Offshoring

I find the offshoring topic be very interesting and timely. And today I would like to share my point of view about offshoring.

First of all I would say that I do not see any advantages of that for the USA. Because I am trying to look at it not from the point of view of individuals like the corporate shareholder who will definately benefit from it but I see how it influences the USA economy and employment.

To be more reliable I am presenting the following data, all of them are influenced by the offshoring.

The U.S. economy experienced an acute job creation crisis between 2001 and 2004: between March to March in these years private-sector jobs declined by 2.6 million.

While the manufacturing sector lost 15% of its jobs from March 2001 to March 2004, the software-producing industries lost an even-higher 16% share of their jobs. Moreover, jobs in software occupations within the manufacturing sector shrank even faster than overall manufacturing jobs. Between 2000 and 2002, total manufacturing jobs fell by 12%, while software jobs within manufacturing dropped by 19%, affecting workers who were told for the past 20 years that they had precisely the skills needed to thrive in the global economy.
Sending technical work overseas U.S. firms undermined the job security traditionally expected by white-collar workers with advanced technical skills. And it also made wage growth slower.

All these actions lead to boost the economy of those countries where the USA is trying to "develop" its offshoring business but at the same time it harms its own economy.

I was told by one professor that he thinks that the USA is able now to digest this tendency. Probably it can but I worry what happens in 10 or 15 years when the growth of the offshoring tendency will have the same pace it has now. My personal prediction is very sad. The USA can lose that power it has now because they invested too much in other countries instead of developing its own industries?!

ERP and horror stories

In general everyone can say that ERP system is a good "invention". But do we really know what it can cause if it wasn't developed in the right way? One article (http://www.isaca.org) that attracted my attention depicts some drawbacks and consequences made by ERP system.

The following are descriptions of recent catastrophic ERP failures in the private sector:

• Hershey Foods - a 19 percent drop in earnings was caused by an incompetent ERP implementation that wreaked distribution havoc during one of its most profitable seasons in the US: Halloween.
• FoxMeyer Drugs - this pharmaceutical distribution company was forced to declare bankruptcy after an unsuccessful ERP implementation.
• Whirlpool - ERP implementation crippled its shipping system, leaving appliances stacked on loading docks and not delivered to paying customers for a full eight weeks.
• Volkswagen - significant delays in parts shipments caused product inventories to build up to costly levels.

It has been estimated that half of the issues in ERP disasters are not technical but are people and culture related. Many of the failures can be attributed to poor change management in the form of inadequate training. Trainers need to understand the legacy system processes and know how to translate these process into the new processes called for in the ERP.

In the US government, the General Accounting Office has identified the following problem with ERP implementations:

• Department of Defense - Defense civilian personnel data system: Costs rose US $248 million to about US $1.3 billion.
• Labor Department: Costs jumped from US $26.5 million to US $71 million, due to underestimating implementation and operating costs.
• Department of Veteran's Affairs: Costs jumped from US $170 million to US $417 million, and the project is currently two years behind schedule.
• NASA: Its ERP failed to produce accurate financial reports. The system was unable to close year-end books on a Cal Tech contract.

The author of this article came to the conclusion that I share completely. These "horror stories" point out a number of key considerations.

First, there is a need to carefully plan and execute an ERP implementation, because the failures can be catastrophic. This undertaking is definitely not for risk-averse organizations unless there is a crisis driving the organization toward an ERP.

Second, ERP vendors rarely discuss these failures (unless they involved a competitor); therefore, you must be able to see through the hype and understand possible consequences of ERP implementation.

Finally, these horror stories serve as valuable experiences, keeping other implementers from falling into the same trap.

Security and IRS

Today I would like to discuss how the information we provide to the Internal Revenue Service (IRS) is secured.

First of all, I found the following in the website of IRS: "We make no attempts to identify individual users unless we suspect illegal behavior. To keep this service available and secure, we monitor network traffic to identify unauthorized attempts to add or change information, or otherwise cause damage to the website. By using this website you consent to such monitoring. Unauthorized attempts to upload information and/or change information on this website are strictly prohibited". Moreover, "The confidentiality of Internet transactions is not guaranteed. You must decide if you want to assume the risk that an unauthorized person may learn your email address or other information you may provide as it is transmitted. Once received by IRS your information is secured. We will not email refund information, account data, tax data, or other personal information as part of our response to you".

According to the Treasury Department's inspector general for tax administration (http://seclists.org/isn/2006/Feb/0116.html) the IRS has not consistently maintained the security settings it established and deployed under a common operating environment (COE), resulting in a high risk of exploitation for some of its computers.

Recently, the IRS has adopted a common operating environment for security configurations on all of its workstations. The common environment should let the IRS control security configuration settings and software on workstations by using one master COE template, which the IRS installs on its computers. The IRS has installed the master COE image on 95 percent of its computers. But of 102 computers tested, only 41 percent continued to be in compliance; 59 percent were not or contained at least one high-risk vulnerability that would allow the computer to be exploited or rendered unusable. Almost one-half of the compliant computers contained at least one incorrect setting that could allow employees to circumvent security controls established by the common operating environment.

Also, at the time of the audit, the COE security settings had not been installed on more than 4,700 computers. Without them, computers were missing security patches and at high risk for viruses. In addition, the IRS at the time did not own a software license tracking or metering tool that could identify software use for a baseline inventory. For example, the IRS spends up to $32 million annually for Microsoft Office suite products. But the IRS could not explain how it arrived at the number of licenses needed.

Nowadays they are working to correct their problems. But I did not find the results of their progress. It may be no progress?

For me all that information was scary even the IRS has declared that all information is secured facts are opposite - there is no guarantee that your personal information was not used for illegal purposes.

IRS and electronic datawarehousing

I would like to expand the topic dedicated to data warehousing issues. In my previous blogging I made an overview about how government agencies handle their huge pools of data. Today I will look closer to the IRS system and its electronic datawarehousing (EDW). I found this information on the IRS website http://www.irs.gov/privacy/article/0,,id=153366,00.html.

So, in September 2001, the IRS initiated the EDW Project. The business goal of EDW was to provide integrated, reliable tax operations and internal management information to support the IRS's evolving decisions analytics, performance measurement, and management information needs. The EDW Project strategy was to incrementally build an enterprise wide data warehouse of detail data. And data marts were designed to meet predictable strategic and tactical information needs. The data warehouse and data marts are using a mixture of existing and modernized tax operations and internal management systems as sources of data.

This system is using the following:

• taxpayer account, taxpayer return, and case data;
• employee type, skills, classification number, and general status data;
• internal Management budget, cost, travel, procurement, and asset data.

Access to the system and control to prevent the misuse (e.g. browsing) of data by those having access

The access to the EDW is belonging to business analysts/researchers and planning/operations managers. And their access to data is controlled by security profiles. The specific documents contain information regarding data access controls and procedures such as EDW Security Features User Guide (SFUG), EDW Trusted Facilities Manual (TFM). At the same time user access is restricted to the minimum necessary to perform normal job duties. EDW uses existing mainframe and UNIX system application and database access control and logging capabilities.

The retention period

EDW is not the operational system of record for taxpayer/ employee data. Data retention is based on requirements for decision analysis and reporting. Retention requirements are the current year plus the prior 3 years immediately accessible (minimum requirement for trend analysis) and 20 years offline (delayed access).

Detail data residing in EDW is not updated. New data from operational systems is added during daily/weekly EDW processing. Moreover, EDW is not used to contact, locate, or monitor taxpayers. Only taxpayer information required for decision analytics, agency performance measurement, and management reporting is extracted from operational systems and stored in EDW.

Besides, there are no potential effects on due process rights of taxpayers and employees. If the analysis research results in the need to contact taxpayers, the information will be passed to operations personnel who will initiate contact and record results using operations procedures to ensure due process.

Unfortunately, there is no discussion about challenges they encounter using the EDW. But what I can conclude from reading this information that the primary goal of that system is to store data and if necessary to do some analysis or research what it usually does.

Data warehousing and government agencies

I was always wondering how government agencies manage extremely huge pools of data and what technologies they use. And I found the interesting article (http://www.sybase.com/detail?id=1038814) that in someway describes and summarizes the methods of some government agencies.

Each year, the Internal Revenue Service (IRS) loads 1.7 terabytes of individual and business tax information into billions of rows and over 200 columns of data storage, all with complex links to associated schedules and other attachments.
U.S. Department of Transportation's Bureau of Transportation Statistics (BTS), which provides data, analysis and consulting services to the Department of Transportation, other federal agencies, universities, trade associations, the media, the U.S. Congress and the public at large, maintains a system which contains more than 400 tables across 100 databases, with total raw data storage of roughly 2.5 terabytes.

The U.S. General Services Administration (GSA), the centralized U.S. Federal procurement and property management agency, has a system which manages 425,000 users, 10.5 million products and 14,000 vendors, with more than 2,000 users conducting some 37,000 searches an hour.

The United States Securities and Exchange Commission (SEC), which is responsible for tracking all daily stock transactions conducted in the United States, has four divisions and 18 offices, including 11 regional offices throughout the country, and has a data warehouse of 320 gigabytes.
The U.S. government is not alone. Governments around the globe face the same challenges. So how do they cope with all that data?

This article promotes Sybase's world-class analytics server, Sybase IQ that "produces high query/reporting performance; highly efficient storage of the large volumes of data; faster and more intelligent decisions based upon real-time information".

The IRS "relies on Sybase IQ" to deliver data in a single integrated environment, with data standardized for decision-making and analysis. It holds seven years of individual and business tax return information, amounting to 12 TB of input data, and achieves a 70 percent compression rate. It supplies users with relevant, timely, and accurate data. It handles complex and changing data. It provides fast, flexible analysis. Finally, it continues to grow with the data but without performance degradation or additional hidden costs.
For BTS, "its Sybase IQ-based system, TranStats", provides a single point of access, consistent metadata for efficient searches, the ability to selectively download data by a choice of variables, online interactive analysis through tables, charts, and dynamic maps, and automatic cross-database linkages and data standardization for more focused analysis decision making. TranStats is a huge success for the agency, with an average of over 25,000 Web hits per day. Loading and indexing data, which used to take hours, now require only 30 minutes.

Sybase IQ provides the system of GSA with high availability, system integration, and lightning fast search capability: an estimated 10 searches a second. The GSA estimates that its Sybase IQ-based solution saves it over $10 million a year.
The SEC, which needed a completely new system to manage a robust disaster recovery architecture and allow it to process large amounts of data while increasing the system's performance, used Sybase IQ to create a flexible, scalable, and reliable data-rich warehouse producing faster load times and query results, and more comprehensive information views - all at a lower cost. Samuel Foster, President of FosterSoft, a SEC contractor said,"Since we've been live with the new system, there has been no unplanned downtime. None".

Of course, this article was written as an advertisement but for me it was interesting to read.

Software program - SAP e-recruiting.

SAP E-Recruiting, an innovative new software application, covers the whole recruiting process chain, from planning and budgeting to attracting candidates, hiring, and retaining employees. The application connects recruiting processes with internal HR infrastructures. Integrated workflows automate the flow of information and processes. SAP E-Recruiting allows you to post employment opportunities on job boards and to direct incoming electronic applications into internal processing channels - automatically through the same medium. The result is a collaboration of all internal employees and external partners in the recruiting chain, which in turn smoothes the way for cross-enterprise process integration.
The following elements, core functions of modern recruiting, form the backbone of the application:

- Talent warehouse
- Recruiter
- Analytics

Talent warehouse
The talent warehouse in SAP E-Recruiting integrates external and internal recruiting on a single global platform. Candidates can increase career options while line managers can gain a larger pool of potential job candidates - in their own country and abroad. The warehouse provides recruiters a wealth of possibilities for maintaining positive, active relationships with candidates.

Recruiter
SAP E-Recruiting manages various posting channels. For example, job postings can be directed automatically to internal channels and transported via an XML interface to external job boards. The recruiter regulates incoming applications, both postal and online, using workflow-supported processes. It triggers application rejections, invitations to an interview, and interview appointments automatically - and coordinates the activities of all parties involved in the recruiting process.

Analytics
To ensure the ongoing optimization of your recruiting processes, you must have access to up-to-date information. In this area, SAP E-Recruiting benefits from SAP's extensive experience in data warehousing, offering functions for reporting and evaluations as well as planning and controlling.

Being the innovation and as a consequence being not very cheap not many companies can afford this software (or simply just waiting to be assured it its real efficiency). But what I found in the internet the company "Hugo Boss" already implemented this program and it seems to be very astonished by its usefulness and efficiency.

By the way, the e-recruiting system could be a good example against Carr's theory, which shows that the developed SAP e-recruiting system software produce a competitive advantage to already existing similar previous technology.

http://www.sap.com/solutions/business-suite/erp/hcm/pdf/SAP_INFO_Hugo_Boss.pdf

http://www.sap.com/belux/solutions/business-suite/erp/hcm/pdf/BWP_SB_E_Recruiting.pdf

Additional information about e-recruiting

I was set up the task to find out what companies are using the e-recruiting system what do not and what job seekers are thinking about that. Unfortunately I could not find the statistical data about those specific targets for 2006 but what we can observe in our "internet age" that almost each company, no mater what size it is, has its web site, huge amount of them have a column "Career" . Only a little amount of tiny-sized companies - usually family owned - do not have their own web site and as a consequence no e-recruiting system. But they do not need it! Why? As an example let us take the private family dental business. I am attending the family dentist who has the staff including only him and his assistant. He does not need to pay for installing the expensive e-recruiting system. When I asked him how he found his assistant he told me that he just applied to the recruitment agency and they did it for him. And of course those recruitment agencies have these innovations. Returning to my dentist he does not have even his own website. He is explaining that his name is on the web sites of insurance companies that information provided is covering all about him and his practice.
Furthermore, my conclusion based on the recent investigation done will be the following:
1. No doubts that e-recruiting system is very cost-efficient for the company and worth of being used;
2. Companies, who have the HR department, without any doubts possess it - because it is widely spoken everywhere: "It saves both costs and time";
3. But there is a little amount of companies not having it because they simply do not need it (for example, they have a few quantity of personnel to be rarely rotated) - it will be much-much cheaper to use services of the recruitment agency.

Now about the opinion of job seekers - to category of which I belong.
Job seekers moved to the Internet long ago. The benefits to job seekers of using the Internet are significant. According to the article "E-recruitment next generation" surfing is less expensive than purchasing print media, job seekers find at least four times as many jobs advertised than in print, and with greatly detailed job descriptions. Searching is a lot more targeted and faster online than sifting through newspapers.
Job seeker responses have been unanimously positive. What appealed most was the fact that candidates knew that they were providing the company with exactly the information they needed, rather than posting a CV and "hoping it was what they were after".
I completely agree what was said above. But what really annoys me some companies "did not elaborate the system to the end" you can be stuck at any stage if you do not find the solution programmed by the system. But in general it is easy and fun.
And also it is a very good movement and development which facilitates the communication between the employer and employee.

http://www.istart.co.nz/index/HM20/PC0/PV23539/EX23420/AR23802;

http://users.ugent.be/~flievens/internet.pdf;

http://www.benefitnews.com/career/detail.cfm?id=1496&arch=1.

Benefits of e-recruiting system

According to e-recruitment analysts interbiznet.com, there are currently 15 million annual job changes taking place in the U.S. workforce of 100,000,000 people - resulting in an estimated $90 billion market of "cost to hire expenses." To reduce this cost, Internet technologies are increasingly centralizing and integrating the entire corporate recruiting process into an e-business supply chain. According to iLogos Research, 79% of companies now recruit on their corporate Web sites - up dramatically from only 29% in 1998. Corporate Web sites are becoming the primary interface of an Internet-based hiring management system - that brings increased efficiencies and productivity to the corporate recruiting process.
Until recently, the typical recruitment process followed the following management flow:
1. Defining the position; 2. sourcing candidates: 3. visual screening of resume/application; 4. interviewing; 5. offer and hiring and 6. hopefully, retention. Within this model, both hiring managers and recruiters have been historically dependent on paper-based systems and outdated communications that result in billions in hiring and personnel management inefficiencies and constraints.
With new, e-recruiting-based models emerging, costs that are now wasted on administrative tasks and manpower can be severely slashed. The resulting benefits established enterprises by lower costs of recruitment, faster time to hire and greater retention. This can only be accomplished with a fast, simple, cost-effective method of online candidate interviewing and assessment.

Traditional recruiting methods that are reactive and oriented to an abundant supply of talent are outdated in today's economy. Competition for good candidates will favor companies who are adopters of the Internet tools now being offered. Investment in candidate acquisition and assessment will differentiate companies who are efficiently recruiting from those using traditional methods. In order for human resources departments to secure budgets to purchase these new solutions, they must prove their value to the organization. Faster, more accurate hiring of high priority openings will help companies earn profit quicker - allowing HR departments to affect the bottom line instead of remaining an overhead cost center.

Source: http://fitability.com/about/industryoverview.asp

http://findarticles.com/p/articles/mi_m3495

E-recruiting

In doing research for strategic uses of technology in business I found very interesting article that attracted my attention: "E-recruiting: opportunities and challenges" published in journal "Information Management", Fall 2006. Recently, a Web-enabled e-recruiting emerged quickly as a powerful method for both job seekers and recruiters. E-recruiting has driven companies to redesign the recruiting process and to move quickly to Web-based integrated human resource systems that provide standardized frameworks for key personnel processes. Companies are using their career Web sites to give detailed job information, to explain the culture and benefits, and to promote long-tem relationships with job seekers.

E-recruiting system was introduced in the mid-1990s and has evolved through numerous technological developments. At the early stage of a corporate e-recruiting system, the purpose of the career Web site was simply to post job openings on the static Web page for job seekers' information. As e-commerce technologies advance and recruiters gain more e-recruiting experience, the front-end e-recruiting systems add new features and functions, target job seekers better, and integrate with a back-end human resource management system. An advanced e-recruiting system of large companies has been powered by an enterprise-wide system and has incorporated best practice recruiting methodologies to achieve strategic advantage.

But the benefits of e-recruiting can be only accomplished with the extensive use of a central database and an array of Web-enabled integrated applications. Given the complexity of an integrated system, it is essential to create an architecture that will guide the development of interrelated components that support the e-recruiting phases and other human resource processes. If clear architecture has not been established, it is difficult to realize fully the e-recruiting potential. Having established a comprehensive architecture, companies then can undertake the development and integration of various e-recruiting technologies that are likely to lead to their desired results.

And as a summary e-recruiting has a potential to reduce hiring costs and time and to improve the quantity and quality of job applicants, but there are four major challenges that remain to be overcome: organizational, managerial, legal, and technological challenges.