The IT industry is facing the challenges that come with an established sector competing in a global market. Competition is getting tougher, the ‘did it, done it’ has become a weak argument to secure market position. How can IT companies provide value that differentiates their capabilities from the main stream ? Not as hard, I think, here are a few thoughts…
The IT Industry Faces the Laws of Global Main Stream Markets
It’s no news any more – the IT industry is facing the challenge of a changing world: for decades, most IT consulting and software companies could safely rely on the fact that they were the only kid on the block. Clients were desperate to find someone who could fix their computer, write software, design a web page or make applications and databases talk to each other. IT was a niche industry where some basic experience and a couple of references were enough to make a living.
Then came globalisation, Internet, freelance sites, outsourcing, crowd-sourcing…you know the story. More kids have come on the block and the block has virtually grown into the clouds (pardon my punt). The propeller head backyard shed has turned into a discount shopping centre. Finding a team of ‘code monkeys’ to write a business application is as easy as finding a builder to construct a new office site. Customers have a choice these days – and many have gained enough experience to choose wisely.
So how can your IT company increase its chance for survival in such an overcrowded market ? “Being different” – as many suggest – is certainly a good approach. But it needs to go further than printing groovy business cards, practising early adoption of new technologies and sticking to the rules of an incestuous IT industry. In order to be different, one has to leave the mainstream. Step back and think about how to out smart the competing code monkeys.
This is what I came up with (so far):
Idea #1 – Be Cheaper (by Being More Effective)
Time is money. Cut cost by reducing human work.
IT costs are mainly labour costs. Offshore competition can cut these cost by 50%. You can counter offer with an extra 25% cut if you decrease the human work necessary to deliver. Building software 4x faster is actually not that hard, here are a few ideas:
- Use The Best Tools & Team.
Ask a car mechanic – good tools are crucial to get a good job done on time. Ask an elite team – professionals are the secret to fast resolution. Get the best tools and team, don’t be greedy on the wrong place.
Get fast hardware – software ‘build cycles’ will shorten to half the time, more tests can be run, less regression means less risk of schedule blow out. Pay the extra to get mature, well supported, well documented and robust tools. Cheap tools will cause extra work expenses due to faults, functionality gaps, data loss and delays waiting for support.
Pay the 50% extra salary for a talented programmer – he will cut code at 2x the average speed (if not more), effectively saving you time, thus money.
Identify the bottle necks in your delivery process and invest some time in removing them – as early as possible. Continuously extending your toolbox will not only make you more efficient (thus cost-effective) – it will also generate intellectual property. Be pragmatic about this, though, don’t get distracted writing the generic tool that does it all. Restrict yourself to reliably removing the bottle neck, with a design supporting flexibility and extension were needed. Design the solution so it can be reused in other projects – if this will be of value.
- Automate Repetitive Tasks
Replace repetitive, time-consuming (and frustrating) human tasks with automated processes. Frustration is a big morale killer in IT. Automate the monkey tasks and challenge your team with something that requires human intelligence. Do the maths – compare the time it takes to manually execute a task N times with the time it takes to implement and execute the process. (Be aware that project progress wont’ be linear: you are taking a time out to build the tools that will carry out the real work at the end.)
It’s 2010. Write software that writes software. The geeks will love this task and management will be amazed: robots code very, very fast and don’t eat, nor sleep.
Idea #2 – Migrate to New Markets
Traditional IT markets are densely populated. Move where there is no competition.
Most IT giants are active in tel-co, finance, supply chain, transport, government, … . Why not extend the ‘IT revolution’ to other industries ?
Identify financially strong areas outside the traditional IT client industries. Where’s the honey pot that your competitors ignore ? What are the opportunities in Mining, Tourism, Small Businesses, Farming, Research, Education, Media, Entertainment, Hospitality, Catering, Sports, … ? Be aware of hypes and try to stay outside – hypes act like competition magnets. Instead, get a good picture of long term trends. Find a niche.
- Do the Homework: Hands-On Research
Potential clients may not be aware of the capabilities of IT. This is why they haven’t called you yet. It is up to you to identify the applications that can be enhanced by or made possible with IT. Get in touch, go on site, sign NDAs, show interest. Think beyond CRM, ERP, location-based mobile apps and similar IT inbreed. What are the existing processes in this market ? Where are the bottle necks, problems, costs, inefficiencies ? What can be automated, how does information flow and how fast does it flow ? Where is the pain and how can IT help ?
Idea #3 – Extend Your Cross-Skills
Strong IT skills make you a good working horse. Crossing them with non-IT skills makes you a unicorn.
The majority of IT solutions are processing data. Not many are interfacing with controllers and sensors, interacting with machinery and carbon-based lifeforms to the extend possible. Extending your capabilities to include such interaction as part of a business solution creates a rare skill set, hence a large opportunity.
Extend your capabilities to provide end-to-end solutions across several disciplines of engineering. Telemetry, remote controlling, industrial processing, engineering, construction all have the potential to interface with IT. But not many people can see how, as there is not much dialog between these disciplines and geeks. If you can take ownership of an umbrella solution that covers IT and non-IT components, then you have a very unique offer.
- Leverage of Your Employees Background
What are your employees education and previous experience ? You may find a valuable source of non-IT skills – and networking contacts. Make non-IT skills an important criteria in the hiring process.
Idea #4 – Use your Enemy
Be different by extending your approach, rather than changing it. Complement your unique features with your enemy’s strengths.
Out smarting the code monkeys does not necessarily mean that you have to compete against them on all levels. You have chosen a more efficient approach, changed market and extended your skills set. Use your smarts to delegate as well as execute. Take advantage of all the effort your competitors put into their own work.
- Delegate to Your Competitors
Avoid getting stuck in the ‘startup’ situation of having one main income stream only. If new opportunities arise, you may find yourself short of resources to successfully generate income streams. Accelerate this growth by sub-contracting to code monkeys. Delegate small pieces of work, with very limited and clear scope. Make sure you do not become dependent on the monkeys. Offload the tiring and frustrating work, keep the intelligence and key decisions with your own employees.
Get experts to temporarily work with your team. Hire them to transfer their skills, rather than just apply them in a dark room. Organise workshops, get the experts to teach your staff by doing project related tasks together.