Us and them

Today I'd like to address one topic that I feel is the worst plague ever. Not the oil spill, not the Greek debt, and not socialism. It is one of those things that keep eroding our industry and could bring us to a doomsday scenario.

I'd like to talk about independent contractors.

Some employees - at one point of their career - decide to abandon ship and go on their own. From their twisted perspective, a large company provides very little benefit and has too much downside, therefore they are willing to break this cherished bond. I know, it sounds totally absurds and morally questionable but it is the reality. People are willing to go on their own, knowing all too well that they will be responsible for finding clients, bill them, do the work and ensure their satisfaction.

You may ask, consulting firms like CGI, IBM or EDS already provide this safe environment, so why to these renegades still go independent? How can they thrive without a precise hierarchy, procedures and annual performance reviews? What can they gain that would offset the comfortable settings of a large corporation?

I think these individuals are flawed on many levels. One, they seek pure profit by keeping to themselves 100% of what they bill. Individuals do not need that much money, in fact this increased wealth may very well be a downhill slope. Enjoying increased revenues, people start buying fancy cars, larger TVs and other goodies, but at the end of the day there are not happier. This wealth may wreck their marriage, induce alcoholism and other deviant behaviour. This is why I think a corporation has to pull the choke on employee salaries (but not executive staff, this is entirely different), people will complain about lower-than-average wages but this is for their own good. Psychologists have demonstrated this.

Secondly, independent contractors believe they can evolve as IT professionals without a structure around them, which we all know is impossible. People need to be managed in order to achieve their desired potential, very few individuals can succeed in life without a superior.

In this respect, I believe than even cavemen had a very structured society, the Homo Sapiens was able to evolve while other branches of early humans were driven to extinction because too many of them went "independent" and ignored the needs/benefits of their group. Sure, those selfish individuals could eat the entire animal that they were able to kill, but the rest of the tribe died of starvation. The independents suffered guilt afterward and threw themselves off a cliff to end their intolerable loneliness. Everyone was dead and the train stopped there. Well there was no train during that period but you catch my drift.

I hope this exposure of the reality we face has brought you closer to my perspective of why independent contractors are a scourge that we must fight everyday. If you see one tomorrow, don't talk to him/her. Ignore their existence, let them assume the choice that they made. Build a wall of brick around them. Maybe by doing so we will convince them that money is not everything and it would be highly beneficial for them to come back to the company.

Redemption is possible.

An open letter to Stanley shareholders

Sometimes the best option is to take the money and run.

Our recently accounted buyout of Stanley is creating a light turmoil that frankly I didn't expect. Some people feel that a 21% premium over market price is not enough, and I gotta say I feel offended by such unreasonable expectations. What's a fair price if not what buyers of your public shares are willing to pay? Is 31% over a fair price? Or 26? Or maybe 200%?

Sometimes I get the feeling that U.S. shareholders are getting used to free lunches, used to have their fat butt saved by the government. Americans are addicted to state capitalism, the Obama administration saved a bunch of turds from self-destruction, General Motors, AIG, Freddie Mac, all those douchebags should have sink like any mediocre organization deserve.

Point is, shareholders sometimes need to accept that their shares are worth zero, like Bear Stearns. Sometimes a company is saved from sinking by generous corporate raiders, like HP purchasing Palm - and they paid a good premium on that. And sometimes a good company is purchased by an even greater company so that a merged entity can continue its golden journey on the profitable growth path.

But what can I say, sometimes people just want more money even if they can't explain why. And don't throw yourself into the arms of C-grade lawyers lurking on Yahoo's message boards looking to rack a huge fee of Stanley's shareholders. These scumbags don't actually give a damn, I hope you know that?

So to all SXE shareholders out there, jump on the CGI ship while the stock is still under $20. Hear what Chip has to say.

Critics and criticism

I've been heavily criticized during the past few days on this transaction, market analysts say that CGI is unable to grow and has to purchase competitors at a premium in order to become a larger company. Some speculate that this acquisition has been done for the sole purpose of increasing our share price for an upcoming acquisition. Some even speculate that I came from an alternate universe with an agenda to overthrow the universe-as-we-know-it.

Here's what a blogger had to say about us.

Though the stock has been performing pretty well recently, I believe we are fast getting to the “sell” point. CGI has been very good at controlling expenses to drive profit. This stands to reason since CGI’s CEO really is a COO. However, at some point, you reach the limit of what can be cut out of the expense base. CGI is reaching that point. It is time for CGI to deliver some solid organic revenue growth – especially in the commercial sector in the U.S. In many ways, CGI in the U.S. resembles the old AMS organization in that it’s solid in government but totally sucks in the commercial market. That shouldn’t be surprising as the U.S. management team is pretty much exclusively old AMS. As such, they don’t have a good grasp on what it takes to win large long-term managed services (i.e., outsourcing) agreements. As I understand it, CGI’s best outsourcing executive in the U.S. left the company several years ago and the effect has been striking; CGI has become a total non-factor which is verified by CGI’s results in the U.S. commercial outsourcing space. CGI needs to invest in rebuilding the capability to once again become a player in the outsourcing market to drive long term organic revenue growth. The question is whether the COO (sorry, CEO) will sacrifice some short term profit for long term growth. I don't hold much hope for that. So, maybe it's time to sell?

Dude, this hurts.

More party poopers

We paid a 21% premium for Stanley and now a farging law firm is investigating if the transaction undervalued their shareholder's invesment. This is irritating, I want to increase business and some anal retentive shareholders are trying to squeeze more money for their own selfish benefit.

What is wrong with you people? CGI being headquartered in Quebec doesn't mean we're a bunch of socialists looking to share wealth. Note to Stanley shareholders: if you want to make money you should short Dell.

BTW I just faxed the law firm a signed copy of my butt, "From GIB.TO with Love".

Our new VP in Troy, Alabama

Please watch this. This is the kind of weirdness one has to deal with when opening a center of excellence in Alabama. There's no way our members from Troy members will carry a gun in our upcoming server room, I'll make sure this clause will be put in writing.

More tomorrow, our Stanley acquisition is turning into a cluster fuck.

Members Column Day: Star Trek Management

Dear FakeMike, you do an awful lot of references to Star Trek in your blog, I wish life at CGI was as much fun as aboard the Enterprise although a couple of my friends have recently gone through the "red shirt" process. Can CGI learn something from James T.Kirk? Phil from Mtl.

Good question. I guess it's the other way around, Captain Kirk would be amazed by CGI if he lived in this century, he'd quit his job to work for us.

Here's the thing: The Federation works in a way too decentralized fashion, it's hard to believe that such an organization is able to maintain itself against much better managed villains. Really.

James T. Kirk is pretty much a loose cannon and isn't much concerned with his superiors. Sure, banging green chicks in mini-skirts is more fun than filling paperwork, but administration is necessary and can be fun. How often do you see Kirk report to his boss? How does Kirk fill his timesheet? When he fights a Klingon ship, does this activity gets assigned to a special Federation internal activity code? If I was in charge of the Federation, I would definitely want to know how much time was spent fighting Romulans versus Klingons versus other species in other to maintain a management dashboard. The administrative link between the U.S.S. Entreprise and the Federation is almost non-existent, and the freaking ship is supposed to be on a 5-year mission. 5 years! I need daily updates on revenues and expenses, how come they let their people go out for 60 months without any kind of control?

When you think about it, Kirk is just a low ranking middle manager yet the spotlight is on him which indicates that something is way wrong. The spotlight should be on the person managing the Federation.

In addition, Kirk does not seem to care much about internal controls either. His staff does not get annual performance reviews, how can they improve themselves? Is there an HR staff aboard the Enterprise? What about quality, how does the Captain assess the job done internally? It's all loose and emotion-oriented, which probably explain why the original series didn't last long.

If Roddenberry had geared this TV series with better management controls, I think the viewers would have appreciated the thrill of space exploration under strict rules and protocols. See Kirk ask permission from this superior before firing a photon torpedo, this is kind of moral imperative that impress young viewers. And young viewers evolve into working-class adults that share the same interest toward respect, rules and way of doing things.

I told you so. Did I?

Even during my conference call with analysts following our Q2 results I was pestered and annoyed about the same stupid questions. I told those Brioni-clad morons that we'd buy something when the time would be right, and patience is not something you find on Wall Street these days.

As you all know by now, we've done a sizeable acquisition last week. Stanley's a great fit for CGI and the risk is very low for us. 5,000 billable people, they suck money from the U.S. government so it's not like the client will run out of money soon. They know how to get in, and we'll merge them with our Federal business unit. Did we pay too much though?

Stanley brings $865M in revenue for $126M in gross profit. That's $25,200 per drone, which is pretty similar do what we do ($654.76M in gross profit for 26,000 employee gives $25,183 per drone). This means those guys know how to press lemons and work pretty much the same way. Stanley could not care less about dividends so we're also on the same page. Dividends are for sissies.

On the downside, our profit and operating margins are a bit different and their corporate culture has some defects. Stanley was nominated a few times as "Best Places to Work" in some states, this highly suspicious event will require immediate attention from our senior management – meaning me. Happiness has a cost and it goes against the spirit of profitable growth. Call me a party pooper if you want, but unlike Happy Raymond I do not believe it is our mission to make members happy. Having said that, once we integrate their staff into our internal processes we should be able to smooth that out.

What does this mean for you members? How does this deal impact your day-to-day routine? Should you raise your expectation level about CGI? I'm happy to report that the Stanley deal won't change a thing. You'll still punch tomorrow and you'll still get a 1% raise this year. If you want to thank me for not shaking your world, the address is still fake mike roach at gmail dot com.

On a final note, the picture above is not my favorite portrait, it looks like a Klingon beamed aboard my ship and I'm very pissed off and about to knock him out with my phaser gun. But this is a favorite tie, aka crossword puzzle.

68% of all IT projects fail

Yet, consulting firms make tons of money, isn't that amazing? Good article in the Financial Post this week, the author does a pretty job of painting a gloomy picture of our industry and blame human beings - not technology per se - for screwing up projects.

Money quote: The first failure is that of the project manager to adequately understand the business's requirements. This might be due to not talking to enough users of the system or not talking to managers and really understanding the problem it is supposed to solve.

The thing is, moronic clients can quickly say what they DON'T want with unprecedented level of details, but when prompted to say what they WANT, you are left with a blank stare. They're like kiddos to whom you serve a broccoli soup, they say yuck, you ask them what kind of soup they want, and they answer I don't know.

You can put clients into long therapy session to extract bits of information here and there, you can fill half a page maybe (using large font size), and this becomes the scope of work for a multi-million dollar project. We'll figure out the details down the road, the client says. Since consulting usually work on a hourly basis, it's a match made in heaven.

The second is a failure to involve the systems users in its design, which often results in the users rejecting the system, even if its design meets the business's requirements.

It takes way too long to involve system users in the decision process, they don't know jack about what they want either - just like their bosses, and they'll have conflicting views. Did Steve Jobs involved focus groups when designing the iPod? No, because people don't know anything and they have a hard time defining something that they can only dream of. So when designing an IT system piggybacking an overly complex business process, you can bet your pants that we won't involve end users. It's a pain to manage. Better knock on the door of the dude managing IT budgets, he should be your next best friend.

The third, which Prof. Neufeld believes to be the most important, is a failure of senior management to get involved in the project, whether it is the chief executive, chief financial officer or chief information officer.

Senior management is sitting in their comfy chair and planning their next golf tournament, the last thing they want to hear is that their business is so twisted with layers of insanity built upon layers of nonsense that it's impossible to design an IT system to meet the requirements. That would require straightening the business, and it's as much fun as a getting a vasectomy performed by a plumber. Therefore senior managers delegate the job to hapless middle managers who are not authorized to make any decisions (hence the word "middle").

Let me tell you something. If people could spend their days on YouTube instead of making important decisions that would improve everyone's life, they'd do it without hesitating. It's human nature.

The Needs of The Few

There are different trends in the IT industry, and from my point of view the best way to manage IT is to impose standards and crush those who differ.

Case in point, I was reading that Kraft has initiated a "Bring your own computer" program for its employeees. This devious program states that "everyone works differently. For some, a standard computer or laptop is just the right tool to get their work done. For others, a computer with a little something extra – a different operating system, custom hardware, more memory, etc. – is the best fit for their job." Kraft's new employee initiative "gives you the freedom to choose the right computer for your lifestyle".

I have many issues with Kraft. For one, they produce a way too great variety of their Singles processed cheese product. Regular version, which is the gold standard for making a grilled cheese. There's the thick version, which serves no real purpose since you can use 2 regular slices and achieve the same thickness objective. There's the Swiss version. There's the low-fat version. There's the extra-calcium version. There's even the Omega-3 version. When I pick a pack of Singles at the store, I have to spend at least 45 seconds to identify the item that I want - that is the standard version. Kraft should eliminate all this confusion and keep a single product - in a single format size, that is 24 slices.

Next issue with Kraft: They are paying a way too generous dividend - a 57% payout ratio - this means that the company keeps $0.43 out of every earning dollar and - gulp - gives the rest to shareholders. This financial non-sense has been going on for years, and they've been increasing this dividend for the past 8 fucking years. Holy Mackarel, this ain't no way to build profitable growth, my dear members. My advice to the Big Cheese: cut that out and tell your shareholders to earn money for themselves, Kraft is not a welfare organization.

Next and finally, their new "Bring your own computer" program, which is just a recipe for disaster. Employees will start bringing Macs and Linux boxes, creating a chaos of unprecedented magnitude. Sure, participating employees must comply with company policies regarding software, security and data requirements, but I think this is wrong.

When everyone owns a cheap beige box with 512 MB of RAM, there is a bond that glues all the IT workers, everyone shares the same pain and that common ground fosters teamwork. When one has a larger screen than others, there's envy. When one has an alien technology so different from anyone else, a social breach rips the bond and IT workers cannot relate to one another. This is bad. Worker "A" cannot understand why Worker "B" prefers to use an operating systerm other than Windows XP Professional and that misunderstanding breeds contempt.

It's a well-known fact that companies and governments that favor uniformity over choice of options are the clear winners on the long run. The Soviets had the right approch but their economic system was flawed and profitable growth was not sustainable. Henry Ford was manufacturing cars with only one color option: black. When your staff / population has a dimmed view of what options are available to them, they tend to be happier once you educate them properly.

Like Nimoy once said, the needs of the many outweigh the needs of the few. So to my friends at Kraft, get your act together while there is still time.