Trendlines from 7/01/08: New, Hot, Unexpected

SAP’s Mid-Market Push Creates Skills Gap

SAP’s strategy to win small and midsize companies as customers while it expands its new product offerings is creating a widening supply-and-demand gap for these new SAP skills inside IT departments, according to recent IT skills and salary research from Foote Partners.

SAP’s expansion has “caused skills and labor shortages that have gripped sizable segments of the employment market in North America and around the world, and created some nasty supply-and-demand fluctuations,” notes David Foote, CEO and chief research officer of Foote Partners, in the firm’s first-quarter 2008 “IT Skills and Certifications Pay Index.” SAP product skills are among those noncertified skills displaying the most dramatic growth in market value during the past year, according to Foote Partners data.

Foote Partners estimates that SAP’s products are found inside 48,000 companies in 120 countries. Newer CRM and business intelligence tools now complement the company’s omnipresent ERP software. Its NetWeaver application- integration toolset and the announcement of a business process management offering demonstrate further expansion and SAP’s desire to pull all these applications together and allow them to work seamlessly.

In addition, SAP’s push into small and midsize businesses has expanded its scope and penetration into new customers’ IT environments. Foote Partners notes that the SMB segment now accounts for two-thirds of SAP’s installed base.

“The combination of these strategies and SAP’s obvious success and large, installed base can only cause disruptions in the skills market because it’s a well-known fact that jobs and skills acquisition lag new product introductions,” notes Foote. However, the SMB market brings its own unique set of challenges. “This segment has different staffing behaviors than large companies,” Foote notes. SMBs simply can’t pay the high salaries for employees with in-demand skills, nor is it economical to hire expensive consultants. As a result, the SAP skills shortage will most likely force IT shops to “accelerate the learning curve internally” as they try to cultivate SAP skills in-house, explains Foote.

Foote says the skills shortage could influence companies’ decisions not to upgrade SAP installations or add capabilities with additional SAP products and services.

“SAP’s story is one that we’ve seen countless times before: high-tech companies as victims of their own success,” Foote observes. “With this skills shortage catching up with them, they are publicly acknowledging their dilemma and starting to pursue initiatives to reduce customer stress levels.”

-Thomas Wailgum

CIOs, Tech Vendors Spread Political Donations

politics In the race for president, CIOs have no clear favorite candidate, based on publicly available records of campaign contributions. But top executives at technology vendors favor Barack Obama. In an informal, not statistically valid survey of The Center for Responsive Politics online database of campaign contributors, CIO examined the 2007 and 2008 financial contributions of 50 high-profile CIOs and 50 senior executives at technology companies.

Just 15 CIOs gave directly to the presidential candidates. Of those who donated to the three major candidates, three went for presumptive Democratic nominee Barack Obama and one for Republican John McCain. None contributed to Democrat Hillary Clinton. Dave Kepler at Dow Chemical gave $4,600 to McCain. Gregor Bailar, former Capital One CIO, and Joe Smialowski, former EVP of Operations and Technology of Freddie Mac, each gave $2,300 to Obama. Northern Trust’s Jana Schreuder gave $4,600 and $2,300 to Obama.

Among vendor executives, Obama edged out Clinton, 17 contributions to 14. However, four contributors supported both Democrats. McCain received six contributions.

Vendor executives were more on target in their support than CIOs. The three strong candidates got more support from vendor bigwigs than rivals such as Republican Mitt Romney and Democrat Christopher Dodd.

Oracle executives, however, are no oracles. Chairman Jeff Henley supported Republican Ron Paul, giving him $1,000. Charles Phillips, Oracle’s president, gave $2,100 to Democrat John Edwards.

–Kim S. Nash

Mash-ups: No Tech Experience Required

Enterprise mash-ups are not yet a panacea for connecting all the dots of corporate data, but they will soon let companies mix and match information to help workers do their jobs better, according to a recent Forrester Research report.

“Mash-ups are trying to solve a long-standing business problem, which is combining disparate data sources,” says Forrester analyst G. Oliver Young, who wrote the report. “We think mash-ups are doing it in a unique way that’s more user-oriented.” Forrester defined an enterprise mash-up as “custom applications that combine multiple disparate data sources into something new and unique.”

Young distinguished between enterprise and consumer mash-ups. Consumer mash-ups typically are built by a person or company and are there for anyone on the Web to use. In the enterprise, users will pull information from different systems and combine them. They will run them on a convenient portal and might represent the mash-up as a widget.

Vendors will provide tools for business users to build a mash-up on their own with no programming experience, says the report. But Young says IT will need to ensure that the tools are easy to use and that existing systems are structured to let users pull information seamlessly.

“IT has to enable the data sources,” he says. “When that happens and the technology matures, we can see business users start to drive the train.”

–C.G. Lynch

Virtual Worlds Project Failure Rate Is High

CNine out of 10 businesses that have launched virtual worlds saw them fail in 18 months or less, according to a recent report from Gartner. The report faulted companies for getting hung up on the technology rather than thinking about how people use it.

“Businesses have learned some hard lessons,” says Steve Prentice, vice president and fellow at Gartner. “They need to realize that virtual worlds mark the transition from webpages to Web places, and a successful virtual presence starts with people, not physics.”

The adoption of virtual worlds for the enterprise began picking up steam this year, buoyed by the success of Second Life, a 3-D environment in the consumer space where people interact with one another as avatars (virtual representations of themselves). Other consultancies, such as Forrester, predicted that virtual worlds would rival the Internet in overall importance to businesses.

Many companies implemented virtual worlds to help with internal collaboration, including Sun Microsystems, whose MPK20 provides a virtual extension to the company’s corporate campus in Menlo Park, Calif. (Read “Companies Explore Virtual Worlds As Collaboration Tools.”)

Despite the high failure rate, the research, which was released at the Gartner Emerging Trends Symposium/ITxpo 2008 in Barcelona, Spain, did indicate that virtual worlds will catch on as companies understand what types of use cases work best for implementing them.

By 2012, around 70 percent of organizations will have set up private virtual worlds, Gartner predicts. Virtual worlds set up for employees to collaborate internally will have a high success rate because of “lower expectations, clearer objectives and better constraints.”

The other upside to virtual worlds for the enterprise: cost. According to Gartner, the cost of implementing a corporate virtual platform averages $50,000, and cheaper trials can cost $5,000. The report argues that this low cost will encourage more experimentation by businesses.

–C.G. Lynch

CIOs Reap Realignment Benefits

On the MOVE In May, three CIOs earned promotions amid management realignments at their companies: At AmerisourceBergen, senior VP and CIO Tom Murphy was given additional responsibility for the pharmaceutical company’s multiyear process improvement project, including a new ERP system.

Flowers Foods, a maker of supermarket baked goods, made CIO Vyto Razminas a senior VP. Don Nelson was promoted from VP of capabilities development to CIO at graphic design services provider VistaPrint. The realignments will position each company for growth and, in AmerisourceBergen’s case, to also streamline its organizational structure.

CIOs are well-positioned to benefit from organizational realignments, says Paul Groce, the leader of executive search firm CTPartners’ CIO practice. CIOs oversee technology for all functions inside the company, he says, so they have a firsthand view of how IT can “drive huge efficiencies” by aggregating and consolidating disparate finance, HR and supply chain systems. Such changes can be the catalyst for new organizational structures.”The CIO can be the enabler of the realignment,” says Groce. “If the CIO of a multinational, multidivisional company can convince everyone that compliance, HR and financial systems can run on a single platform, the CEO may decide to consolidate.”

Groce says it wasn’t possible to achieve such efficiencies in the past because the technology wasn’t mature enough to support such realignments or companies’ reporting requirements. “Ten years ago such a move would have created confusion. Today you can truly supplant the layers, the redundancies in management and in geographies with technology, he says. The result: Other people move out and the CIO moves up.

-Meridith Levinson