Young people and their generational differences (1980-2004)

Young people and their generational differences (1980-2004) Generation Y: people who were born between 1980 and 1994.

Generation Y is the kind who voice their opinion loud and clear. Be it the right to vote, the right to scream, the right to consume alcohol and so on. If you have a child who belongs to this generation, then you should not complain much when they turn up at home with their belly pierced. It is the most opinionated generation of all. If something is wrong, they will ask and if something is going wrong they will try to stop it. However, when it comes to right or wrong, it is their opinion and not anyone else’s that will be taken into consideration.

When it comes to generation Y and drugs or alcohol, this generation is not above trying and experiencing anything new. They are willing to experiment with drugs and alcohol and do not think that there is anything wrong with it because it is their life and they can do whatever they want with in. Therefore, generation Y has no qualms about doing drugs and alcohol and are proud about it as they will brag and talk about it with their friends.

However, it is important to understand that the generation Y expects more out of life and not less. So when it comes to compromise they are not good at it. However, at the same time if they want a better life, they will work for it.

During their time the economy, technology, health care breakthroughs, and even worldwide economic conditions were growing rapidly. Every single family was doing well and there was a boom in every kind of business. Children that were brought up during these times were financially secure and also lived with comforts. By this time there was cable television, answering machines, many models of cars that were affordable, international holidays and even private schools. These kids who were born during the economy boom do not know how to adjust with less.

They have seen their parents work hard and hence know the value of hard work. They are prepared to do anything like accepting new challenges, facing changes at work and personal front easily. However, what they cannot do is adjust to poverty and circumstances where their basic are denied to them.

However, future generations are less likely to experience major differences in technology and our social life as they did.

Generation Z: people who were born between 1994 and 2004. Many of them are in their early teens and differ from the earlier generation in many ways. This particular generation is still in a stage of evolution and they are yet to learn several things in life.

As per research this generation can be an active set of consumers. Being born during the time of consumer market boom they have access to almost all the best things one could get. They have access to almost everything such as communication tools, internet cell phones, MP3 players, IPods, and all the current gadgets. They are the children of the modern world and are also called the digital generation. They also are growing up in a world of equality and they believe men and women are equals.

Since they are leading much more structured lives than any of their ancestors, they can be responsible adults and also with high social values. This generation has embraced technology and also they are highly dependent on it. They are more inclined to the virtual world and are less likely to take to extreme measures like terrorism. If generation Z is molded properly, they can achieve a lot more than their earlier generations using the digital media. However, on the other hand they may be poor with interpersonal skills and, in addition; they may not give too much importance to family values. They are very individualistic in their characteristics.

Beyond 2020, there could be drastic changes in work culture, ethics and even values that will be set forth by the generation Z. The generation Z is not good listeners and they severely lack interpersonal skills. They use the World Wide Web mostly for communication and keeping touch. So when it comes to work, in future they may barely be seen in an office communicating with their colleagues but might live their life in the virtual world. They do not believe in land lines or email... they have instant all.

They are less oriented than the generation Y but have strong opinions and do not take suggestions well. Psychologists are noticing a drastic behavior change from generation Y to Generation Z. For the generation Y, the emphasis has always been career and studies whereas the generation Z does not believe in career and formal studies either. Their personal lives can lack communication and this lack of communication may not be very effective for bringing up future generations by them. Also by the time the Generation Z starts working there might be severe shortage of professionals like doctors and scientists. Also, such professions may not hold any value for the generation Z.

The characteristics and qualities of the generation Z has to be completely set apart from the others and they are the newest generation in their own category. Generation Z are people who were born after the 1990 and by then technology was ruling the world. The generation Z is also called the silent generation, iGeneration, generation quiet and net generation. They have several other names based on their qualities.

Today, the generation Z makes up for nearly 18 percent of the world’s population. Here are some classic qualities that the generation Z exhibits.

For generation Z, computer technologies and the Internet is the common place. All their communication takes place on the internet and they show very little verbal communication skills. Most of their formative years are being spent on the World Wide Web. They are used to instant action and satisfaction due to internet technology.

They are very impatient as they desire instant results. The Internet is there and they take it for granted. They do not consider it to be the greatest tool for mankind as it has always been there for them. Their means of communication is mainly through online communities like Orkut, Google, and Face Book. They do not believe in personally meeting their friends and developing relationships. They are capable of making huge communities and have massive collaborations using the Internet without knowing anyone personally. They may not do very well in areas of public speaking and regard privacy to the core. They may consider living with others as intrusion of space.

(based on several articles from the internet)

“It’s not only the beginning of a new year, it’s also the end of the IT business cycle that began in 2003”

 “It’s not only the beginning of a new year, it’s also the end of the IT business cycle that began in 2003”............ The STKI Annual Market Forecast prepared for the SUMMIT 2009 (24 March) suggests that very basic structural changes, taking place in the wings of a global economic drama, will propel a new‘market order V2.0’ for the Israeli IT market.

THIS ARTICLE IN HEBREW. THE MARKER..PRESS HERE 

2001-2003 were “IT depression” years.  Spending stopped, projects were canceled and excess inventory flooded the market, destroying pricing.

Why? Because IT had a long way to fall. IT spending in 2001 had fluff and fat everywhere. When the bubble burst, the fall was precipitous. IT fell from its high of 3.4 billion dollars in 2001 to less than 2.5 billion USD in 2003. At the end of this fall a new IT business cycle started, which STKI called the “market order V1.0”.

 The market order V1.0 that started in 2003 was characterized by heavy vendor consolidation as well as a market that grew from its low in 2003 to a peak of 4.3 billion USD in 2007 (over 70% growth in 4 years). During that time the IT services market moved towards consolidation in favor of larger local players (Matrix, Malam-Team, Ness, etc) and the IBM, HP, etc. (International Players). Although users of technology, between 2003 and 2008, were far more disciplined and did cut out the nonsense, IT growth was spurred by the booming Israeli economy and the new available technologies (standard servers, enterprise applications, etc.).

The economic slowdown starting in 2008 and hitting us hard in 2009 will accelerate the market transformation from market order v1.0 to market order v2.0.This market transformation of the Israeli IT market has already started, with market players preparing for a new landscape. What's different about this crisis is it's a capex (capital expenditure) crisis because it involves expenditures used to acquire or upgrade physical assets.

Today's credit crunch directly affects IT because, for many companies, technology is the No. 1 "capex" (capital expenditure) item. That means IT leaders need to pay more attention to financial metrics such as the weighted average cost of capital, or WACC. WACC measures the rate that a company is expected to pay to finance its assets (the higher the WACC, the higher the "hurdle rate" in a return-on-investment calculation, or the minimum rate of ROI that must be met to undertake a project).

The start of the new landscape is also about a negative growth rate regime, so the players need to innovate, leveraging the existing knowledge and align continuously to market opportunities. The economic slowdown will further increase and accelerate the need for Business Transformation (BT) IT Services in most Israeli Enterprises. These services include business intelligence, business process innovation, virtualization, social computing, mobile computing, Green IT, SOA, extended Internet (connecting the physical world to the digital world): all these are front and center on the agendas of large companies. Will many of these projects get cut back? Yes. But many are part of long-term company plans -- they will persist despite economic slowdowns.

Another metric getting scrutiny is payback period, not just about ROI, but what ROI can I get in the next 60 days. This will change not just what gets funded but also how you think about sequencing projects and which components you're going to launch first.

Companies will intensify their focus on goals they have pursued in the past few months but now they will break up projects into smaller components with deliverables every 3 months. They will be evaluating and possibly reducing the application portfolio by a certain percentage and eliminating redundant functionality.

Projects that show concrete cost reductions will take precedence over those that provide functional enhancements.

In market orderV2.0, the two ends of the outsourcing services market i.e. low-end services like support services and high-end services like Business Transformations (BT) services will undergo further consolidation. Low-end volume services, because of increased competition, will find margins coming down and larger players will acquire their counterparts, while at the same time accelerating their movement towards better margins and specialized Business Transformation (BT) IT Services in 2009. As the IT people who will run BT, vendors will be forced to engage in a discussion of process, customers, and operations, not only references to SOA, web services, and storage management. The client’s executive team will look at these BT vendors as legitimate partners in driving revenue, profit, and market share.

Market Order V2.0 will be an era of following dynamic strategy as any existing strategy will not remain effective for long and would need to be re-constructed. The economic slowdown will only accelerate this transformation, which would manifest itself in terms of cost savings, productivity enhancement and customer retention in the short run, giving way to new engagement and delivery models in the long run.

Technologies that can deliver near-term cost savings will remain in focus while the larger capital-intensive green investments with longer payback cycles will move down the priority list. On account of the slowdown the technologies that deliver significant cost savings such as virtualization, unified communications, open source etc. will see heightened interest and adoption by enterprises in 2009.

As the economic meltdown forces enterprises to consider new computing models that promise lower capital costs, such as cloud computing, which refers to a variety of techniques in which technology capabilities are provided as a service. Focus on reducing per-unit costs, such as cost per server, per terabyte of storage, per help desk ticket, per programmer or per line of code.

We should still investigate the economics of the cloud, including migration, transition and security costs, as well as the solvency of the vendors that offer it. Capex is not just affecting end users but also technology vendors.IT ‘Cloud Computing’ service offerings–including software as a service (SaaS), hosted delivery model will get tested and adopted on a small scale. The cloud model’s advantages of lower capital outlay and operating costs, coupled with the reassurance of more major players coming on board and building capabilities (including enabling and educating the channel), will encourage more customers at the margin to invest in cloud offerings. Enterprises which have been shying away (on account of issues of security, connectivity etc.) will be forced to re-evaluate the model. Organizations across verticals will evaluate different models with services delivered through the cloud, hosted and managed by suppliers (International IT vendors), Telecom Service Providers, Israeli System Integrators or pure hosting players.

As enterprises look at optimization technologies like virtualization, cloud computing and hosted delivery models, a key challenge will be information security. Keeping the entire data secure on the cloud while at the same time making it accessible remotely and addressing other vulnerabilities will force organizations to look at integrated security solutions. The heightened security risk perception will force enterprises to inspect Business Continuity services seriously. As a consequence, the Security Solutions space is expected to evolve and grow in 2009.

The channel space had undergone a shift during Market Order V1.0 (2003-08) with linear distribution models giving way to multiple types of channels. These multiple channels (like system integrators and ISVs) added more value to the technology adopted by the end user. Keeping the key attribute of ‘value addition’ intact newer forms of channels would emerge during Market Order V2.0, with the market transforming yet again. The key differentiator for the new channel forms will be their ‘services’ play as compared to the ‘product’ play of the past. This services play will occur around the emergence of ‘Cloud Computing’ technologies and the need for reliable hosting and delivery channels.

 

 “Unfortunately, generations of salespeople have been brought up with the notion that they create value by bringing in revenue…bringing in revenue means collecting value, not creating it. And that is not enough to survive in today’s competitive markets.”                              Source: McKinsey Quarterly

Sales should generate value or just collect it

“Unfortunately, generations of salespeople have been brought up with the notion that they create value by bringing in revenue…bringing in revenue means collecting value, not creating it. And that is not enough to survive in today’s competitive markets.”

Source: McKinsey Quarterly

In Israel IT vendors like HP, IBM, Oracle, Microsoft, etc have in recent years re-organized their sales and support abilities.

 

For the very big corporations they have moved to sell directly and for the SMBs they have very successful two-tier distribution organizations.

What about those companies that employ between 250 to 1000 employees ?

During this recession how should they “connect” and sell into this market? 

During this new economic era can they  “trust” their  old sales force and distribution partners ???

 

According to a new study by Mckinsey (see below) the two-tier distributors should always be used.

 I tend to disagree. I believe that VAR resellers are more important than two-tier distributors

In the market I follow, Israel, we can see that IT global companies try to conduct business through distributors that bring revenues not those that created long term value. OEM companies should recognize the value created by VARs and invest in such partnerships rather than distributors. Companies like Emet and Glasshouse have both shown the value of a good VAR. Value added resellers (VARs) focuse on specific customer segments, and industries. Small and midsize enterprises prefer to buy from VARs because they understand their needs and industries.

 

“Talented people can become experienced, but experienced people cannot be injected with additional talent.”

 

.

WHAT DO YOU THINK>>>>>>>>>>>>>>>

 

 I will quote parts of their study .

 

http://www.mckinseyquarterly.com/High_Tech/Hardware/Rethinking_high-tech_distribution_2252

DECEMBER 2008 • Mckinsey  Quarterly, Distributors may hold the key to high-tech sales growth in many markets.

 

 -“as OEMs look for growth in new markets, they should take a closer look at the value offered by some distributors—particularly those known as two-tier distributors.

Two-tier distributors  (so named because they buy from manufacturers and sell to resellers) are well positioned to boost sales in emerging markets, where these distributors’ revenues have grown by 33 percent annually for the past five years. What’s more, in both the developed and the developing world, such distributors can help manufacturers sell to small and midsize enterprises—for they control 42 percent of all distribution to that market—which is growing by 7 to 10 percent annually.

Two-tier distributors do well in markets (as Israel) for several reasons:

1: deals are smaller, so the cost of a manufacturer’s direct sales force is prohibitive in comparison with the cost of using a distributor. Such distributors sell multiple brands of hardware and software so they can gain scale and serve these markets more effectively.

2:  local resellers are better at assessing credit risk in emerging markets and are more likely than large manufacturers to finance smaller deals. Finally, manufacturers sometimes have considerable difficulty forecasting sales in developing economies and building the necessary expertise to address them. A distributor with a network of resellers can mitigate credit risk for manufacturers by taking some of that risk on its own books and tap the local market knowledge of its resellers”-

 

 

C A P E X crisis = IT vendor crisis

As we said before... this is a CAPEX crisis......

From the Wall Street Journal today-"Companies are pulling back on capital investment (capex crisis) as they pare their work forces and brace for a weak year, damping prospects for a rebound in economic growth anytime soon. Orders for big-ticket manufactured goods such as machinery, metals and computer equipment slumped in December for the fifth month in a row, the Commerce Department said Thursday, a sign that businesses are holding off on investment in the face of weak demand and losses from the final months of 2008."- 

A wide range of industries saw a drop in new orders last month, including computers and software.  But a gauge of future business spending -- orders for nondefense, nonaircraft goods -- tanked at the end of the year, falling 2.8% in December from the previous month, in an ominous sign for spending in 2009.

The drop in business investment is a key reason U.S. economic output, which contracted at an estimated 5% to 6% annual rate in the fourth quarter, is expected to shrink by a similar amount in the first three months of this year.

What is happenning? part 4

Early 2008, 24 March, well before the financial meltdown in mid-September, STKI analysts discussed  information technology  2008-9 budgets. It was the first of many presentations intended to address what we saw as a troubling economy in the coming two years, given conditions in the financial markets and general economic indicators.

Not that we had a real crystal ball, but we were concerned about the direction the future would be taking.

Despite that early and clear-eyed start we recommended our clients to continue reviewing their budget  plans quarterly. They should have been revising their spending plans and preparing to be fluid and ready to respond to any number of scenarios.

Basically working from two plans, based on worst- and best-case scenarios. Many if not most of our clients followed our recommendations and basically worked quarterly in 2008 and now in 2009. IT vendors had good quartersin  Q108 and in Q208 and worst than expected for 2h08. Which means that the year was closed at a flat to minus 5% growth in the IT market in Israel. (more info during our STKI Summit … 24 March 2009)

http://www.facebook.com/event.php?eid=59832895434&ref=mf

Because, today CIOs lack the ability to forecast next week's business conditions -- much less this year's -- IT's marching orders are shifting to emphasize flexibility, especially as business priorities and resources change.

Here are factors to consider :

 

1.    Understand the Credit Crunch….. renamed the IT CAPEX crisis

http://www.slideshare.net/jimmyschwarzkopf/stki-8th-cio-bootcamp-2009-presentation

 

In my presentation I tried to give  some background on what is happening.

What's different about this crisis is it's a capex (capital expenditure) crisis because it involves expenditures used to acquire or upgrade physical assets.

Today's credit crunch directly affects IT because, for many companies, technology is the No. 1 "capex" (capital expenditure) item.

That means IT leaders need to pay more attention to financial metrics such as the weighted average cost of capital, or WACC.

WACC measures the rate that a company is expected to pay to finance its assets (the higher the WACC, the higher the "hurdle rate" in a return-on-investment calculation, or the minimum rate of ROI that must be met to undertake a project).

Many companies will enter usage assessment projects (click here or see below).

2. Compress Payback Periods…. ROI in the next 90 days

Another metric getting scrutiny is payback period,.not just about ROI, but what ROI can I get in the next 60 days.. This will change not just what gets funded but also how you think about sequencing projects and which components you're going to launch first.

Companies will intensify their focus on goals they have pursued in the past few months but now they will break up projects into smaller components with deliverables every 3 months. They will be evaluating and possibly reducing the application portfolio by a certain percentage and eliminating redundant functionality.

Projects that show concrete cost reductions will take precedence over those that provide functional enhancements.

3.    Learn More about CLOUD COMPUTING and other new computing models

Look (click here) at several cloud postings (below) explaining the technology and its problems

The credit crunch practically guarantees that CIOs will be pressured to consider new computing models that promise lower capital costs, such as cloud computing, which refers to a variety of techniques in which technology capabilities are provided as a service. Focus on reducing per-unit costs, such as cost per server, per terabyte of storage, per help desk ticket, per programmer or per line of code.

We should still investigate the economics of the cloud, including migration, transition and security costs, as well as the solvency of the vendors that offer it.

Capex is not just affecting end users but also technology vendors.

 

Technology and politics: what if Israeli candidates....

Imagine having in Israel someone that would copy Obama's plan:

• Protect Net neutrality.
• Safeguard privacy.
• Create new levels of government transparency and accountability.
• Hire a national chief technology officer.
• Lead the world in broadband deployment.
• Increase investment in science and research.
• Reform the patent system.
• Use scientifically valid evidence to make policy.
• Make math and science education a national priority.
• Increase opportunities to retrain workers in technology fields.
• Modernize public safety networks (all 10X numbers with call centers of the 21st century)
• Invest in a national electronic health-care information systems.
• Enable Israeli industry to develop renewable energy sources.

is it logical ? ? not to me

Today I visited a client whose IT budget is no more than 1.6% of its revenues. His boss asked him to cut 20% of the capital investment and 10% of the operational budget (a total of 10% compared to budget 2008). 

In order to do this the company will stop projects that could have increased revenues, some that could reduce costs and some cuts would increase the risk of IT failures. 

Now my thoughts: 

by cutting .16% of revenues (as expenses) the company lost much more.

Does it make sense to cut IT without a real analysis??????? 

I cannot understand the logic...........  any comments ??????

What is happening? Part 3

status quoLet’s look into IT procurement “best practices” in a recession (not a complete list and based on STKI Round Tables and meetings):

1)       The IT procurement organization has a responsibility to keep vendors aware of corporate objectives and strategies. This will keep vendors focused on how they can help fulfill business goals.

a.       Use Web2 technologies (blogs, etc) to create IT procurement transparency. Explain buying decisions and mandates through social systems.

2)      Question the status quo.

a.       Is the procurement process matched to the new economic realities?

b.      Are current replacement plans necessary? Can we move them back? Delay deployment plans of unpopular systems like Vista.

c.       Don't let blind cost cutting destroy relationships, quality or compliance standards.

d.      Look to buy new tools that will improve monitoring of contract compliance and service level agreements.  EXAMPLE: PPM project portfolio management as a gatekeeper that prevents overspending.

e.       Cut the weak, superfluous vendors that were hanging on in good times.

f.        Don't just cut -- be ready to invest. Be prepared for acquisitions and the upturn. Don't rule out a relationship with an amazing new vendor.

g.       Everyone thinks they are good negotiators -- they're not.

h.      Move from long-term contracts to short-term. This will lower risk.

3)      Software licensing issues:

a.       Stop constant, unnecessary upgrades.

b.      Cut maintenance contracts on mature or non-critical software. Take the risk and lower cost.

c.       Cut back on software proliferation -- use these times to create fewer, stronger standards and rationalize licenses.

d.      Re-negotiate perpetual licenses, if needed (although some have better value than new contracts).