This Guest View article was submitted by Nearshore Americas – an Allied Partner of Accelerance. The article was written by Toby Eduardo Redshaw - CEO of Kevington Advisors, and a featured speaker at Nexus 2016.
Leading CIOs are not be constrained to traditional outsourcing destinations. They experience the benefits of outsourcing to Mexico and other nearshore countries of Latin America every day. Latin Americans share a context with us North Americans through movies and popular television shows that other cultures don’t.
A WORD FROM STEVE MEZAK
This article recommends that leading CIOs are good at “getting rid of stuff”. That means finding partners to “do a better a job, cost less and — most importantly just take care of it.” That’s the major benefit of what Accelerance calls Outsourcing 2.0 where you’re hiring a company to provide a custom and collaborative software development service capable of delivering digital transformation for your company. Outsourcing 1.0 was really no more than outsourced recruiting to get you the individual developers. It was motivated by the low cost of each developer but in the end, increased management cost and reduced productivity often led to disaster.
It is the best of times, it is the worst of times — and time for the CIO to embrace nearshoring.
When Charles Dickens wrote The Tale of Two Cities, I am pretty sure he was not commiserating with the plight of the modern CIO, but it sure does sound like it.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.”
It sure does sound like today’s CIO situation. Some studies report that less than 10 percent of CIOs are deemed highly successful by their business partners. The job used to be hard back in the good old days where you had years to successfully implement an ERP or CRM behemoth. Today, the job is harder, much harder. The climb ahead used to be Mount Snowdon, now it is Kilimanjaro, soon it will be Everest.
The CIOs in the top 7 percent can stop reading here, but the rest of you and their networks should keep reading.
It Is the Worst of Times
There are tremendous pressures on CIOs (and also CTOs) to do more for less. After all, this is the hallmark of modern technology. The unit costs for computing, networks and storage have ski slope trends over the last 15 years. On top of that the IT intensity in any industry segment has increased and will continue to do so. IT success is now strategically important across all industries — and this with a back drop of most IT shops underperforming in the eyes of their businesses.
Layer on top of that the current mini-era for the CIO is defined by broad, difficult change. Things like DevOps, SDN, SDDC, botnets/botwalls, cyber in general, Big Data, 3rd generation Agile, artificial intelligence/machine learning, containerization, next-gen visualization, BPM/DTM, API economies, modern mobility platforms, Internet of Things, augmented reality, context-aware soft sensors and sensing capable value-chain platforms to name a few all need attention.
Then just over the horizon what do things like 5G, VR, additive manufacturing, next-gen robotics, a 50x leap in Big Data capability do to IT and to your business?
It Is the Best of Times
This is simply because those that get the majority of this and pragmatically innovate with modern tech win and will eat their competition for lunch.
Why Context Matters More Than Ever
A huge portion of the history of IT underperformance is anchored in the context gap between the IT folks and the business. We know this, it has always been so. At one point we took IT away from IT and gave it to a good business person who could communicate with other business folks well. That was the ’90s and the era of the business-savvy not-so-techy IT leader. It belonged to the Enterprise Software vendors and it was not a fair fight. It peaked with a bazillion dollars spent along with a lot of bad behavior, re: Y2K.
The lesson is context matters, and as Alan Kay once said “context is worth 80 IQ points.” In today’s world this context for the CIO has four intersecting areas and the fourth is largely missing.
#1 Business Acumen
Clearly deep context between tech and the business as well as the tech capability and pragmatic execution of business mission/strategy is hugely important. The best weapon in the world aimed at the wrong target counts for little. We still have a long way to go in this area. Think of the board of directors and how deep their tech context is for example. (You can find a little piece on that here.)
#2 Emerging Tech
Understanding the emerging tech context is hugely important. Over the next five to 10 years, your company may end up as the guy at the gun fight with a knife if this is not managed well. You must keep up with the fast-evolving tech areas mentioned above — and more. You must see over the horizon and “future proof” your firm. If you are not moderately terrified about the amount and impact of tech change upon us now and three to five years into the future you are not paying attention.
#3 Operational and Financial Efficiency
These have to be an automatic focus for IT. This is not only for obvious competitive financial reasons but because today all businesses are, at some level, service businesses. If you understand the fact that we keep score in dollars (or yen or pounds or zlotys) and that service is critical, then IT must be leading the charge for cost-structure improvement and service excellence. FedEx always knew this. Minor detail that excellent service lives on the back of high-precision process control, which turns out to be the anchor for low-cost (error-free) operations. That is the anchor for smart, omni-channel customer service, not commonized pretty user interfaces.
The context element that I most often see missing is the leadership impossibility of the current situation. When I talk to CIOs they can often list off their challenges and focus areas quiet easily. What is almost always missing is the context awareness that sees that today it is almost impossible for a leader to cover all these bases. There simply is not enough time in the day, nor clever delegation, for key leaders to focus appropriately on today’s mash-up of herculean challenges.
So the answer to number #4, to the 10 pounds in a five-pound bag problem, is simply to get rid of stuff — but in a smart way. The calculus here goes like this: If I can find a partner who can handle this for me, do a better a job, cost less and — most importantly just take care of it so the leadership time I spend on this is minimal — then I win. The icing on this cake is that the right partner can also be a good source for input in other areas. As smart as my teams were asking a company who had done XYZ 500 times about what they have seen is always accretive to a team that is trying it for the first or second time.
There is a twist. As you know by now I believe context matters. So I think we are going to see an increase in nearshoring into Mexico and Latin America, specifically from the United States, because of capability, cost, and most importantly context. That relates to culture, proximity, time zone and accessibility.
In Mexico in particular it also relates to the growth of leading firms, like say a CEMEX or the giant new automotive footprint in the Leon area, that help a thriving nearshore offering by growing internal IT talent supply chains.
You can find out more about nearshoring here. The fact that it is economically advantageous at a national level for places like Mexico will be fuel to the fire.
This is not about a migration of jobs south of the border. It is about a smarter more effective IT shop helping the company succeed and win in a global economy. It will be a win win on both sides of the border in terms of jobs created in, say, Mexico and jobs created in the United States through beating the competition and growing market share, profits, and thereby growing the business.
Toby Eduardo Redshaw is CEO of Kevington Advisors and was a featured speaker at Nexus 2016, a yearly pre-eminent event covering the nearshore world.
This Guest View article was submitted by Nearshore Americas – an Allied Partner of Accelerance.