Any CIO can tell you how hard it is to find IT help these days. Web, networking, and ERP skills are in high demand and short supply. Constant turnover is the rule, as techies go where the coolest technology or most lucrative stock options are. Nearly 350,000 IT positions remained unfilled in 1998, according to the Information Technology Association of America, and more recent estimates put the number even higher.
All this is why companies rely heavily on contractors to fill their IT labor gaps, and why this dependence won’t change anytime soon. Consulting firm Meta Group Inc. predicts that by 2005, as much as 40 percent of the IT workforce will consist of outsourced labor.
By then, however, companies should have an easier time finding and managing IT contractors, thanks to outfits like Vivant Corp. (www.viva nt.com). Last fall, Oakland, Calif.-based Vivant launched what it says is the first Web marketplace designed to help companies source and manage their contract workforces. Vivant.com recently counted between 30 and 40 staffing firms and job boards on its open network of suppliers, as well as individual contractors.
“Most of [our suppliers] are nationwide,” says CEO Cindy Padnos. “We have access to hundreds of thousands of contractor résumés.”
The large companies currently using Vivant generally bring the staffing firms they do business with onto the Web site, enabling them to replace their relatively labor-intensive process of dispatching job orders with an electronic one. Companies source contractors on the site for free, while suppliers pay Vivant a transaction fee based on the value of the engagement.
Contract workers constitute an expensive, poorly managed asset, charges Padnos; companies frequently lack a handle on just how many contractors they have, what those contractors are doing, and how much they’re being paid. To better control that asset, Vivant offers Vivant Contractor Management, a software tool accessed via the Web site. For a small subscription fee, companies use the software to maintain detailed data on contractors, and to generate summary reports on contractor activity and supplier performance.
At Vivant customer Deutsche Financial Services Corp., in St. Louis, about a dozen hiring managers use the software to track some 70 IT contractors, says Stephen Parker, assistant vice president for human resources. “We can see who’s been here, from which companies, what the rates were,” says Parker. “We can do any kind of analysis.” He adds that he couldn’t find a packaged app with the same functionality.
The times are indeed a- changin’ in IT workforces, confirms Parker. “You can provide the best work environment, the best security, the highest pay–and people will still leave you.”
Adjust Your Budgets
In 2000, starting salaries in information technology will increase an average of 6.8 percent over 1999, predicts RHI Consulting, an IT recruiter in Menlo Park, Calif. (www.rhic.c om). That’s slightly down from last year’s forecast of 7.3 percent. Consulting and systems integration will lead the way, with starting salaries rising in some specialties by more than 17 percent.
RHI, which bases its 2000 RHI Consulting Salary Guide on the thousands of job orders managed by its U.S. offices, also sees a rosy year for Lotus Notes developers (14.9 percent over 1999) and E- commerce specialists (14.8 percent). The average starting salary increase for Internet-related positions: 7.2 percent. m
The eight hottest specialty areas in IT: %
|Help desk/end-user support||16|
SOURCE: RHI CONSULTING SURVEY OF >1,400 CIOs
Our Bond Is Your Bond
The information technology industry, maintains Dan Brennan, resembles nothing so much as the construction industry. How? For starters, about the same amount of money (in the $400 million range) is spent annually on buildings and computer systems in the United States, according to Brennan. Both industries are project based. The systems integrator is equivalent to the general contractor–and both are evaluated in much the same way, says Brennan: “Do they have a track record of successful projects and a reputation for quality? Does a project fall in the sweet spot of their expertise, and do they have the resources to deliver?”
But there’s a significant difference between the two industries, he adds: “You almost never see a building start up and not be completed.” Why is it that so many technology projects are derailed? According to Brennan, one overlooked reason is the absence of surety bonds to keep IT projects on track.
Each year, about $3 billion worth of surety bonds are generated by construction projects, says Brennan, compared with a mere $8 million for IT (mostly for government work). “The buildings are bonded,” he says. “It provides a mechanism for keeping the project going. There’s a lot of motivation to finish the project.” As principal and co-founder of Gladwyne Software Surety (www.it surety.com), in King of Prussia, Pa., Brennan thinks surety bonds for technology implementations is an idea whose time has come.
Founded last year, Gladwyne’s principal business is conducting prospective risk assessments and ongoing audits of IT projects. Now, it offers IT surety bonds, which guarantee on-time, on-budget implementation of technology projects. The bond is offered in conjunction with Gladwyne’s own engagements and with KPMG LLP software implementations that include Pivotal Corp.’s (www.piv otal.com) customer relationship management software. The predictability and reliability of KPMG’s Pivotal implementations make bonding eminently feasible, says Brennan.
At press time, Gladwyne hadn’t issued a bond yet, but Brennan says it’s close to doing so. Several triple-A insurance companies have been lined up, three clients are in the assessment phase, “and about 30 deals are in the pipeline,” claims Brennan.
One Gladwyne risk-management client is The Jackson Laboratory, a world-renowned genetic research institute in Bar Harbor, Maine. Jackson Laboratory (annual revenues: $67 million) is embarking on an Oracle ERP implementation, and if it decides to sign a fixed-price contract with Oracle Consulting Services, the institute will probably purchase a surety bond, according to CFO Lee Wilbur.
Brennan says he’s never met a CFO who didn’t like the idea of an IT surety bond, and Wilbur, who previously participated in two SAP installations in Europe, is no exception. “A surety bond works well if you have a fixed-fee contract,” says Wilbur. “It keeps you and the provider focused.” A bond would also reassure Jackson Laboratory’s board that the ERP project won’t spin out of control. The cost would be 1 percent of the project cost, says Wilbur.
Commonality and standardization characterize the construction industry, observes Brennan, and he believes that bonding and risk management can
drive standardization in information technology. In the future, surety bonds for IT projects will be commonplace, he hopes. But for now, Gladwyne just wants to get the ball rolling.
Participants in a 1999 survey of shared-services organizations reported an average ROI of 27 percent, according to Deloitte Consulting LLC (www.dc.com). Deloitte, in conjunction with International Data Corp., interviewed project leaders at 53 companies in North America and Europe.
The processes in shared services tend to fall into five broad process bands, says Deloitte: order to cash, procurement to payment, recording to reporting, employee services, and IT management.
Some of the survey respondents are also outsourcing support processes. The most frequently outsourced functions are payroll (17 percent), IT support (11 percent), and accounts payable (9 percent). Companies most likely to outsource processes have mature shared-services operations, reports Deloitte. Why? They understand what it costs to operate a given function on a standardized basis, and can thus evaluate external outsourcing providers, explains Andre Pienaar, a Deloitte principal and co-leader of the firm’s shared-services practice in the Americas.