The race to replace IT's baby boomer generation

At first glance, it's hard to see why the retirement of New Jersey teacher Kathleen Casey-Kirschling last October should be of interest to the IT profession,...

At first glance, it's hard to see why the retirement of New Jersey teacher Kathleen Casey-Kirschling last October should be of interest to the IT profession, or even why such a seemingly innocuous event should have made both national and international news.

But Kathleen was born just past midnight on January 1 1946, and is widely regarded as the first of the US's post-war baby boomer generation. For the US government, the most pressing concern is how it can support the 80 million individuals due to follow Kathy into retirement and claiming social security benefits in the coming years.

For business, the challenge is different, but just as profound. As experienced staff and management start to leave the workforce, a skills crisis looks set to ensue, exaccerbated by falling birth rates. And nowhere is this likely to be felt as strongly as in the IT industry. The largest number of baby boomers were born between 1946 and 1964, so the first impact will be felt over the next few years, becoming much more severe over the next five to ten.

Tom Kucharvy, a senior vice-president at Ovum, explains: "The first big change will be a shortage of senior IT people. But another big problem is the dramatic decline in Generation Y adults [born between 1981 and 1995] who are moving into IT."

According to a recent survey for by Salary Services, this scenario is already being reflected in wage hikes for junior staff as the number of permanent IT jobs advertised grows and the number of suitable candidates dwindles.

And the situation is set to worsen, in part because the high-tech sector is no longer considered as lucrative and rewarding as it once was, and therefore fewer students are opting for IT-based degrees.

"These days there just aren't as many high-tech companies to act as employers and a lot of influences were shaped during the bust. Job security isn't what it used to be and more and more entry-level jobs are going offshore, so IT isn't seen as such an attractive proposition anymore," Kucharvy explains.

Senior personnel

But as the availability of senior personnel begins to wane as well, major change will become inevitable. Brinley Platts, executive chairman of the consultancy, clarifies the dynamics. "The majority of CIOs in the FTSE 100 will retire over the next five or six years as they're well-paid and are approaching their 50s. So right across the senior echelons, we're going to lose a lot of skills. But they're not going to be easy to replace and those coming through now will have a lot more choice, because experienced, high-calibre people are going to be more scarce."

This move from a buyers' to a sellers' market will have several repercussions. The first is that retirees are likely to find themselves being offered interesting incentives to stay on longer - on a part-time or more flexible basis.

Another is that the role of executive advisor will become more mainstream than is currently the case. So IT directors that have chosen to retire will be given the opportunity to come back as consultants operating under one-to-two-year contracts in order to mentor less experienced colleagues or undertake specific activities such as business transformation, perhaps in industries that they have not worked in previously.

A third implication is that IT directors are going to have to undertake succession planning more carefully than ever before, meaning that they will need to be much more proactive in identifying the next generation of IT management from both within the company and outside in order to bring them on. But because of the demographic decline of the traditional recruitment pool - white, middle-class, and male - it also means that they will be forced to expand their profile of suitable candidates.

"In the future, we might face a world that is very short in all kinds of resources and that will promote breakthroughs. Lip service tends to be paid to women and ethnic minorities now, but the CIO profile is going to have to broaden out. It's a fact of life," says Platts.

Even though IT is currently considered "a very hostile" work environment by many women, making it more female-friendly is going to become particularly important, according to Diane Morello, a vice-president and Gartner fellow.

Lack of experience

Yet another repercussion of the lack of experienced and available senior IT management, however, will be a growth in non-technical executives with knowledge of multiple disciplines being brought in to head up the technology function.

This will not only necessitate more organisations putting effective training programmes in place to develop and mentor people from different parts of the business in this role - and likewise those moving into more junior IT positions - but it will also lead to a progressive blurring between the two areas.

Marc Dowd, principal of the CIO Group at Forrester Research, takes this logic a step further, however. He indicates that there is already a shift towards replacing chief information officers with chief operating officers and he believes that the trend will only continue.

"CIOs will either become much more business-focused and almost interchangeable with the COO role if they have enough business acumen, or they'll be replaced by a COO with some understanding of technology," he says.

But having some understanding of technology is and will remain crucial, warns Graham Quint, IT manager at Tewkesbury Borough Council. "There has to be some understanding of the implications of introducing this or that technology into the business. IT experts are there to ensure that people don't walk down a technology cul-de-sac or open up a can of worms. A little knowledge can be a dangerous thing and that's not going to change," he says.

Nonetheless, the entry of more non-technical staff into the IT sector will inevitably be forced by two key factors - demographics and the progressive requirement that IT moves closer to the business. This means that IT heads, whether they have a technology background or not, will increasingly need to have both a deep comprehension of business requirements and be able to come up with innovative technical solutions to business problems.

Lateral thinking

The latter proposition, however, implies being able to think laterally. "A lot of it is just about re-purposing someone else's ideas from other environments and applying them to your own," says Dowd. "So we'll see the creation of more innovation teams that look at technology in the widest sense to see how it can be used in the business to help move it forward."

Quint likewise agrees that delivering pertinent services will become more about strategy and ideas and less about the technology per se. "It's like buying a car. They all get you from A to B in some way, but a farmer wouldn't buy a hatchback as it wouldn't meet his particular requirements - he'd buy a 4x4 instead. So really it's about being clear what you want to achieve and delivering it in the most effective way, while also managing the risk," he says.

As a result, he believes that not only will IT take on an increasingly strategic role, but it will also become more and more embedded in the business so that "you're working not just at the technical level, but more and more at the information management level". To do this, however, will require a major rethink of how the IT function is structured and organised.

A key challenge here, however, is that such a shift may have to take place against the backdrop of a growing split between front office and back office IT, with the latter will be progressively outsourced.

Kucharvy explains: "There'll be a need for an IT function for a long time, but I think IT teams will increasingly be moved into business units. The head of IT will have dotted line responsibility for them, but they'll report directly into line of business executives to ensure that front-end systems really address business needs."

Standards-based technology

The two areas will be connected using standards-based technology such as web services, he believes, but the fall in available numbers of IT personnel will mean that it becomes increasingly difficult to justify and afford large in-house teams to manage back-end infrastructure.

This accelerated adoption of outsourcing models will, however, both help enterprises to cope with the onshore staffing shortfall and to revamp their legacy systems, which will become simply too expensive to maintain and support into the long-term - particularly as baby boomers with Cobol and other mainframe expertise start leaving the workforce too.

"I don't think organisations will have any alternative. They'll have to go through modernisation programmes and migrate to things like SOA architectures, standardised software and programming models and automated hands-off policy-based management tools. For many outsourcers, this is their focus and they have a lot more skills in doing it than existing IT organisations, although there are exceptions," says Kucharvy.

But this situation will also see vendors start to embed existing deep technological knowledge into their products in order to simplify them and make them easier to use. This, in turn, will lower requirements for staff to have that deep technical knowledge themselves, but will instead push them into more business-facing roles such as business analysis.

"Career prospects for techies with poor communications skills won't be that great in the future. CIOs going into the baby boom retirement era will have to look carefully at people coming through the ranks to evaluate their social skills as they're going to become increasingly important. And if staff don't have them, it'll have to be a case of helping them on their way," Dowd says.

But the same theory also applies to IT directors. As they progressively become relationship managers rather than technical experts or even vendor and service provider contract managers, the need for softer relationship-building and influencing skills will come to the fore.

"Even only 10 or 15 years ago, we had technology barons running IT departments and while the current generation has moved on from there, the next generation will first and foremost be business technologists and analysts with a lot of soft skills. They may love technology, but they won't waste time doing IT. Instead, they'll focus on how they can use it to support business processes," concludes Platts.

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