While most IT leaders acknowledge that their job is all about ensuring an optimum interaction between people, process, technology and information, the real heart of IT and in fact any organisation is the talent that sits behind it. And over the next few years, I think we are in for a rough ride.
I have seen a number of studies over the last few months that all point in the same direction of concern. The Harvey Nash CIO survey citing 90% of IT Directors were concerned about talent; or the EU, which has launched an initiative around e-leadership, a study by Adecco's Spring Technology or from Robert Half's recent study showing 49% of companies having an increase in voluntary turnover.
The shortage of skilled IT staff is already affecting recruiters. In my role we recently had an instance of someone who had accepted a role and then we were gazumped. Talking to a variety of recruiters, this is happening more and more.
There are several factors to consider and I have broken them down:
Millennials and Generation Y think, act and work differently from those of us who are in the Baby Boomer or Generation X categories. The new generations and especially Generation Y seem un-phased by renting everything and having little in the way of possessions. This is vastly different to previous generations – where ownership and wealth accumulation was the ultimate goal. Generation Y's have even more mobile, social and technical awareness, and as studies are starting to show a different set of values again.
Adecco have recently produced a study on attracting future IT talent which demonstrates that the traditional deal breakers of talent attraction of salary and location are becoming less of an issue. Other factors such as ability to work flexibly, company reputation, IT infrastructure and ability to work remotely were all cited as factors that affected their ability to choose the company that they wanted to work for. These are important statements. In the future the company that is recruiting for in-demand skills is being interviewed as well.
Generation Ys and Millennials as a result, will enjoy working in more creative environments, where culture and a flat organisational structure is a way of life. I was lucky enough this week to drop into Softcat in Marlow, and talk with Sam Routledge, Solutions Director, and see the effect in action. As with Google, Softcat have opted for an open and transparent design of their office layout with bright colours and picnic style tables in collaborative areas. I was with Routledge for less than an hour but really observed that the culture was encouraging people to be who they are and create in teams rather than have to adopt a conformist traditional corporate culture. Staff is encouraged to dress how they want; shorts, tee shirts, flip-flops all good. Softcat also run a tech graduate programme, as Routledge said: "To bring on young guns with an interest in technology and give them a place to learn, grow and develop." The result – Softcat have been in the UK's top best great places to work in the last three years, and enjoyed a stellar double digit growth year on year since 2006 and in 2013 turn-over was £400 million.
In 2011 Forbes predicted 40% of the work force will be Generation Y and Millennial's by 2020, so organisations need to adapt to attract this kind of talent; and given the kind of steps Softcat and others are taking, for some traditional organisations – the cultural shift won't be easy.
Having worked in social housing for the last four years and using London as a barometer, it's obvious to see the impact the chronic shortage of housing is having on house prices, the cost of living and overall impact on disposable income. Although the biggest impact is on London and the South East, the shortage creates ripples as people move towards places that offer more for less. In London and the South East, there will be no let up for the foreseeable future.
London's population is at an all time peak of 8.4 million, with best estimates of 9 million by 2020 and 10 million by 2030. The additional 50,000 affordable homes that have been promised over the next five years looks already set to fall short, not to mention the impact on wider infrastructure.
The impact is particularly challenging for organisations that operate across the UK, internationally or globally. Salaries that are benchmarked across national or international boundaries are starting to look more disproportionate; and international business will perhaps look at alternative models to ensure the cost of IT people is kept within an affordable limit. Indeed, at a recent CIO UK event, a peer was considering reducing the size of the IT team in the UK as a direct result. Talent to fuel the new trends is in short supply; some technologies in the job market seem only to exist mainly on a contract or day rate basis.
Some organisations that have innovation at the heart of their DNA all recognise they have to manage talent differently. BT for example are "talent farming" from overseas to overcome shortages. The telco has invested heavily in Malaysia, but has also built several innovation centres around the globe. Domestically John Lewis create JLabs, and now Tesco with its own innovation incubator – all attempting in their way to attract the talent which they hope will create the market disruption that will provide them with the competitive edge.
But what of SMEs who don't have the flexibility to move location? The options are limited; if you think it's a challenge now – the future doesn't bode well at all.
Demand side – changing tech changing times:
IT has matured and like many professional disciplines that started with a generic all-encompassing remit, IT skills are becoming more diverse and more specialised. The diversity in IT now spreads way beyond the software developers and hardware engineers of old. Digital Managers, Big Data and Analytics Scientists, User Experience Engineers are a new range of roles that reflect the revolution that is going on in IT. One of the obvious manifestations of this is the current paradigm shift for CIOs and the debate over relevance of the CIO job title in the digital age.
We all know as IT Leaders that big change is coming, Gartner unveiled their top predictions for 2014 and beyond in 2013.
- Digital Industrial Revolution (3D printing and its impact on manufacturing and IP)
- Digital Business (social, mobile, analytics, cloud, code halos and their impact)
- Smart Machines (self-learning machines and artificial intelligence)
- The Internet of Things (network centric operations, situational awareness, etc.)
To make these happen – you need people, and the right kind of people. And if you don't react to this, just remember this; of the 100 companies that made up the FTSE 100 on its inception in 1984, only 30 remained in 2014.
We have seen obvious corporate activity reacting to this new wave. Carphone Warehouse and Dixons announced merger in May – initially I thought what is that all about? But when the rationale came back that as a combined entity, they are able to take better advantage of the Internet of Things, it makes obvious sense.
But looking beyond where we are now, and into the future, we know that there is a lot of discussion on wearable technology and the Internet of Things; both of these technologies have the power to cause a fourth wave of digital disruption.
The impact of cloud technologies is having an effect on the IT talent pool. An IT engineer 10 years ago, used to look after email and file servers for roughly 500 users.
Organisations in retail have been data driven for many many years, but access to the tool set is become more accessible. Hadoop is rapidly becoming a standard in data analytics; and cloud-based analytics services are emerging. But leveraging these tools still requires talent; and business technology talent that understands the data relevance to your organisation, to gain insight and to make data actionable. Data scientists are not IT engineers or programmers, they are more likely to come from a heavily statistical or mathematical background, and share more in common with marketing functions than pure IT.
We also know that SMEs are vital for UK's and Europe's economies, and that there is demand for the new wave in that space. The federation of small business gives the following facts to show the strategic importance.
- There were an estimated 4.9 million businesses in the UK which employed 24.3 million people, and had a combined turnover of £3,300 billion.
- SMEs accounted for 99.9% of all private sector businesses in the UK, 59.3% of private sector employment and 48.1% of private sector turnover.
- SMEs employed 14.4 million people and had a combined turnover of £1,600 billion.
- Small businesses alone accounted for 47% of private sector employment and 33.1% of turnover.
- Of all businesses, 62.6% (3.7 million) were sole proprietorships, 28.5% (1.4 million) were companies and 8.9% (434,000) partnerships.
So if you want to take advantage of new tech, it is fine if you have deep pockets. But what if you don't? What if your organisation is 200 people, and you want to make better decisions and become "data driven" and compete nationally, internationally or globally.
The bottom line is that the new wave of IT is causing a skills shift. There is a sizeable increase in demand for new skills. In some areas though, particularly ones that are being commoditised through the adoption of cloud services, demand for those skills is levelling off and in some cases decreasing.
They are of course plenty of other supply and demand factors to consider, and I may well be magnifying some of the issues. But how can business respond to this gap. I think there are some practical things that can be taken.
1. Perhaps the simplest thing, is to engage early with talent. Don't sit on CVs - review them quick, and if you identify a potential candidate get them on Skype or Face-Time for an initial chat. Get them interviewed quickly. Prove to them earlier that they are valuable. Make the recruitment journey simple, easy and automated.
2. Look at new types of contract for employees to offer greater flexibility and looking at how support can be delivered differently. For example, do you really need someone on site 9am to 5.30pm, or actually does it work better if they deliver 40 hours of productive output within a seven-day cycle?
3. Greater use of suppliers to provide "fill in" services. We are seeing start-ups that are able to deliver the new tech with a small impact. For example I am in early discussions with a cloud based analytics company that that will take data, processes it, analyse it and deliver it back in a digestible format. In Peabody, we have already implemented one such a service to help spot trends and patterns in rent payments.
4. Companies are now offering part time CIOs and IT Directors, to help oversee SME IT investment. I predict this kind of service to grow, as the tech gets more complex and the breath of skills to design, implement and manage – even in a cloud world becomes more complex.
1. Acceptance of staff with Portfolio careers. I am already starting to see this trend, especially with staff who offer "niche" skills. They may for example develop a specific piece of functionality, and whilst internally you have the skills to maintain the code, when you need further development work done, retention contracts are in place to ensure the work is done in a timely manner.
2. Syndication of skills. I talked to the CTO of a start-up recently. He explained that whilst the initial development for the web site had been handled by a contractor, support is handled by a group of individuals across the world, six in total, and each module within the system supported by at least 2 of them. It delivers round the clock support, in a cost effective manner. Clearly there are concerns over security, but as the site holds no personal data. The security concerns are at this stage not material.
3. Outcome based contracts. Having worked for many years for an outsourcing provider. Outcome based contracts - that are clearly defined - worked best for the supplier and the customer. So "make sure my web site is available 24x7 and fully supported" rather than provide me with six people to support my website. I predict in the medium term there will be an increasing shift to this model of outsourcing – in line with the expectations and ease of use that cloud services have created.
4. Increased level of overseas talent farms. I have coined the term talent farms, because in my mind that's what global corporates are doing; and there will be more. In the medium term (3-7 years) there will not be enough UK and European talent of the right kind. Global business will start to harvest the seeds that they are sowing now.
1. In the longer term, we have to address some structural problems that exist in IT and beyond. Diversity is still a major issue. I have been to two IT dinners over the last month and both of them all male. We need to encourage more women into IT, and having seen the affinity of Generation Y and the Millennials to technology, I am positive that the balance will be addressed significantly, but not completely by 2020. Encouraging diversity will increase the overall supply pool
2. We need to start young. We need to encourage though professional bodies such as the BCS, CIO UK, to encourage the government to adopt a more flexible syllabus for GCSEs and A levels. We know that for technology-based subjects the curriculum needs to change rapidly, not in reaction to, but ahead of market trends. The professional bodies, along with research firms such as Gartner and IDC know what is coming; our children should be prepped for this as well.
As with all change, there will be winners and losers. Those that are able to adapt, especially ahead of the curve and those that will fall by the wayside. CIO's and IT leaders recognise through very recent studies the talent gap. As with everything though, it is more about what you are able to do about it, rather than talk about the problem. Business's will be able to avail themselves of new technologies, but for some there will be painful cultural changes to make, whilst for others, it's already part of their DNA. As an industry though, I feel we do need to do more, earlier, with more impact if we are able to compete as a country in the longer term.