Fixing IT

What should be on the ''to do'' list of CIOs in the new year.

Ed Sperling

Crystal-ball forecasts for the coming year ignore one of the most fundamental truths about people deeply engaged in information technology: Real IT folks don't just dream about IT, they fix things.

In keeping with that spirit, I'd like to offer up a "to do" list for CIOs and other technology-driven workers, based on some ideas of what technologists want from technology--and what it will take to get there.

Better Connectivity

It's relatively easy to look at Japan or even Europe and say connectivity is better because, well, it simply is better.

Sure, those geographies are smaller, which helps the infrastructure more economically serve a great number of people. But connectivity in China is typically better than what we get in the U.S. (The New York Times' Thomas Friedman makes this point painfully well here.)

Connectivity needs to be radically improved everywhere in the U.S., including in densely populated centers where calls are still dropped or filled with static. The fact that we even know how to read bar charts for reception is a stark sign of the problems. The solution will involve a much bigger investment in infrastructure, which means a collaboration between private enterprise and government--something that has been lost since the breakup of AT&T.

More Bandwidth

Much of the fiber backbone laid during the dot-com bubble is still dark, because the "last mile" connections to businesses and homes never happened. These digital dirt roads are slowing down the adoption of all sorts of services that demand high bandwidth, as well as new ones, such as Internet TV and streaming high-definition movies.

More Research

Innovations don't happen overnight. (Longtime entrepreneur Judy Estrin has written vividly about this problem.

Research groups such as Xerox's (nyse: XRX - news - people ) Palo Alto Research Center (PARC) and AT&T's (nyse: T - news - people ) Bell Labs brought us the graphical user interface (best exploited by Apple (nasdaq: AAPL - news - people ) in the Macintosh and later by Microsoft (nasdaq: MSFT - news - people ) with Windows); the six-way pointer (Nintendo Wii); wireless LANs; cellphones; Unix (Mac OSX and all versions from Windows NT onward); the C programming language; Internet switching; laser printers; e-mail and many more developments we take for granted.

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Such programs, however, are increasingly scarce. IBM (nyse: IBM - news - people ) has some, as do university labs. Microsoft and Google (nasdaq: GOOG - news - people ) contribute a bit. As a nation, we have to find ways to encourage pre-competitive research as a foundation for many efforts.

New Compensation Schemes

The trouble with pure research is it doesn’t mesh well with corporate mandates to meet quarterly numbers and squeeze every last penny of profitability from a company. That may suit current shareholders, but it doesn't build much for the future. We've heard calls for research tax breaks and incentives for years--and those are useful measures, but corporate management needs to revamp its perspective, too. C-level executives should be compensated for superb management as well as visionary planning that will last well beyond their corporate tenures. Executives who get that mix right should be handsomely rewarded--that takes a lot more thought and talent than just cutting costs and shifting jobs to lower-cost areas.

More Openness

CIOs have love-hate relationships with open communication schemes. On one hand, they allow ideas to be freely exchanged on a global basis, which always produces better results. On the other, they create security problems that must be fixed swiftly, disrupting or competing with dozens of other pressing mandates put on CIOs.

The smartest CIOs I speak with live with the problems; they quickly fix any issues that arise so their companies can benefit from a free exchange of ideas. And guess what tools help fix those kinds of problems most efficiently? More data connectivity, better bandwidth, more agile researchers who can see and solve problems well, and executives motivated to find innovative answers with positive repercussions, quarter after quarter.

Wipro Technologies Ltd. plans to buy Citigroup Inc.'s India-based information technology business for $127 million in cash, the companies said Tuesday.

The deal comes amid a broad restructuring at Citigroup (nyse: C - news - people ) as the New York financial giant struggles through the worst banking crisis in decades.

The company avoided collapse in November by securing another $20 billion lifeline from the government and has also announced plans to sell banking units in Japan and Germany.

Citi Technology Services Ltd., based in Mumbai, provides IT services for Citigroup's operations in more than 32 countries, Citigroup said.

As part of the deal, Citi will award Wipro (nyse: WIT - news - people ) a contract worth at least $500 million in revenue over the next six years to provide technology infrastructure and application development services. The companies expect the deal to close by March 2009.

Citigroup said the business has about 1,650 employees and is projected to generate $80 million in revenue for 2008.

Wipro shares added 32 cents, or 4 percent, to $8.40 in midday trading, while Citigroup shares fell 18 cents, or 2.6 percent, to $6.57.

As U.S. jobs disappear at a rapid clip, the official unemployment figure seems understated. While November's 6.7% rate is a full 2% higher than the same time last year, the rate remains well below the 10.8% postwar peak, reached in November 1982. One issue is that the official unemployment number captures only a slice of the total joblessness in the U.S. To be counted as unemployed in this statistic, a worker must not have a job, be currently available for work, and have actively sought employment within the last four weeks. In other words, a lot of the jobless are left out of the government's tally.

Rajeev Dhawan, director of Georgia State University's Robinson College of Business, says the official unemployment rate is "not a good measure of what is happening in the economy. It's drawn from a sample too small and filled with too many assumptions. Absolute job losses and retail sales give a better idea of what's really happening in the economy."

Fortunately, digging deeper into the labyrinth of the U.S. Bureau of Labor Statistics' (BLS) Web site can offer a more complete, if imperfect, picture of joblessness. Since 1993, the BLS has tracked a category of unemployed called U-6, which captures the total unemployed, plus what the agency calls "marginally attached" workers and those employed part-time "for economic reasons." For November 2008, that rate was 12.5%, nearly double the official unemployment rate and the highest since the government started tracking this category.

Outside Looking In

Marginally attached workers are those with no job and who aren't hunting for one but who are interested in working—people who have left the workforce because the employment situation seems so bleak that they've stopped trying. This measure covers anyone who has looked for work in the past 12 months, not just the past four weeks. In November, 1.9 million workers were marginally attached, up 637,000 from a month prior. This category includes long-term unemployed, such as factory workers who can't find a job paying close to what they'd been earning before. Unemployment rates in construction and extraction jobs such as mining hit 12.1% in November, followed by 9.4% in production jobs. That means the ranks of the marginally attached will increase.

Those employed part-time for economic reasons, who are counted as employed in the official statistic, want and are available for full-time work but have had to settle for a part-time schedule. As of November, the number of workers in this category rose by 621,000. There are now 7.3 million involuntary part-time workers, up 2.8 million over the past 12 months.

Contract workers, sometimes known as freelancers or independent contractors, face a special set of problems when it comes to being counted by the government. First, employers aren't required to report layoffs of contract workers to the government, so when companies say they're cutting their contractor workforce—as Google (GOOG) did in October—no one knows by how much. These job cuts are also not recorded in the official job-cut statistics tracked by the government. In other words, the 533,000 jobs lost in the November count don't include any of the tens of thousands of contract workers being slashed from company payrolls as the recession deepens.

Falling Between the Cracks

Some self-employed workers are incorporated into other BLS statistics, but not all of them are counted. Those traditionally considered self-employed, such as independent real estate agents or accountants, are included in the government's household survey of the unemployed. But those working as long-term freelancers for one particular company without the benefits of being staff members—often dubbed "permalancers"—are not. That means a good portion of this group, which the Government Accountability Office says makes up 10% of the workforce, isn't properly tracked. "We really don't know what is happening with the [contractor employment] numbers," says Sara Horowitz, founder of the Freelancers Union, a 93,000-member organization of contract workers. Horowitz says the government should develop better measures of contract workers, perhaps by identifying the number of contractor tax filings with the IRS each year. "An increasing part of the economy is driven by this new workforce, but government agencies haven't updated their methods for counting them," she says.

The BLS does capture other pieces of the unemployment puzzle. It breaks out such demographic categories as education levels. As of November the unemployment rate for college graduates increased less than a percentage point, to 3.1%, while the unemployment rate for high school dropouts rose from 7.6% to 10.5%. The BLS also tracks such categories as age and ethnicity; the unemployment rate in November was 32% for black teenagers, for example. Other data offer state-by-state comparisons of unemployment rates. In the most recent data, which cover the first 10 months of 2008, Rhode Island and Michigan were tied with the highest unemployment rate, at 9.3%, with California next at 8.2%. Though not officially a state, Puerto Rico's rate stands at 12%.

Still, calls for improving the BLS metrics continue. While Horowitz presses for better accounting of contract workers, Georgia State's Dhawan says the surveys need to account for population growth. "Fifty years ago, the [official unemployment] number had some validity," he says. "Now I have little faith in it."

Whether it's milking venomous spiders or picking up roadkill, the secret to career fulfillment is not to follow your passions, but to chase your opportunities.

Mike Rowe

I've been thinking about the first time I castrated a lamb with my teeth. (It's a real job, I swear.) I was anxious, and judging by the sounds coming from the lamb, I wasn't the only one. He was propped up on the fence rail, pinned in place by a cheerful rancher named Albert, who was holding the animal's legs apart for my convenience. The blood in Albert's mustache was still wet from his demonstration moments before, and he spoke in a way that reminded me of the directions on a bottle of shampoo. "Grab scrotum. Cut tip. Expose testicles. Bend over. Bite down. Snap your head back. Spit testicles into bucket. Rinse and Repeat."

It wasn't the first time I found myself cocking my head like an Irish Setter, wondering if I'd somehow misheard the instruction. (Spit testicles in bucket? Really?) I had assumed the same expression a few months earlier, when a jovial bridge worker explained that I would be walking up a skinny suspension cable 600 feet in the air to change a light bulb over The Straits of Mackinac, which connect Lake Michigan to Lake Huron. Likewise, when the happy-go-lucky Shark Suit Tester casually informed me that I would be leaping into the middle of a feeding frenzy to "field-test" the efficacy of his "bite-proof shark suit."

I didn't create my show on the Discovery Channel, Dirty Jobs with Mike Rowe, to get myself killed or scare myself half to death. I created it to show that there are hundreds of ways to make a living that no one was talking about. After four years and 200 dirty jobs, I'm no longer surprised by the variety of opportunities out there. What does surprise me is the fact that everybody I've met on this gig--with the possible exception of the lamb--seems to be having a ball.

It's true. People with dirty jobs are in on some sort of a joke. Maggot farmers are ecstatic. Leech wranglers are exultant. I've personally witnessed lumberjacks and roadkill picker-uppers whistling while they work. And don't even get me started on the crab-fishermen, spider-venom collectors and chicken-sexers--they're having such a blast they've sworn off vacation. So why are people with dirty jobs having more fun than the rest of us?

The answer, (aside from the fact that they're still employed) is because they are blissfully sheltered from the worst advice in the world. I refer, of course, to those preposterous platitudes lining the hallways of corporate America, extolling virtues like "Teamwork," "Determination" and "Efficiency." You've seen them--saccharine-sweet pieces of schmaltzy sentiment, oozing down from snow capped mountains, crashing waterfalls and impossible rainbows. In particular, I'm thinking of a specific piece of nonsense that implores in earnest italics, to always, always ... Follow Your Passion!

In the long history of inspirational pabulum, "follow your passion" has got to be the worst. Even if this drivel were confined to the borders of the cheap plastic frames that typically surround it, I'd condemn the whole sentiment as dangerous, not because it's cliché, but because so many people believe it. Over and over, people love to talk about the passion that guided them to happiness. When I left high school--confused and unsure of everything--my guidance counselor assured me that it would all work out, if I could just muster the courage to follow my dreams. My Scoutmaster said to trust my gut. And my pastor advised me to listen to my heart. What a crock.

Why do we do this? Why do we tell our kids--and ourselves--that following some form of desire is the key to job satisfaction? If I've learned anything from this show, it's the folly of looking for a job that completely satisfies a "true purpose." In fact, the happiest people I've met over the last few years have not followed their passion at all--they have instead brought it with them.

Despite the collapse of Lehman Brothers, Richard Fuld can still negotiate a deal. For example: taking home $20 million on $13.5 million worth of sold art.

Click to enlarge

What:

Arshile Gorky ''Study For Agony 1'' Graphite, crayong and ink wash on paper 22 x 30 inches Executed in 1946-1947

Where:

Christie's, New York Post-War and Contemporary Evening Sale Nov. 12, 2008

How Much:

Pre-Auction Estimate: $2.2 - $2.8 million Final Selling Price: $2,210,500

Don't feel too bad for Richard Fuld, CEO--at least until the end of this year--of once-mighty Lehman Brothers. Despite the demise of his fabled Wall Street firm, Fuld still knows how to negotiate a good deal.

Take, for example, the sale earlier this month at Christie's of 16 works of art owned by Fuld and his wife, Kathy. The collection was expected to sell for between $15 and $20 million. Instead, it barely pulled in $13.5 million. However, the Fulds still made $20 million on the sale.

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Kathy Fuld, a trustee of the Museum of Modern Art, assembled the collection over the past 20 years and focused on buying drawings from the Abstract Expressionist movement of the 1940s and 1950s. She chose well and presumably had expert advice from MOMA curators.

But selling the group of drawings proved challenging--not only because the art markets has hit a major bump amid the economic gloom that, in some ways, was fueled by the failure of her husbands giant Wall Street firm--but also because Abstract Expressionist drawings are not an easy commodity to trade.

Drawings from this time period are esoteric and intellectually demanding. They require a connoisseur's eye. Most everyone understands works by a pop artist like Andy Warhol, but not everyone gets Arshile Gorky.

Still, the Gorky drawing was one of the few fiscal highlights of the works sold by the Fulds. Bought for $370,000 in 1996, the work sold comfortably within its estimate range for just over $2.2 million. The drawing, called ''Agony I,'' was made between 1946 and 1947 and is a study for a painting owned by MOMA.

At this period of his life, Gorky was a tortured soul, reeling from a fire that destroyed his studio and he was coping with cancer. His grief overwhelmed him one year later--he took his own life at the age of 44.

• View Slide Show

Amid the roiling waters of the stock market and economy, which have tossed tech investors around for weeks, Apple Chief Executive Steve Jobs made a special guest appearance on Apple's fourth-quarter earnings call Oct. 21 to try to calm things down.

Profits soared (BusinessWeek.com, 10/21/08) on knockout iPhone numbers and strong Mac and iPod sales. But Jobs wanted to make a point broader than any one quarter's results: Apple planned to seize the opportunity of these difficult times to bolt ahead of the competition. He pointed out that Apple (AAPL) has nearly $25 billion in the bank. The economy could present "some extraordinary opportunities for companies that have the cash to take advantage of them," Jobs said. "We may get buffeted by the waves a bit, but we'll be fine—and stronger than ever when the waters calm in the future."

These are difficult times for all companies. But some are figuring out how to thrive amid the turmoil. BusinessWeek's annual Tech Hot Growth ranking shows the sector's top 75 performers over the past year. Some have done well because they help their customers cut costs—witness IBM (IBM), Accenture (ACN), and software maker VMware (VMW). Others made the cut because they help customers generate more revenue in good times or bad. Google (GOOG), for example, reported a surprisingly strong quarter (BusinessWeek.com, 10/17/08) on Oct. 16, because companies that get sales from online advertising kept on spending. It also doesn't hurt to sell to the government, whose buying tends to be somewhat insulated from the broader economy. That factor propelled infrared technology supplier Flir Systems (FLIR) and defense suppliers Mantech International (MANT), Harris (HRS), and SAIC (SAI) into prime spots on this year's scoreboard.

Gilead Sciences at No. 1

The ranking is based on a number of metrics. Revenue growth counts the most, although total revenues, shareholder return, and return on equity all factor in, too. The ranking is based on the most recent four quarters available, as of Oct. 15.

Gilead Sciences (GILD), the top-performing company on the list, booked big gains in profits and return on equity through sales of its drugs to treat AIDS, hypertension, hepatitis B, and other diseases. It has capitalized on the success of its most recently approved HIV drug, Atripla, and its 2006 acquisition of pharmaceutical company Raylo Chemicals.

At the fastest-growing information technology companies, it's clear you need to take a different attitude in downturns than in normal times. You must focus on why you're going to stand out from your competition and why your customers will need you more than they need your rivals. You have to think aggressively—as Jobs is doing—rather than defensively, in retreat. "Selling more of the same doesn't work," says John S. Chen, CEO of Sybase (SY), which provides database software used widely on Wall Street and which ranked No. 34 on this year's list. Because Sybase customers Bear Stearns, Lehman Brothers, and Merrill Lynch (MER) have disappeared, Chen is concentrating on helping the finance industry's consolidators, including Barclays (BCS) and Bank of America (BAC), find new ways to reduce operating costs. "I'm desperately creating a lot more new functionality," he says.

So far, so good. On Oct. 21, Sybase reported that third-quarter sales rose 11% to $284 million, and profits rose 2%. Sybase's profits were up more than 77% during the 12 months ended in June, according to BusinessWeek's analysis.

Stock Woes For All

Tech companies are scrambling for advantage in these lean times. Intel (INTC) is one of several catering to budget-minded shoppers. The chipmaker is ramping up production of processors for a new class of small portable notebooks that cost as little as $300 to $400. Oracle (ORCL) has spent $34 billion on 50 acquisitions over the last 44 months and plans to shop for additional bargain buys in order to generate recurring product-support revenues, which roll in during good times and bad. And in the past five weeks, Microsoft, Hewlett-Packard, and Oracle have announced plans to buy back billions of dollars of their own shares.

Still, it's been a rocky road for the stocks of even the best-performing companies. The average share-price return for the 75 companies on the scoreboard was -37%, and the top 10 on the list generated an average return of -22%. Dell (DELL), which posted big gains in profitability and return on equity by cutting costs and revamping its products and distribution strategy, has warned of a tougher environment ahead. And investors worry that the down economy may erode prices for such premium brands as Apple and Salesforce.com (CRM).

"We'll be prudent," says Robbie Bach, president of Microsoft's $8 billion Entertainment & Devices Division, which makes the company's Xbox game console and Zune music player. Microsoft hopes consumers buy more Xboxes as they resort to stay-at-home entertainment instead of going out. But Bach doesn't think consumers' holiday spending will accelerate until after the Presidential election. "At this time of year, we're talking to our retail partners every day," he says.