Scott Burkett's Pothole on the Infobahn » CIO

Technology Cost Comparison: Web 1.0 vs 2.0

Scott Burkett — Mon, 01 Jan 2007 01:56:44 +0000

Inspired again by this post from Fred Wilson at Union Square Ventures, I began thinking of the differences in the capital required to launch something these days. Much ado has been made over Web 2.0, and how much cheaper it is to build technology solutions these todays.

I came across an old proposal that I received from a vendor years ago (in the 1.0 days), and got a good laugh out of it.

We all know that things are cheaper to build these days, but I thought it might be interesting to put together a post illustrating the actual dollar differences in hardware, software, services, and labor costs. And yes, this is my last official post for 2006 – so happy new year in advance (4 hours from now!).

Preface

Note: I am using the phrases “Web 1.0″ and “Web 2.0″ to simply represent the passing of time.

The numbers that I am using to represent the Web 1.0 days are taken from a series of documents from a startup I was working with at the time. I am going to show those vendor dollars (and time components, where possible), and compare them to what my estimate would be if I were building that same system today. The focus, of course, will be on dollars, time, and trends.

The exact specifications of the proposed system are not important. For the purposes of this post, consider the proposed system to be a “typical” B2B/ASP procurement system. The only important criteria here at this point is that there should be a suitable “stage” environment, which would run parallel to the production environment.

These numbers only reflect hardware, software, and outsourced labor costs – they do not reflect internal IT spend (laptops, mobile fees, etc.), and do not reflect salaries of FTEs or other business-related expenses. I think it is safe to say that there were more than a few companies back then spending money on frivilous non-essential items.

Enterprise Software Costs
The original system was built on a stack comprised of ATG’s Dynamo web application server (with the personalization license add-on), and Netscape’s Enterprise Web Server. The backend was facilitated by an high-end Oracle database.

On the application side of things, we were building upon Oracle Exchange, which was Oracle’s attempt at fighting Commerce One and Ariba. It was *supposed* to provide a big pile of transactional and catalog management capabilities – it turned out to be a vaporous pile of ****, but that’s probably a post best left for another day.

Interwoven was the content management system (CMS) of choice, and Verity was selected to provide “search” capabilities.

We implemented a very high-end CRM solution built around Silknet’s product and Aspect’s ACD (call center) solution.

Component	Qty	Unit Price	Total
Oracle Database	1	120K	120K
ATG Dynamo	4	10K	40K
ATG Personalization License	4	20K	80K
ATG Development Seats	5	10K	50K
ATG Staging Licenses	4	5K	20K
Netscape Enterprise Server	2	1K	2K
Silknet	1	170K	170K
Silknet Maintenance (1st year)	1	34K	34K
Aspect ACD	1	250K	250K
Aspect Maintenance (1st year)	1	41K	41K
Oracle Exchange	1	825K	825K
Interwoven Bundle	1	90K	90K
Verity Bundle	1	120K	120K
			$1,842,000

Nearly $2M in infrastructure software spend, and we haven’t written any code or hired any employees. As you will see in a moment, for a tiny fraction of this same amount, you could very likely build not only the entire application, but build the entire company around it.

If I were building this same system today (as a startup), it would very likely be built upon the LAMP stack (Linux, Apache, MySQL, PHP). Why? Low cost, high human resource availability, and sufficient scalability. For CRM purposes, I would do a 5 minute download and install of the free version of SugarCRM.

For the CMS, take your pick – there are several dozen very high quality open sourced/GPL’d CMS products out there that are comparable in functionality (PostNUKE, Plone, Joomla/Mambo, Etomite, Apache’s Lenya, etc). Building a CMS framework from scratch is certainly an option as well – very easy to do with current toolkits. Adding search capabilities is just as easy (Apache’s Nutch project, htdig, Sphinx, even Google).

Total cost? $0. Gotta love freely available, open sourced, GPL’d software.

Hardware Costs
In the original system, the servers were all obtained from Sun, and were broken down as follows:

Component	Qty	Unit Price	Total
Sun Microsystem E250 (1 CPU unit) – front-end web server	2	10K	20K
Sun Microsystem E250 (2 CPU unit) – Dynamo hosts	2	20K	40K
Sun Microsystem E450 (2 CPU unit) – database server	1	30K	30K
50 Gbyte RAID device (back-end storage)	1	40K	40K
			$130,000

We were eventually going to add some additional hardware, but this was our initial environment (about $130K worth). Obviously hardware is more powerful now, so to support the same number of users, logic tells us that we would need fewer of today’s servers. Of course, web services are more widely adopted now by B2B users, so our number of users would probably go up – in the end, it is probably works out about the same.

The bottom line is that you can obtain a nice 2U or 4U rackmounted server, dual or even quad CPUs, loaded with several gigabytes of RAM, 15K RPM SCSI RAID arrays, for less than 10K each (I’ve recently procured them around the 7-8K point.) If I were building a system comprised of six (6) physical servers, you’d be looking at less than $50K, which would be a savings of $80K.

That of course assumes I am interested in launching with relatively high-end hardware. If you really wanted to pinch pennies, you could slide down the scale a bit – remember, hardware is more powerful these days, so perhaps a dual CPU (or even dual core) unit would suffice in lieu of a quad-CPU rig. You get the idea.

Hosting Costs
Hosting was one of those things that really became a racket in the 1990s. Now, it is back to being a commodity, where it should be. Hosting providers have to differentiate themselves by tacking on true value-added services (imagine that).

Oracle was charging us $300K/year for hosting their Oracle Exchange. $50K per month! That didn’t count the $100K we spent on routers, switches, and other network equipment (so we could do our own hosting for our core online service – again, imagine that).

In the first year, that represents a $400K spend on hosting.

In today’s market, we could have hosted all of our servers, on a reasonably fast pipe (against a fiber ring) with a reasonable throughput capacity of say, 10Mbps, for less than $5K per month (much less, depending upon the vendor, if we were co-locating the servers, leasing a full rack vs. 1/2 rack, etc.)

Labor Costs
If the savings in software, hardware, and hosting hasn’t made a strong enough case, wait until you see the labor savings.

I am reminded of one of the great “de-motivational” posters available at despair.com, which says “Consulting: If you are not part of the solution, there’s good money to be made in prolonging the problem.” I both made, and spent, a small fortune in consulting during the 1990s.

We had a veritable army of people working on this project. We were paying one consulting team (from a typical vendor) a total of about $3.4M over a nine month stretch to build our core product. An additional $840K was budgeted for another four (4) month phase after that.

We had another team working against a $1.4M purchase order to build out our customer care portal. And finally, a third, smaller team consulting with us on “corporate strategy” against a $480K purchase order.

I won’t count the latter (corporate strategy consulting), as no startup in their right mind would pay for that service today. Nevertheless, the total labor bill came to around $5.6M.

With a decent offshoring team (even in India, where the prices have been rising steadily), you could build this entire application for between $500K – $1M (as a reasonable estimate based on my experiences in both worlds.) If you wanted to use one of the cheaper, emerging countries (Vietnam comes to mind), you could probably build it for less than $500K.

For that matter, a dosmestic team in your own office could build it for at least half of the original price. Even cheaper if you “inshored” to a cheaper development shop in a smaller market. Finding a handful of college kids with a penchant for creating things is also an option.

What about scability?
There are some who would scream that PHP isn’t as scalable as J2EE. To those people, I simply say fire up your web browser and go to “yahoo.com.” Is it fast? That’s PHP. People who claim PHP isn’t scalable simply don’t know how to scale a PHP application.

MySQL was certainly not scalable a few years ago, but they have made tremendous strides in bringing their product up to enterprise levels (with the added functionality around replication, transactions, clustering, etc.) These days, I have no problem deploying MySQL 5 in a production environment.

Friendster has scaled to north of 40M users using PHP and MySQL. That represents about 39.9M more users than most startups have right before they crash and burn. :)

Why the big difference?
For starters, I should point out that a great many vendors really pumped up their prices in the 1.0 days. Thankfully, the days of billing out a fresh-faced college graduate as a technical resource for $300/hour are long gone. This clearly played into those inflated costs. Everyone was going along for the ride. The “get big now” pressure from investors also added a “kerosene on the fire” factor as well.

The passing of time has also helped. Time has a great knack for putting downward pressure on costs, especially when the environment becomes hypercompetitive.

Open source/GPL tools have continued to develop. They are at a point now where they are viable at the enterprise level. Additionally, they have matured to the point where they can signficantly reduce the amount of effort required to create something from scratch. There are exponentially more freely available libraries, tools, and canned solutions than was available just a few years ago. Back in those days, you had to either create things from scratch (and hope you could reuse them later for other things), or open your checkbook and pay for the best vendor-peddled solution you could find. No more.

Additionally, the bursting of the bubble forced the “rackets” to shift to being pure commodities, and driven more by corporate consumers. Hosting is the big example of this. The benefit here has been better service and lower costs from hosting providers.

Hardware has evolved to the point where an entire rack of horsepower five years ago can fit into a single 4U space. Pricing has also fallen to the point where even the lowliest startup can afford a serious array of horsepower. Illustrative of this point is that for the price of our original hardware ($130K), you could actually launch many Web 2.0 type plays, at least in an initial beta state!

The continued evolution of Linux has also played a tremendous part in all of this, and it shouldn’t be overlooked. Over the years, I have used OS solutions from Microsoft, IBM (AIX), HP (HPUX), Sun (Solaris, SunOS), etc. None have played such an important role in helping startups watch their bottom line, and put serious firepower online more than Linux. From price (free) to scability to POSIX compliance – you just can’t beat it. If you are a startup, and you are building your solution around costlier platforms, you are simply wasting your money, or worse, the money of your investors – period – end of the story.

The offshoring revolution has certainly played a key role in the lowering of labor costs – no doubt about it. And given that hourly rates from India have gone up dramatically over the years, we are moving into a second wave of offshoring. We are seeing CMMI Level 5 shops popping up in places like Vietnam. The decentralization of the labor market through places like odesk.com and elance.com have also played a hand in things.

Summary
Not much to summarize really – it is obviously cheaper to get things done these days, and there are lots of valid reasons as to why that is.

To circle back to Fred Wilson’s original post – the reduced technology-related spend is not a panacea for successful startups. As Fred points out, eventually, the capital requirements to build a sucessful company come full circle. However, you can definitely take advantage of certain trends to substantially lower the slope of the spending curve – which obviously assists you in controlling your burn.

I don’t think anything amazingly profound or prophetic has come out of this post, but it was fun to put together. Hopefully, you enjoyed it and found it of interest.

Cheers.

How Not to Hire a CIO

Scott Burkett — Mon, 17 Apr 2006 11:00:12 +0000

Sadly, today’s post is going to be comprised of “YARS”, or Yet Another Recruiting Story. The one really good thing about being “in transition”, is that I am never at a loss for recruiting stories! Today we are going to explore how NOT to go about hiring a CIO, CTO, or other types of technology executives.

The other day, a colleague of mine forwarded a rather interesting Atlanta-based CIO opportunity. This particular opportunity was for a $20-25M logistics company focusing on the railroad industry. One of the key requirements was some experience working within either the logistics, railroad, or supply chain industries. Since I have some supply chain experience in my background, I thought I would toss my name into the proverbial hat and learn a bit more about what they were doing.

Now I should point out that from what the job description stated, this firm needs some serious help. They’ve gone from $6M to $25M in 4 years, and as a result of that rapid growth, their technology systems are, well, quite “varied.” They have 5 different platforms, and my guess is, its all held together with bubble gum and bailing wire. Hence, their need for someone to come in and straighten out the mess, and position them for growth by consolidation and migration.

I sent the recruiter a nice but succinct introductory email, along with my resume. She replied to me several days later with a rather interesting email. In this email, she pasted a lengthy questionnaire, along with some instructions.

I took a quick look at the first few questions, and they seemed routine enough, so I thought I would take some time to compose a nice response. Given that recruiters can quickly become overwhelmed with candidates (and also having personally hired hundreds of candidates over the years), I completely understand the various screening techniques that they use.

NOTE: Be sure to ANSWER all the questions below, as well as:

*where you LIVE NOW…local Atlanta candidates will be given FIRST consideration!!

*when you are available to interview,

*when you are available to start and

Your MINIMUM annual salary requirements.

Now the questions above seemed pretty innocuous. These are all standard fare when it comes to any job interview.

NOTE:
** Experience in transportation, logistics, rail, distribution or supply-chain industries is absolutely required for this position.If interested, write back with the number of years of experience and a brief explanation of that specific experience in each of the following:

# Years in logistics software (name of software)
# Years in supply chain software (name of software)
# Years in railroad
# Do you consider yourself an expert in Microsoft Project, Excel, Access, Word, PowerPoint?
# EDUCATION: from where? in what?

Text

Please go through this technology…and let me know how much experience you have in each:
# .Net
# ADO
# ADO.Net
# ASP
# ASP.Net
# BCP
# BEAM Resources
# C#
# COM
# Crystal Reports
# DTS
# HTML
# IIS
# JavaScript
# MDX
# Oracle Database
# PowerBuilder PFC
# SQL OLAP
# SQL Server database
# VBScript
# Visual Basic
# XML
# XSL

**NOTE: Also be SURE that if you have a particular experience from the above listing..that you have reflected that technology under the specific job(s) where you used it on you resume…not just in your technical skills section!

However, as I progressed further into the list of questions, it became readily apparent to me that the person sourcing this role (or at least the person who put together these questions) had little understanding of the way that executives are hired. Curious, I did a little more research on the company that the recruiter works for, and the haze quickly vanished as I realized that she worked for a body shop (staff augmentation firm). Now it made perfectly good sense. She simply didn’t know any better. Sending out these questionnaires is how she routinely hires IT staffers for her clients. Nothing wrong with it – it makes perfectly good sense in that arena. However, it doesn’t translate well into the executive space.

Trust me when I say that you don’t need to know how many “years of experience” a CIO has with HTML, or whether or not they have direct experience in two dozen other technologies (which is what this questionnaire asked). Technology executives need to understand 3 things about a given technology: what it does, what it costs, how it integrates. They don’t need to have memorized all of the attributes of HTML table tags or CSS options.

In order to make this post a bit more fun, I sent this job description to a retained executive recruiter who is an associate of mine, and asked him to rewrite the job description. This is what he sent back:

———————

Scott, this one is bad. Real bad. Very unprofessional.

First, we push our clients to write the job description. That way we can validate what they asked for. However, probably half we have to write for them.

Couple of things to look for at first and avoid …

Any job opportunity with out a compensation range is a red flag
Any job opportunity which point out negative aspects of the job – “Downtown” , “fallen by the wayside”
Any C-level opportunity that talks about parking dollars or riding Marta hints that it is very small
Any C-level opportunity that list detailed low level requirements that our required

The following is a big sign that this is being handled by a non-executive recruiter:

Also provide me with your availability to interview, when you would be available to start and your minimum salary requirement. When you are available to interview, when you are available to start and Your MINIMUM annual salary requirements.

… all that before they have even spoken with you!

OK here goes the rewrite. This is difficult because I don’t know what the client is really looking for …

Position: CIO
Location: Atlanta, GA
Compensation: $150k-$200k
Summary:

A world-class provider of Logistics and Supply Chain software products is looking to fill a CIO position. This client provides Logistics Management and integrated Supply Chain tracking systems to customers on five continents. The client has been in an accelerated growth mode and is looking for a leader who can set strategy and bring structure to an organization which has grown very rapidly. The CIO will be responsible for an organization that manages a variety of technologies such as … Visual Basic, Crystal Reports, .Net, Oracle, IIS and ASP, PowerBuilder/PFC, XML, XSL, JavaScript, VBScript, HTML, and DHTML.

Requirements:

Experience in transportation, logistics, rail, distribution or supply-chain industries is needed
Experience setting IT Strategy
Experience consolidating multiple IT platforms and architectures
Experience reorganizing and motivating IT organizations

If you are interested or know someone who might be, please call us at …
————-

What a difference!

At any rate, this is what can happen when you let a body shop staff your CIO role. If you are in the market for a CIO, CTO, or some other technology executive, you owe it to yourself to partner with a recruiter or firm that specializes in handling executive-level hires. Retained firms are the best, but more expensive. Many contingency-based firms can also handle your requests with skill and care. If you insist on going with a body shop to find your CIO/CTO/Tech VP, take some time to review their process – make sure that they are looking for the right things – the things that will matter to you in the end.

By not doing so, you run the risk of running off decent candidates, and fostering the perception that your firm isn’t serious about its executive-level technology hires.

Cheers.

The CIO Domain Conundrum: What Makes A Good Fit?

Scott Burkett — Mon, 03 Apr 2006 11:00:42 +0000

If you ran a convenience store, and needed to call someone in to unclog the drains in the bathrooms, would you call a good plumber, with a variety of experiences under his belt, or would you leave the drains clogged up until you could find a plumber that has deep vertical experience (no pun intended) working within the convenience store industry? Of course not! Sadly, this is the lame cloud under which many CIOs are hired. Call me crazy, but I’d just want a good plumber. Someone who was a problem solver.

A plumber provides a service, much like a CIO. The plumber is there to support you in your operations, not tell you how to run the convenience store. A CIO is also a service provider, albeit an internal one.

One of the things that I have noticed is that CIO job descriptions are often crafted under the same guidelines as other executive positions (sales, operations, finance, and marketing). First, they want the skills – okay, this is obvious. You have to know technology. In addition to that, however, they often want domain expertise – generally, deep domain expertise.

For a CFO, this makes sense, as each business and industry has different financial treatments.

For a COO, this also makes sense, as each business/industry can have a varied, complex, unique operational model.

For a CMO, again, this makes complete sense, as each industry tends to have its own marketing demographics and quirks.

For a CSO (sales), this also makes perfectly good sense, as you want to tap into their industry relationships to capture sales.

However, technology can be a slightly different animal. It is most often an enabler, and not a vertical leg. This isn’t always the case – so before you send in a comment to this post telling that there are exceptions to this – I agree!

There are basically two types of CIOs. The first works in an organization where technology is the core of the business – the core competency that is centric to everything they do. Examples of this type of environment are generally software, hardware, e-business, and other such technology companies. Technology can run very vertically within these types of firms.

The second works in an organization where technology isn’t at center stage, but rather is an enabler for the rest of the organization. Examples of this include manufacturing, retail, and transportation companies. In these environments, technology is a horizontal support structure – critical to the business, yes – but not a vertical leg within the firm. Most firms with CIOs fall into this category.

Call me crazy, but you wouldn’t need to know anything about the doughnut industry or desert “manufacturing” in order to provide technology services throughout Krispy Kreme. Don’t get me wrong, I think if you actually found that CIO candidate who had “doughnut industry” experience, you should court them, if nothing else than for the intangibles. However, there are a lot of extremely qualified CIO candidates that get passed up due to lack of domain experience.

From the CIO’s perspective, things such as call centers, servers, data centers, VOIP, technology budgets, hiring profiles for technologists, interconnectivity, ROI/IRR/EVA, and the Rationale Unified Process don’t change merely because you change business cards. These are staples found within the toolbox of any decent CIO.

A while back, I was fortunate enough to land in the mix for a CIO opportunity for a large mortgage firm. I was ultimately ruled out due to my lack of experience within the “mortgage industry.” Now, the last time I checked, CIOs don’t approve mortgage applications. Pay no mind that I have worked within the financial services sector for much of my career (consulting to Goldman Sachs, Chase Manhattan, Zurich-Kemper, Citibank, and several other firms). Heck, I even started my career as a computer programmer years ago working for one of the world’s largest credit card processors.

I should also add that I wasn’t bitter about losing out on this opportunity. This is business, and I’m a big boy – c’est la vie. I am simply using my own experience to illustrate the point.

Sadly, this has not been my only experience in seeing this line of thinking. A fellow technology colleague was recently ruled out for a position as a CIO with a large furniture manufacturer, because he did not have any experience working within the “furniture manufacturing” space. “You’re a fantastic candidate, but we need a furniture guy.” Uh huh – if you say so, Sparky.

Dan Gringas, a partner with Tatum Partners, summed this up nicely in a recent article entitled “How to Hire the Best CIO” over at CIO Update.

Business Knowledge vs. Domain Knowledge

No, you don’t need someone who comes from the cement-mixer industry. Guess what, manufacturing is pretty much the same whether you make cement mixers or cake mixers.

This drives me crazy and it’s endemic in CIO hiring. I once lost the competition for CIO in a company I had a real passion for because they wanted a “shoe guy.” I had deep knowledge of distribution, manufacturing and their core architecture, but I came from a different manufacturing background.

Most businesses should try to find someone from another industry well known for their strategic use of IT rather than trying to find someone from their specific industry. Hospitals are notorious for this, feeling that they are so different that they have to get someone from another hospital.

As I mentioned earlier, technology is an enabler. Within the office of the CIO, specifically, you are expecting to see some thought leadership around leveraging technology innovations in order to achieve efficiencies across the enterprise. You are also expecting the CIO and his team to support the operations of the firm by managing the flow of information throughout the organization. The CIO’s functional role is of a supporting nature.

The ideal CIO is quite often not an industry zealot, but rather, someone who brings a consultative approach to solving business problems through the smart deployment of technology. Frankly, I would prefer someone who has worked in a variety of industries (e.g. a consulting background), and is used to looking at problems from a multitude of angles. There are actually very few scenarios in which deep domain expertise is going to make or break a good CIO.

Umesh Vasistha is the CIO of Jindal Stainless, the largest manufacturer of stainless steel in India (USD $4B in revenues). In an interview by The Financial Express, he shared a great response to one particular question:

Q: Are CIOs participating in the company’s strategic decisions?

Industry experience is a critical factor in operating the company. A CEO often comes from the operations/sales side in the same industry, while a CFO usually has finance/accounting experience in similar industry. Conversely, CIOs often come from technology careers from cross-functional industry experiences. A CIO wears many caps and is expected to take care of business methodically and use proven formulae of success to generate positive results for the company.

One of my friends who is an executive recruiter informed me that she has the same problem with sales opportunities that she is placing. The client wants someone who has sold software. Doesn’t matter that you have a GREAT sales person with a GREAT track record. They want a industry specific salesperson. And the funny part is, most sales people in technology don’t know or understand technology. She has had this argument with several companies:

Client: “We are in trouble, and we want you to fill our CxO position. The last guy fit in great but the firm is still in trouble. So find us someone just like us and he will fit in well”.

Recruiter/Business Consultant: “Wouldn’t you prefer someone someone very qualified, yet possibly different? His diverse experience could bring new ideas and solutions to the table?”

Client: “No!”

The good news is, I’m not alone in my thinking.

Dan Gringas (Tatum Partners), How to Hire the Best CIO, November 2005
CIO Magazine: A CIO is a CIO is a CIO, March 2006
Don Curt/TechLINKS: The Right Process for Hiring a CIO, April 2006

If you are hiring a CIO, do yourself a favor and read these articles before you publish your job description and start seriously interviewing candidates. And stay tuned to The Pothole, as I have an upcoming article which will discuss the “hidden” qualities of a great CIO! Keep an open mind as you screen your CIO candidates, and remember that the CIO is there to provide a service to the organization, not run your business.

What say you? How important is industry experience? Which industries are more stringent than others, and would it be better to have someone who is more well rounded that brings new ideas to the table?

Cheers.

- Scott Burkett

The Very Model of a Modern Major er… Technologist

Scott Burkett — Mon, 20 Mar 2006 11:00:22 +0000

The truth be known, I entered the information technology industry to be a computer programmer, not a business person. Back in those days, computer programmers, operators, and other such technicians were the “doers”. We were expected to stay in our world, while the “business guys” sorted out what needed to be done next. When that miraculous decision was reached, it was “thrown over the wall” to the engineers. It was then that we got busy trying to live up to the expectations of whatever was actually sold to the customer. Techies and business folks didn’t co-mingle. That would have been the equivalent of the Hatfields and the McCoys having a lovely Thanksgiving dinner together. My how the times have changed.

When I landed my first job as a young, entry-level computer programmer, it was by responding to a newspaper ad (yes, a newspaper ad). it was similar to this:

Wanted computer programmers. Must be able to type. Must know IBM assembly language and basic flowcharting. Will train on industry, great pay, good benefits.

While I doubt many folks are finding tons of technology jobs through the newspaper these days, a modern ad for that same type of position might appear as follows (note: this is part of a real posting, copied from Monster.com):

SYSTEMS DEVELOPER

~Bachelors Degree in Mechanical Engineering or Agriculture Engineering
~1+ years design engineer experience
~Experience with Commercial Software a must
~Experience with Visualization Software / Groupware / Collaboration software
~Excellent verbal and written communication and presentation skills
~Ability to make presentations to platform leadership
~Ability to travel 10% of the time both domestically and internationally

A MAJOR PLUS IF YOU HAVE THE FOLLOWING:

~Jack
~Division / Mockup
~JAVA
~C++
~OpenGL
~Hardware experience in a multi-processor and multi-pipe computer graphics system
~Six Sigma
~Masters Degree
~Pro-E
~Farm Equipment Experience

If I had read the latter in the paper back in the 1980s, I probably would have taken up a different profession. I probably should have anyway, as my starting salary was only $13,500 a year, but that’s another story. Who would have ever thought that experience with “farm equipment” would be the deciding factor in a neck-and-neck race against another equally-as-qualified computer programmer? Farm equipment? Delivering presentations? International travel? … “I’d love to help you out with debugging that Fourier algorithm, Jed, but right now, I need to go and jumpstart the John Deere, then I’m off to Paris to deliver a presentation for the Chiracs. Can we get together next month instead?”

The hiring profiles have changed significantly over the years. In the old days, employers were thankful to even find people with programming aptitude, much less actual experience. Many technology roles require ancillary, non-technical experience, in areas such as regulatory compliance (e.g. Sarbanes Oxley), project management (PMI), quality management (TQM, Six Sigma, Lean) and process management (ITIL, CMMI).

Technologists are also expected to be more “customer facing” these days. Being able to function in a pre-sales or sales support capacity is fast becoming a critical skill for even junior-level programmers (excuse me, “software developers” – only us old guys still have the word “programmers” as part of our professional vernacular).

Another interesting evolution is in the wardrobe department. Techies are no longer expected to wear one technology hat, but many. Very many. The days of the pure specialist are all but over. Programmers need experience in database management, web design/HTML, new media, and at least 300 different programming languages. Today, techies are only considered marketable if they can list about 800 acronyms on the resume. If the resume doesn’t look like alphabet soup, forget about it. Experience with tools traditionally reserved for business analysts, such as Excel, Word, and Powerpoint, are absolute requirements.

The educational requirements have gone up – way up – when I got into the industry, a 2 year Associate’s degree was a ticket to a fantastic career. Now, Master’s degrees in computer science, CIS, or other related fields are quickly becoming the norm – not just for promotion to higher levels, but for entry-level roles as well.

Ah, but the changes aren’t limited to just the folks in the trenches. Change is also afoot at the executive level. The best friend of the CIO used to be the head of operations (COO), or possibly the CEO. These days, the CIO’s number one relationship is with the CFO – financial and regulatory pressures being the driver there.

As I was preparing this piece, I received the latest copy of CIO Magazine in the mail. This is the “State of the CIO” issue that I look forward to each year – very timely considering the topic I am discussing here (yes, I know this report was published at the beginning of the year, and it is now March – that tells you how long some of my blog drafts stay on my to-do list!). The issue hits on a number of major areas, including some of the ones I’ve talked about above. It is definitely worth a read if you get a chance.

We in IT are working with partners we could have never predicted years ago. The business is becoming much more aware of how information runs through the veins of technology.

- Susan Kozik, CIO, TIAA-CREF

Despite the appearance of having all of these changes “thrust” upon us, I consider the collective change to be a very positive development. Technology is an enabler for the business, and is no longer considered something that operates in a vacuum; a silo’d cost center that no one cares much about. We will see continued focus on IT’s alignment with the overall business, and this is a good thing for technologists – despite the fact that we may have to choose which hat we’ll need to wear to work each day.

With sincerest apologies to Gilbert and Sullivan.

Cheers.

- Scott Burkett

The New CIO’s Open Source Decision

Scott Burkett — Tue, 28 Feb 2006 11:00:50 +0000

To open source, or not to open source? That is the question that CIOs have been asking themselves for the better part of a decade. And while the argument for open source grows stronger every day, especially at the enterprise level, questions still remain. Being the new CIO doesn’t help either. You just never know what political minefield awaits you.

The other day I found myself sitting quasi-comfortably in an interview for a CIO position. This particular organization had a technology environment that wasn’t necessarily all that complex, but it was deemed mission critical to their operations. At one point in the interview, the CEO asked me the following question:

What are your views on open source versus proprietary/COTS (Commercial-Off-The-Shelf) software?

There it was, laid out before me like the proverbial holy grail of interview questions. I felt much like Olympic snowboarder Lindsey Jacobellis probably felt as she was on the final portion of her gold-turned-silver medal run in the snowboard cross event. All I had to do was coast to the finish line – don’t showboat, or get too fancy – just stay the course, and the treasure would be mine. This is one of those questions that as technology professionals, you have unknowingly rehearsed so many times at networking events and break room conversations that it can rattle off the answer about as fast as you can pour your next cup o’ joe.

Generally speaking, before an interview, I will have researched the company, its technology, and its principals to the fullest extent allowed to me by the major search engines, my personal business networks, and other “valued” resources on the net (such as searching the major job boards to try to find some hiring profiles for their technologists – a great way to begin gathering intelligence about their business model and system architectures). Unfortunately, I had very little information on this firm’s technology platform, so my canned (but well thought out) answer to his question would have to suffice. There would be no tailoring and positioning this time around.

On the one hand, if you respond with something along the lines of “open source is great; I love it; it is the best thing since 32-bit registers”, you run the risk of isolating yourself if the organization has not embraced the open source movement. On the other hand, if you respond with “open source is folly, give me Microsoft or give me death”, you run the risk of being labeled something completely different, and again, isolating yourself. So, you have to straddle the fence, but you try to do so as intelligently as possible.

I also am very careful not to tread into the political side of the open-source debate. I view things primarily through the business-benefit prism. I could care less about people who use open-source solutions solely because they “hate Microsoft”, “want Bill Gates to slide under a moving milk truck”, or “believe that software should be free”. The “I hate the system” spiel is so 1967.

The following is a longer, more structured version of what I served up as my answer to that interview question, but the general tenets remain:

Implementing a solution grounded in open-source code is not something to tread into lightly, although it can provide certain benefits. However, the extent to which those benefits reach depends upon a wealth of criteria:

1. First and foremost, the obvious business prism questions. What business problem does an open-source tool solve? What inherent business benefits am I going to obtain by using it?

2. New system or existing? Are we talking about building a new system from the ground up with very few constraints, or are we talking about an existing system that is mired with them?

3. What is the company culture, at both the technology and management levels? Will the company’s culture support open-source?

4. Do you have the right skillsets in house, and the right mentality for open source? In other words, will there be a learning curve on the implementation side, or is this going to be a no-brainer for your staff?

5. What are the integration points with your customers (internal and external), vendors, partners, etc.?

6. What are the cost ramifications? What is the total cost of ownership of these systems? True, open-source software is generally freely available, but there could be hidden costs. This goes back to all of the questions above. For example, if you don’t have the skills to implement the solution in house, then there would inherently be some form of training cost, followed by opportunity cost. Or, perhaps services fees to a systems integrator.

7. On the other hand, in organizations where the company culture, the skillsets of the IT staff, and the business requirements are in line, open-source can represent a tremendous reduction in cost/COGS (cost-of-goods-sold) and development timeframes.

Satisfied with my answer, I looked at the CEO, patiently awaiting his response, or perhaps a followup question. Instead, he responded with:

Well, you should know that we are a .NET/C# shop, and that isn’t about to change.

Um, okay, if you say so, partner.

Suffice it to say, he probably wasn’t thrilled with my answer, because in the end, it did leave the door open for open-source as a viable solution. I immediately responded with “but I’m not necessarily endorsing open-source as a panacea to solve all of your technology/business problems”, but I don’t think it did any good.

This particular fellow turned out not to be what I would call an “enlightened” CEO, at least as it pertains to the strategic deployment of technology.

An “enlightened” executive realizes that sometimes, in order to be agile within the marketplace, solutions need to shift. The landscape for technology changes each day – there is no such thing as a “long-term” solution anymore. Every solution we put into place has a half-life associated with it. You just hope that you make the right decisions that will lead to slightly longer half-lifes than those of your competition.

What say you? Share your thoughts on the open-source decision by using the comment form below! No registration is necessary, but all comments are moderated to prevent spam.

Cheers.

Q4/2005: Tech Spending Uptick

Scott Burkett — Thu, 23 Feb 2006 11:00:53 +0000

According to IDC, corporate sales of computer servers was up 4.4% in 2005. Doesn’t sound like a lot until you realize that it represents a move from $49.1B in 2004 to $51.3B for 2005. That’s a nice bump. The usual suspects were in the mix (IBM, Dell, HP, et al). IBM remained ranked in the top spot with a 32.9% chunk of the overall server market. No big surprises there.

According to Red Herring:

Because servers are used by most companies ranging from small-to-medium businesses (SMBs) to large corporations, market figures indicate that enterprise tech spending increased.

On top of that, shipments of hard disk drives jumped up 21% in Q4, driven primarily by demand in the portable/mobile markets.

That’s good news, folks.

Also of no big surprise, Sun Microsystems continued to lose market share, falling down to 9.5% of the overall server market. How long they have left is anyone’s guess. The question to me becomes one of reinvention. Will Sun successfully reinvent itself a la Apple, or will they continue to dwindle in influence? Either way, and much to my dismay as I’m a big fan of Sun, it is only a matter of time.

Cheers.

Global State of Information Security

Scott Burkett — Tue, 14 Feb 2006 11:00:29 +0000

On Tuesday, Feb. 28th, the Georgia Tech Information Security Center, the Technology Association of Georgia and PricewaterhouseCoopers are teaming up to present a program entitled “The Global State of Information Security.” The survey is the largest of its kind and is conducted by CIO Magazine and PwC.

Mark Lobel, PwC Principal, will be presenting the survey results followed by a panel discussion at the TSRB Auditorium (85 5th St.) on the Georgia Tech campus. Even though this event is focused on security, there is significant amount of value to be gained by people from across any organization.

CEO’s, CIO’s, CSO’s, VP’s and IT Directors will want to attend to hear the results of a worldwide study by CIO magazine and PricewaterhouseCoopers (PwC). “The Global State of Information Security 2005,” a worldwide study by CIO magazine and PwC, is based on the responses of more than 8,200 CEO’s, CIO’s, CSO’s, VP’s and IT Directors from 63 countries. The study represents a broad range of industries, including computer-related manufacturing and software, financial services and banking, government, education, healthcare, telecommunications, transportation, and professional services and consulting. Following the presentation of the survey results by Mark Lobel, the PwC Principal who drives the survey, we’ll have a panel of CIO’s & CTO’s vet their experiences and companies’ policies.

Meeting Date
Tuesday, February 28, 2006

Meeting Time
7:30 a.m. Registration & Breakfast
8:00 a.m. PwC Presentation of Security Survey results
9:00 a.m. CIO Panel
10:00 a.m. Q&A

Panel:
Rob Webb, CTO, Equifax
Paul Judge , CTO, CipherTrust
Dr. Guido Sacchi, CIO, CompuCredit
Gustav Shrils, CTO, International Hotels
Becky Blalock, CIO, Southern Company

Meeting Location:
TSRB Auditorium (85 5th St.), Georgia Tech

Cost
Free attendance for all! What a deal!

To RSVP/Register, click here!

Cheers, and see you there!

Mornin’ Cup: Hands-on, Hands-off

Scott Burkett — Wed, 01 Feb 2006 13:19:36 +0000

I had a rather interesting discussion this week with the chief executive of a small, but growing tech firm here in Atlanta. He informed me that he was looking to hire a “hands-on” CIO. Intrigued, I dug in a little more.

He had originally called me to gauge my interest as a potential candidate for this role. As it turned out, I was not a good fit for the position, as the industry involved was not something I had direct experience in. I did, however, offer to learn more about the position, in hopes of turning him on to someone who would be a better fit.

When I asked him to describe the responsibilities he envisioned for this person, he initially told me that the CIO would need to really be able to jump into the fire and help the development team with the day-to-day development effort. I told him that it sounded to me like he needed to hire a “software development manager”, not a CIO. Hiring a good development manager would provide more focus on his software engineering efforts. Additionally, it would be more cost effective than hiring a CIO, and the savings could then be put back into the budget for other things.

He pondered this for a moment, and proceeded to inform me that this person would also need to be responsible for keeping the network and data center up and running. This would involve network availability monitoring, and management of all of the routers, switches, servers and other big glowy boxy-looking thingamajigs in the data center. I told him that it sounded to me like he needed to hire a “network operations manager” to work in conjunction with his software development manager.

He muffled a small sigh, and replied that he was also looking for this person to manage the strategic alignment with their technology partners, and provide architectural oversight for the company’s core software product line. I told him that it sounded to me like he needed a “chief technology officer”, or CTO, to work in side-by-side with the network ops manager and the development manager.

I thought about his burgeoning list of needs for a moment, and realized that his expectations were a wee bit out of skew. I posed the questions “what are the priorities here? Which tasks are more important than others?” He replied that they were all equally important, and that he was hoping to find them all in the same person, as he only had room in the budget for a single hire. Suffice it to say, I don’t think he liked my advice.

I realize that smaller firms need employees that are able to wear many hats, but in this day and age they can’t conceivably wear them all at once. I suppose that it is possible to find someone capable of doing all of the things he wants, it just isn’t very probable. 10 or 15 years ago, it wasn’t only probable, it was easy. That is simply no longer the case.

Back then, you could wear all of those hats with very little effort, as the technical environments we worked within back then were not as sophisticated and as complex as what we have today. Technology folks back then, even at the executive or managerial levels, were not required to become intimate with the business drivers – no longer the case. In addition, the standards against which we had to adhere were sparse or nonexistant (for example, HIPAA & Sarbanes Oxley).

In situations like this, it is probably more advantageous to prioritize your needs by aligning them with your overall business strategy, and hire accordingly. At some point, it may make sense to bring on a CIO-level hire, however a tighter focus on operational-level hires is probably going to have a better ROI in the short-term. In addition, you avoid the risk of putting someone too junior in a role that will eventually require someone more senior (as your business scales).

Cheers.

Executive Briefing: Ruby on Rails

Derek Haynes — Mon, 30 Jan 2006 11:00:58 +0000

According to Derek Haynes of Atlanta-based Highgroove Studios, CIOs & CTOs that don’t investigate Ruby on Rails could be missing out on the holy grail of web application development – faster development, cheaper development, and vastly more usable applications. As our guest blogger this week, Derek provides a nice executive overview into this fascinating technology platform.

“Mom – is my bedroom still available? I’ve run into some financial difficulties.”

It sounds over dramatic to talk about a web application framework as a life-changing experience on par with marriage, college graduation, and the birth of a child, but Ruby on Rails (Rails) has had more of an impact on my professional career than any other event.

In the spring of 2005, I was reluctantly leaving a startup I co-founded where an application built with Java 2 Enterprise Edition (J2EE) formed the basis of our business. Development was a nightmare. Besides being slow and overly complex, it wasn’t fun. If starting a car was like building a J2EE application, I’d have to spend 10 minutes configuring the engine before I even started the car. It doesn’t matter how nice the car is – if it takes me 10 minutes to start it, I’m not driving it.

The J2EE development experience could lead a person to swear off technology, purchase a hotdog cart, and head down to Atlantic Station.
As I’ve never been much of a cook and I lack street-vendor-hawking skills, I decided to give up on that idea.

Luckily, the story gets better. If you have an iPod around, go ahead and cue your favorite “I was down but now I’ve risen” song. Reading about Rails for the first time was like walking out of an evangelization camp where 2 people were cured of cancer and a third was cured of blindness. I was re-energized – ready to take on web applications with a framework that looked like it was the freakishly perfect child born from Google and Apple. Development was fast and fun and the code was amazingly readable. If Valentine’s Day hadn’t already passed, I might have asked my significant other if I could bring my laptop and reserve another seat at the dinner table for my Rails application.

Today, my relationship with Rails is even better, and instead of sleeping in a twin bed in my childhood bedroom, I lead Highgroove Studios, a growing web development studio with locations in Atlanta, GA and San Mateo, CA. Largely because of Rails, we’re delivering applications on-time and on-budget, while creating pieces of work that literally change our clients’ views of what a web application can do. While I’ve seen how Ruby on Rails can impact my services firm, I’m also witnessing how it can change larger organizations. CIOs & CTOs that don’t investigate Ruby on Rails could be missing out on the holy grail of web application development – faster development, cheaper development, and vastly more usable applications.

I’m going to cover Rails at a higher-level in this article and talk about some of the great side effects of Rails development. I’ll cut out the discussion on moving to Rails and the technical differences between Rails and other frameworks as plenty of resources covering these topics already exist. There’s a great article on migrating enterprise development to Rails by Rick Bradley, a project manager who is doing just that. IBM also has a solid piece on the technical differences between Rails and J2EE.

Rails In a Nutshell

The goal of Ruby on Rails is to make web development simpler. It’s fairly new, having recently reached version 1.0, and is an alternative to building applications in J2EE, .NET, PHP, or any of the other web frameworks and languages. Rails, built on the Ruby programing language, makes it vastly more productive to write web applications – as much as 10X faster than J2EE. Besides the productivity increases, Rails also has the best support of the for mentioned frameworks for implementing AJAX technologies. AJAX allows a web page to change state (for example, adding a message to a page without reloading). Web applications that utilize AJAX can blur the line between a desktop application and a web application.

Why Rails

Time is Money
While 10X productivity increases might only apply to specific projects, I haven’t worked on a web application that could be developed faster in a framework other than Rails. Other knowledgeable people agree. With Rails, there’s basically no configuration within an application. All of the needed components are available when you start your project. There’s also zero turn-around time to view changes in code (Ruby is a scripted language, which means you don’t need to recompile code to view changes in your web browser). I’ve found that “zero turnaround time” is one the best ways to encourage developers to write more maintainable code. With J2EE, developers might avoid refactoring bad code as the time to recompile and restart the web server serves as a major deterrent. With Ruby, it takes seconds to view the changes.
Rails’ earliest detractors have become it’s biggest supporters
This may be the greatest sign – an acknowledgement by many of the leaders in the Java community that Rails has really gotten to the root of the web development problem. Many people who have a considerable investment in Java are endorsing Rails. In the words of Levar Burton of “Reading Rainbow” fame, don’t take my word for it…
Smaller Teams = Better Projects
Small teams can accomplish a lot with Rails – and there are few arguments against small teams in development projects. Instead of delegating work to a development team, I can personally lead and develop our applications (while doing it profitably), and I can afford to hire a few of the best instead of a lot of the rest.
The Rails community is the cream of the crop
Developers who use Rails do it because they recognized there must be a better way – I’d argue they have a much better sense of the pieces needed to complete a successful project than a “heads down” coder. “Big Picture” coders need less management attention, which again leads to more successful small teams.
…and it’s easy to switch if you don’t have Rails experience
While the number of Ruby developers pales in comparison to other languages, it is an extremely easy language to pickup. I have few reservations about hiring a developer without Ruby experience as they don’t need to know a lot of details about the framework – they just need to be good coders.
When usability matters (and when doesn’t it?)
Many people associate Rails with great-looking applications. Because Rails has fantastic AJAX support – implementing AJAX is becoming trivially easy – the framework works great with small teams that have the ability to work on the interface design and the backend functionality. Usability is more important than ever – people have less and less patience for tedious applications today, and Rails gives developers the tools to make applications easier for its users.
Higher Quality
We’re not perfect, but the amount of broken code that’s been rolled out in our Rails projects is far less than the number of bugs I’ve experienced in applications with other frameworks. This is largely because it is far easier to implement unit testing in Rails as compared to other frameworks. Unit Testing is a way of automating tests – developers write scripts to test out parts of an application, and can then run these at anytime in the future. Just added a new feature and not sure if it will break other parts of the application? Simply run the tests and see if they all pass.
But can it scale?
One of the major items of concern raised by those in the Java community is whether Rails can scale. The bottom line: there’s no reason why it can’t do it better (and cheaper) than Java. However, there hasn’t been an eBay-like application written in Rails to prove this theory (but there haven’t been a lot of new eBay-like applications as a whole either). Scaling is never simple, but there’s no reason why it would be any harder in Rails.

As the framework has matured, it has become more and more difficult for Rails developers to cite cases where Ruby on Rails development should not be the framework-of-choice for web applications. As it grows, some of the framework’s relative weaknesses, like a lack of internationalization (support for multiple languages) and a complicated server setup are fading.

I’ll leave with a quote by David Geary, the author of Core JavaServer Faces and a Java-to-Rails convert:

“Will Rails hit a tipping point and become widely adopted in the near future? I am certain of it.”

Biography

Derek Haynes is the founder of Highgroove Studios, a web applications studio specializing in building elegantly simple Web 2.0 applications. Before starting Highgroove Studios, Derek worked in a variety of industries – from sales in a Fortune 100 company to software development in a 6-person firm. Graduating with High Honors from Georgia Tech, Derek bleeds black and gold.

A special thanks to Derek Haynes of Highgroove Studios for serving as our guest blogger this week. Great job, Derek! As IT leaders, we should always strive to explore new efficiencies, and how they might fit into our strategic technology plans.

Have an opinion on a topic relating to technology, leadership, venture capital, entrepreneurship, business networking, or the Atlanta business scene? If you or someone from your organization would like to participate as a guest blogger here on The Pothole, by all means let me know! This is a great way to get your message out into the blogosphere without necessarily having to create and maintain your own daily blog.

Cheers.