Host Intro (Gene Kim)

So the next speaker is Ben Grinnell. He is one of the very few people who has attended every one of the 15 DevOps Enterprise Summits we've had since 2014.

Seventeen years ago, he founded a consultancy in the UK who aimed to be the friend of the CIO and to grow client capability, not consulting dependency. That became North Highland, a global change and transformation consultancy with 3,500 consultants.

I'm so grateful that he's been a part of the programming committee since 2016. Like all program committee members, he brings his own problems that he wants to solve, things he wants to learn, experts he wants to see.

There's something that he brought up earlier this year that definitely caught my attention. He pointed out that, as a program committee, we've had some pretty explicit biases against outsourcers, favoring organizations that have insourced their engineering talent. But we know that this is not a prerequisite to get great engineering and business outcomes. After all, we've featured many stories like this. And as some of you may know, in the State of DevOps research, we found that it is not outsourcing that's counter to performance; it's functional outsourcing, where you give Dev to one group, Ops to another, Security to yet another. This is what drives up coordination costs.

He presented earlier in London on a problem that he wants to solve, and all I can say is that it feels like a very important frontier that so many in this community will have to solve. More exciting is what he wants to do about it. So here's Ben.

Ben Grinnell

Good morning, everybody.

I hope you're all having a fantastic learning, networking, conference-live experience so far. I know I have, and it's definitely been too long.

This morning, I want to start an important conversation with all of you and build some momentum in this community around a problem that I think we've largely ignored, and one that frustrates millions of IT workers.

01Background

Before I do that, let me quickly introduce myself.

I started my career in the early 90s in Ops. I was a VAX/VMS system manager, if anyone knows what that is anymore. By the late 90s, I was moving into Dev. I'd funded my PhD business by designing company websites in Netscape and Mosaic. Then I got a proper job as a consultant at Andersen's, mainly programming in Java, a bit before that famous Enron scandal.

In 2004, as Gene said, I helped found a consultancy to try to build client capability above consulting dependency and be the friend of the CIO. That became North Highland, which is now a global change and transformation consultancy where I'm still at today. And it's not quite 35,000; it's 3,500 consultants worldwide.

Outside of work, I love playing sport, squash, and triathlons. I've just finished building my eco-home in London, which has been a trial. I've been a vegan for six years, and I've got a wonderful family: my wife Eula, three daughters, and a son, ranging from 12 to 30. That's a bit about me.

Why did I get here? I flew over to that inaugural San Francisco conference and realized that what this community was trying to do was really special, and it was absolutely needed, having been working with CIOs for 10 years at that point. I got involved in the programming when we did the inaugural conference in London and have been involved ever since.

I love what this committee is doing and how many people we've all helped. Every conference I go to, I take more stories back home to share with some of the skeptics and some of the people who just need a little bit more confidence to stick their neck out at their company and take a chance, try something new.

It's great to be back in person. I'm loving this, but I'm also loving some of the things we did while we weren't in person, like the video library, which is really increasing our reach as we get some of these people who can't make it here this time.

02Holistic Sourcing Of The IT Workforce

Today, I want to start a conversation about holistic sourcing of the IT workforce. By that, I mean the internal function, the consultants, the contractors, the managed services, the outsourcing: all of those people that are involved in that one team that we want to have.

The idea for this talk came as I was looking at the programming and knowing that this community wants to improve the lives of everyone who works in IT. I felt there were millions of people that we weren't helping enough. There are millions of people that work for the global system integrators delivering those outsourced contracts, and the people who work with them on the client side. We haven't got enough stories for those people. We haven't got patterns about how to make this work. That's what I want to start working on.

I originally started looking at sourcing back in 2007. I spent three years as the IT director for the UK Border Agency. That controls all of the entry and exit to the UK, passports, and everything else.

When I landed in that role, all of my application maintenance and my operations were outsourced to Fujitsu. I had a massive development contract for everything we were custom-building with Atos Origin. Then I had a huge portfolio of change programs, three of which were over a hundred million a year, and those three were all being outsourced effectively to three different Big Four consultancies. In-house, I had a procurement function.

There was nothing in that model that encouraged any collaboration between those suppliers. Quite the opposite: they were all competing with each other. The things we talk about here -- collaboration, enabling each other, sharing -- were in short supply. None of the behaviors were possible. It was impossible to implement anything like that in that environment.

Some of that is still happening today, and we've got to find a way to fix it.

03The Insource Question

Every enterprise I speak to at the moment is trying to grow their internal IT capability. I'd love to know if that's true of all of you. If you're working for a large enterprise, let us know in Slack whether that's true or false for your firm: growing your internal IT capability.

As they're trying to do that, the question I get asked by many CIOs is this one: Do I have to insource to accelerate my DevOps goals?

There's a lot of evidence out there that the answer should be yes. You'll hear a lot of stories in these conferences and in the video library about firms who have made great progress in those DevOps goals, and usually it's accompanied by a shift from outsourcing to insourcing.

A group got together in 2019 and wrote a paper. I wasn't involved in this one, but it's a great paper: Project to Product. It's a white paper on the IT Revolution site. It's about a hundred pages with some great content. It studied 14 enterprise journeys, and some of the quotes I've got here were pulled from that paper. Most companies went from 70% outsourced to 30% outsourced over the course of their DevOps transformation.

In lots of other places, you'll find that functional outsourcing is cited as an anti-pattern.

So can the answer be insourcing? Unfortunately, the people that make most of these decisions are not the people reading the IT Revolution white papers. They're probably more likely to be reading Forbes. This is what Forbes said in May: the state of tech staffing, success tomorrow relies on smart outsourcing today. They projected that software developers and outsourcers would increase 70% between 2022 and 2023, and global outsourcing revenue is going to be 587 billion by 2027.

How many developers is that? The number of software developers in the world is expected to be 28.7 million by 2024. It's a lot of people. That's what they're reading. We need to get them to be reading our papers as well.

04The Global System Integrator Problem

If you look at the global system integrators themselves, they've got their own challenges.

They've got a huge internal transformation. If you're trying to do DevOps across the global system integrator workforce, not only is it a massive workforce and a much bigger problem than many of their clients, a lot of the time they can only go at the pace the client will enable. They can't transform across their organization. They can say, this client is a bit more DevOps, this one isn't, so it's not entirely within their control. Modernizing that entire workforce is a huge program.

A lot of the work they're doing is paid for by contracts they've won which have been tendered for based on cost reduction and risk transfer. They've got to contend with that.

Then there's the customer misalignment. As they were bidding for those contracts, their customer is procurement. They're not allowed to speak to anyone else or they get chucked out. When they win the contract, if they're lucky, the customer will switch mainly to IT and less procurement. Sometimes that's not the case. But the real customer, the business, maybe they never get to speak to them. Those customers will all be pulling them in different directions.

Then there are their needs. Their businesses are not charities. They need to drive shareholder value, and shareholder value is driven by growing revenue, growing margin, and increasing the security of the revenue pipeline. If you think about doing those things, getting sticky, increasing the share of the pie, they're not really aligned to what the DevOps-enlightened customers want, which is: help me grow my internal capability and reduce my dependency on the outsourcer; help me get automation into my system so I need fewer people and less money to do this work; and collaborate with the other people in my ecosystem, the other suppliers, so you can help everyone bring their A-game and make everyone else look good too.

You can see some quite difficult dependencies and alignment to get right there.

05The Insourcing Problem

If we look at the other option, which is insourcing, that doesn't lack challenges either.

As I said, most IT directors I speak to are trying to grow their internal capability. But for a lot of them it is just an aspiration. When I say, okay, what capabilities have you got in-house today, which ones are you trying to grow, and where do you want to be by 2024, there isn't a plan.

If there is a plan, has that plan been agreed with the CFO, who's usually their boss? Has it been agreed with procurement? Has it been agreed with the CHRO? If you're not agreeing this with the people function, how's it going to work?

If you go into companies and ask the CFO, the CHRO, and the CIO what their plan is to build internal capability and see if you get the same answer, in my opinion it's rare. I've tried that several times and haven't got one yet.

HR often underestimate what it takes. A lot of people think growing internal capability is hiring a lot of experts at this level. Particularly in today's market, if you're not growing your own, it's not going to work. It's going to be transient. You can hire some experts; they won't stay without having teams underneath them, and you won't have a sustainable business model. People underestimate what it takes.

If you haven't agreed the aspiration across your C-suite, told all your people, and really painted that vision to the market you're trying to recruit from, then you're not going to be able to attract the people.

A lot of you might be trying to grow your internal capability. Let me know if you think there are things I've missed in that list. I'd love to hear more ideas.

06Capability Centers Of Excellence

I wanted to look at the way some people are trying to procure if they're trying to move away from those contracts. What sort of contracts do they want to go with?

Some of them are procuring help into capability centers of excellence. I've seen a lot of contracts come out recently where people are saying, I've got a capability I want, I definitely need more capacity, and I want to increase the capability. I want to move away from just having lots of contractors increase my capacity. I want to procure a managed service with a wrapper that is going to add the people I need to the capability, but also help me grow my entire capability and help me make that center of excellence better and better.

Things to think about for the buyer of those contracts: how do you get rid of the commercial misalignment? Obviously, if you're providing that managed service, you want to get as many roles as possible. It decreases the cost of that service or wrapper you're putting around it and it makes you grow your revenue. But the client wants you to grow their internal capability and decrease the reliance, so find some way to get into the commercials something that nullifies that misalignment.

Optimizing assignments is something I often see missed. A lot of organizations, the center of excellence in IT and the business customer will say, I want an expert in this. Actually, I want one of the experts from the outsource supplier. I don't want your people because they're all learning on the job. You've got to get that right. I've been a consultant most of my career, and I know that scheduling the right assignments for your people is the lifeblood of the organization. If you give your internal team that you're trying to develop the bag-carrying roles, they're not going to stay and you're not going to get that growth you need.

A lot of procurement people would like to see: we've got a center of excellence and we're getting roles in there; we want two or three suppliers to be supplying the roles so we can compete everyone and get the best price. Because, obviously, the lowest day rate is a proxy for value.

That's an anti-pattern for me. Again, you've got that service wrapper where they're trying to grow the capability. If you've got two or three bubbles of two or three companies with their own methodologies to find people, that's not going to work. Trying to avoid competition for roles and trying to make it feel like one team -- leave your badge at the door -- is really important.

A sustainable learning workforce is another thing people overlook. They need to buy something from a supplier that the supplier can provide. Very often I see, I don't want anyone learning on the job; I only want your experts. If you say that to a supplier, how are they going to build a sustainable business? How are they going to develop their junior people? What you do is change what could have been a good relationship with a supplier and a partner, where you're both growing together, to one where you force them to effectively go out and get contractors in to fill that gap because they can't get enough people. Then you moan at them that they haven't got the business continuity and they're not bringing people that are all aligned, but you've just changed them from a provider of a service to basically a provider of bodies from the contract market. You could have done that yourself.

Lastly, I see a lot of mismatch. I see a lot of funding going to the missions of the business and the product teams, and quite often the centers of excellence are just feeding off the scraps of them. Their money and funding is coming from the big projects because they've got to sell their people to them. In that model, you can't really build any internal capability that's going to last.

07Ready-Made Cross-Functional Teams

Another pattern I see is people buying ready-made cross-functional teams: give me a pod to go and develop this.

Again, the commercial challenge there: you could go time and materials, but procurement appreciate outcomes. If that pod is going to get into work, have you really got something you can separate off enough from the rest of your business to put an outcome-based contract around it without that going wrong when you need to pivot further down the line? Be really careful with that.

How do you build internal capability if that pod is doing something that's separable enough for you to separate out from the rest of your business in an outcome-based contract? Can you put your people into it? How do you make that work?

There may be others I haven't got time to drain today, and I'd love to hear more from everyone who's tried some of these. Any examples you've got, please let me know on Slack or DM me. I'd love to hear more.

08Keys To Success

To summarize, whichever model you choose, I think some of the keys to success are:

Be intentional. Have a plan for what capability you want to build and where you want to build it, agree it with all of your C-suite executives, and publish it to the market.

Get HR on board. Growing an internal capability is a big job, and developing people is something that the HR function needs to be involved in. I often find that the IT directors and the HR directors aren't working together in lots of organizations, and given how much they struggle at the board level, they really should team up more.

Grow your own. Definitely in today's market, if you're not growing your own talent, you're not going to have talent.

Look at your partners' business models. A big mistake I see is trying to get a partner to do something that isn't in their business model. Don't let them invent something for you; it won't work.

Talk about the goals. Talk about their incentives and their measures. The more open you can be about the misalignments of their incentives and your incentives, the more you can do things to nullify them and the less they'll get in the way. It's really important to have that transparency, and maybe you can get some commercial measures that nullify them. If you've got a really forward-thinking procurement team, you might get there. But it's hard, so at least talk about them and keep them out in the open.

Incentivize partners into play. Very often when two suppliers talk to each other, a lot of the clients I work with assume collusion. You need to have collaboration. If you have silos between all of your partners in a big ecosystem, it's not going to work for you. How can you encourage them to make each other look good rather than try to make each other look bad so they get more of the pie?

It's a difficult problem to solve. Those are things to think about. What I really want to do is get this community more galvanized to solve this problem and get the ideas and more of the stories so we can share them out to the rest of the world and make some advances. Everyone I've spoken to -- I've spoken to lots of CEOs and CHROs about this -- they recognize that. What are you doing about it? Nothing. So let's get some motion.

09Request For Help

What I'm looking for help with: I'm looking for more stories this community can share where these models or others are working or not working.

Where have you got an example where a service provider has enabled the growth of internal capability, reduced the client's dependency, reduced their revenue, and been rewarded? How has that worked? I'd love to hear some stories like that.

Over the next couple of years, IT Revolution and Gene are going to pull this thread a bit further. We're going to try to write some thought leadership. We'll get that out. I'm going to try to look for more stories to put at the conferences, and I would love to have some things that you can bring and share.

The other thing I wanted to do is bring the global system integrators into this community more.

I want to be very clear. When I talked about what they're doing, it's not putting the blame at their door. They're responding to a market that our companies created. They built a business to respond to contracts that were let for the lowest cost for IT, and those contracts are still being let today.

We need to help them. We need to listen to what DevOps barriers they're seeing from the other side, and I'd like to see them represented a lot more here. If you've got global system integrators you're working with that are really helping you with the journey, let's bring them into this community.

Thank you.

Host Close (Gene Kim)

Ben put out a request for help, and I eagerly wait to see what you create with Ben for us to present next year. Thank you.