IBM Watson is just fine, thank you !


ibm-bets-watson

Over the last couple of days, I have seen a bunch of articles on my social media feed that are based on a research report from Jefferies' James Kisner criticizing IBM Watson.

I am a big fan of criticism of technology – and as folks who have known me over time can vouch, I seldom hold back what is in my mind on any topic. I strongly believe that criticism is healthy for all of us – including businesses, and without it we cannot grow. If you go through my previous blogs, you can see first hand how I throw cold water on hype.

Unlike my usual posts, I cannot claim to be an impartial observer in this case. As much as I am a geek who wants to make my opinions known on technology topics, I am also an IBM executive , and I run a part of IBM GBS business in North America that also includes services on IBM Watson (including Watson Health) . I also own IBM stock via ESPP and RSU. I don't set product direction for Watson – but my team does provide input to the product  managers. So I was in two minds over the weekend about blogging about this – but net net, I think I will go ahead and say some things about this , and as always I am happy to debate it and stand corrected as need be. So here we go.

IBM Watson's primary focus is on enterprise, not consumer !

This should be obvious to most people but perhaps the technical and use case implications are not super clear when they conclude Watson is in trouble.

Lets take an example of something that is often used to make the point in favor of consumer AI tech – Alexa. I often get asked Watson versus Alexa/Google assistant questions. You can tell Alexa or Watson to check the weather and they will both do it. The big difference is – Watson keeps the context of the first question while you ask the second question, and Alexa treats the second question as if the first one was independent of the second one. In the set of use cases Alexa solves, this is not a big problem – but the ability to keep context is important for the use cases that Watson solves, like customer service. In a customer service scenario, you cannot engage in a conversation without knowing and interpreting what has already been said.

That said – it is very easy to combine Watson and Alexa. For example , if you have echo installed at home, you can invoke Watson via a voice command and keep having a conversation without even knowing it is Watson that you are talking to.

While Watson cannot solve every possible customer service scenario – it can solve several and deliver very high value. For example – lets say you are a utility company that gets calls from clients who want to pay a bill, check a balance, find outage restorations etc. Those are all things Watson can do just fine, and leave the high value tasks – like being an energy advisor , or a retention specialist – to expert humans. Imagine the type of value generated for that utility, and the consistent and fast customer service for their clients . Consumer AI does not tackle these kinds of problems – and that is a big difference. There are many such examples like this in enterprise side of the house – like this video about how Watson acts as an expert engineering advisor for Woodside, and H&R block using Watson as a tax expert.

IBM Watson does not share one client's data with another client

This design principle is very key to enterprise clients. Data security and privacy drives a lot of AI decision making. Consumer AI generally keeps the data all users give it and uses it to learn and get better. I am sure those companies have high ethical standards and the data won't get misused. But that is not how enterprises look at their data. It is important for clients to have full trust that their data is not shared with others that they don't want to see it.

A lot of the criticism that Watson takes a long time to learn and needs data in a specific format that is hard to do for clients come from this principle being not fully understood. Watson can learn from a given client's data – usually unstructured data – and keep getting better, but will not use company A's data for Company B's system to learn. Even if we ignore Watson and look at data science as a general topic – there is no way to shy away from an AI model having to learn. That is the core of the value prop of AI.

This is not to say every client starts from scratch. In many cases, there is a well established starting point. Lets take a Telco call center as an example. If a client wants to put Watson to augment a telco call center, they don't need to build intents from scratch. Instead, they can use "Watson for Telco" that has hundreds of prepackaged intents and just add of change as needed. Over time, this will be applicable to all industries. These are all repeatable patterns – another point that observers don't seem to notice.

IBM Watson has plenty of successful implementations , including Healthcare 

The Jefferies report calls out MD Anderson project uses that to extrapolate that Watson is doomed. I don't see any mention of Mayo Clinic trials,  Or Barrow ALS study, or  Memorial Sloan-Kettering-IBM Watson collaboration   .  Where is the balanced analysis that led to the dooms day conclusion ?

Watson is in clinical use in the US and 5 other countries, and it has been trained on 8 types of cancers, with plans to add 6 more this year. Watson has now been trained and released to help support physicians in their treatment of breast, lung, colorectal, cervical, ovarian, gastric and prostate cancers. Beyond oncology, Watson is in use by nearly half of the top 25 life sciences companies.

IBM Watson is delivered as APIs that its ecosystem can easily use

When Watson won Jeopardy, that incarnation was largely monolithic. But that is not how Watson works now. It is now a set of APIs. I am under no illusion that IBM will be the only game in town, although I strongly believe we are one of the best. Partners and clients will build Cognitive applications using Watson in a much more productive way because the functionality is exposed as APIs.

This gets painted as a negative by some of the articles. You can't have it both ways. As I mentioned above, where it makes sense to package something for a given industry or domain, IBM or someone in the ecosystem will of course package it. But the decoupled nature is the most flexible way of innovating fast and at scale in my opinion. The fact that billions of dollars of investment is directed into this field is good for IBM and its ecosystem – let the market decide on merits who succeeds and who does not.

IBM Watson some times needs consulting , but it only helps adoption

Let me also point out the role of consulting – be it my team at GBS or another consulting company. Clients are still largely tip toeing into Cognitive computing. They need significant help to understand what is possible and what is not in their industry and their specific company – which is what we call advisory services. The actual integration work is not complex and can be done by in house teams or a qualified SI. The other service I often see that is requested by clients is for design. In some other cases, they also need services for instrumentation (like in IOT use cases).

If we rewind couple of decades and go to the time when SAP was just starting out in ERP, What was the role of consulting ? Did consulting  services help or hinder the adoption of SAP globally ? None of this is any different from any other technology at this stage of its life cycle. So I am not sure why there is an extra concern that adoption will tank due to consulting.

IBM Watson team does great marketing, and we already have amazing AI talent 

To be perfectly clear, I am not a marketer – nor do I have any serious knowledge of marketing other than a couple of classes I took in business school many years ago. However, I am VERY proud of the work IBM Marketing has done about Watson. Its an early stage technology – and that needs a certain kind of messaging to get clients to take notice. If all we did was fancy videos and panel discussions and there were no customers using Watson today, I would have gladly joined the chorus to boo Watson. But that is not the case – All over the place leading companies are using it and as I have quoted above, several are public references.

From what I could learn internally, there are about 15000 of us working on this at IBM. This includes about a third of IBM Research. And we are hiring top AI talent all the time. In fact if you are an AI developer and want to work on Watson, shoot me an email and I will get you interviewed right away. While we of course use job boards etc to attract talent, that is not the only way we find people. We already have more AI folks than a lot of our competition – so perhaps that should be factored in to the discussion on "look at job postings, IBM Watson is short on talent" part of the story.

So why is IBM not publishing Watson revenue specifically ?

I am not an official IBM spokesperson – and I am not an expert on this topic. So this one aspect – I have to direct you to people with more stars and stripes than me in the company.

Advertisements

IT In India Could Use Some Help – Are You In ?


I woke up this weekend to this depressing news http://toi.in/ot3e_a

I have worked at various SIs all my life before deciding to join SAP labs in January of this year . So this problem hit me hard – and in some way, I felt that I am responsible too somehow for this dismal situation that the younger generation is facing .

This is not just an HCL problem – every SI I know of has had this issue of having a big mismatch between supply and demand . The irony is that these SIs all have very capable S&OP type experts who have done fantastic work for their clients solving this exact problem . Yet they can’t seem to solve it for their own business .

The academic world in India does not work as closely with Industry as it should. I am a mechanical engineer by training – but there were hardly any good mechanical engineering jobs when I came out of college . The only decent jobs were in IT – that too in SIs . There was practically nothing that I learned in Engineering that I could directly apply to my IT job . And yet, vast number of mechanical engineering students come out of colleges every year and look for IT jobs . Why isn’t there a supply adjustment to suit demand ?

It is not as if the education is much better for core mechanical engineering needs itself. The labs in most colleges still use engines that were obsolete 40 years ago . When I went to college – auto transmission was popular outside India . I remember just passing references to it in my text book – and that was it . I am glad I did not have to do mechanical engineering for a living . I just wasn’t well prepared for it . As I talk with young students now – I think the syllabus has barely changed from when I did engineering 20 years ago.

And yet – thousands of new engineering grads are churned out every year . This cannot be good – the average quality is not good for their core discipline nor is it good for IT .

IT education is not much better . People still learn C and java and come out of school looking for software jobs . I met a recent computer science grad last week who did not know why servers use fusion I/O cards or even SSDs. They very rarely have seen good code in college , because there is very little interaction with corporates . So corporates take them, train them and few years later they are productive . If academicians took a look at what the industry wants – these unproductive years could be absolutely minimized . But most of them don’t – they just love status quo.

The VC culture in India is nascent at best . All the major VCs have presenxe here – but several people who could use their investment have no idea where they are or how to get their attention . And vast majority of people don’t understand even basics of how startups work . It pains me to see some of them fall prey to local loan sharks . This lack of awareness results in several brilliant students live a “next best life” as a programmer at an SI, and rise through its ranks to varying degrees of success . It depresses me to no end . I try to talk to as many people as I can and try to give them pointers and help them build a network – and I know several others do it too . But it is not done at a scale that matters , given the magnitude of the opportunity cost .

This should change – and every Indian who knows better should spend some time and effort in helping those who don’t . If enough people take an interest at grass roots level – I am sure this could change for the better . Actually, I am not sure any more – but I sure hope and pray that it will change !

Be Proud To Be An IT Expert – But Please Evolve !


Between Analysts, Bloggers and Software Vendors – I think a lot have been done to demoralize IT professionals already. A lot of fantastic IT people that I know have started to feel insecure and unwanted. This includes many of my friends and mentees. In the last few months – I have had innumerable conversations about this with my friends who work at customer companies, SI companies, HW companies etc. I think it is a huge mistake to downplay IT like it is done now – and just wanted to post a few thoughts here.

First – IT absolutely needs to evolve, just like every other part of the enterprise. And I think that is already happening. I don’t see any IT experts I know who live under a rock. If there are any – then yes, they should feel insecure and unwanted and all that.

But lets look at other parts of the enterprise to see how IT compares. Take HR for example – how many companies can boast of a lean super efficient HR system where talent management, career progression, complaint redressal, succession etc are all efficiently done? Many companies I know struggle with most of these functions, just like they struggled when I started my career. The big improvement has been in payroll processing – like outsourced payroll etc, which happened not only because of business model changes – but also due to great IT innovations. Or lets take sales – several large enterprises still do most of their sales like they did 20 years ago, with good sales people knocking on doors (literally and figuratively). Many of them have complicated and manual approval processeses that I did not understand in the 90s, and I still don’t get them. The parts that improved – like cloud based sales force automation, pricing optimization, etc all happened because of IT innovations. Look at engineering – machine design got a huge uplift in large part because CAD got sophisticated over years, and computers can now handle heavy duty collaborative design seamlessly.

If none of that sounds impressive – imagine the business impact if the IT systems that handle sales orders or payroll goes down ( please don’t say “that is why we should move to cloud” as your response – cloud goes down too ). Yet – the “business” side of the house doesn’t get anywhere near the criticism that IT gets. And IT gets very little credit for jobs well done.

For sure, there is some significant complacency in IT – many IT people feel entitled. Several have not kept pace with the latest and greatest. But on a relative scale – are developers and DBAs worse off in this matter compared to colleagues in HR and sales? My answer is an emphatic NO.

Software vendors and SIs do make a claim that they are all about business solutions. This is of course the right message – IT’s job is to solve business problems . However, this message is now interpreted as “We are all about business, and we don’t care about IT”. That is not how it works in real companies – even in departmental purchases (like it often happens in BI for example) , at some point – integration, security etc will come into play. Not involving IT upfront almost always results in grief and extra cost down the line. I have seen many CXOs repent that they did not involve IT upfront in their procurement decisions.

Some IT folks have morphed into procurement experts – and I am not sure of this is good or bad. Procurement skills are important – since a good part of the job involves dealing with Vendors. However, the way this has translated in many companies is that the sole focus is on price reduction. If IT and the actual procurement department both focus strictly on price – the vendor gets very little opportunity to explain the value of the solution. And this usually is behind the reason why IT vendors like to establish relationships with business side of their customers so that they can also present the value side of the equation, and not just cost. The mature IT organizations act as orchestrators – pulling in business, procurement and all other stake holders – and enabling and advising and coaching all the parties including the vendors. That is where IT adds value in “buy” decisions. I have learned a lot from such IT experts – and I am grateful for that learning.

Then there is the whole cloud argument – that cloud makes IT obsolete. Nothing could be farther from truth. Cloud definitely is the future – but it will be a very long time till everything moves to the cloud. And since the predominant pattern in cloud is for customers to buy best of breed solutions – someone needs to integrate all the disparate solutions between themselves, and also to the on-premises systems. Same holds true for security. And who will advise the business colleagues on HA/DR etc for cloud purchases? Even in the case where most of the landscape is shifted to cloud, IT jobs won’t go away. The cloud companies – hosting companies, data centers, application companies et al need the same skills that customer companies used to need.

So, my friends in IT – don’t feel that you are any less important than your colleagues in other parts of the organization. You are every bit as important – and an equal partner in making sure your company meets its goals. Stop thinking of “business and IT” as two things. “business” is not your customer – they are your partner. You both have only one customer – you know, the people who sign checks etc 🙂

But please don’t sit back and be happy with status quo – complacency is the only thing that can make you obsolete. Learn more about usability, design , organiational behavior and most importantly – learn how the business of your company really works . Adapt and evolve – ALL THE TIME !

On Business, IT And Artificial Distinctions


Whoever started the concept of IT treating Business as a customer did a big disservice to the world. Don’t get me wrong – I grew up thinking that Business is the dog, and IT is its tail, and the tail does not get to wag the dog. My thinking has evolved a lot recently, mostly because in the last few years – I got more exposure to some forward thinking CXOs.

IT is not the only cost center in a business, and neither is it usually the biggest in head count or budgets. Yet why is it that CIOs have to treat others – from both profit centers and cost centers – as customers? How many times have you heard the head of HR or Marketing refer to their fellow  leaders as customer? IT is as much a part of business as HR and Marketing, and hence should not be expected or forced to be subservient to rest of the organization.  How many organizations can even last a week in business these days if IT did not operate with great efficiency? That being the case – why not give IT its due place at the table for decision making?

There is only one customer – the end customer who pays the bills. IT, and everyone else like Sales, Marketing and HR have to work together to delight that one customer. Any change from that singular focus to create an artificial distinction between internal and external customers is just a waste of precious time, money and resources, and rarely results in anything good.

IT is a competitive differentiator – and rest of the organization needs to understand and appreciate that. If IT does not do a good job, it is virtually impossible for rest of the organization to do internal or external work efficiently. And those companies that have better IT capabilities typically have an edge over those that do not. That being said – not all CIOs do a good job in making a case for IT to be treated on par with other parts of the organization.

In most cases, CIO budgets have shrunk over time, or have remained flat. And the vast majority of the CIO budget is just spent on keeping the lights on.  The question is – how many CIOs can spend more time with other parts of business to impact top line and bottom line, compared to the time they spend on operations? If they spend most of their time on operations – obviously, their chance of earning the respect of their peers and leaders decreases. Don’t get me wrong – ops are very important, but that needs to get into a model that sustains itself with minimal supervision. Outsourcing might be a way for CIOs to get to spend less time on worrying about ops, but that is not to say it is a magic bullet. That is a whole another topic though.

The budget constraint is an artificial one in several cases. Budget is a constraint only when there is no way to prove that value obtained through the spend is greater than the cost involved.  Some of the smartest CIOs I know of don’t worry about budgets for the most part. They know that if they approach their peers with proposals that show value greater than cost, they have good chances of securing the budget. Sadly, not all CIOs operate this way. And these are the type of CIOs who are consulted by their peers in rest of the organization on how to take the company to the next level. They are a far cry from being order takers.

Several vendors have latched on to this distinction of IT and Business big time – especially software and SaaS vendors. Their mantra these days is that “We are all about the business, and not about IT” . In some cases this just translates into “CIO’s office will poke so many holes in our offering that we will never close a sale, so we try to circumvent them by going to other parts of business and say that IT is blocking them from earth shattering progress” . In other cases, these vendors have a genuine case to go to non IT buyers directly. But from the customer’s stand point – it makes perfect sense for rest of organization to involve the CIOs office in IT buying decisions. At the very least – this will make sure that non functional requirements like security, scalability, roadmap etc will get more thoroughly checked out before issuing the PO. It should also be not forgotten that IT will probably need to live with supporting the solution once it is implemented.

There are plenty of pundits – and CIOs – out there who say that for IT to be effective, the CIO needs to report to the CEO. I have not seen any real evidence in real life scenarios to support this claim. Reporting to the CEO usually will mean the CEO just becomes a bottleneck to making several IT decisions. This is not to say CIO should not have access to CEO – he or she should of course have access. But adding an additional layer or two should not hurt all that much. CIOs mostly report to CFOs or to head of procurement in several companies. I fully expect them to report to CMOs at some companies too. As CIOs do more and more to help in front line business, I think the conventional org chart will see the impact. But the converse that org chart is what drives CIO success lacks merit in my limited experience.

That was a lengthier rant than I thought I would go into. Many thanks to my buddies who debated this endlessly today with me . Lets keep the conversation going. And sincere thanks to the client CXOs who helped change my views on this matter.

 

 

 

 

 

 

Long term future of IT in India


When I went to college in India, all I wanted to do was take the first job that will send me to US. And a dozen years later, I am starting to think of where I will retire, where I will work the latter parts of my career and so on. This makes me ponder on the long term future of IT in India. I might as well think aloud here, with the hope that I get some insights from the readers. As always, these are just my personal opinions – not that of my employer.

India’s IT scene is dominated by about 20 to 50 companies or so, and the rest is fragmented by smaller shops. Amongst the big ones – and I mean big in terms of head count – the biggest ones are in services. A large number of people make their living doing production support and BPO type work. There is also some design and development type projects in the mix. Outside the services work, there is some product development too. Most big product companies in the world have some presence in India, and they pay better than the services companies to attract top talent. So in short, there is plenty of companies where an IT job can be found.

One thing I do like about the workforce in India is that it is fairly inclusive. Although I don’t have stats officially – I have seen several more women in offices of IT companies in India, including in leadership roles compared to other countries I have visited. 12 years ago, only certain states had fair representation in IT jobs, but by now – people from all parts of India are getting better opportunities.

I think IT pays better on an average than most other jobs in India, and as a result a lot of people have better quality of life. Most youngsters are now able to buy houses and cars early in their life, which is also pretty good. There is a lot of good restaurants and bars and gyms and movie theaters and all that, so life outside work is enjoyable too.

That is the bright side, but I have my worries on the flip side.

How about the supply side of the picture? No issues here either at first sight with plenty of college grads coming out of the education system every year. From the time I joined the workforce – and possibly a few years earlier, IT jobs attracted away a lot of talent from the top colleges, especially engineering colleges. IT companies at that time ignored non-engineering students. They were not exactly looking for comp science grads – any engineering degree was fine. I am a mechanical engineering major, and it never mattered to my first IT employer . I never could put a finger on why engineers were considered at the expense of every one else. I would just as well gladly hire a math major or a physics major or a liberal arts major with the right attitude – since I have to train the engineering grad also to work in IT. Being an engineering grad myself – I am not convinced that education gave me something extra as a programmer, that I would not have gained if I took say Chemistry as my major. I hope this has changed, or is changing.

After a dozen years since I left India, I still have not seen the engineering colleges tune their education to the needs of the IT market. Text books are still the same as what I learned and what my dad learned before me, with very little updates. And people still join mechanical engineering degrees with the sole purpose of getting a job in IT – with no interest in becoming a mechanical engineer.

There are also plenty of IT educational institutions that train people in programming. I try to check out their course work and teaching methods when I can, and honestly have not been very impressed. They teach many different languages in one course – like C, C++,Java, ORACLE PL/SQL, MS SQL, HTML, javascript etc, but with hardly any focus on good basic software engineering. I am even more dismayed when I see a lot of the teachers have never worked in real projects. It gives me the same awkward reaction I had to the guy who taught me power plant engineering who himself had never set foot in a power plant. As a result, employers give a very thorough training after people are hired , and before they can be put in a project. In my specialization – SAP – in which India has a lot of talent, I doubt how many colleges teach SAP. I know plenty of people who have been cheated by expensive “mom and pop” SAP coaching centers.
Someone recently told me that there are classes at these places for HANA too.

The good thing despite the above is that thanks to internet, working in global teams, and the ability to go abroad for projects – Indian IT workforce has access to almost everything that others have, and hence could keep up well with the global pack.

There are some societal side effects – since the best and brightest grads do not seem to want to go to the government services, military,banking and so on which were the coveted jobs for the previous generations. I often wonder if this will have an impact on society over the next several years.

Infrastructure has been a long term problem. A visit to Bangalore will prove the point. It is near impossible to drive in Bangalore at peak hours unless you have lived there for a while. Pollution is also pretty high. Yet, I know several companies who send work to India insist that it be done out of Bangalore. There are physical limitations to expanding the towns where IT is concentrated now – not just Bangalore. Thanks to political structure of the country, the private sector is fairly limited in what it can do to make the situation better. Thankfully trade unions have not yet taken over IT in India and destroyed it, like they have for manufacturing sector etc.

A big advantage India has held over other emerging IT power nations has been the proficiency in English. Companies in the west readily pay a premium for it. But this is not a long term advantage – I have many friends in Vietnam, China and South America who speak very good English, and it is just a matter of one more generation when this becomes less of a differentiation.

Cheap skilled labor was a big reason why western countries outsourced work to India. Well, it is not exactly cheap any more. Salaries have increased manifold. My first job paid me INR 150,000 a year or so. And that is after I did my engineering and MBA. Today I know my nieces and nephews make more than 3X or 4Xthat in similar jobs when they enter the work force. The rates charged by Indian companies to their clients abroad have not increased 3X or 4X – if anything, competition has forced them to keep it down. They still thrive because of volume and exchange rates and so on. This does not mean other countries will readily over take India in near future – that is like saying 25 years from now, Daddy and I will be the same age. India has tremendous experience and skills now and will carry that edge for foreseeable future.

I am also worried seriously about the credit card debt that many of the younger folks carry that I know India. Just based on personal observation – peer pressure has driven many a young IT employee to spend beyond their means and incur bigger loans than they reasonably should take. I have seen this movie before in US from the front seat, and I would hate to see a replay in India. On second thoughts, I am not very sure if this is an IT only issue or whether others are affected too. I guess every one needs to make their own mistakes and learn, and that learning from someone else s mistake is harder.

Bangalore – and other IT hubs – have one thing missing that stops them from being the next silicon valley. And that is a good VC system. It might be a chicken and egg problem since a large part of the IT business is still on services side, and not on product side. I am yet to have made a trip to India where I have not had a conversation with a bright eyed young guy (or gal) who would tell me that he/she has this amazing idea, but can’t move forward without capital. The De-facto capital raising mechanism is to run to a local bank and convince them to give a line of credit. It is an ineffective process to put it charitably. Off late, I know some VC friends in Silicon Valley who lend a hand to budding entrepreneurs in India, but it is a drop in the ocean compared to how things move in the US. It is certainly not a lack of liquidity in India that investors are not supporting these companies – I think it is one of a cultural difference. Since a lot of people from India who worked in US have now moved back to India, I do see some change in this behavior. I am looking forward to see VCs and Angel investors doing more in India.

One last thought before I go back and plant the last few plants in my front yard ( this is what was accomplished before I started typing this post https://www.facebook.com/media/set/?set=a.3381192563120.151791.1068608267&type=1&l=48b8a0feb8 ). If cloud is truly the future – and if most companies move heavily to SaaS etc, what will happen to the majority of IT people in India, who make a living doing services projects?

Let me know your thoughts

Thoughts on SAP Outsourcing, Part 1 – the evolution


As always, this is just my personal opinion and not that of my present or past employers. I need to do this in a few installments – starting with how outsourcing of SAP evolved in front of my eyes, and then some common problems, easy and difficult solutions and a reality check .

As many of you know, I grew up in India, finished my education there and came to US more than a decade ago. Pretty much from the time I stepped out of college, I have been an SAP consultant. I have worked in and managed both consulting engagements – or “development projects”, and outsourcing engagements – or “maintenance” projects. And I am fairly sure I have seen a big part of the evolution of SAP from R/3 till today. Similarly I have watched outsourcing of SAP services from close quarters for a good while. I have seen this from India and also from outside India (Europe and North America). While I don’t claim to be an expert, at least I am pretty familiar with the landscape. I just want to share a few observations on this topic – hoping someone will find value.

In the mid-late 90’s many Indian companies were already doing quite a bit of outsourcing work for US/European/Japanese companies. But for the most part – they were not in SAP. They did this in other technologies, and infrastructure services. Towards late-90s’s this got a big push with the Y2K challenge. Companies developed a factory model to tackle the Y2K factoring. And then the light bulb went on – why not do this with SAP work and build some serious scale?

Infrastructure was the big issue to begin with. I remember sitting in India copying ABAP code to text files and emailing to colleagues in US to test, since the dial up connection would die if I tried to compile or execute on a server in US. A phone call from India to US was about 100 rupees a minute and was not a cost effective mode to communicate. But since projects all had plenty of time built into it – and since offshore was cheaper – it was not a big deal at the time. Funny enough, looking back – all of it looks a lot worse than how people felt at the time 🙂

There was no real structure to the whole process in the beginning. We used to get emails with a rough idea of what needed to be developed (Hey you, check VA03 with Sales order number 1234, and build me a data load program..cheers, your best buddy in US) . We did what we could, and some one fixed it onsite. Essentially, we were just doing 50-75% of work, and quality was not always very good. Again, for the cost – this was more than acceptable as a productivity improvement. As I remember everything was at time and materials basis from a contracting perspective when we started.

This was improved pretty quickly, and a more structured process evolved with better written specs being sent from project site to offshore site. Also, since timezones, accents and all started to come in the way – we started having a role of “onsite-offshore co-ordinator” in most projects. It is a very stressful job, and they get beat up by all parties. I remember a colleague telling me over beer that “Man, i feel like everyone’s bitch” . But things started to scale big time.

And as time progressed, the notion that functional modules are too complex to outsource quickly disappeared. And from the initial days of “someone who needs to clarify specs to developers and do offshore PM work” , the role changed to “experts who have deep expertise in business, who can do part of blueprinting remotely”. Another big reason for the jump was that many Indian clients started implementing SAP and this helped increase experience and talent immensely. Another big improvement was that by early 2000s, many consultants from India had returned after projects in US and Europe. These folks added a lot of new skills and experience to the team. Conversely, their colleagues at client sites got a better appreciation for how their colleagues in offshore locations worked. So naturally, communication improved big time.

As the model became more mature, the outsourcing companies could do better estimations and repeat business predictably. Contracts started becoming more of a fixed price, and managed to SLAs, instead of hours. It is not that offshore part of the equation alone improved – the onsite teams by now figured out what can be outsourced, and how to communicate effectively. Of course clients always have wanted quality – so more strict processes came in, including CMM type formal ones. Many layers of QA were established so that final version seen by the customer was much better.

However as time progressed, training did not always keep up. So you will still see many programmers not familiar with OO ABAP, or WebDynpro or SOA. Same is true for functional side of the house too. As demand shot up – companies started hiring like crazy in India. And many SAP training centers opened – several of them really bad, and very expensive. These schools focus heavily on canned technical training. Once the big outsourcing firms hire them, they have to get trained a second time in consulting skills, software design etc., and often in the core technical skills too.

There were some (unintended) side effects too.

One side effect that happened was that due to the large demand, companies started promoting people faster. Folks with 2 years experience became leads and with 4 years some became project managers. Some did well and many did not. It went to a stage that if you hired a 4 year experienced programmer, that person rarely wanted to code any more. To some extent, I think this problem still stays that way . Of course there are many exceptions too.

When hiring happens in bulk, inevitably the quality suffers. I have seen this to also have a long term damage aspect. When a poor skilled person is hired, and then promoted because of the need to grow the business quickly – there is a big chance that since person will hire even more poorly skilled employees. I am not just talking about SAP skills – I mean the soft skills and leadership aspects too. Mediocrity breeds like rats at the scales hiring happens. Companies realized this at some point, and started course corrections – but it will take some time to weed out people who are not equipped to do this work.

Yet another side effect was that offshore talent started having two distinct flavors – one with a strong focus on projects, and another on production support. General impression is that the project side of the house is the lucky lot, and the other side usually feel they don’t get the same training and exposure. This is an awkward scenario – project developers are used to all kinds of innovations to get the project to go live with good quality. And production support gang is used to making sure SLAs are met for every problem that is thrown at them. There are mature processes that govern both sides, and it all works fine. But the moment you put a project guy on support, or a support lady on projects – you can generally expect a “fish out of water” feeling to prevail. It is a pretty sharp divide, and something that people not working offshore often realize or acknowledge.

So when a person who is really good at solving high priority bugs gets assigned to a project as a developer, the instinct usually is to find the solution that solves the problem in the least amount of time. And this is what a lot of times leads to the perception that these people are not good. They are actually quite good – their leaders are not smart enough to coach them in the right path. The exact opposite is true in reverse. A person used to project work will go to maintenance work, and will pull hjs hair out. However, the instinct is to rewrite everything when a bug is reported, rather than get it fixed within SLA time and get the business back up and running. It needs good management skills to coach and align these people to suit the current assignment – and it is an area where many managers fail miserably, usually because they don’t understand these nuances.

These days – it is not uncommon for projects and production support to work out of several different countries working around the timezones. Infrastructure is far better – high speed networks are the norm, cell phones are common, visualization tools and video conferencing help remote blueprinting etc. But as I talk to friends who started in SAP with me but chose to stay back in India, it appears that the processes we put in to counter the poor infrastructure etc are all pretty much untouched till today. As I will explain in a later post, this is not an unnecessary overhead as it first appears.

This is the relatively bright side of the story. But outsourcing generally has a bad ring to it if you ask around consultants and clients. Next time, I will try to explain my thoughts on how it “successfully” earned the bad reputation.