Did you say `trained personnel'...?

Look who’s inviting India’s IT and BPO moghuls. Beachy Sri Lanka. They are calling Indian ITES and BPO companies to invest in the island nation claiming that the country would provide competitive edge with its large talent pool of trained personnel available at lower costs.

Here’s what its minister for export development and international trade G L Peiris has to say at a FICCI conference in Chennai. “Indian companies can invest in Sri Lanka to oursource their projects here. We have a large talent pool of trained personnel avilable at lower costs. Outsouring of projects here will significantly help Indian companies reduce operational costs as well as offset the effect of rupee appreciation against the dollar”.

Hey, wait a minute. Did he say a large talent pool of `trained’ personnel…? Parse the word `training' and see where he allots real estate for your BPO. If it is in Jaffna or Mullaitheevu, you’ll save money on security guards. The word `training’ means something entirely different there. In that part of Sri Lanka, they train differently. At age 3, you handle a pistol. At 6, you know how to hurl a grenade. At 7, you launch a missile from your shoulder. Every call center guy you hire could as well be your security guard. The upside…? You can give those `other’ guys a run for their money if they ever try to blow you up.

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Cloud fails to capture

Cloud computing may be the in-thing, but if early fanfare is to go by, don't play the requiem music for enterprise software just yet. Those folks with their heads in the clouds about online productivity tools doing serious damage to Microsoft's Office got a reality check recently -- some stats showing just how far away that may be.

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A sampling of U.S. PC users by research outfit NPD found that 73% had never even heard of Google Docs, the search sovereign's collaborative word-processing tool, or any other manifestations of cloud computing. An additional 21 percent had heard of such things, but never tried them. And by the time you get down to those who use the online tools often and to the exclusion of a desktop suite, you have to squint to see the 0.3 percent.

Those numbers tempted some to rush out a declaration that the concept of Web 2.0 office suite was DOA. "The scant adoption makes some sense of Microsoft's Office Live Workspace, which went into broad beta last week. The service clearly is designed to be an adjunct to Office desktop software rather than a Web-based alternative," writes Joe Wilcox. "If NPD's numbers are indicative of real-world usage, Microsoft hasn't much to worry from Google Docs and Spreadsheets or other online alternatives. Maybe too many people make too much about the Web 2.0 threat to Office."

Or maybe too many people made too much of it too early. "We're in the early stages of the 'hybrid phase' of personal productivity applications, when most people will use Web apps to extend rather than replace their old Office apps," writes Nick Carr. "This phase will play out over a number of years as the Web technologies mature, at which point it will become natural to use purely Web-based apps (with, probably, continued local caching of data and program code). ... Once people get used to using the online apps at home or at school, they may well find the idea of buying an expensive piece of software, installing it on their hard drive, and regularly patching and updating it to be awfully old-fashioned. That's the scenario that should be of greatest immediate concern to Microsoft, and it's a scenario that is beginning to play out, even if the numbers aren't yet huge."

But can Enterprise suites get smug and choose to be un-sexy…? Hardly. Here’s to their tomorrow.

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Not so soon, dude....

Tata Consultancy Services (TCS), one of the largest Indian outsource consulting firms, with $4.3 billion in revenue, has released new IT failure research, based on survey results of 800 middle and senior IT managers from large companies.

According to the study findings:

a) 62% of organizations experienced IT projects that failed to meet their schedules
b) 49% suffered from budget overruns
c) 47% had higher-than-expected maintenance costs
d) 41% failed to deliver the expected business value and ROI

Business-critical software and services projects are clearly failing to deliver on the business objectives they set out to achieve. They take too long, cost too much and are riddled with defects.

1 in 3 companies’ IT projects fail to perform against expectations…

I suggest the local vendors should go back and take a look at their project commitments and under-achievements. A neat, honest compilation would highlight where they go wrong and the shortfalls that led to them. If you are too shy to do it, learn from others and bridge the knowledge gap – Michael Krigsman interviewing N.Chandrasekaran of TCS. Some candid admissions there.

Then I read this report today. It kinda’ pats the Indian IT vendors and tells the investors to go long on Indian IT. They seem to say it is still a good bet despite the rising Rupee and falling margins / stock prices. I say don’t get deluded – if local vendors don’t start listening to the customer. The customer speaks thro his CIO who in turn sounds more like LOB executive. Spend some time understanding customer’s LOB and be a strategic partner besides just being a bodyshop or an off-shore vendor. If you don’t, you are sure to be outdone by an IBM, Accenture or an EDS at the next pitch.

If the Indian vendors still aren’t convinced, Wall Street (ADRs are listed at Nasdaq and NYSE) and Dalal Street (counterpart at Mumbai, India, where their underlying shares are listed) will talk to them. They will understand that language anyway. You decide which option is better.

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Losing sight of domestic business...

Yeah, flat world indeed… Here. IBM eating straight off Indian IT vendors’ plate, snatching it right from under their nose.

Vodafone Essar has signed an IT outsourcing agreement with IBM India. Deal size is rumored to be about $600 M. Under the five-year agreement, IBM India will assume responsibility for the management of all Vodafone Essar's IT operations with the exception of network service platforms. IBM India will also manage internal IT services for Vodafone Essar like data centre operations and the help desk while supporting key areas like security and change programs.

I wonder why Indian IT vendors like Infosys, TCS, Wipro and Satyam didn’t get this business. In these bad times for the $$, revenues in any other currency should be most welcome - it acts as a zero cost natural hedge against the falling dollar and protects margins to some degree. Still haunted by that margin fixation…? Or is it that Vodafone India has lost its western flavor after acquiring Hutch Essar…?

While Indian IT vendors are crowing about falling $$, global IT majors like IBM are cornering larger share of India’s growing domestic IT budgets. Smart, isn’t it…? Deals like this act as a natural hedge against the fast decaying dollar and ups the ante against India’s IT majors that still keep gazing westward.

But with one difference. They also do this. The thoroughbred that IBM is, it also plans to increase its investments in its two software laboratories in Pune and Bangalore as part of its $1.5 billion security initiative in 2008, announced on November 1. Fuelled by recent security business acquisitions (including Internet Security Systems — now IBM-ISS), and more than 18 months in development, the IBM security initiative is the largest-ever undertaken in the IT industry. In comparison, the R&D spends of India’s IT vendors are mostly on project specific training for setting up labs etc., before client visits (masked as R&D). Now you know why that looks like a rounding error to me…:)

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[Update : Industry estimates peg the turnovers of MNCs like Dell, Intel, Microsoft and IBM at well over the half-billion dollar mark. Firms, like Cisco, are said to have crossed the billion-dollar mark in domestic sales in 2006-07, and for a player like HP India, it is estimated in excess of $2.5 billion. ]

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"Hell, I don't know how to bill"

Andy Dornan examines the impact of virtualization and multi-core processors on software licensing models, with significant implications for data center consolidation projects that use these technologies. Article is a bit long, so I gist it for you.

Licensing savings were one of the main arguments initially made in favor of application streaming, the first desktop virtualization technology aimed at the enterprise. Vendors like Softricity promised that centralizing applications on a server, instead of installing them on every desktop, would mean fewer required licenses, because apps would need to be licensed only for the number of people actually using them at any given time. That savings pitch fell by the wayside, however, once Softricity was bought by Microsoft.

Now the traditional licensing model is threatened again. Multicore processors and virtualization are nails in the coffin for standard software licensing models, but there's no agreement on a replacement. And the problem isn't confined to the data center. Licensing issues have already slowed development of Intel's virtualization technologies aimed at desktop management, while Microsoft is using desktop virtualization as a way to drive adoption of its Software Assurance subscriptions.

While it's tempting for enterprise IT to chuckle at this state of affairs, you need to pay attention: Alternative licensing schemes range from the familiar, like open source and SaaS, to untested models like pricing based on memory or virtual cores. At best, they could mean lower costs and more flexibility.

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But let's be real--when have software vendors embraced low costs and flexibility? Worst case, the hardware savings from the server consolidation that virtualization enables will be gobbled up by software licensing charges....

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"Guess, where I am"

Starting next week and over the next few months, several United States airlines will test Internet service on their planes – News.

That's progress, but as usual, there's a price. As many people as there are who are enthusiastic about keeping their connections aloft, surely there must be an equal number who appreciated the brief hours of electronic abstinence imposed by airline travel, the enforced opportunity to put the keyboard away and do something analog, like reading one of those low-tech paper books, or pondering the questions of the universe, or even something as bold as emptying the brain and quieting the mind. Sure, you'll still have the choice to unplug; you just won't have the built-in excuse. Still, these pilot programs are the leading edge of an inevitability.

Can’t imagine someone sending IMs up to the cockpit saying stuff like, "I'm in ur cabin, messing with ur frequencies."

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Are you really sorry, Facebook..?

Mark Zuckerberg says something like this on the Beacon Fiasco in his Facebook blog. The only sentence that conveyed something close to remorse in that smallest font, full-page piece is “I'm not proud of the way we've handled this situation and I know we can do better”. Does that sound like an apology to you…? Not really.

To me it sounded like the tone of someone big who never thought he would get caught. Yet here he is, caught with his fingers in the "Big Brother" jar. May be Mark thought it's okay to break the law until it's discovered, then just haul out PR people until it all blows over – in doing that, he's only following the other moghuls that went down that road before him. They are made of sterner stuff. Even after they get caught, the instinct is to spin and fudge and brazen it out. No wonder Microsoft has partnered with them and got straight into business – of infecting them with its wild ways. It's a match made in heaven. These guys are a bit like Google too, only their slogan isn't "Don't be evil" -- it's "Don't get caught."

Business models are known to align the enterprise interests with those of its customers. The happier customers are, the more money they make. Facebook's business model is the opposite. It pits Facebook against its customers. The amount of money that Facebook can make is defined (and constrained) by the degree to which its users will allow themselves to be exploited.

But how different is Facebook from other big players? Not much. Is it any different from Google handing over search data to China, or Microsoft crushing opposing browsers beneath its heels, or Du Pont denying that CFCs destroy the ozone layer, etc.?

"If Facebook is so ass, why not just stop using it?" I ask the world. I am not expecting candid answers though....

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