country for preparation, the first step an Indian tax prep subcontracting company takes is to have the documents scanned in (let's say) California. With a click of a button by a knowledge worker in Bombay, those documents, while complying with the law and physically remaining within the borders of the US are viewed and managed on the other side of the planet at the push of a button by an Indian knowledge worker for the grunt work of tax preparation. The important element of this model is that the accountant is now freed up to work creatively with his clients on financial strategies, estate planning, and investing. All dessert and no brussel sprouts. This basic model is applicable in many other industries and on a broad spectrum of scale, from the small one or two man shops run out of basements all over the country to corporate behemoths with quarterly revenues in the tens of billions.

How will this affect the American economy? I don't know, but I might have a better idea after I finish the book. How will this affect me? It already has. I've made a conscious and concerted effort to guide my career out from under the crowded hood of the IT department to the scary, sometimes lonely, but lucrative seat behind the wheel. This strategy is beginning to bear fruit. My current contract working on SAP at a large pharmaceutical company is more wrench turning and less driving, so I have put out feelers to the usual big head hunters to see what contracts they can find out there that bridge the chasm between the business units and technology departments. The phone has been ringing as more companies are realizing that this chasm is costing them lost productivity through development of solutions incompatible with business needs. This is more of a question of accurate communication and less a question of headcount under the hood.

Part of the reason for recording my thoughts on this subject is to allow me to go back and revisit it in the future. Was I right to abandon the comfort underneath the hood of the racecar to climb behind the wheel? Will companies ever figure out a way to outsource my liaison role bridging the gap between the business and the IT department?

Will this strategy bite me in the ass?

We'll see, but I'm hedging my bets that anyone who puts all their eggs in the basket of "they'll never outsource my tech job" will find that hundred dollar bill they're lighting their cigar with burning dangerously close to their fingertips.