Reader Feedback On the Summer, Fall 2003 Issues of CIO Magazine: Demand Forecasting Systems; Wireless; the Global Workforce

Human Factors Are the Real Problem

I take issue with the premise that the faults in demand forecasting can be attributed to software that underperformed vendor promises and hype (“Future Results Not Guaranteed,” July 15, 2003). Frankly, the article was unbalanced and overly critical of technologies that, in many cases, are saving companies millions of dollars per year, improving customer service levels significantly, enabling the beneficial redeployment of production, inventory and financial assets, and overall improving shareholder value.

It was telling that the article did not include one reference to a statistical forecasting success. One of the companies mentioned in the article has told us that our forecasting software solution was instrumental in achieving a 20 percent inventory reduction together with a 10 percent increase in customer service levels?in less than one year. In addition, the software helped streamline the forecasting process and increased the percentage of product items forecasted from 20 percent to 80 percent. And this company also claims that it’s not yet tapping the full potential of the product.

In many cases, it is the human factors, not the software solutions, that impede the ability of customers to realize these and other types of positive results. Companies often purchase the wrong software product for the wrong job or the wrong reasons. In addition, insufficient data, internal politics, limited resources and lack of commitment to proper implementation are major factors in their inability to achieve forecasting success.

Charles N. Smart

President

Smart Software

Bechtel Bounces Back

Your July 15, 2003, article on wireless technology applications (Emerging Technology, “Building on Air”) makes the claim that Bechtel’s new bookings from 1999 to 2001 slid in part because of controversy over the award-winning Central Artery/Tunnel Project in Boston, which Bechtel is helping to manage as part of a joint venture.

The truth is that Bechtel, like other firms in the engineering and construction industry, was simply a victim of the economy’s cyclical turn from boom to bust. Bechtel’s bookings subsequently jumped 37 percent in 2002, evidence that our company has strong forward momentum?and that our reputation remains as excellent as ever.

Jonathan Marshall

Media Relations Manager

Bechtel

Creating a Global Workforce

You missed a couple of points in your Offshore Outsourcing Special Report (Sept. 1, 2003). You present the choice as either in-house or offshore. The real choice is in-house or outsource. The high degree of specialization, coupled with a shortage of specialized talent, forces many of us to seek outside help. Once this decision is made, the comparison is reduced to nearshore or offshore. In this light, the availability of quality resources at reasonable prices makes the offshore strategy a very strong one.

I would also stress another point absent from the article and lacking any focus by the press. My company has actually saved jobs by going offshore. Our presence on the Internet started, as did many, during the dotcom boom. The bubble burst, and many companies terminated their dotcom workforce and abandoned their e-commerce plans. We were able to shift some of the work offshore, and by so doing, we saved our site and several jobs managing, designing and running it.

The popular view today appears to frame the issue as a choice between American labor and foreign labor. If not for “cheap” labor abroad, goes the argument, we would be able to retain our jobs here. It is not that simple.

We have shrinking resources in the area of technical talent, and we have shrinking budgets for investments in technology. The solution to both problems will be found in striking a balance and utilizing a global workforce.

Craig Hergenroether

CIO

Barry-Wehmiller Cos.

Development Debate

CIOs need to understand that there are cost-effective alternatives to outsourcing.

Michael Schrage’s comparison to agile methods such as XP is brilliant (“Don’t Trust Your Code to Strangers,” Sept. 15, 2003). Readers should be aware that it is not an either-or proposition, and the two can be used together. For example, instead of CIOs making significant commitments by negotiating long-term, multiple-year contracts with outsourcers, they should consider applying agile methods.

Principles such as “early and continuous delivery of valuable software” can be incorporated into an outsourcing contract. An enterprise should be able to drop an outsourcer at any time and walk away with working software. Consider making the contract based on iterations of no longer than a couple of weeks.

Another agile principle?”At regular intervals, the team reflects on how to become more effective, then adjusts its behavior accordingly”?can be used as a cost-saving measure. Many contracts force a particular mode of interaction that has to be carried out even though people have figured out better ways of interacting. There are outsourcers in other lands such as Idaho and Iowa that practice agile outsourcing methods that will match the rates of the large outsourcers in India. CIOs should consider these as viable alternatives.

Learn to crawl before you walk….

James McGovern

Enterprise Architect

Recently I was teaching a class of executives at a local utility about how to manage project managers and provide an effective project management environment. The question came up about whether outsourcing is effective. I quoted some recent research that showed that India has far more SEI-CMM Level 5 organizations than we do, yet getting good applications is still highly problematic.

My own research shows that the problem lies not in the coding, but in the requirements-gathering process. Nobody can understand your business requirements better than you do. If your developers are in your own company, it’s easy to clear up confusion about requirements. If your developers are half a world away, there’s virtually no hope of getting your requirements understood.

When I made that statement, I could see heads nodding, and one manager said he had to bring some of the development personnel to the United States to get a handle on the requirements.

I also stated that if your applications are being developed overseas, you have no insight into any additional code they put into the application. They could easily put a back-door access into your system, and you don’t have any idea about it unless you’re specifically testing for it. But that would add significantly to the cost.

Frank R. Parth

President

Project Auditors

As a project manager 15 years ago, I discovered that the best requirements definition and design from the user viewpoint was created when the analysts and developers knew the work environment.

Even if they don’t actually work in the job, they need to be there to watch the end users and see what is happening around them. If we had developed the application design in this project according to the current IS standards, the system would never have been used. By understanding how the end users had to work, what they needed to accomplish and the high-stress environment they were in, we were able to design an application they could use and that actually improved their work.

Ginny Dugan-Earley

Senior Business Systems Analyst

Merrill Lynch and Information Security

I admire Merrill Lynch’s approach to gaining competitive advantage and moving to newer technology platforms (“Merrill Lynch’s Billion-Dollar Bet,” Sept. 15, 2003). But I wonder if the project can truly reach its expected value. With a 1,500-page contract (psst, the lawyers are the real winners) and all of the major IT players and consultants involved, there’s a strong possibility that this will end up as a Harvard Business School business case for MBAs?let’s hope as a successful one.

The true “success” in this project is leadership. Merrill should be applauded for taking the plunge and moving with the very best technology partners and consultants available. But more important, the company should be applauded for its approach to project governance?now and for the duration of the contract. Continued excellent leadership and project governance will determine the success of the project in the long run.

One thing that did worry me slightly is corporate security. I didn’t notice any reference to it in the article and wonder if Merrill considers this core. If not, I suspect that this will cause others?customers, managed security providers?to take note and reassess their options.

Best of luck Merrill!

John G. Keogh

Managing Partner

VirtualExecs International I was disappointed that “Merrill Lynch’s Billion-Dollar Bet” lacked reference to an information security plan. This is of particular concern given the increased importance and profile of security practices across all business systems, but in particular with Merrill’s requirement for compliance under the Gramm-Leach-Bliley Act.

Mark Johnson

Chief Information Security Officer

Halliburton

Merrill Lynch responds: Naturally, Merrill Lynch is extremely focused on information security, privacy and regulatory compliance for the Wealth Management Technology Platform (WMTP) effort as well as all of our other technology and business initiatives.

Full-time information security and privacy experts have been part of the WMTP team since its inception. The service-level agreements (SLAs) discussed by John Cummings and Byron Vielehr in the article include detailed sections for the vendors to adhere to Merrill Lynch’s security requirements and appropriate laws and regulations. Examples of the kinds of SLAs include customer data protection, system and data security, antivirus control and remediation, incident response, and personnel security. Monitoring and oversight of the SLAs and actual security implementation is provided for in the ongoing management of the WMTP service.

David Bauer

Chief Security & Privacy Officer

Merrill Lynch

Journey out of Depression

The topic of burnout is near and dear to me. I recognized all the signs and symptoms you described in “The M.I.A. CIO” [Hot Seat, Oct. 1, 2003]. I spent the past two years pursuing my MBA while working full time. Two years of extreme stress, a steady diet of fast food and running on about four hours’ sleep a day were killing me.

As I went into the last semester of school, my family, classmates and coworkers all commented on how much my disposition had changed. I had once been a happy, cheerful, active, outgoing, “glass is half full” kind of guy. I had gained weight and become sedentary. I was frustrated and angry with my work, disillusioned about my educational progress, and yelling at my wife and kids about the smallest things.

In retrospect, things were great. I was carrying an A average at a top-25 B-school. I had two wonderful boys and a wife who was essentially a single mother keeping our household and family functioning and together while I was at work and school. I was getting raises at work during a period when raises were frozen by company policy due to industry and economic conditions. So why was I so bitter?

One word: depression. My wife, who had some experience with depression in her family, recognized the signs and asked me to see the doctor. I took an honest look at the changes in myself and agreed. I started medication and saw an immediate improvement. The really scary thing is that I have a mild case. My dosage is “entry level,” and less than one-quarter what people with severe depression take. I can’t imagine what kind of hell a truly deep depression must be.

But I learned some lessons in this. First, depression is a treatable physical chemical imbalance. Second, it’s caused by long-term exposure to high stress levels. Third, I learned all the success in the world can’t make you happy if you’re sick. I was sick, but I was surrounded by people who cared about me; they helped me turn the corner.

Your tips for reenergizing are great, but they’ll probably be ineffectual for a depressed CXO in the long run. Depression is a medical condition and can only be diagnosed by a doctor. However, there are plenty of self-evaluation tools to help a stressed individual decide if a trip to the doctor is in order.

Anonymous

Senior Consultant, IT Security