Trends but No Directions

Nordic Region Technical Conference
Oslo, May 2006
Michael Erichsen, CSC
Trends, but No Directions?
IT in the Age of Globalization

GUIDE SHARE EUROPEMay 2006 2
Purpose of this
Presentation
 Not really to answer questions, but to try to ask them
 CAUTION:
 The speaker does NOT necessarily have any deep knowledge in
the areas discussed
 The presentation consists mainly of unsubstantiated statements,
unfounded prejudice, and loose claims ripped off the Internet
 A complete literature list would be longer than the presentation
 But perhaps we could draw some perspective and inspiration
when considering the many confusing trends
 The thoughts, opinions, and considerations are the speaker’s
own, and not necessarily those of his company or of the GSE
Steering Committees

Paradigm Shifts and
Foresight
 “Paradigm Shifts” is a way of discussing changes in
the past by grouping them on a high level
 “Foresight” is a technique used by Governments and
Universities to build scenarios to help them choose
policies to further their aims and strategies
 Why are such methods important?
 They can help us better understand the trends that affect our
countries, our companies, and the future of each of us

IT in the Age of
Globalization
 Paradigm Shifts

What’s a
Paradigm?

Scott Adams’ Own
Comment
 If you can say
“Well, we are going to do a
paradigm here.
We're looking at different
models.
We'll run a few simulations
and put this together to see if
we can get a consensus.”
 That sounds much better
than “I don't know”

Brother, Can You Paradigm?
 Thomas S. Kuhn:
The Structure of Scientific Revolutions (1962):
 Scientific advancement is not evolutionary
 A series of peaceful interludes punctuated by intellectually
violent revolutions, where one conceptual world view is
replaced by another
 A Paradigm Shift is a change from one way of
thinking to another
 It's a revolution, a transformation, a sort of metamorphosis. It
just does not happen, but rather it is driven by agents of
change
 As paraphrased by professor Frank Pajares

Some Paradigm Shifts
 Offshoring labour intensive work → Automation & Back-
shoring → Offshoring automated work
 “EDP” a part of accounting → IT a strategic resource → dot.com
→ Cost containment → Innovation
 Batch → On-line → Client/Server → Web → SOA
 Decoupling of operating system, data, business processes,
presentation, business rules
 Data Centric ↔ Process Centric
 Data Entry ↔ Case Work
 Stationary → Mobile
 Centralized ↔ Decentralized
 Top-Down ↔ Bottom-up ↔ Meet in the middle

Details and the Complete
Picture

No attempt made to explain “Everything”
 A theory has to be simpler
than the data it explains,
otherwise it does not explain
anything
 Gottfried Wilhelm Leibniz
in “Discours de
métaphysique”, 1686,
paraphrased by Gregory
Chaitin

Offshoring of
Manufacturing
 In the 1950’es manufacturing boomed, and workers were drawn
from the countryside to the factories
 In the 1960’es workers were imported from abroad
 In the 1970’es manufacturing was exported to the third world
 “Footloose” industries, Free Trade Zones
 Automation and robots demanded highly skilled workers
 Some manufacturing was “backshored”
 In the 1990’es a highly skilled Chinese workforce entered the
world market, and almost all manufacturing was re-offshored
 Important to note that this has been a non-linear process
 The consequences in Europe: Marginalization of unskilled labour
(to a high degree affecting imported workers and their children).
Fear of globalization (“Fortress Europe”)

The Role of Information
Technology
 IT entered companies as Data Processing (EDP), a subset of the
accounting department
 Faster file handling, better calculations
 As IT matured, and IT departments became more ambitious, they
promoted IT as a strategic resource
 Seen by upper management as a trick to gain power
 During the dot.com bubble, everybody rushed into e-something
 ERP, CRM, SCM, EAI, Web…
 The bubble burst, and cost containment ruled
 IT must support cost cutting – and take a lot of cutbacks itself
 Now focus is moving back from the bottom line to the top line
 IT now must support Innovation to help companies compete

Innovation is not the Same as Creativity
 "Innovation… is generally understood as the introduction of a new thing
or method… Innovation is the embodiment, combination, or synthesis of
knowledge in original, relevant, valued new products, processes, or
services.“ (Luecke & Katz, 2003)
 "All innovation begins with creative ideas… We define innovation as
the successful implementation of creative ideas within an organization.
In this view, creativity by individuals and teams is a starting point for
innovation; the first is necessary but not sufficient condition for the
second". (Amabile et al, 1996)
 "Innovation, like many business functions, is a management process that
requires specific tools, rules, and discipline." (Davila et al, 2006)
 Definitions taken from Wikipedia

Tools to Promote
Innovation

Six Myths of Creativity
Myth Research Results (Teresa Amabile, Harvard)
Creativity Comes From Creative
Types
Anyone with normal intelligence is capable of doing some
degree of creative work
Money Is a Creativity Motivator The handful of people spending a lot of time wondering about
their bonuses were doing very little creative thinking
Time Pressure Fuels Creativity Creativity requires an incubation period; people need time to
soak in a problem and let the ideas bubble up
Fear Forces Breakthroughs People are more likely to have a breakthrough if they were
happy the day before
Competition Beats Collaboration When people compete for recognition, they stop sharing
information
A Streamlined Organization Is a
Creative Organization
People's fear of the unknown led them to basically disengage
from the work

The Computing Platform
 Aiken’s Law, 1947: “Only 6
computers needed to perform all
calculations in the US”
 Batch → On-line →
Client/Server/ERP/CRM →
Web → SOA → POA? EDA?
Something completely
different?
 Driven by forces like
 Technical inventions
 Globalization
 Business changes like mergers
and acquisitions
 Changing expectations by
users, customers, and partners

Decoupling
 The first systems were tightly coupled Operating System-Data-
Business Logic-Presentation monoliths
 Operating systems and applications were separated
 Data was separated using database management systems
(network, hierarchical, relational etc.)
 Presentation was separated using client/server, GUI, and Web
Interfaces
 Application components were decoupled from each other using
APPC, EDI, RPC, RMI, and Web Services/SOAP
 Business rules, processes, and control logic were separated using
Business Process Management Systems

A Counter-Trend to
Decoupling
 Case tools in the 1990’es like IEF/COOL:Gen derived
applications and data so strongly from business models that data
was effectively owned by specific applications
 This is a problem for current reengineering projects, because an
enterprise data model is difficult to implement
 Shrink-wrapped ERP packages like SAP and Siebel is a new
generation of monoliths
 In practical life you cannot access or understand SAP relational data
outside the SAP system
 SAP opens up to SOA architectures by defining itself as the core
and providing the ESB

The Data Centric
Paradigm
 The Data Centric paradigm was driven by Database Management
systems and decoupling of data
 Built on a mathematical basis: Set Theory founded by Georg Cantor
 Modelling starting from enterprise “master data”
 Identities and attributes of customers, products, employees, and other core
reference data
 Implemented in CRM, ERP, and other Shrink-wrapped systems of the 90’es
 Backed by vendors like Oracle and SAP
 Business Intelligence, OLAP, Data Mining, ETL, etc. can discover new
information from non-obvious patterns in large sets of data
 Object orientation enhanced data with its inherent methods
 Metadata makes data more independent of single applications
 XML an excellent medium
 Including both structured data (Databases) and unstructured data (email,
Office documents)

The Process Centric
Paradigm
 The Process Centric paradigm was driven by recent business changes,
SOA technologies and decoupling of processes
 Built on a mathematical basis: π Calculus founded by Robin Milner et
al.
 The processes of the enterprise is seen as the most important aspect
 Sees databases as a place, where state is kept, when lights are out
 Focus is moving to innovation
 First generation SOA projects are often mainly technical integration
projects
 Service-enablement of legacy systems and SOAP-interfaces exposes
functionality as services and prepares combination into business
processes that can be dynamically reconfigured
 BPM systems are maturing and integrating with SOA technologies

No More Waiting
Rooms?
 Customers waiting in line,
spending hours in waiting
rooms, or rusting on telephone
queues are no longer deemed
acceptable
 Office staff changes from data
entry clerks to case officers,
handling a case or a client “from
cradle to grave”
 This drives continuous
improvement of processes,
higher degrees of automated and
IT-supported processes,
integration between systems,
and self service

Computer Terminals become
Mobile
 Teletype Terminals → green
screens → GUI → handheld
terminals/PDA’s/mobile
phones etc.
 Gartner predicts that in the
future everybody will only
have laptops – and that we
will have to pay for them
ourselves, since we also use
them for private purposes
 This sounds like a hit
among company chief
financial officers

Centralize or
Decentralize
 This set of paradigms has
regularly shifted back and
forth
 And will probably continue
to do so

Where to Start your Design Projects
 The discussion about Top-Down or Bottom-up has been
running for years
 Top-Down puts the business needs in focus
 Bottom-Up provides robust building blocks to build any
application needed, and includes the possibility of buying 3rd
party components
 The Business Process-Service Oriented design is becoming
popular by combining into “Meet in the Middle”
 Business Process Analysis and Modelling should be guiding
your services design

IT in the Age of
Globalization
 Foresight

What is Foresight?
 Foresight covers activities aiming at
 thinking
 debating
 shaping the future
 The driver is the complexity of
science, technology and society
interrelationships, the limitation of
financial resources, and the increasing
rate of scientific and technological
change

Thinking, Debating, and Shaping the
Future
 Forecasting, technology assessment, future studies and other
forms of foresight try to identify long term trends and thus to
guide decision-making
 Foresight aims at identifying today's research and innovation
priorities on the basis of scenarios of future developments in science
and technology, society and economy
 Foresight is a participative process involving different
stakeholders
 Methods include academic studies, panels, and working groups
 Foresight aims at identifying possible futures, imagining
desirable futures, and defining strategies
 Results are generally fed into public decision-making, but they also
help participants themselves to develop or adjust their strategy

Business Foresight
 Consider whether you could use or participate in such Foresight
projects
 There are university people who are very good at it
 One aspect is the expectations of the next generation of users,
customers, citizens
 They are going to be very much different from their parents’
generation
 And the next wave of retired persons are going to be demanding and
difficult too – because that will be many of us in this room!
 The new generation of reengineered IT systems that we are
building now might have a lifecycle expectancy of maybe 15-20
years, so very big changes in such directions must be prepared
for

Technology Foresight
 If we think of a 15-20 year period it takes little imagination to
foresee the possible size of technology changes over such a
period
 Wireless everywhere, grid, all kinds of new devices…
 Loosely-coupled, open-interface integration between systems
that need to know nothing about the internals of each other will
be the standard
 At the technology level nobody can claim to have the slightest
idea whether the differences between mainframes and midrange
systems still will exist or whether they have converged
 This does not necessarily mean that mainframes will die, as often
forecasted, but rather that midrange system will grow in size,
processing power, stability and close symbiosis between hardware
and operating systems, so the differences will wither away

The Gartner Christmas Report
2005
 No more company paid laptops
 Telephony will be mobile or internet based
 The job market for IT specialists will shrink
 More Business Process outsourcing
 Software will save lives in the health sector
 Government regulations will be in focus
 The actual report is of cause more detailed and faceted. Get
the details from Gartner yourselves

A Gartner “Hype
Curve”
 Gartner’s phases are:
 Technology/Business
Trigger
 Peak of Inflated
Expectations
 Trough of Disillusionment
 Slope of Enlightenment
 Plateau of Productivity
 No presentation is complete
without either a Hype Curve or
a Magic Quadrant

A Revolution that Never Took
Place
 “Before man reaches the
moon, mail will be delivered
within hours from New York
to California, to Britain, to
India or Australia by guided
missiles. We stand on the
threshold of rocket mail”
 Arthur Summerfield, US
Postmaster General, 1959

Remember “The New
Economy”?
 “There isn't an Internet
company in the world that's
going to fail because of
mistakes – Internet
companies make thousands
of mistakes every week”
 Candice Carpenter of
iVillage, 1998

IT in the Age of
Globalization
 Globalization

The Globalization
Era
 There has been an international division of work since long
distance trade started in the Stone or Bronze Age
 It changed drastically during colonial times when colonial
powers controlled who manufactured, who produced raw
materials, who were allowed to buy from whom – and who were
sold as slaves
 After World War II and decolonization countries have become
politically free, but with very different levels of development,
economy and political rights
 Changes in economic strength, the fall of the Iron Curtain, and
the establishment of new networks of terror have changed both
the political and the economic climate of the planet: The Cold
War Era has been replaced by the Globalization Era

Characteristics of
Globalization
 People around the Globe are more connected to each
other than ever before
 Information and money flow more quickly than ever
 Goods and services produced in one part of the world
are increasingly available in all parts of the world
 International travel is more frequent
 International communication is commonplace
 Critics claim that Globalization means US Domination
(“McDonaldization”, “Coca-Colonization”)

A Globalization
Scenario
 One scenario often discussed is the
global consolidation of companies into
three of each with an undergrowth of
national subcontractors:
 Three car manufacturers, three computer
companies, three airplane
manufacturers, three airlines, three food
producers, etc.
 Imagine the consequences on systems
integration, network, layering of the
Internet, etc.

Warfare is changing
 Warfare has been the main driver of technology for
the last several thousand years
 “The cold war” is replaced by “The war on terror”
 The US Patriot Act, EU, and national Nordic anti-
terror legislation affects the IT and telecommunication
businesses by demanding large scale storage of
communication patterns and/or content
 Its will keep a lot of the database, data mining and OLAP
specialists busy
 It also is subject for a large debate in all democratic countries

IT in the Age of
Globalization
 Changes in IT

Ten Key Trends for IT Services in 2006
ComputerWire Market Watch predicts:
Steady growth in spending
Mega-deals to decline
Multi-sourcing
Telecoms, pharma and retail the hot sectors
Continental Europe warms to outsourcing
Telecoms/IT services crossover continues
India arrives in infrastructure management
Procurement outsourcing to explode
Finance & Accounting outsourcing to ramp up
Mergers and Acquisitions among IT service providers

Compliance
 Financial scandals has put focus on
“compliance”, i.e. acting according
to accepted standard procedures and
processes
 Sarbanes-Oxley and Basel II
 Outsourcing, offshoring, and the
change of IT from art to industry has
changed may relations from close
partnerships to commercial relations
 A contract is now a governance tool
rather than an emergency brake
 Tight standards on IT processes and
project management like ITIL,
PRINC 2, CMMI, and Six Sigma

Processification of
IT
 The compliance paradigm drives IT
organizations to change their ways of
working from art and handicraft to
industrial processes
 Better documentation is one important
product
 Mainframe has learned to work structured
many years ago
 Midrange and desktop are struggling to
change their processes
 This is a sign of maturity, and without
any doubt necessary
 It changes the skill sets necessary to do
the job
 Which consequences for innovation and
creativity?

Does IT Matter?
 Article by Nicholas Carr in
Harvard Business Review,
May 2003
 Followed by the book “Does
IT Matter? Information
Technology and the
Corrosion of Competitive
Advantage”
 Observation: IT becomes a
commodity, and competitive
advantage diminishes
 His conclusion: Stop
investing in IT

IT Doesn’t Matter – Business Processes
Do
 Smith and Fingar divide IT
into three stages:
 IT infrastructure
 Business automation
 Business process
management
 IT does matter in the last
area because it is a business
process enabler, say Smith
and Fingar

Software Engineering
 Procedural programming is
based on mathematical
models like λ calculus and
the work of Alan Turing
 Correctness can be proved
mathematically
 The US DoD spent years
validating the Ada language,
used for spaceflight and
guided missiles

Weinberg’s Second Law
 If Builders Built Buildings The
Way Programmers Write
Programs, Then The First
Woodpecker That Came Along
Would Destroy Civilization
 Gerald Weinberg, 1972
 Years ago I quoted to an
architect Weinberg's line. "Oh,"
she said, "but that's just how
they do build them.“
 George Jansen in RISKS
Digest, 2005

A Component Architecture Debate in
“RISKS”
 “If you have small components that you know are right, and you then
combine those components to manipulate each other according to their
published interface specifications, the results should be consistently
correct. The results will be predictable, the usage will be consistent
every time. But in general, this is not how we are designing software.”
(Paul Robinson)
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“RISKS”
(Paul Robinson)
 “There is only widespread take up of component reuse where those
components are reliable and free.” (Steve Taylor)
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

“RISKS”
(Paul Robinson)
 “Software patents make component reuse dead. Reuse a bunch of stuff
and pay many fees, royalties, patent searches, lawyers and contract
negotiations. So who will try reusing components with very real legal,
financial, etc. risks when the risk of consequence for a bug (even
resulting in deaths or huge financial losses,) is small?” (Steven Hauser)



“RISKS”
(Paul Robinson)
 [Open Source] “provides us with the ability to obtain components that
we can fix (or hire experts to fix) if they break.” (Tom Swiss)


“RISKS”
(Paul Robinson)
 [Open Source] “provides us with the ability to obtain components that
we can fix (or hire experts to fix) if they break.” (Tom Swiss)

A Critique of OO from the Same Debate
 “What OO has done to the development of software engineering is
devastating
Instead of continue to develop more advanced languages we got stuck
with half-assembler languages like C and followers. A compiler for a
high level language (re-)uses code templates. A compiler for a more
advanced language could reuse even larger chunks of code, without any
need for a programmer to try to find the code in a catalog
To my disappointment, I have seen very little progress during the last
two decades in the field of software development
The ever increasing speed of the processors and the cheap memory
prices has more encouraged fast hacking than a systematic development
based on sound engineering principles.” (Kurt Fredriksson)

The Case for SOA and for
LST
 The current answer to the problems discussed is Enterprise
Architectures that are built on standard components, shrink-
wrapped packages, legacy systems functionality, plus custom
built service-enabled applications where needed
 Plus stronger management procedures like ITIL etc.
 The case for Legacy Systems Transformation (LST) is that these
systems are thoroughly tested, tuned, debugged, and functionally
corrected by change management, based on years of user
observation in real production
 If it makes sense to reuse parts of their functionality in the new
business processes
 But Kurt Fredriksson would probably accuse us of hiding the
symptoms rather than curing the disease

Open Standards and Open
Source
 Open standards like SOAP
means that you can connect
separate systems to each other
in a documented way without
paying a license fee
 Everybody says they support it
 Open source is just another way
of pricing products and services
 The question about the quality
of open source has mainly
ended by now
 The discussions about open
source and open document
standards are also a battlefield
in the struggle for market
domination

IT in the Age of
Globalization
 SOA, POA,
EDA, and other
TLA’s

SOAP is not the same as
SOA
 SOAP is not the same as SOA

SOA
 (Just wanted to make a point)

SOA
 SOAP (aka Web Services) is a
protocol used for system-to-
system communication
 Any system can be equipped
with a SOAP interface – like an
APPC interface, a Sockets
interface, an RPC interface etc.
 SOAP can be used in a SOA,
but so can other interfaces
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SOA
 SOAP (aka Web Services) is a
protocol used for system-to-
system communication
 Any system can be equipped
with a SOAP interface – like an
APPC interface, a Sockets
interface, an RPC interface etc.
 SOAP can be used in a SOA,
but so can other interfaces
 SOA is an enterprise
architecture model, where
functionality in separate systems
is exposed using loose coupling
and open standard interfaces,
including – but not exclusively
– SOAP
 Many current SOA projects are
technical infrastructure projects
rather business projects
 Which is why some people call
a full SOA with BPMS a
Process Oriented Architecture
(POA)

Robert Morris in zJournal, 2006
 There’s no shortage of vendors
willing to further confuse the
issue by offering simplistic
solutions to delivering
mainframe Web Services, and
claiming this is synonymous
with delivering SOA
 This approach should come with
a warning label: “Web Service
enclosed. All assembly
required.”
 It’s like delivering a load of
lumber to a prospective home-
builder
 It requires:
 An in-depth understanding of
how the components work
together to comprise a
recognizable business task
 Automating the interaction of
the underlying functionality
and data sources necessary for
the task
 The whole thing be packaged in
an easily recognizable and
accessible form for effective
use and reuse
 Talking “Web Services” instead
of “business services” really
misses the point

POA according to Howard
Smith
 From “Workflow is just a π Process”, 2003:
 A BPMS does not “integrate” applications and Web services as
many workflow solutions and EAI do. That approach only
creates aligned data and some workflow control over messaging
 By contrast, a BPMS assists in the direct reuse of existing
investments in IT processes by consolidating them within a
process-oriented architecture (POA)
 This means we can persist them as data records in a BPMS
process base, a database of process records. Like stored
information within the thread of email, the process base contains
the past, present and alternative futures (via simulation) of the
stored process

Smith
 Within a POA, the conceptual centre is the business
process itself, the focus of management attention
 In the same way that the RDBMS, based on the
relational model of data management, replaced
disparate hierarchical and network-oriented databases,
we believe BPMS will replace multiple approaches to
workflow
 The BPMS heralds a change in the IT stack itself,
from applications built on a data foundation, toward
process management tools built on a process
foundation

Smith
 The BPMS platform provides a
process-oriented architecture (POA)
that can be deployed over today’s
Web services platforms that are, by
contrast, service-oriented
architectures (SOA)
 Web services are just fine at
exposing the process participants the
BPMS can exploit
 Web services live in the era before π
calculus-based technologies
 They represent the final
standardisation of 20th
century
technology, and for many businesses
that’s long overdue
 By contrast, the BPMS is a 21st
century innovation and ripe for
market adoption

Event Driven Architecture
 Event-Driven Architectures
(EDA) can be seen as an
extension to SOA and BPMS
 EDA refers to any applications
that react intelligently to
changes in conditions, whether
that change is the impending
failure of a hard drive or a
sudden change in stock price.
 Gartner sees EDA as “THE
NEXT BIG THING”™

IBM and Event Driven Architecture
 “Planned enhancements to the CICS family of
products”, IBM Statement of Direction May 2006,
include:
 “IBM intends to support Event Driven Architecture
(EDA) to initiate the event-triggered delivery of a
message for appropriate action in managing and
separately maintaining infrastructure and business
processes
 It is planned for CICS to provide non-invasive
instrumentation of business logic that can be used
by both business analysts and developers. As a first
step in its longer-term EDA strategy, IBM intends
that the complementary product, CICS Business
Event Publisher for MQSeries, will be extended to
conform with the Common Event Infrastructure for
working with a wide range of business, system, and
network events”
Capability Description
Decoupled
interactions
Event publishers are not
aware of the existence of
event subscribers
Many-to-
many
communica
tions
Publish/Subscribe
messaging where one
specific event can impact
many subscribers
Event-
based
trigger
Flow of control that is
determined by the
recipient, based on an
event posted
Asynchron
ous
Supports asynchronous
operations through event
messaging

IT in the Age of
Globalization
 Outsourcing
and Offshoring

Growth of Indian
Offshoring
 Has gone through three stages
 Development of world-class applications development skills,
when firms like Tata became partners with Western firms for
low cost development
 Indian firms offering low-end back-office services (call
centers, transcribing medical records, processing insurance
claims etc.)
 More complex services are now being provided in IT and
Business Process Outsourcing
 According to The Economist, 2006

New Countries are Joining In
 Some of India's offshoring giants are offshoring themselves,
fueling the next round, and U.S. firms are joining in
 Tata has opened offices in Budapest, in Hangzhou, China, and in
Chile. It plans to add 1,500 to the 485 people at its Brazil arm
 Infosys Technologies set up shop in Shanghai, Mauritius, Prague
and Brno
 Wipro has new offices in Shanghai and Beijing and soon in
Bucharest
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New Countries are Joining In
 Some of India's offshoring giants are offshoring themselves,
fueling the next round, and U.S. firms are joining in
 Tata has opened offices in Budapest, in Hangzhou, China, and in
Chile. It plans to add 1,500 to the 485 people at its Brazil arm
 Infosys Technologies set up shop in Shanghai, Mauritius, Prague
and Brno
 Wipro has new offices in Shanghai and Beijing and soon in
Bucharest
 U.S. firms are expanding beyond India, too
 Call-center giant Convergys recently opened offices in Dubai and
Budapest
 IBM Global Services is adding staff in China, Hungary, the Czech
Republic and Brazil
 Accenture is adding staff in the Philippines, China, Slovakia and the
Czech Republic

China’s Five Surprises
 Edward Tse recently wrote in “Resilience Report” that by 2030,
if not sooner, China could be the world’s largest economy. He
thinks China will succeed, where Japan didn’t, because of five
“surprises”:





“surprises”:
 “Why not me?”
 The intensity of Chinese entrepreneurialism is propelling many
companies, even now, beyond a role as producers of low-cost
commodities



“surprises”:
 “Why not me?”
 The intensity of Chinese entrepreneurialism is propelling many
companies, even now, beyond a role as producers of low-cost
commodities
 Fearless experimenters
 China’s emphasis on rapid-fire research and development makes it a
seedbed for original products and services in the future

 China’s “brain gain”
 The ability to attract and retain executives from around the world
has provided a higher level of competence for China’s enterprises





 Out from Guanxi
 Outsiders still view China as a largely patronage-based economy, in
which connections and ethnic background determine success, but
increasingly (at least in some sectors), high-quality management
and transparent governance structures count more



 Out from Guanxi
 Outsiders still view China as a largely patronage-based economy, in
which connections and ethnic background determine success, but
increasingly (at least in some sectors), high-quality management
and transparent governance structures count more
 China’s overseas ambition
 The country is taking on a role as a catalyst of sustained economic
growth in the emerging markets of the developing world

Backsourcin
g
 Backsourcing is taking back in-house services that
were previously outsourced
 JP Morgan Chase did it with IBM in the wake of the
Bank One merger
 Banco Santander has said that it is backsourcing some
of Abbey’s IT operations
 Sainsbury’s announced that it is bringing back in-
house its multi-billion outsourcing with Accenture
 Also examples from Denmark
 Could this happen for offshoring as well?

The Danish Globalization
Council
 Established by the Danish
government April 2005
 It has been advising the
government on an ambitious,
comprehensive strategy to
prepare Denmark better for
globalization
 It comprised representatives
from Trade Unions,
employer organisations,
education, and research
circles

“Progress, Renewal, and
Security”
 A report from the government after
listening to the Globalization
Council, published April 2006,
concluded among other points:
 Better education
 More competition among
universities
 Stronger cooperation between
companies and universities
 Stronger competition
 Import of more highly educated
workers
 Lower taxes






“Progress, Renewal, and
Security”
 A report from the government after
listening to the Globalization
Council, published April 2006,
concluded among other points:
 Better education
 More competition among
universities
 Stronger cooperation between
companies and universities
 Stronger competition
 Import of more highly educated
workers
 Lower taxes
 The report has been criticised for not
listening enough to the council, for
just repeating existing government
policy, and for having too short a
perspective
 It wisely focuses on furthering the
Scandinavian “flexicurity” model
 When I used the same argument as
the report about education in a
recent discussion, I was challenged:
“What can your education do to
compete with 100.000’es of Ph.D.’s
in India and China?”
 Perhaps the Innovation paradigm
would be a better answer?
 It is in fact a keyword in the report

The Offshoring Equation for
Companies
 Offshore 20 jobs and keep 30 at home – or lose all 50
jobs to your competitor?
 Offshoring is a fact of life
 Companies have to analyze what to keep locally and
what to offshore
 Companies have to adapt new processes and standards
to control and manage this new level of complexity
 What are the social consequences for society and for
employees?

Intergovernmental
Interoperability
 The Danish Ministry of Science, Technology, and Education is
promoting Intergovernmental Interoperability based on Service
Oriented Architectures and a very long list of recommended
standards
 Many very large government systems are being reengineered
into SOA architectures
 Some systems, however, are too simple in their structure for a
SOA to make sense
 Alternatively, they are exposing relevant parts of their functionality as
Web Services for others to use
 “Nordic Relocation” is an Inter-Nordic example of such projects

IT in the Age of
Globalization
 Stratification of IT

Symptoms of
Stratification
 Stratification, i.e.: separation in layers
 Peter F. Gammelby observed in a Danish newspaper, 2006:
 Globalization and the lack of Danish IT experts are creating a deep
salary gap in the Danish IT business
 A growing number of companies are having their IT work done in
low pay countries, which primarily affects the least educated IT
staff here, both on job opportunities and salary
 Highly educated IT specialists in contrary are in shortage here, and
they are currently earning prize salaries. The lack of them are
however now so strong – and their salaries so high – that companies
have started to find the highly specialized workforce in low pay
countries

A new Stratification is Emerging
 Companies often look at IT as a commodity or utility
 They want to have unlimited IT resources and pay as they go
 This pushes IT down the Value Chain
 IT departments look at IT as a strategic resource
 They want to move IT up the Value Chain and into the board room
 The net product is a new division of work and a stratification of IT functions,
departments, and staff inside companies, between companies, and
internationally
 This question poses itself:
 Will you be an industrial worker on the code assembly line or in operations?
 Or will you be part of business- and customer-facing engineering, architecture,
and consulting?
 This may affect your long-term job satisfaction and job security

IT in the Age of
Globalization
 Thank you for
Listening
 Please fill in your evaluation forms

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