Offshore CTO?

May 1, 2011

At first the idea of off-shoring the CTO function looked a bit difficult to comprehend.  To put it in context, IT Organizations hire a Chief Information Officer (CIO) for ensuring that the organizations information technology investments are aligned with its strategic business objectives. For most Fortune 2000 companies, the CIO has become the the architect of building and managing technology assets that meet the business requirements. Many CIOs come from a business background and lack the hands-on-skills in architecting solutions.   To help alleviate this gap, often a Chief Technology Officer (CTO) was hired to support the CIO.  While the CIO was the big boss in most organizations, technology-centric firms gave more credence to the CTO.  Large firms can afford the luxury of having both the CIO and CTO.  Small to Mid-Sized Businesses (SMBs) rarely have the luxury of affording two executives.    Many CIOs lack the technical skills to build contemporary IT efficiently.  Conversely, many CTOs lack the business skills to build a technology portfolio that best matches the organization’s needs.

The idea of of an off-shore CTO working under the direction of a CIO to help architect and deliver a technology platform does appear to make sense, particularly in light of the fact that many technology solutions are in fact developed off-shore.  A few guidelines for successfully off-shoring the CTO services:

  1. The business drivers must be articulated on-shore by a CIO or equivalent;
  2. The off-shore CTO must be co-located with the implementation team;
  3. The off-shore CTO must provide PMO functions to ensure successful outcomes;
  4. The CTO must be fluent in the enterprise architecture; and;
  5. If the development team is outsourced, the CTO function must not be from the same outsourced entity.  This will help ensure that the CTO’s loyalty is to the enterprise and not to the outsourced entity.

Off-shoring a CTO is not necessarily undertaken to reduce costs, rather it is to help minimize the gaps between the desired outcome and the delivered technology platform. The capability of the CTO determines the success of the engagement.  Fortunately, with the large number of engagements that have involved on-shore and off-shore projects, it will not be difficult to locate competent CTOs.  Many qualified CTOs in Europe/US may themselves avail of off-shore engagements further boosting the pool of available CTO resources.


The New Global Brain: Find & Direct Brainpower

January 22, 2010

In an article published in Newsweek, Work The New Digital Sweatshops, Jonathan Zittrain talks about how the Internet is revolutionizing tasking by aggregating global resources, termed “crowdsourcing”, similar to how aggregated computing power speeds the engines of technology companies ability to process millions of search requests every minute.

In the latter, the computers dont have emotions, rights, or shed a tear when called into action at 3AM after cranking out search results for the last 1,345 days.  The ethical dilemma, Zittain purports, is when you seemingly take advantage of a hungry resource halfway around the world to execute mundane tasks like deal with a drunk, hungry sports fan ordering a pizza at halftime.

Frankly, I see it as supreme supply chain optimization, a zero-waste global economy, that will eventually create a certain global “synchronicity” where we all continue to quickly evolve technology through global teamwork and collaboration.  The mundane task of pizza order-taking may quickly evolve into chip design for our next-generation zero emission vehicles.  There is always distribution of labor, now today we have global connectivity enabling a more perfect distribution to the right resources with the right skills at exactly the right moment.


The Benefits of Remote Infrastructure Management for SMBs

August 15, 2009

Frameworks such as ITIL have developed guidelines for strategizing, designing, implementing and managing IT Infrastructure that provides best value to businesses.  While the guidelines were designed for Tier-1 firms, they are also applicable for Small to Mid-Sized Businesses.  Ignoring the Fortune 1000, there are 17000+ companies who have between 500 and 10,000 employees.  Let us call these companies Tier-2 companies.  There are probably 200,000+ companies who have more than 100 employees but less than 500.  Let us call these Tier-3 companies.  A challenge Tier-3 companies, and to some extent the Tier-2 enterprises, face is the lack of economies of scale.  If they do not have a outsourced environment, they require systems administration expertise, network management, helpdesk, maintaining the server farms, and maintaining the user devices (PCs, laptops, PDAs, etc.).   One easy way to gain economies of scale is to outsource, particularly off-shoring to leverage the lower costs. 

According to Stephanie Overby (CIO Magazine: Outsourcing: The Pros and Cons of Offshore Remote Infrastructure Management dated: March 18, 2008), the services that can be off-shored are:

Service                % that can be off-shored

Network Services                80%
Internal Help Desk              75%
Servers                              70%
Maintenance                       60%
Administration                    35%
End-user Devices               15%

While the degree of off-shoring can vary for each enterprise, Stephanie’s insightful article points out the need for a blended model – a combination of on-site expertise backed by Remote Infrastructure Management (RIM) services.  Cost savings are a result of three factors:  1)  labor arbitrage, 2) shared services including SaaS, cloud computing, and, 3) shared expertise.  The best example of labor arbitrage is off-shoring.  Large outsourcers such as IBM, Infosys, and Wipro have provided these cost benefits to Tier-1 companies.  In the past five years, many Tier-2 and Tier-3 outsourcers have provided niche RIM services.   Cloud computing has helped reduce infrastructure costs.  SaaS (Software as a Service) has gained momentum helping companies pay for services actually consumed.  Shared expertise is another strong benefit as outsourcers provide a multitude of expertise that would be very costly to in-source.

Savings can be significant.  Typical savings for e-mail hosting and support can amount to over 100% , over 200% for remote server monitoring, and over 50% for applications monitoring and support. 

In addition to cost savings, RIM offers a much higher level of service.  For example, outsourcers can provide 24-7 support far more economically than in-sourcing.  Another significant benefit of using outsourcers is the ability to provide higher availability of services on demand.  RIM is a proven model for managing IT Infrastructure.  In the past these benefits were limited to Tier-1 firms managing large data centers.  Recently, the growth of highly qualified and credentialed Tier-2 RIM providers makes it easy for Tier-3 enterprises to take advantage of off-shore partners.