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Friday, November 28, 2014

Of Switzerland, the country, its HR practices and technology landscape

Lake Zurich became the blogger's temporary home last August,
and many a weekend were spent crisscrossing
this eminently bikable town
(Picture by the blogger)
I have been visiting the Alpine country for a good decade and a half now, with a strong focus on the French-speaking area around Geneva and Lausanne. In the late 1990s I was a frequent rider on the Paris-Lausanne train visiting a client, La Suisse Assurances, to help them move to a package HR system (that ancient insurance company is no longer, its parent company, Swiss Life, having decided to fold it several years ago.) I still remember vividly my favorite restaurant, le Vieux-Lausanne, at the foot of the cathedral, for its delicious food. Then, in the early 2000s, I would become a frequent traveler to Geneva, where Oracle's European headquarters is located, for internal meetings and customer presentations, especially at UN agencies; I dedicated a full chapter to Geneva in my book, High-Tech Planet.

The German-speaking part, though,was largely unknown territory to me until last August when I set up camp in Zurich to help Credit Suisse, the country's second largest bank,  on their new HR system. This more intense exposure to the country has given me further insight on what is one of the most original countries on earth.

Politics: Swiss exceptionalism
For someone used to the continental size of the US or Brazil where, despite the huge landmass and population, a single language prevails, diminutive Switzerland with its three main languages (German, French and, in one state, Italian)* can be puzzling. And yet, despite ethnic, religious and linguistic differences, Switzerland is a haven of peace, prosperity and serenity (and also, let's face it, at times stultifying dullness) unequaled anywhere else on earth. A lot of it has to do with its unique system of (semi-)direct democracy, which those of us who suffer from renewed gridlock in the US or stagnation in France under the most incompetent and despised president in history can only envy. In Switzerland, no topic is too important not to ask citizens to vote on it. This month, the question is whether the country's central bank should increase its share of assets held in gold from 8% to 20%. In any of the mock-democracies of Europe and North America, the decision would have been taken by a politician or an obscure committee behind closed doors. Not in the Helvetian Confederation where the people are asked to vote on what may sound as too an arcane topic to most. I always wondered why I never see political protests and demonstrations in Switzerland. Now I know why. Who are you going to protest against? Yourself? Your neighbors? Most decisions are made by citizens directly, you can't blame anybody but yourself if you aren't happy with the results. (I have always been a keen advocate of direct democracy, those interested can read my post,"Technology-enabled Democracy 2.0.")

Global business: punching above its weight
Except for the Netherlands, which has has twice its population, no other small country in the world boats such a roster of successful global companies: Roche and Novartis (pharmaceutical), Nestlé (food), UBS and Credit Suisse (banking), Adecco (staffing), Swiss (airlines) are world class champions. This success lays to rest the cliche about the Swiss excelling only at clocks and chocolate, although some of the challenges facing the banking industry with the looming end of banking secrecy will have a not insignificant impact on the overall economy.

Rules-based engine
Another key feature of the Swiss national psyche is the strong, almost obsessive, adherence to rules. Peter Ustinov, the great actor/director/writer, who lived many years in Switzerland, once said, and quite accurately so, "In Switzerland, everything is either mandatory or forbidden; nothing is optional."  Woe betide you if you dare cross the street with the red light still on, even if there is no incoming traffic for as far as you can see. I mischievously jaywalk from time to time just to see how many Swiss will get a stroke at the heinous crime I am committing. And don't you even consider being late at a meeting; I know of an employee who was fired for his tardiness. For the Swiss punctuality is up there with cleanliness, motherhood and apple pie. It also helps that their public transportation system is amazingly efficient and in this town trams, buses and trains run on time. I have yet to witness a tram that didn't pull into its stop at the exact time advertised on the monitor. In comparison with another country I know well, Brazil, Switzerland is the anti-Brazil in every respect. Whereas a Swiss takes their job very seriously (the worst insult you can throw at a  Swiss is, "You are not professional!"), telling the same thing to the average Brazilian will elicit nothing more than a hearty laugh and a shrug.

Small wonder then that managing Swiss companies requires quite complex HR rules made even more so by the decentralized nature of the country where every state (or canton as they are known here) is quasi-independent and sets its own rules.

Small country but specific requirements
Of all Swiss statistics, one figure stands out: the traditionally low unemployment rate which, in 2014,  is around 3%.  Labor-market tensions are not going to improve with the greying workforce since more workers are retiring than are being replaced by young arrivals. This explains the high proportion of foreign workers in Swiss companies, and not only in border areas, but all over the country. Another reason for the strong reliance on foreign workers is the presence of many multinational companies (along with international governmental organizations such as the UN in the Geneva area) and the fact that Swiss mid-sized companies tend to be  strong exporters.

  • As part of an HR system multi-assignment/contract is a key requirement: somebody can be working in a canton hospital, teach at university and  oversee a small business. All these jobs will have to be tracked and, when fed into a payroll system, the latter will have to split the relevant taxes.
  • The French-speaking area tends to have more of a focus on competency management than the German area where companies tend to spent HR and HRIT investments on regulatory aspects of HR.
  • Make sure that your HR system covers work permit extensions by date along with alerts and reminders. Local state offices are as efficient in granting work permits as they are stern when it comes to non-compliance with reporting requirements.
  • The Swiss take their data privacy very seriously, even more so than other Europeans, and certainly more than the US.  Any foreign company doing business in Switzerland will need to take into account this Swiss variant on work-life balance.
  • If you are expanding to Switzerland and need to manage your Swiss workforce as part of your global HR system, check that your vendor is Swissdec certified. It'll ensure that HR and payroll data are stored and sent to government agencies in the required format and scope.
  • Several reports are key such as the Beschäftigungsstatistik.
  • Support for SEPA bank format has become a recent requirement as well, although Switzerland is not part of the euro area.You may be puzzled by the fact that you can easily wire funds into a euro-denominated account abroad but not not the other way round. 

It is worth specifying that although Switzerland is not part of the EU, most of its trade is with the EU, many of its workforce comes from EU countries, as mentioned earlier, especially neighboring Germany, Austria and France.  As part of an agreement with the EU, there is a free movement of labor between Switzerland and the EU (it remains to be seen how a recently held referendum will jeopardize this arrangement).

HR vendor landscape
Although Zurich hosts a prestigious technology university (ETH) and  is a research hub for several technology firms such as Google, Switzerland has not sprouted strong local software firms. Actually über-technology firm Amazon is not even present in Switzerland since its small size, difficult terrain (all those mountains are a transportation nightmare) and prosperous citizens do not justify the investment. As can be expected, neighboring Germany's SAP,  reigns supreme, especially in the German-speaking majority area. The only Swiss software firm of note is talent-management vendor Haufe (based in St-Gallen, home of another prestigious university) whose Umantis offering is one of the few, if not the only one, in Europe to have been developed organically.

The Google campus in Zurich, on my way
to/from the Credit Suisse office
(Picture by the blogger)

This most conservative of countries is moving its HR systems to the cloud at a glacial pace as legacy vendors are finding out. Oracle's Fusion implementation at banking giant UBS has been beset with product-quality issues that have delayed the go-live date several times. Workday, on the other hand, a virtual unknown this side of the Alps, without even a local presence, has managed to  sign up a couple of local companies including well-known travel firm Kuoni.

As we move into the second half of the decade it will be interesting to see how Swiss on-premise customers migrate to the cloud and, in doing so, which system they select. So far, no single unchallenged winner has emerged, so the market is still up for grabs.

*Actually, there is even a fourth national language, Romansh, spoken by a small minority. Speaking of languages, it is interesting to note that whereas Swiss French is quasi-identical to the one spoken in France, Swiss German is a dialect that differs markedly from standard German (Hochdeutsch). Adding to the complexity, Swiss German (Switzerdeutsch) is only spoken whereas standard German is the one used in writing giving a sense of Swiss schizophrenia

NOTE: It goes without saying that the opinions expressed in this post are the blogger's only, and do not reflect the position or  policies of Credit Suisse or any other Swiss company I have been/am associated with.

Monday, July 21, 2014

No SaaS please, we're bankers!

As traditional, on-premise corporate computing moves relentlessly to the cloud, especially its more sophisticated version, SaaS (software as a service)*, one business sector seems impervious to the march of History: the banking industry. Since banks spend more on IT than any other business, it is worth discussing what is holding up bankers (no pun intended) and wondering whether it is a question of time before the industry moves with the times, or will it remain as a quaint on-premise island in a sea of SaaS-based systems. In this post I'll focus on HR systems, since that is the corporate IT sector I have more experience in.

The changing landscape of international banking and how it will affect HR
Following the financial meltdown that started in 2007, banks are facing some unique challenges:

- More stringent regulations in all developed countries, though so far the bark has been worse than the bite. European banks have been faster at adopting so-called Basel 3 rules, thus giving them, counter-intuitively, an edge on US banks because, once the latter are hit, they will find their European counterparts better prepared. 

- Some of the new rules, especially in Europe,  have to do with bankers' compensation. Senior managers will have to learn to focus on profits (see below comment). One of the challenges of HR leaders will be how to enforce a new culture where greed is no longer good, and where other aspects of performance are taken into account, rather than the obsessive focus on revenue.

-  Increased use of technology, such as complex trading algorithms, which means that many jobs formerly done by humans  are now done by machines which do not threaten to leave you for the competition nor demand exorbitant compensation.

- The days of unlimited profits are gone, and that will have an impact on IT budgets. This would be a driver to move to the cloud since costs can be reduced substantially when your HR system of record is migrated from on-premise to SaaS.

- Most of the global investment banks are retreating from their global operations and closing businesses. This deglobalization will affect all players, with global powerhouses shrinking their global operations, and the size of their workforce, and a larger number of regional/domestic banks will become even more local in nature. The challenge for all banks will be to trim fat without cutting muscle.

- In emerging markets, such as Brazil, Turkey, China and South Africa, local banks will matter even more than the global one, a trend not really new as I witnessed myself when I started spending part of the year in Brazil and was shocked to see that  the local HSBC subsidiary had little in common with the European parent company. It was quite surprising, and humbling, to see that Premier status, despite HSBC's marketing slogans, meant nothing there. In that market, as in India (think ICICI) local talent prevails and is giving the global banks a run for their money, if that is the phrase. If global banks want to survive, they will have to learn to fly the right talent on the right opportunity, say from London or New York, to São Paulo or Singapore, close the deal and then back home. The type of skills necessary will be markedly different from what we currently see.

Better be safe than sorry
There are various reasons why bankers are reluctant to move to a SaaS HR system of record (note that for other HR functions, such as recruiting or learning, the move to SaaS started a while ago.)

First, HR systems of record, along with  core banking tools, tend to be particularly sticky here. This most conservative of industries tends to favor status quo systems, stressing their advantages ("We've been using them for so long") while drawing attention to some problems associated with  the cloud. The financial crisis, which revealed banks' boldness, has put the brakes on many innovative ideas. The cloud suddenly became particularly risky, and it is a brave HRIS leader that will push for it. Rarely does a banking head of HR even bother about it, feeling s/he has more urgent battles to fight.

The banking industry also has a long history of home-made systems, in use next to packaged software, the latter often customized beyond recognition, thus adding another strong incentive to stick to legacy systems longer than other industries. And yet the complexity of their  legacy systems will eventually force the banks to move forward and start considering SaaS more seriously.

Security, for obvious reasons a predominant concern with banks, has them look at SaaS with particularly watchful eyes. And NSA snooping has not helped the SaaS movement, especially in Europe, where banks are not particularly keen on having the integrity of their core HR data  compromised along with privacy concerns. It is safe to say that SaaS vendors are losing 10% of their potential revenue in Europe because of this issue.

As everywhere else, moving to SaaS entails cultural change that banks are not finding easy to make. A bank 's IT department with an army of PeopleTools or ABAP consultants will be reluctant to consider that it has a problem, and that it may not need these skills anymore. Often, HR does not have enough clout to stand its ground and insist on having its own technology.

Leading by example...where there is no clear example
HR departments in the banking industry tend to display pack mentality. There is a lot of hand-wringing, indecision and wait-and-see among HR/IT leaders, with everybody watching their counterparts in other banks to see who will take the plunge first. (Interestingly, their brethren in the insurance industry didn't have such qualms and have moved to the cloud much faster.) As the following graph shows, there have already been a couple of banks that have made the move to SaaS HR (adopting mainly Workday) but they tend to be tier-2 banks. None of the global behemoths have pulled the plug on their legacy HR (usually PeopleSoft), although several are looking at the SaaS model seriously.

Whatever the geography, on-premise HR rules the roost

Action items for a successful transition
Any successful move from legacy HR to cloud HR in the banking industry will need the following:

  • Display bold HR vision from determined HR leaders. When considering the challenges facing the banking industry, this is a golden opportunity for HR leaders to lead change and transformation and try to show their value. The move to SaaS is a once-in-a-decade opportunity to do so.
  • Identify what needs to be available for a successful cloud implementation: Is the SaaS model good for us? Can the vendors' service level agreements meet our needs? Will they understand our way of doing business? If we, a European bank, select Workday, how confident are we that they will protect our data? I heard Workday's Aneel Bhusri the other day reiterate that HR data is safe because the customer can decide to have it stored in any of the regional data centers outside the US. That is simply not true. Even outside the US,Workday is still an American company, subject to US law and jurisdiction. If a US court orders it to provide the data stored in its data center in Ireland, will Workday refuse to comply? And if it complies,  what guarantees will a European bank (or any customer, for that matter) have that the data will not be subject to NSA abuse? No American vendor can provide any such guarantee.
  • Find the budget for the new investment. Considering the vast amounts banks have traditionally spent on IT, you might think that that should not be a problem. But with profit growth going south HR leaders need to beef up their ROI and make a more compelling case than in the past, something which, as mentioned earlier, they should be able to articulate cogently...if they know how to do it!
  • Realize that the move to a SaaS model requires a mental recalibration of people and organizations, along with revisited processes. That spaghetti environment that HR systems in banks have become over the decades should be disentangled and streamlined. What better opportunity than a move to a new next-generation system?

Banks should remember the unique characteristic of an HR system: it is the only IT system in a company where every employee is a user. Provide them with a rich interface and a modern user experience, and you are suddenly increasing your current and future employee engagement. Just as an earlier generation moved en masse from mainframe computing to a cloud-server environment, what are you waiting for, bankers, to move to SaaS?

No SaaS? You must be bonkers!

*For those who are confused about the terms "SaaS" and  "cloud", mainly because some  less-than-wholesome vendors use the two interchangeably, let me clarify some key differences. When a company's IT system no longer runs on its own data centers but is hosted by a third-party vendor, it is said to be "in the cloud" whether that IT system refers only to the hardware (network, for instance), the technology (database, OS) or the application (say, HR system.) When your application runs in the cloud, and the hardware and infrastructure are also managed by the same vendor, then we are talking about SaaS, the most advanced cloud offering. For software purists, as your humble servant is, you then have true SaaS (such as Salesforce, Workday, SAP's SuccessFactors) or faux-SaaS, a term I coined to refer to those products (such as Oracle's Fusion and the numerous legacy systems masquerading as SaaS) that were developed as an on-premise offering and then ported to the cloud, often in a single-tenant environment. True SaaS, on the other hand, is always multi-tenant, with a single line of code, is not available in an on-premise deployment, and only requires a browser to access the application.  In other words, a true SaaS product is always in the cloud; the reverse, however, is not true.

(Although the blogger, in his capacity as advisor-cum-consultant, has been involved with two banks on their legacy-HR-to-SaaS projects, the ideas defended in this post are his only, and do not reflect neither the banks' opinions nor their particular situation)

Sunday, June 15, 2014

Curse of Spanish Monarchs: Never to die on the throne


It was from this rebellious and republican city that, two weeks ago, I heard the momentous news. I had just landed at Barcelona's splendid airport (the only one I know that boasts an outdoor section in the transit area, thus allowing you to breathe fresh air and bask in the  sun) and hailed a taxi to take me to my hotel. I had barely sat in the back seat when the taxi driver asked me, "¿Qué le parece?" (What do you think?)

"¿Qué me parece qué?" (What do I think about what?) I asked.
"La abdicación." (The abdication) was the curt answer.
"La abdicación, ¿de quién?" (Whose abdication?)
"Pues, ¡del Rey!" (Well, the King’s) the taxi driver replied before turning on the radio.

I was stunned. As I explained in my blog post "My 20-year affair with Spain" I have known only one Spanish monarch, Juan Carlos, and have always been a great admirer of what he had achieved for his country (Note: I am NOT a royalist, read my April 2011 blog post "Abolish the monarchy or reinvent it"). Sure, the last few years have been quite difficult, in no small part due to the economic crisis which had triggered a popularity loss for all political institutions in the Western world (never high in the first place, anyway) and it wasn't so inconceivable that the great man would bow out. But still, once it happened, it was quite a shock, even in independence-minded Catalonia.

As fate would have it, I find myself back in the same city just a few days before the coronation of Felipe VI. A lot has been written in the press and commented on TV and in the blog sphere, in Spanish and English, about the meaning and consequences of the abdication, but I haven't seen any historical perspective on the topic, namely that unlike British or even former French monarchs, Spanish ones have a long tradition of losing their crowns.

The first Bourbon king, Philip V*, who came to the throne in the early 18th century, abdicated in favor of his son only to climb back to the throne a month later when the new king died unexpectedly. If you want to go back even further, the first king of a united Spain, the legendary Emperor Charles V, the most powerful monarch in his time, ruling over most of the Americas and a good third of Europe, voluntarily renounced his throne in the mid 1500s and finished his days in a remote monastery in western Spain.

But let's just go back two centuries. The early 18th century saw Charles IV** deposed by Napoleon who, ever the family man, put his brother Joseph on the Spanish throne. With Napoleon himself deposed in 1815, brother Joe (known to Spaniards as Pepe Botella*** for being too partial to alcohol) was removed and the Bourbon dynasty was restored with Charles's son, Ferdinand VII, on the throne. Ferdinand lost his job twice but managed to die with his crown on. His daughter and successor, Isabella II, didn't fare any better. After 30 years on the throne she was overthrown; and so disgusted was the country with the Bourbon dynasty that they plucked an Italian prince to come over and become their new sovereign. 

Barely three years into his reign, Amadeo was forced to abdicate and pave the way for the First Spanish Republic which didn't last more than a couple of a years (interestingly, the first  two presidents were both Catalan) and in 1875 the monarchy was restored not with Isabella, who remained in exile, but with her son, Alfonso XII. Young Alfonso was to be the only Spanish king in both the 19th and 20th centuries not to abdicate or be deposed. However, his succession was far from assured since it was one of those rare cases where, upon his death, it was impossible to announce, "The King is Dead! Long Live the King!" The reason? Alfonso had no children; but his wife, Maria Christina, was pregnant. So Spain had to wait until she was delivered of a baby to know whether they had a posthumous king or queen; it was a son, who became on his birth King Alfonso XIII. 

Alfonso 's reign was an utter disaster: it started with the American-Spanish War of 1898 when Spain lost all its remaining colonial possessions. In 1931, Alfonso XIII (current King Juan Carlos' grandfather) lost the rest of his kingdom when he fled the country and  the Second Spanish Republic was established . Worse was to come with an early version of the Syrian conflict, the Spanish Civil War (another similarity with the Syrian situation was that many foreign fighters rushed to Spain to fight for the Republic). 

Alfonso died in exile, just like his grandmother Isabella, and his son Juan (who carried the title of Count of this city where  a major avenue bears his name) never ruled because dictator Franco wouldn't relinquish power in his favor. For reasons only known to the Generalisimo (or Caudillo as he was also called), he decided that upon his death Juan Carlos, Juan's son,  would succeed him, thus restoring the monarchy in 1975.

With King Juan Carlos following in the family tradition of regnum interruptum, if I may coin the phrase, it is a fair question to wonder whether his son's won't be an even shorter reign, maybe the last one of a long line of monarchs. He is already off to bad start, through no fault of his, though: with Spain, the ruling world soccer champions, having lost humiliatingly their first World Cup game to Holland 5-1 two days ago, many Spaniards are equating Felipe VI= V-I and wondering if worse disasters are yet to come. But Spanish kings have an uncanny knack for survival: after all the  civil wars, rebellions, foreign invasions, forced abdications and other  upheavals, they have managed to transfer the crown from grandparent/parent to child/grandchild for 1,000 years within one single family line. **** 

*Apart from the current monarchs, I am using for the historical ones the English names under which they are know, thus "Charles" for "Carlos" and "Philip" for "Felipe". 

**No mistake in the numbering. Although belonging to the same dynasty, the Hapsburgs (known in Spain as the "Austrias"), Charles IV did come after Charles V. The reason? Charles V was also Holy Roman (that is, German) Emperor and the number  "V" was his number as Emperor. As Spanish king, he was Charles I; but even in Spain he is widely referred to as Charles V, as evidenced by the roundabout in Madrid known as Glorieta del Emperador Carlos V.

***Pepe is Spanish for Joe and botella for bottle. No relation to Madrid's current mayor, Ana Botella.

****Even when the dynasty name changes, because of a female marrying outside the dynasty, it is still the same family. Thus, the first Bourbon king (Philip V)was also the grandson of the last Hapsburg king (Charles II) through his daughter Maria Teresa who had married the famous French King Louis XIV. The three houses of Trastamara, Aragon and Habsburg, who ruled in succession in the late Middle Ages/early Renaissance, were actually a grandmother (Isabella the Catholic), daughter (Joanna the Mad) and grandson (the aforementioned Emperor Charles V.)

Friday, May 9, 2014

Could the last executive leaving SAP turn off the lights, please?

On-premise revenue is dwindling much faster
than cloud revenue is increasing. How much
longer can SAP afford to dither? 
When it rains it pours, they say. It sure felt that way this week at the world's largest business-software company where a wondering workforce watched as one top executive left after the other. Two and a half years ago I wrote a blog post questioning SAP's acquisition of SuccessFactors ("Acquisition #13: SAP's $3-billion cloud(y) adventure") which I then updated when SAP announced its new cloud HR strategy.
Since then I have been very vocal, both in private to my clients and in public in various forums, about the many issues that SAP is still grappling with on its way to cloud nirvana: to wit,

  1. A reluctance (inability?) to build a payroll based on the SuccessFactors technology (along with other functional holes it needs to plug),
  2.  The confusion raised by the availability of its legacy product (Business Suite) in the (private) cloud as it thus competes with SuccessFactors,
  3.  An absence of how a fully integrated cloud ERP will be developed from the various bits and pieces acquired here and there. 

Customers who already felt confused about the lack of a compelling strategy could be excused for being at their wit's end when watching the accelerating speed at which top executives are leaving the company. The move started exactly a year ago and has been gathering pace since the beginning of the year (see below graph).

Nothing wrong per se about a top executive deciding to leave their company for "personal reason" as the hackneyed phrase goes. But what SAP is going through is a flood of Noahesque proportions. I cannot remember any other software vendor that has gone through such churn in such a short period of time. And this is happening at the same time when co-CEO Jim Hageman Snabe is relinquishing his post (but staying on as board member.)

SAP has always been quite unique in the software industry for its two-CEO structure which it brought to an end in 2009 when Leo Apotheker was named sole CEO.  Less than a year in the office he was fired and SAP reverted to its dual management structure. Now, it's back to just one CEO.

For how long?

A software product is not built or sold sui generis. It is the result of decisions made by senior executives, some who become strongly associated with it (like Sikka with HANA) or are the face of it before customers. Every time a software vendor changes the head of a product line or a business customers are justify to wonder what new directions to expect.  It is increasingly obvious that the once great company which brought integrated business software (ERP)  into the mainstream, no small achievement, is adrift with an unclear strategy and a lack of continuity which only stable management can provide. To many observers SAP appears like the proverbial rabbit caught in the glare of (cloud) headlights and doesn't know which way to go. And how to get there.

Should customers be worried? Especially those I deal with on a daily basis: HR buyers? Of course they should. And for three reasons: First, some of these executives had direct responsibility for the HR offering. Second, an overwhelming majority of SAP customers bought the HR module as part of their ERP project. Anything that can affect the ERP product will therefore affect them. Third, SAP's cloud business is still in its infancy and therefore fragile: why should customers adopt SuccessFactors when there is no guarantee that it will be the preferred cloud platform in the future?  An HR buyer wants to put his/her implementation dollars where SAP puts its development dollars. So far, SAP has failed to clarify how it will move to a cloud ERP future. Maintaining and developing multiple platforms is unsustainable in the long run and, until and unless SAP makes up its mind, customers will be very cautious before selecting SuccessFactors.

Or staying with the on-premise solution.

Time for SAP to become bold and display vision and thought leadership. Or face gentle decline.

Could it be that SAP is already dead? And just doesn't know it?

(The blogger is spending a good part of the month in London, the UK being the most advanced cloud HR market in Europe. During his free evenings, he indulges his taste for the theatre and strongly recommends the following two plays: King Charles III, an astonishing Shakespearean political-fiction production; and Blithe Spirit, a Noël Coward farce, starring a sprightly Angela Lansbury. The audience did not seem to be particularly concerned about the fate of SAP - or any other software vendor, for that matter.)

Sunday, April 13, 2014

Work-life balance, French-style: No after-hours work email

If you liked the 35-hour workweek, then you'll love the ban on after-office-hours email which has become law in France this week (actually it is an agreement between business and union which as such as the force of law.) Since there is little doubt that many employees are overworked and stressed out  anything that could restore a healthier work-life balance can only be applauded. Few people realize that France, supposedly a worker's heaven, is also home to frequent corporate suicides.

There is clearly a cultural bias here. Whereas in Europe in general, and in France, the country of la joie de vivre, in particular, work-life balance is seen as enhancing workers' rights, in the United States, the country of 24 x 7 business, it is considered  a cost on business.

First, let us clarify what this new policy is all about. It does not apply to all French employees, only to those working in consulting and technology companies, therefore at most one million employees. Actually, when you take into account executives (cadres) who do not have a strict work schedule, probably just a few hundred thousand employees will be impacted by this law. Of course, nothing can prevent the current administration from extending the law to all French employees, say, before the next election, when it is desperate to emerge from the abysmal approval ratings it has sunk into.

Second, enforcing this law is not going to be easy. Actually almost impossible. There are so many ways to circumvent it that one wonders why they even bothered to adopt it. For example, even if you are one of those employees prevented from sending email after 6 pm, nothing can prevent you from copying  on a thumb drive any documents you need, go home, work from there and then shoot an email from your private email address. People have been doing this for years, and will now be encouraged to do it even more.

Then, there is the case of those road warriors, especially when traveling across time zones. It may be 6 pm in Moscow, but because France is a couple of hours behind it means you still have a few more hours to shoot that criminal message before your email server goes dead.

And, of course, nothing can stop you from writing zillions of messages offline, and the next morning, as the email server wakes up, it'll find itself busy dispatching tens of thousands of messages which  will create even more anxiety, pressure and workload on the recipient workers.

So, why is the government (in France no labor agreement happens without the state's blessing) bothering about a law which for all practical purposes will not protect burnt-out employees, but can work as a disincentive for foreign investors in France? The problem is the disconnect between politics and business/technology. No matter how fast you adopt a law, it always lags behind technological advances which are so much faster.

Controversial or pioneering? France goes where others fear to tread

If government bodies had any idea of what the business world REALLY looks like and how disruptive technology can be, they would not stop at email. What about social media? Government should also stop corporate employees sending business-related tweets, or updating information on LinkedIn. And yet, none of this is contemplated.

And what about business software? A lot of the work that people do now is done through ERP-type systems many of which can be accessed via the cloud anywhere, anytime. As a manager, you can still finalize a performance appraisal after having served dinner to your children. You could check on the recruitment status of some job vacancies in your team after having watched your favorite TV show. Again, the law does not  even seem to realize that such technology use is even more prevalent than email and can impact a worker's work-life balance even more significantly.

Worse, as I mentioned earlier, this new policy could have an adverse impact on workers by reducing the number of jobs available to them. Just as I have never known in my adult life France with a balanced budget, I have rarely seen an unemployment rate lower than 8% or 9%, it usually hovers around 10%. This new law is not going to encourage companies to hire more workers in France; and, honestly, what kind of work-life balance are we talking about here when we know that without work you don't have much of a life?

In summary, this new law won't change much. It will just add more compliance costs to companies, deter foreign ones from hiring in France and put even more pressure on employees to do more within the 9-to-5 work  schedule, thus achieving the exact opposite of what it set out to do.

Oh, mon Dieu! I am posting this business column on a Sunday. I am in full violation of French labor laws that forbid work on  the Lord's Day. If you don't hear from me in the next couple of weeks, that will mean that the Labor Inspector has knocked on my door and I am languishing in jail for contempt of the laws of the Republic.

Tuesday, March 11, 2014

America and France: Two countries united by failed military payroll

“Dulce et decorum est pro patria mori,” ancient Romans
used to say. It is not only good to die for one's country,
but payroll software requires you do it for free
Last month saw France's president pay a state visit to the United States. Among the various topics on offer for Presidents Obama and Hollande  one could mention the drop in foreign investment in France (due to the French government's idiotic policies), the impact of the NSA spying scandal (due to the US government's idiotic policies), both leaders' marital woes (alleged in Obama's case, true in the case of Hollande who regaled the nation with two First Ladies, one official, one hidden), the various crises around the world (Syria, Ukraine etc.) However, there is one topic which the two leaders probably didn't get to discuss: how their respective military failed spectacularly in implementing a payroll system for their armed forces.

The U.S. tries first... and fails first
As in so many other cases, the U.S. was a pioneer in the use of package software to run its HR and payroll operations. In the late 1990s it adopted the HR software leader of the time, PeopleSoft (which had developed a specific Federal product) to integrate over 90 different systems into a state-of-the-art HR/payroll system. Several hundreds Department of Defense (DoD) contractors  and employees worked on the project which was supposed to go live in 2006. I will spare you the the details of this soap opera which comes with epic cost overruns and deadlines missed, but suffice it to say that in 2010, that is TWELVE years after project kickoff, DIMHRS (Defense Integrated Military HR Systems as the acronym goes) was announced dead on arrival (the system integrator  was Northrop Grumman.) Oh, and it only cost $1 billion, by the way. Quite a lot for a payroll system that was never used.

The solution was...to go back to the 40-year old system (written in Cobol) and it did not fare markedly better as it results in countless payroll errors for many of the 2.7 million active-duty personnel: many soldiers get shortchanged on their pay, others get overpaid and then have to do with abrupt paycuts as DoD recoups the monies, which is hardly the best way to motivate troops who put their life on the line all over the world. In some cases deserters continue to be paid for years. Retirees who are rehired to find themselves in a bizarre situation: a glitch in the system often results in retiree records being updated to "dead" with condolence letters sent to the  family of an otherwise quite healthy soldier. This happened to none other than the U.S. Army Chief of Staff.

It is quite mind boggling that an organization like the Pentagon which uses the most sophisticated technologies in the world can be defeated by something quite humdrum as payroll software.

Where the US leads, its oldest ally, France, follows
The French military is smaller in size than its U.S. counterpart (300,000 troops half of which in the Army) but it is proportionately as maddeningly complex, if not more. As in the US every branch of the military uses a different HR/payroll system, each originally custom-built and with pleasant names such as Concerto, Rh@psodie, Symphonie. Starting around 2005 each branch decided to move to a package software based on SAP. As the below diagram shows each branch had its own version of SAP HR which was interfaced to Louvois, a new custom-made payroll system, to be replaced in 2016 by ONP, an HR Access-based payroll system for all French government employees. Unfortunately for French servicemen and taxpayers Louvois, like its US counterpart, was an unmitigated disaster. Costing north of half a billion euros, with several hundred million more in overpayments, compensation paid to tens of thousands of military families who got shortchanged and additional implementation/maintenance costs to fix the issues, the French military will probably end up paying even more than the Pentagon for the same result: a failed payroll system. At least we French have one consolation: in one area, failed military payroll projects, we outdid the Americans.  The French Minister of Defense had to recognize the failure since it was on such an epic scale and promise to build a new payroll system by the end of next year before it was to be replaced by ONP. Even the CEO of Steria, the IT company which built the system, appeared on TV for a prime-time attempt at damage control. And now the bombshell: I have it from confidential sources that even the ONP project  will be scrappped: another half a billion dollars are thus being simply thrown out the window with this second  project failure by the same government. Two spectacular HR IT  failures two years in a row. Who can say that we in France don't do things better than in the United States?

What went wrong? 
- Too many obsolete payroll and accounting systems which do not communicate with one another and HR systems. This issue has more than academic results: for instance, a soldier who is the beneficiary of payroll errors is wounded in Afghanistan and sent back to a hospital back home. According to the rules he should be forgiven all debts related to payroll errors. Except that since HR systems take for ever to be updated and when they are they are badly interfaced to payroll, our soldier finds himself without a "wounded warrior" status and he and his family have to go through unjustified financial hardships. Hardly the best way to reward someone who almost lost their life for the country.

- Absurd number of manual workaround and paper-based processes: staff data has to be written on a form, then physically sent to another location where it is manually entered into another system, by yet another employee.  In 2014, when organizations are moving their HR operations to the cloud such an antiquated way of doing business is unbelievable

- The complexity of rules, pay levels and status types in both countries is mind-boggling. In the US the multiple basic pay/entitlements/housing allowance/re-enlistment bonus often results in a soldier's pay changing several times per day. The creativity of French legislators and bureaucrats is no less astounding: for instance, the Navy pays a €300 allowance to every single mother whose child has  been recognized by one of the Republic's sailors whatever port city in the world she can be found in. Many Navy personnel have recognized up to 10 children. A senior naval officer even told me that he knows of one case where a sailor owned up to ...20 children! The French government, ever understanding (and generous with taxpayers' money) when it comes to such shenanigans, coughs up. And every payment has to comply with the tax rules of every country the child was born in. Only a particularly robust HR and payroll system  can handle such complexity. It is obvious that some rules have to change, and Congress and Parliament will have to make the necessary changes. But many processes are not mandated by law: they are just the result of a decades-long practice of using paper and manual processes. These can be streamlined much more easily, and should have been done so. Why weren't they? Incompetence is one answer, and the vested interest that system integrators have in maintaining the staus quo: after all, the more complex the requirements are, the more need there will be for customization. Here, as we have seen in other industries, what is good for an SI is not good for the customer and, ultimately the taxpayer.

- The various HR systems used do not provide for an efficient way to track personnel and allocate them swiftly. The U.S. Marines are in an altogether different one. France, as shown in the previous diagram, replicates the madness: does it really make sense to have each branch with their own SAP implementation? Wouldn't have it been much more efficient to streamline HR processes first, arrive at a common set of requirements and then implement just one instance of SAP HR for all military personnel, something they will eventually have to do. And why spend years and hundreds of millions developing Louvois if it is to be replaced, upon implementation, by yet another payroll system? The strategy does not make sense at all.

- Change resistance by  a reluctant bureaucracy and competing priorities are not helping, either. Change management was rarely given the importance it deserves, and the decision-making process was at best byzantine with defense committees and appropriations sub-committees fighting for control: this is hardly the hallmarks of success.

What to do about it? 
Although some of the issues seem to spring from the unique circumstances of government organizations, most can be encountered in any industry, regardless of size or geography. Before some start  hysterical attacks on the wastefulness of government, they should be reminded that failed IT project (whether HR or ERP) are prevalent in all industries: I know several well-known brand names whose HR systems are a shame, so let the company that has never known a failed IT project cast the first stone. However, in the case of government's failed projects one difference stands out: we taxpayers are paying for it. If a private business mismanages its HR budget, well, it's only the shareholders who are losing money; when government does, it's all of us.

- Reduce the complexity of rules. Sure, government is unique, but do you think that multinational companies that track and pay hundreds of thousands of employees (for some) across several time zones/dozens of currencies/scores of different legislations are easier to manage? If they can, whey can't Defense? When reengineering your processes, trace every requirement to a law or a policy; everything else should not be in the system. Ensure that there is a single point of contact to facilitate decision-making. When too many cooks fight in the kitchen, the result is rarely a great broth.

-Beware of requirements creep: a tendency seen in all industries, but particularly prevalent in the public sector is, in the absence of an agreement as to requirements, to revert to As-Is which undermines the whole business process reengineering exercize. Using a requirement-tracking tool is another great advantage in enhancing the quality of the requirements, something that few defense organizations do comprehensively.

- Realize that unlike wine, Cobol lines of code don't improve with age. Documentation, when available is long gone, as are those who created both. It is high time to move to the 21st century.

- Go vanilla! Eschew customization, one of the greatest ills to have been inflicted on corporate IT. The decision to go with off-the-shelf software was the right decision, however the military organizations decided to atone for it by customizing the software out of recognition (especially in France) and in the case of payroll, and some other HR functions, even use home-made software. In both the US and France, going back in time and re-adopting the old custom-made system is another grievous mistake.

- Build up your resources: government organizations tend not to be the leanest organizations with the availability of high-tech skills lagging other industries. They should set up Centers of Excellence (CoEs) and transfer knowledge from HR/IT vendors as soon as possible so that by the time the system integrator is gone, everything does not go down the drain or deplete state coffers by resorting to expensive contractors.

- Improve planning and be fast: I know it is a challenge to circumvent government bureaucracies, but decision-making should be sped up as much as possible. Because technology changes much faster than government bureaucrats can countenance, try and break down these huge projects into smaller ones based on relatively easy to define HR processes and sub-processes.

- Develop KPIs about progress, success factors, user satisfaction and ensure these are measured adequately: all deviations should be explained and accounted for. It is nothing short of scandalous that when French Defense Minister Le Drian was asked who should be blamed for the fiasco, he replied, "it is a collective responsibility," meaning that since everybody was guilty, then nobody was. And so far, not a single head has rolled reinforcing the culture of impunity so prevalent in the public sector. Are key product features missing from the HR and payroll products? Then how come that we didn't ask the vendors to include them in their roadmap? And if we did, how come that SAP/Oracle/HR Access didn't deliver them? And if they didn't when they were supposed to, then how come they are not held accountable and being asked to pay the hefty penalties that should have been part of the contract? If the issue is one of configuration and customization, then all eyes should turn to Northrop Grumman, Steria, HR Access: did they implement the system according to specifications? If not, then they should be held accountable. Were specifications provided in a clear, thorough and timely fashion to the system integrator? If not, then government employees and contractors should be held accountable. And who took the decision to unplug the older systems which worked and replace them by the newer ones which ended up not working? As we all know, a new payroll goes live only after several parallel processes are run and all issues are fixed. Somebody must have taken that decision. Who? Why?

- Learn from others: Defense may be unique within every country, but since its roles and activities are replicated throughout the world, learning from others can yield great benefits, especially when comparing oneself with similar armies such as members of the NATO alliance.

- Start looking at the cloud: one advantage of being a laggard is that you can learn from others without paying the price of being a guinea pig. Some HR functions can be safely moved to the cloud with cost reductions and quality gains, others will require strategic product decisions by SAP, Oracle and Workday. So far none has seem ready to move their public-sector products to the cloud. A nudge from the customer would go a long way.

In summary, taxpayers, that is you and I, are right to wonder why in the private sector (well, the better managed businesses at least) to produce a payslip costs a couple of hundred dollars per year , whereas in the military the figure is closer to $1,000...when it works! How can our troops win the wars of the future (especially knowing that they will increasingly be IT-related) when they are defeated by a mere software? These are hard questions for which so far very few cogent answers have been provided.

Note # 1: As in all posts in this blog,  text, charts and diagrams are Ahmed Limam's intellectual property. They cannot be used without his written authorization.

Note # 2: The blogger's advisory and consulting experience covers all industries, including government, both national (such as defense)  and international (such as EU institutions and UN agencies- he worked five years for the latter in New York and Madrid.)

Sunday, February 9, 2014

Bereft of actresses and heroines, a sadder, poorer world awaits us

An article in this week's edition of The Economist made me hit the roof. The famous British weekly referred to Scarlett Johansson (pictured here) as a "Hollywood actor." I don't know this person intimately but I have seen her in enough movies to state with quite some confidence that she is a woman. In that case she should be referred to as a "Hollywood actress", right?

21st-century, post-modern Anglo-Saxon society, especially the American variety, is driving politically correctness (PC) to absurd levels. For the sake of sexual equality we are asked now to erase all signs of sexual differences, even in language. This is crazy. As there are boys and girls, cows and oxen, roosters and hens, so are there actors and actresses. What is wrong with that?

Gender-equality advocates, the looniest of PC freaks, make the case that here we are referring to positions or roles, and a position can be held by either a man or woman, therefore there should be just a single word for it. Otherwise we would be perpetuating the notion that some roles are still confined to a sex.

This approach is simply wrong for various reasons.

First, English is already largely a gender-neutral language. Player, director, dancer, executive etc. are used equally to refer to a man or woman in that role. This is the result of the language's natural evolution and gender-equality proponents should therefore be happy enough and shut up.

Second, why don't English speakers come out of their self-centeredness and check what is happening in other cultures and languages? Whether Arabic, German or Latin languages, over one billion people have a masculine and a feminine for all these roles. Actually, Latin languages such as French, Spanish and Portuguese have gone the other way to further equality between the sexes: they are insisting that a word which traditionally only existed in the masculine form (French "Président" and Spanish/Portuguese "Presidente") now have a feminine as well since a woman can also hold the position of "President". We now have "Présidente" and "Presidenta", although there are still organizations that refuse to use the term (the French Academy, a refuge of old farts disconnected from everyday life, still insist that a woman elected to the highest office in the land  be called, absurdly "Madame LE Président") and Brazil's most read daily O Globo refers to Dilma Roussef as "Presidente" - check  my blog post on this topic). Sure, there are some languages such as Turkish which don't distinguish between the masculine and feminine genders, but English is not one of them, so why force-engineer a linguistic change which, let's face it, is not going to change facts on  the ground per se? It can't have escaped you that several Latin and Muslim countries have already had female presidents while the US is still waiting for one.

Third, PC freaks are so obsessed with their nutty crusade that they don't realize that their proposal for gender equality perpetuates the old male-dominated system when they insist that the masculine term should be the neutral one. If we wanted true equality, then we should say, "OK, from now on only one word for both. For words X, Y & Z it will be the masculine one; for words A, B & C it will be the feminine one." But no, they want everybody to become actors and heroes. If a woman can be referred to as an "actor" then why can't a man be referred to as a "heroine"?

Fourth, common sense has been completely lost in this fight. If  "ambassadress" has all but disappeared and "Jewess" is no longer used (which it was as some terms naturally become obsolete), "director" has always been the only form  for both male and female holders of that titles: are we going to rewrite history and refer to Russia's Catherine the Great as "The Emperor Catherine"? Should Elizabeth II, a monarch in her own right, insist that, for equality's sake, she now be known as King Elizabeth ? Most people would agreed that is absurd, and yet if gender-equality advocates value consistency they should propose this.

By the way, I have nothing against feminists. On the contrary. I believe that women (among other groups) have been historically discriminated against and that should stop. Yes, I believe in women's rights but also in the right of language to evolve naturally and not become deformed based on any lunatic group's ideals .

Can we come back to our senses? There are many more serious issues in this world (global warming, wars, drought, hunger, Aids etc.) Can we focus our energy on these and not waste our time on preposterous fights? We would do everybody, including good-prose lovers, a great favor.

Friday, December 6, 2013

Mourning the passing away of a unique political leader: Nelson Mandela, 1918-2013

I was 26 years old when Nelson Mandela was freed . I will never forget that day. I was living in the United States then and, watching the news on TV, I was shocked when I realized that he had entered jail before I was born, meaning that he had spent an entire life, a generation, behind bars. And why? Just because of his principles, mainly that all human beings are equal.

In a world ruled by corrupt, incompetent, rotten and often illegitimate rulers, Mandela stood apart: a political leader motivated only by his people's interests, with zero ambition for himself. This was made  even more obvious when, at the height of his popularity, basking in his people's and the world's adoration, he refused to seek a second mandate and retired.

For his funeral world leaders will congregate to praise the great man. How hypocritical that neither Obama, Putin, Hollande, Cameron, and certainly not Mugabe, will follow his example but will continue to serve only themselves and their corporate and banking friends with total disregard for their citizens.

Goodbye, Madiba. The world was made a better place by your presence. It is made worse by your absence.

It will take generations, if not centuries, for a man of your caliber to appear amongst us.

Saturday, September 28, 2013

"Custo Brasil" or the Absurdly High Cost of Living in Brazil

How The Economist magazine
saw Brazil's prospects in 2009...
I have been visiting Brazil for ten years now, spending half of the three years between 2010-2012 in this city, and I am constantly flabbergasted at how ridiculously high the prices have become.

For my daily pleasure of reading O Globo I used to pay just R$1.00; I have now to fork out R$2.50, that is a 150% increase. In the same period of time its Paris equivalent Le Monde has only known a 50% increase. A Rio Metrô ticket costs now R$3.10 the exact equivalent of €1.00 whereas in Paris it costs...almost the same price: €1.10, and a subsidized price (for workers, students, senior citizens, unemployed) costs just half that. Yes, you have read right: a basic good such urban transportation costs 50% more in Rio (which knows of no subsidies or daily/monthly passes)  where average income is one-third that of Paris. This is complete madness and explains that riots broke out last June because of the bus fare hike.

In January 2003 when I arrived for the first time in the Marvelous City taxi rides were so cheap that it never crossed my mind to use buses. A taxi ride to Galeão international airport would cost as low as R$35. Now you'll be lucky if you can get it for less than R$100. A restaurant meal was so affordable that I rarely bothered to go to per-weight joints, a Brazilian institution. Now, a single dish at a buffet restaurant would cost you easily a  whopping R$15. Eating in New York is much cheaper, and what makes it even more scandalous is that Brazil is blessed with an efficient agriculture and a land where everything grows and is raised effortlessly. 

Currency exchange rate fluctuations are to blame in only a tiny proportion: when I arrived in Brazil in 2013 US$1 bought close to R$4, by last year it was down to R$1.6, now it has inched back to a more reasonable R$2.2. The euro has followed a similar pattern (the euro is now worth around R$3), making the country extremely expensive for foreigners. But even with a stable real, inflation and price levels are outrageously high for the locals as well (if not more so, since their income levels are much lower than foreigners'). This can be seen from the below table on the price increases I have witnessed over the years.

The only thing growing at double-digit figures in Brazil are prices

There are several reasons why prices are so high: poor infrastructure, red tape, high taxes, low productivity. I would single out two of these: high taxes and low worker productivity. High taxes are not in and of themselves a bad thing. If Brazilians were getting Scandinavian-level public services, that would be fine. But the sad truth is that Brazilians suffer the highest tax burden of any emerging economy and are rewarded with pitiful health care, education and infrastructure. Where does the money go, then? Ask the politicians, among the most corrupt in the world. Compounding the situation is the low productivity of the Brazilian worker. Now, I never expected a Protestant work ethic in Brazil the way we know it in Northern Europe or in the United States, but still, I  am flummoxed by how poorly educated, trained and motivated Brazilian employees tend to be. Of course, there are pockets of excellence here and there, but overall the average Brazilian employee has to wake up at 5 am every morning, spend an average of two hours to get to work, fearing to be mugged on the way. By the time the poorly educated Brazilian arrives at their poorly paid job, they are exhausted, and have only one thing on their mind: get through the day and head back home where a host of problems (violence, not enough money to make ends meet etc.) await them Are you surprised then that discharging their duties efficiently, optimally and with respect for the customer (a notion alien to most Brazilian companies) is not exactly their top priority?

But let me continue with my whining about insane prices. A broadband internet connection at one of the four major operators (Oi, Vivo, Tim, Claro) will cost you on average the equivalent of US$40. And that is for just the connection which, in many parts of the country, and even in Rio, is a haphazard affair. For the same price in the US and Europe you get true broadband connection, unlimited phone calls to fixed lines all over the world,  high-definition TV channels, a cell phone number with a monthly credit for calls and text messages. It is mind-boggling to see how much Brazilians are paying for so little. And still putting up with it. 

If you are an expatriate settling in Brazil, one of the first things you will do is make sure you have a decent health plan. And, here, you will have the shock of your life, especially if you hail from Europe. Sure, you can always rely on the Brazilian government's health service knows as SUS (probably short for SUCKS) but it is so dreadful that anybody with some discretionary income buys a private health plan. Brazil has world-class hospitals (such as the Sirio-Libanês in São Paulo or the Samaritano in Rio de Janeiro) but they don't come in cheap. And to ensure you get developed-world standards you'll need to pay premiums in  the range of hundreds of dollars per month. The best healthcare can even cost you north of US$1,000 per month! And health plans in Brazil do not cover medication which you have to pay out of your own pocket. 

For Americans and Europeans used to reasonable airfares, especially by low-cost companies, flying from Rio to São Paulo (roughly a 350-mile distance) will easily set you back between US$300 and US$1,000. A Paris-London airfare (covering a similar distance between the two most important European capital cities) can be found at a fraction of the Brazilian fare. And Europeans are way wealthier than Brazilians! There are times when it is cheaper to fly to Paris from Rio than to São Paulo.

One key difference between subway transport in Rio de Janeiro or São Paulo and their equivalent in New York, London or Paris is the number of people who use the ride to read newpapers, magazines or books in the northern hemisphere. In Brazil, a book-reading subway rider is a rare occurrence. That is due to the overall population's high illiteracy rate and the high cost of books. Go to any bookstore chain, such as Saraiva or Livraria da Travessa, and you'll be hard pressed to find a book costing less than R$30-40, if not more, which makes it way too expensive for a majority of Brazilians. (On the other hand, you can find true bargains in second-hand bookstores, or sebos as they are called in Brazil. Mere stalls on the sidewalk will offer you even better deals, another reflection of the law of supply and demand: with so few Brazilians used to reading, the only way book peddlers can sell their wares is by offering low prices - probably the only low prices you will ever find in Brazil!)  

You will purchase domestic appliance (pots and pans, irons, blenders, etc.) in Brazil only under duress. You will then grab the item and leave the store screaming at what can only be called highway robbery. And when you realize that the coffee maker you bought a few months ago suddenly stopped working and is good for the scrap heap, you will understand the pain of most Brazilians who can afford these high-ticket items only through credit which, in addition, they have to repay at punishingly high rates. (Another Brazilian oddity is that most people who buy on credit repay it through monthly installments - I was bewildered when at a McDonald's restaurant I was asked in how many months I wanted to pay my hamburger. Yes, prices are so high in Brazil and people's incomes so low, that the only way for some to afford a hamburger is to pay a few cents per month for the period of a year!) 

Rio's 5-star hotel rates are higher than in Paris, London or New York. And as for residential real estate, prices have skyrocketed to reach the surreal. Prices in the city's South Side (Zona Sul) have been going up by 30-40% per year for the past four years. For instance,a small one-bedroom apartment in Copacabana, shoddily built, with wires hanging out, hot because buildings are all built next to one another with no ventilation - and we are in a beach district!) will easily make you poorer by an astounding $8,000-10,000 a sq meter! And maintenance charges have gone through the roof: for a similar apartment expect to pay hundreds of dollars per month! (Property tax, though, is still affordable.) One of the reasons housing maintenance costs are high is due to another Brazilian oddity: the need for every residential building to have several doormen working different shifts to ensure 24 x 7 availability. And with wages shooting up (if only to offset inflation) homeowners have only one option: cough up ever more. (Add to that yet another Brazilian oddity: coop board presidents are exempt from paying maintenance so their share is picked up by the other homeowners pushing their home maintenance bill further up.)

The latter is clearly the result of a bubble in the making similar to what we saw in Spain and in the US. Those who are selling now are those who bought cheap several years ago and are cashing in now quietly before moving their money away. Real estate buyers are fools, paying today before weeping tomorrow.

...and how it sees Brazil now

In general one can summarize the absurd prices in Brazil the following way: first-world prices for third-world quality. I am afraid that when that statue of Christ the Redeemer  falls back to Earth, it will not be on its pedestal on top of Corcovado but further down, trodden and trampled. The day after the hangover will be painful for some.

(The blogger has shared many aspects of his Brazilian experience in several blog posts: on Brazil's colonial towns, Lula's "third" victory at the polls,  and his thoughts on the country, HR and technology.
He has also published in Portuguese a blog on HR systems in Brazil.)

Sunday, June 23, 2013

Thoughts on India, its HR/technology space and the latest on Oracle

Wipro's HQ in the Electronic City district of Bangalore
The last few few weeks have been hectic as I crossed half the globe to visit the center of the universe, a.k.a. Bangalore, heart of the Indian IT industry before heading back to Europe for a 10-day training on Workday in London. (Interesting how one's center of universe tends to change over time: for a decade when I worked for US software powerhouses PeopleSoft and Oracle it used to be San Francisco, now that I work for an Indian company it 's as far east as I have ever been.)
Working for a systems integrator makes me realize how imbalanced is the perception of users and other observers: an IT project is almost always called an SAP project or an Oracle project when sometimes the SI's involvement is such that it would warrant to have its name tagged to it. After all, user organizations use the same standard software, the difference and consequently success (or lack thereof) hinges on how well (or badly) it has been customized/configured, which falls within the remit of the SI.

Bangalore is a good epitome of India, encapsulating all the chaos, historical layers, mix of first and third worlds in a single place (albeit of subcontinental proportions, since the city is home to 10 million people.) Whereas other Indian cities have adopted their local names  (Madras/Chennai, Calcutta/Kolkata, Bombay/Mumbai)  Bangalore, which is locally known as Bengaluru, still retains the British-era name of Bangalore even officially. Actually, I was surprised at how much of the old Raj is still present in downtown Bangalore, with its British-style clubs, parks and inevitable statue of Queen Victoria.

The blogger doing some sightseeing at a Hindu
temple in Bangalore
One thing that India has in common with another emerging country, Brazil, (more below) is creaking infrastructure and the challenges to bring it up to global standards. And yet an impressive surprise awaited when I landed at Bangalore airport. In the five years that have elapsed since my last (and first) visit to the place, a brand-new airport has sprung up. (Let's see whether the Brazilians manage to upgrade their poor airports,especially in Rio and São Paulo on time for the World Cup and the Olympics.)  On the way to your destination a fascinating mix of thousands of years of history meets you (Hindu temples, British-era army barracks, Muslim mosques, Christian churches, sacred cows strolling about, gleaming IT campuses, maddening traffic, glitzy bars where expatriates and the local elite meet.) During my stay the monsoon started and I was caught unawares on MG Road, one of Bangalore's thoroughfares. The street soon turned into a flood and I was lucky there was a railing I could grab otherwise I would have been swept away (I still had to waddle knee deep in the water and was copiously splashed by passing cars.)

Queen Victoria, the first and last Empress of India, still stands guard in
 Cubbon Park, an oasis of peace in the hustle and bustle of Bangalore 

Some characteristics of India's HR and technology landscape:

  • First you have to realize that India's 10-million-strong civil service may not be overall the most efficient in the world (there are some pockets of excellence, though) but it is one of the oldest, even predating the US Civil Service by several decades.
  • Just as in Brazil, a country I know well having spent there part of the last couple of years, India's labor laws are quite complex. The federal government imposes no less than 55 labor laws and the states another 150... at least! Dismissing an employee, as in the South American giant and co-BRIC fellow, is quasi-impossible if your company is of a certain size.
  • Although the buyer of any HR system remains the head of HR, s/he is often unable to justify the investment which gives some power to the CTO/CFO/CEO in the decision-making process.
  • The numbers of HR players is quite astounding, with few national ones and many local ones, in addition to the global ones ("SOP") catering to multinationals' local subsidiaries. Ramco is India's best-know HR and payroll vendor with a presence in the whole Asia-Pacific region.
  • HR is still not considered strategic by most Indian companies, payroll automation being the key driver for many.
  • The wide availability of IT capabilities in India means that companies tend to over-customize some HR processes rather than rely on standard software.
  • One trend that will affect the global IT workforce: according to ILO, a UN agency, soon three out of 10 of the world's new workers will be Indian.With labour cheap in India the impact in developed countries will be felt, especially as India's software companies move up the value chain from lowly technical work such as integration and data conversion to higher value tasks such as configuration and business process analysis.    
  • Most unexpected is that India, despite its red tape, is, according to Forbes, the most tax friendly country in the world. Considering that France is at #14, maybe I should talk to my employer about relocating to Chennai, Pune, Gurgaon or the very Bangalore. 

Just when I was about to start adopting an Indian accent, local quirks of speech ("Kindly revert to me after the needful has been done"") and nodding my head quickly from left to right, it was time to cross several time zones and a half (another Indian oddity) it was time to fly to London for an 8-day product training session.

Back to the world of software, Oracle announced this week that it has missed its quarterly targets for the second time in a row which sent its shares to plummet by almost 10%. and Reuters published an article about it yesterday, largely in line with I have previously wrote in my blogs.

Some great excerpts that hit the nail on the head:

  • [Oracle's CEO]  "is struggling to fit his ageing IT giant into a newly cloud-centric world - a hard scramble."
  • [Oracle's] rivals have grown, winning business from corporate and government customers seeking cloud-based software that is cheaper and faster-to-deploy than traditional offerings housed in massive inhouse datacenters.
  • "They [Oracle] spent the last four years focusing on engineered systems when the bigger industry trend was the cloud," JMP Securities analyst Pat Walravens said. "They now have a structural problem."
  • "Emergent (sic) business software providers such as Workday started from scratch by focusing on ease of use and simpler interfaces, while old-school IT giants like Oracle have been hampered by legacy systems and software products that they were slow to re-tool." "This is causing a real disruption in Oracle's business," said Tim Ghriskey, chief investment officer with Solaris Group."
  • A great one on the futility of Oracle's cloud strategy based on faux SaaS: "The inevitable is the inevitable," Goldmacher said. "You can get as many tummy tucks and face lifts as you as want, but it doesn't make your heart and liver and kidneys any younger."
  • And my favorite, a reminder of how Larry Ellison is trying to rewrite history: "What the hell is cloud computing?" Oracle Corp Chief Executive Larry Ellison said during a diatribe against the whole concept at an investor Q&A in 2008... the software giant's head said he had no idea what people were talking about when they referred to cloud computing, describing it as "nonsensical" and those writing about it as "insane".  (Here is the full article.) 

Exciting times when we are witnessing the passing away of the old guard (or dinosaurs as I call them) and the emergence of a new model of corporate computing. There are few things as satisfying as seeing history unfold before your own eyes. And being part of it.

(For those interested in India and partial to great prose, some of the world's best contemporary literature has come from Indians, residing in the sub-continent or belonging to the diaspora. I would strongly recommend the following:

  • Arundhati Roy's The God of Small Things: this first novel, which deservedly won the Booker Prize, tells the complex story of a family by shedding layer after layer of secrets until the shocking truth is revealed.
  •  Two other terrific books also tell the story of modern India but with slightly different messages: Vikas Swarup's Q&A (made into a film as Slumdog Millionnaire) seems to imply that to make it in India today you need luck while Aravind Adiga's brilliant The White Tiger (another Booker Prize winner) suggests crime will do the trick.
  • Rohinton Mistry's A Fine Balance and Vikram Seth's A Suitable Boy are two other great
  • If you don't have the patience to go through a book but can spare a couple of hours watching a movie, my favorite Indian films  include  Salaam Bombay (the most powerful and authentic of the lot), Lagaan and Devdas (the latter a Bollywood movie with Aishwarya Rai, India's answer to Angelina Jolie.)