Trendlines: New, Hot, Unexpected

Cut Cables Raise Questions

The undersea cables that carry the Internet’s traffic were out of sight and out of mind for most IT leaders until a recent series of mishaps focused attention on their potential to disrupt global commerce.

The first cables broke in the Mediterranean on Jan. 30; two more were disrupted in early February in the Persian Gulf. Internet access in the Middle East was hardest hit; India, South Asia, the U.S. and Europe also experienced slowdowns as service providers rerouted traffic. Initial news reports speculated the damage was caused by ships dropping anchor and accidentally cutting the lines. Sabotage was considered unlikely. However, the rash of incidents raises questions about the vulnerability of the Internet’s infrastructure and serves as a reminder of the importance of contingency planning.

Global IT leaders and their vendors quickly responded by activating contingency plans to mitigate the potential effects of the disruption as word spread that bandwidth in India had been cut in half after the Mediterranean cables were cut on Jan. 30.

“We were able to route traffic through Hong Kong,” says Steve Bandrowszak, CIO of Nortel. As a result, the $11.4 billion telecom provider—which has a technology center of excellence in Bangalore, satellite operations in several other Indian cities and outsourcing partnerships with Wipro, Tata Consultancy Services and Infosys—experienced no business disruption.

For most IT leaders, the cable breaks were a watching-and-waiting game. Bill Maguire, CIO of Virgin America, monitored the airline’s traffic and performance the minute he heard about the problem, but saw no impact. John Stadick, director of IT at Sunbelt Rentals, a construction equipment rental company, was also on alert. Sunbelt’s parent company, Ashtead Group, is based in the U.K. and runs a private trans-Atlantic link to usher data traffic between the U.S. and London. When Stadick heard about the India problem, he had his network manager put automated traffic monitors on the Atlantic lines “just to be safe,” he says. “We don’t send a huge amount of traffic through it, but it’s still a vital link back to our parent company.”

Ultimately, no major disruptions related to India’s decreased bandwidth were reported. “India has redundant connections to the rest of the world,” says Dean Davison, vice president of marketing and research for offshore outsourcing consultancy NeoIT. “Ten years ago, this would have been a big problem (for India). Countries that were impacted the most only have one major link to the rest of the world. I don’t think that it was much news for India, but it was a very big deal for the Middle East.”

Experts say such events should have little impact if companies have planned properly. “This does serve as a reminder to conduct due diligence and ensure disaster recovery and redundancy plans are in place,” says Cliff Justice, managing director of globalization for outsourcing advisory EquaTerra.

-Stephanie Overby

New Google Apps Bypass IT

IT managers who fret about employees using unauthorized software at work have something new to worry about: a new edition of Google’s hosted applications suite that end users can bring into the office without the help of the IT department. Google Apps Team Edition is for employees who are interested in using Google Apps but whose employers haven’t signed up for it, says Rajen Sheth, Google Apps senior product manager.

Team Edition contains the core communication and collaboration services and applications from other editions but not Gmail, which requires IT to reroute a company’s e-mail flow. More than 500,000 smaller organizations have signed up for Google Apps. Other versions require IT to implement the suite because services are linked to an organization’s Internet domain. With Team Edition, workers can set up Google Apps workgroups if they have valid e-mail addresses with their organizations’ domains.

IT departments shouldn’t get angry about Team Edition, says Sheth, as it does provide a path to IT-manageable versions. “The IT department always has the option to sign up for the Standard Edition for free if they want to provide control over this,” he says.

Team Edition fits Google’s strategy of appealing to individuals and will boost adoption of Google Apps in organizations that don’t yet use it, says Gartner analyst Matt Cain. Still, Google needs to strike a balance between rallying end users and giving IT managers some control. “Google will encourage end-user adoption, but it can’t disintermediate the IT staff, which will have to ultimately clean up any mess,” says Cain.

-Juan Carlos Perez

Indian Firms Take Aim at Infrastructure Management

India’s outsourcers have a new target: the market for remote infrastructure management services (IMS).

Indian outsourcers already handle a large share of outsourced application development and maintenance and are dominant in business process outsourcing. Now, they are planning to more than double revenue from IMS to $15 billion by 2013.

IMS involves managing an enterprise’s core IT systems, including hardware, software and people. The industry is moving toward a remote delivery model where services are delivered from low-cost locations by service providers and wholly owned services subsidiaries of user companies, according to India’s National Association of Software and Service Companies (Nasscom).

U.S. and European customers are increasingly willing to outsource IMS to offshore locations because the data does not move out of the home countries and is only managed remotely, says Siddharth Pai, a partner and managing director at sourcing consultancy Technology Partners International.

In India, IMS business is going both to Indian outsourcers and the Indian operations of large IT services companies, Pai says. Because of the large staff component involved in IMS, there are cost benefits in outsourcing IMS to low-cost, offshore locations like India, he adds.

Research done by management consultancy McKinsey for Nasscom suggests that the IMS business could generate between 325,000 to 375,000 jobs in India by 2013, as 70 percent to 75 percent of the roles in IMS can be moved offshore. Low-cost locations, including India, have so far captured a mere $6 billion to $7 billion of the IMS opportunity.

-John Ribeiro

How Well Does Your IT Shop Welcome New Hires? Ask Them.

Want to find out what new employees think of your IT department? Just ask them, says Direct Energy CIO Kumud Kalia.

Kalia takes 20 minutes to meet with all the people he’s hired in the past 90 days to ask them for their observations while they’re still fresh. It’s a trick he picked up from executives at a previous company and implemented once he entered the C suite.

Kalia likes to use this informal group meeting to get real-time feedback on the company’s on-boarding process, to find out what the newest employees think of the work environment and ask them how they’ve interacted thus far with colleagues, business partners and customers. He also likes to pick their brains about how Direct Energy compares to other companies. “This is good for breaking down old myths that support grass-is-greener kind of views [that can crop up],” says Kalia. “We can also get some insight into best practices we haven’t considered.”

This kind of information has a short shelf life; employees forget their early experiences once they’re settled. New employees obviously won’t want to be too harsh, “but it is possible to get at the truth without overt criticism of coworkers [or] the company,” says Kalia.

He’s let the practice slide as his time has become tight, but he intends to reintroduce it this year. “I’ve noticed a few new faces around and think it’s a little sad that I don’t recognize everyone,” he says. “This will help connect me to new staff. It’s important that employees have met with their department head and feel like they have a relationship.”

-Stephanie Overby

Talent KNows No Boundaries

The New York Times recently noted the growing number of American companies hiring foreign-born CEOs and predicted this trend would permeate the rest of the C suite. Executive recruiters at Korn/Ferry International and Heidrick & Struggles agree that it is happening with CIOs.

“I see more foreign-born CIOs for several reasons,” says Mark Polansky, North American managing director of Korn/Ferry’s IT Center of Expertise. “Number one is globalization. I also think that because of the overdemand for and undersupply of great CIOs, American companies will have to look further afield.”

Indeed, Gerry McNamara, managing partner of Heidrick’s CIO practice, says clients are “agnostic” when it comes to talent. “They want the best glo­bally,” he says. Clients don’t care where his firm finds candidates; they’re willing to expatriate them to the United States. Case in point: Dupont named Singapore-born Phuong Tram its CIO in December.

So what does globalization mean for American IT executives? They need to demonstrate cultural sensitivity and have global work experience on their résumés, says Polansky. He suggests they volunteer for assignments overseas and work closely with foreign business units. “There are lots of companies in America where you can’t get into the C suite without an international assignment,” he says. “That’s been true for a while but it’s become more of a reality in the Fortune 1000.”

Meanwhile, U.S. CIOs have more opportunities to parlay their experience abroad. Last fall, British Petroleum tapped Dana Deasy as its CIO. “The opportunity will be greater for American CIOs who have the size, scope and complexity experience and want to work overseas,” says McNamara.

-Meridith Levinson