Fortune Favors the Prepared Mind

I'm not finished yet, but I can already tell that The World is Flat [Updated and Expanded]: A Brief History of the Twenty-first Century is going to be one of those books which is going to havea great impact on my professional life. There is so much truth (I don't have to like the truth) in the information presented, I was motivated to shoot an email to almost everyone in my email address book to recommend the book to them as a way to prepare for the impact of globalization on their life and careers.

The email had "Fortune Favors the Prepared Mind" as the subject line and read as follows:

A friend of mine recommended The World is Flat [Updated and Expanded]: A Brief History of the Twenty-first Century to me as a great book on the impact of globalization. I'm only about 20% done with it (the audio version) but I think there is a lot of good material on outsourcing, offshoring, India, China, etc. which I believe would benefit each of you as you think the future and the kinds of opportunities we all probably need to prepare for.

See also some great quotes from the book at www.wikiquote.org.

Some samples:

Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.
It knows it must outrun the slowest gazelle or it will starve to death.
It doesn’t matter whether you are a lion or a gazelle.
When the sun comes up, you better start running.
-African proverb

• In the pathbreaking 1989 essay, “Computer and Dynamo: the Modern Productivity Paradox in a Not-Too Distant Mirror,” the economic historian Paul A. David explained such a lag by pointing to a historical precedent. He noted that while the lightbulb was invented in 1879, it took several decades for electrification to kick in and have a big economic and productivity impact. Why? Because it was not enough just to install electric motors and scrap the old technology – steam engines. The whole way of doing manufacturing had to be reconfigured. In the case of electricity, David pointed out, the key breakthrough was in how buildings, and assembly lines, were designed and managed. Factories in the steam age tended to be heavy, costly multistory buildings designed to brace the weighty belts and other big transmission devices needed to drive steam-powered systems. Once small, powerful electric motors were introduced, everyone hoped for a quick productivity boost. It took time, though. To get all the savings, you needed to redesign enough buildings with small electric motors powering machines of all sizes. Only when there was a critical mass of experienced factory architects and electrical engineers and managers, who understood the complementarities among the production line, did electrification really deliver the productivity breakthrough in manufacturing, David wrote.

Bill Gates: 30 years ago, if you had a choice between being born a genius on the outskirts of Bombay or Shanghai or being born an average person in Poughkeepsie, you would take Poughkeepsie, because your chances of thriving and living a decent life there, even with average talent, were much greater. But as the world has gone flat, and so many people can plug and play from anywhere, natural talent has started to trump geography.

• America integrated a broken Europe and Japan into the global economy after World War II, with both Europe and Japan every year upgrading their manufacturing, knowledge, and service skills, often importing and sometimes stealing ideas and equipment from the US, just as America did from Britain in the late 1770s. Yet in the sixty years since World War II, our standard of living has increased every decade, and our unemployment rate – even with all the outcry about outsourcing – stands at only a little above 5 percent, roughly half that of the most developed countries in Western Europe.

• By automating these jobs, it enables companies to save money and free up talented brainpower from relatively mundane tasks to start new businesses in other areas. You should be afraid of free markets only if you believe that you will never need new medicines, new work flow software, new industries, new forms of entertainment, new coffeehouses.

• It takes a leap of faith, based on economics, to say there will be new things to do. But there always have been new jobs to do, and there is no fundamental reason to believe the future will be different. Some 150 years ago, 90 percent of American worked in agriculture and related fields. Today, it’s only 3 or 4 percent. What if the government had decided to protect and subsidize all those agricultural jobs and not embrace industrialization and then computerization? Would America as a whole really be better off today? Hardly.

• Well, here’s the truth that no one wanted to tell you: The world has been flattened. As a result of the triple convergence, global collaboration and competition – between individuals and individuals, companies and individuals, companies and companies, and companies and customers – have been made cheaper, easier, more friction-free, and more productive for more people from more corners of the earth than at any time in the history of the world.

• The sense that our kids have to be swaddled in cotton wool so that nothing bad or disappointing or stressful ever happens to them at school is, quite simply, a growing cancer on American society.

• In China today, Bill Gates is Britney Spears. In America today, Britney Spears is Britney Spears – and that is our problem.

• As exciting and as visible as the flat Indian high-tech sector is, have no illusions: It accounts for 0.2 percent of employment in India. Add those Indians involved in manufacturing for export, and you get a total of 2 percent of the employment in India.

• Immigrants are always hungry and they don’t have a backup plan. Young Chinese, Indians, and Poles are not racing us to the bottom. They are racing us to the top. They do not want to work for us; they don’t even want to be us. They want to dominate us.

• The best companies outsource to win, not to shrink. They outsource to innovate faster and more cheaply in order to grow larger, gain market share, and hire more and different specialists – not to save money by firing more people. (p. 360)

• The business organization consultant Michael Hummer once remarked, “One thing that tells me a company is in trouble is when they tell me how good they were in the past. Same with countries. You don’t want to forget your identity. I am glad you were great in the 14th century, but that was then and this is now. When memories exceed dreams, the end is near. The hallmark of a truly successful organization is the willingness to abandon what made it successful and start fresh.

• People don’t change when you tell them there is a better option. They change when they conclude that they have no other option.

• Louis Pasteur said it a long time ago: “Fortune favors the prepared mind.”

The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions.

Overtime Pay for I/T Architects?

I didn't even know this was going on until this morning, but apparently several high-tech companies including IBM, Siebel, and Computer Sciences Corp. have settled class action lawsuits regarding overtime pay for technology workers.

"International Business Machines Corp. settled a federal class-action lawsuit Wednesday, agreeing to pay a total of $65 million to 32,000 technology workers who claimed the company illegally withheld overtime pay....The case involved workers classified as "Technical Services Professional and Information Technology Specialists." IBM considered them highly skilled professionals exempt from overtime laws detailed in the Fair Labor Standards Act and California labor laws....Software maker Siebel Systems Inc. settled a class action suit by more than 800 workers earlier this month. The workers, who had job titles such as "software engineer" and "senior software engineer," will receive a total of $27.5 million....Last year, El Segundo-based Computer Sciences Corp. settled an overtime class-action suit by 30,000 employees for $24 million. "

For more complete details, see IBM Settles Overtime Lawsuit for $65M.

I don't plan on spending the money until I see it in my bank account. :-)

Copyright © 2006 by Philip Hartman - All Rights Reserved

The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions.

Data Integration Nightmare for Your Supply Chain?

A while back I had a post Supply Chain, the Next Sarbanes-Oxley regarding the possibility of greatly increased government regulation of supply chains due to Homeland Security concerns. This included the possibility of US importers having to take responsibility for security of their inbound shipping containers enroute (regardless of when they legally take ownership of the goods), increased demands for standardized data (What was the passport number of the driver who brought the goods in from Mexico?), and more. The US Customs is currently piloting with some major importers a program which uses Global Positioning Satellite receivers to track the exact route taken by ocean bound shipping containers. (Why did your shipping container make a stop in Pakistan on the way to the US?) This kind of information collection is currently voluntary but there is speculation it could become mandatory. For an update of pending Customs-Trade Partnership Against Terrorism legislation take a look at C-TPAT Legislation Update.

The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions.

Supply Chain, the Next Sarbanes-Oxley

I have spent most of my I/T architect career working on customer service and sales & marketing type applications in the industrial sector. I will admit a lack of real-world experience in the area of supply chain. However, when I read Security Compliance: Customs Rattles the Supply Chain I found myself wondering how long it would be before my first supply chain project.

It seems that the recent political spat over the safety of US ports and public discussion of how ports could be used by terrorists has shined a bright spotlight on something called the Customs-Trade Partnership Against Terrorism, or C-TPAT. There is now some widespread speculation that this currently voluntary program might become mandatory and have as big an impact on US corporate life (and I/T Architects) as Sarbanes Oxley.

In a program called Operation Safe Commerce, it seems that the Department of Homeland Security has been quietly using GPS and RFID technology to track the cargo containers enroute to some major US importers and the results have been unsettling. A few quotes:

....companies actually know very little about what goes on in their supply chains.
Among common unsafe practices identified by these sources were: truckers dropping off containers without ever encountering terminal security, containers left in unsecured areas, and containers bypassing a port that's considered safe (even if scheduled to pass through that port) and traveling instead through a country that poses a greater threat—without either the company or U.S. Customs and Border Protection being informed.”

Some other randomly selected quotes:

Right now, information about any given supply chain is hard to come by. And that's by design. The goal of supply chains is to get something that's needed—a part, a product—to where it's needed as quickly and cheaply as possible. If a container arrives too late to be loaded onto one ship, it's rerouted and loaded onto another. And as long as the container arrives on time—or close to it—no one need be the wiser. In fact, historically, each person or entity that handles a shipment collects and shares information only to the extent necessary to guard against liability.
Similarly, Customs was created to enforce tariffs and calculate import taxes. And while Customs' role expanded to combat drug trafficking in the 1980s, regulating trade was the department's primary job until September 11, 2001. Now, says Robert Bonner, former commissioner of U.S. Customs and Border Protection (he resigned in November), "The priority mission of U.S. Customs is national security."
Experts say that Bonner, who was sworn in at Customs on Sept. 24, 2001, was right to change the agency's focus. Most agree that the likelihood of terrorists attacking the United States through the global supply chain is so high that it's a matter of when, not if. Such an attack (most analyses focus on a dirty bomb) won't primarily be designed to kill a lot of people, but to cause panic. "It isn't the event but the sudden lack of faith in the system that it causes," says Stephen Flynn, senior fellow for national security studies at the Council on Foreign Relations.

If a bomb goes off, Flynn says, there will be huge pressure on the government to close all the nation's ports until every container on every site in the country is inspected. An October 2002 war game that mimicked that scenario found that closing the nation's ports for as many as 12 days created a 60-day container backlog and cost the economy roughly $58 billion.

Legally, a company is responsible for a container only when it formally purchases it, which—precisely for that reason—usually doesn't occur until it reaches a port, either in the United States or abroad. Target, for example, typically does not legally purchase the clothes it orders from China until they arrive in the terminal. But the government wants importers to take responsibility for everything that occurs prior to purchase, even if the container is in the custody of a trucker in China or a longshoreman in Rio de Janeiro. The principle vehicle for this is C-TPAT. This so-far voluntary program gives certain benefits, such as reduced inspections, to companies that can show they meet a minimum level of supply chain security.

The second prong of Customs' strategy is to collect as much information as it can about what's happening in the supply chain so that, through data mining, it can spot anomalies. The key to this is the Automated Commercial Environment, or ACE, a $3 billion-plus trade processing system begun in 2000, which Customs plans to complete by 2010. ACE has modules that do everything from serving as Customs' ERP system to targeting containers for inspection. Within the next six months, carriers entering the United States through land-border crossings in seven states will be required to send close to 100 data elements to Customs, including information about the vehicle, its driver and its cargo. If they don't, they don't get in. Customs is also piloting an ambitious ACE add-on called the Advance Trade Data Initiative (ATDI), which requires importers to share with Customs every bit of information about a shipment, including the purchase order, which ports it passes through, proof of delivery and its final destination within the United States.

Soon, companies that achieve this level of compliance will be rewarded with a Green Lane designation—essentially a "get out of Customs free" card that will do for borders what E-ZPass does for highways.

It's also important to limit access to supply chain information. "If the bad guys know that IBM is going to ship products from point A to B on a particular Tuesday, it gives them a leg up," says Debbie Turnbull, IBM's program manager for supply chain security. A bad actor inside a company could alter the information attached to a container from Karachi, Pakistan (which might raise an alarm), so it looked like it was coming from a factory in Hong Kong (which might not). Or that bad actor could pass scheduling information to a crony outside the company. IBM uncovered one such plot a few years ago. A worker in a plant in Mexico noticed that one container he was about to load was 53 feet long on the outside, but only 50 feet long on the inside. Upon inspection, it was found that the container had a false back, behind which was hidden several million dollars in narcotics.

Even secure processes "can be compromised," says Ken Konigsmark, Boeing's C-TPAT program manager. "[Overseas workers] get paid peanuts, and it would be very easy to bribe them." CIOs need to be able to tell when a truck driver leaves a factory and when he arrives at a port. The CIO can then alert Customs if a four-hour trip turns out to take 12.

For example, Customs wanted information that UPS stored as address line one in address line two. In other cases, Customs wanted information that UPS simply didn't have, such as a driver's passport number.

The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions.

Will State Income Taxes on Telecommuting Put a Damper on Geographically Dispersed Application Development?

My friend just showed me a an article from the Nov 1, 2005 Wall Street Jornal, Page D-1 entitled "Telecommuters May Face New Taxes." Apparently, the US Supreme Court, by not choosing to review a case, will let stand a New York decision to tax the income of a Tennessee man who was working for a New York-based company via telecommuting. He was only in New York 25% of the time but was taxed on 100% of his income. (This may also be an issue with Tennessee not having a state income tax.)

I think the impact of this decision (or is that non-decision?) will be huge! If you've got a team of programmer spread around the country, will your software project team members soon be facing new state income taxes? Will staffing decisions on new projects now have to consider which state tax telecommuters? Will talented programmers quit because of sudden cuts in take home pay? What about all those global teams? Will states start trying to collect taxes from non-US citizens doing application development work from places like India, China, Brazil, and the Phillipines?

The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions.