Author: Jeff Herzfeld
Hello and welcome to the second edition of the QuarterNote Newsletter
In our ongoing and continuous effort to improve DITEX outreach to our Alumni and Friends, we offer the 2nd volume of our newsletter herein. Let me stress that we would like to obtain input regarding this newsletter from our readers. Eventually we may get to a “Comments” section, but for now a simple email to your editor, or a LinkedIn posting will have to suffice.
And don’t forget we are actively seeking updates on the aforesaid Alumni (job changes, achievements, awards, promotions – kindly provided by you to your appreciative editor), and potentially, guest editorials or articles by Alums (ping me if interested). And at this point, since this is a “work of art in progress”, we want to hear from you—the constructive criticism, as well as the good points (though hopefully more on the positive side of the ledger—we have set up a separate repository for the negative comments—we call it the Circular File). And yes, that last part is, and will continue to be recycled….. : )
“To each there comes in their lifetime a special moment when they are figuratively tapped on the shoulder and offered the chance to do a very special thing, unique to them and fitted to their talents…….Winston Churchill
We have a few asks today of our DITEX Alums:
- The DITEX Active Members are trying to ensure that there is a complete list of DITEX Alums (or at least more complete than we have today) and are looking for your input. If you’re already receiving DITEX emails, or are part of the Alumni Slack channel, but have changed roles, contact info, etc. please send updated information to Jeff Herzfeld. If you aren’t receiving emails or part of the Alumni Slack channel, please send the following information to Jeff Herzfeld: Full Name, email address, current company, phone, and LinkedIn link. In keeping with our pay it forward philosophy, as well as the DITEX Charter which says that “each member’s mission is to help every other group member graduate from the group by supporting them in finding and landing a new Technology Leadership role”, it is incumbent for the organization to have as much current contact information from DITEX Alumni as possible.
- Help spread the word about DITEX by following reposting, liking, etc. content on the “Public” LinkedIn site, https://www.linkedin.com/company/denver-it-executives-ditex/. Please note that this is different than the DITEX private group, which historically has been used for all DITEX communications and which will continued to be used primarily to communicate with Alumni and Friends of.
Thanks for your help!
Speaking of Editorials……
The QuarterlyNote Stream of Consciousness—WT[H] IS HAPPENING?
The editor(s) of this Ditex newsletter will, from time to time (or pretty much always), opine on various and sundry issues (which, occasionally, he/she/they will know something about). Please NOTE: Any errors and/or statements herein which annoy our readers are the work of others.
Today it seems appropriate to address the economic markets in general and, how this affects IT.
The 1st quarter of 2023, while not quite over, has been remarkable for its rapid job-shredding, volatility, and its sense of inevitability of having to pay the piper for playing throughout the non-stop drunken orgy of extreme valuations and growth projections touted by IPOs and SPACs in the post-Covid tech world. OK, maybe there is a smidgeon of the dramatic there….but I caught you looking.
We have already seen significant layoffs at large tech companies (Alphabet, Amazon, Microsoft, Dell, Salesforce, SAP, IBM, Twilio, Yahoo, Zoom, PayPal, etc.). And in the last week we have seen the lightning fast, zombie-like semi-demise of Silicon Valley Bank, which was the big dog on the Silicon Valley block for tech startups and their billionaire investors……and the 2nd largest bank failure in U.S. history. We have also seen a sub silentio bailout/resurrection of the undead…..that the government insists is not a bailout, but which may, in any case, have significant negative future ramifications. Next up, is the current ice-skating competition being waged by Silvergate, First Republic, Signature, and, most recently, Credit Suisse). The jury is out as to whether there will be any winner. If so, it probably won’t be the U.S. taxpayers.
In short, the economics of the marketplace have become exceptionally unsettling, and likely predictive of at least a few gale-force winds. Throw in the various clumsy and sophomoric attempts by the FED to do something….. anything right, while moving to intentionally destroy hiring and increase interest rates (after indicating inflation wasn’t a problem), and you get a witches brew of toxicity, cluelessness and a strong flavor of déjà vu ….which is so 2008. Yet amidst the angst, teeth grinding, and sphincter-clenching, there is some good news related to unemployment and job creation (read below for specifics) as well as the massive upswing (for better or worse) in AI interest (and soon, spending on AI) after the roll-out of ChatGPT……which, along with Bing AI, needs serious psycho-therapy before it can be considered appropriate for broad-scale use) See, e.g. the following articles:
- Microsoft Trying To Rein In Bing Chat After AI-Powered Bot Called AP Reporter Ugly, A Liar, And Hitler
- The Dark Side of AI: Microsoft Bing Chatbot Wants to ‘Engineer a Deadly Virus,’ ‘Steal Nuclear Codes’
- ‘I want to be human.’ My intense, unnerving chat with Microsoft’s AI chatbot
- Creepy Microsoft BING Artificial Intelligence
However, whether or not any good news acts to calm jittery investors and stakeholders remains to be seen. What we can say is that the overall economic uncertainty in the markets seems to be causing C-levels to reassess, and more heavily scrutinize their overall spending and budgets, including technology spend.
Some of that scrutiny on tech budgets seems to be resulting in realignment/shifting of spend, (from Opex back to CapEx, or at least to a more balanced position?), rather than necessarily reducing overall spend (it’s too soon yet for meaningful data to exist for Q1 2023). And because supply chain issues are much more prominent than they used to be, many companies are increasing infrastructure spend and inventories of critical hardware and components, while some are bringing manufacturing back from off-shore locations. Tesla is just one example of many. Batteries and chips that used to be sourced off-shore are, and will increasingly be sourced locally (i.e., in the U.S.).
Additionally we have seen what appears to be a more thoughtful approach (perhaps accelerated due to required belt-tightening in tech spending) being exercised by companies in an effort to reduce spend in some cloud environments (hyperscaler prices have skyrocketed), while bringing data back in-house, and refreshing and upgrading the ability to store that data. David Heinemeier Hansson (the creator of Ruby on Rails) has written that “Any mid-sized SaaS business and above (with stable work loads) that does not benchmark their rental bill for servers in the cloud, against buying their own boxes is committing financial malpractice at this point.”
But, while I don’t necessarily foresee vast armies of servers returning to their previous homes in the manner of inanimate prodigal sons re-occupying the virtual basements of their parents….. I do think there will be renewed interest in a rigorous and thoughtful analysis of cost/benefits associated with storage and services going forward.
Additionally, we will continue to see significant concerns and spend related to security issues, both at the government level and in the private sector (see for example some of these articles concerning hacks, and projections related to security spend:
But because black-hat hackers aren’t going away anytime soon (though one can still dream of Edward Munch-like screams emanating from them in Dante’s 4th and 8th levels of hell some day in the future), IT security is likely to continue to be an area of robust spending.
NEWS BYTES (see what we did there?)
Financial Services’ AI Appetite Grows
Bottom line – Top uses for AI in the financial services sector include next-best systems, portfolio optimization, and fraud detection. BUT Tech Executives must ensure AI systems are trustworthy and explainable via a governance and risk management framework.
The percentage of financial services executives surveyed who said their executive leadership teams value and believe in AI has more than doubled to 64% from 36% of those polled last year, the Santa Clara, Calif.-based Nvidia reported.
The study asserts that AI can be a tool to address economic challenges, noting that financial services firms are turning to it to “more accurately assess risk, create operational efficiencies, and reduce costs.”
Overall, nearly half of those surveyed said improved customer experience was a key business improvement resulting from AI efforts. More than 70% said their firms are building a governance and risk management framework to ensure AI systems are trustworthy and explainable.
To be sure, beyond the new technology’s price tag, CFOs must also keep a watchful eye on the risks that generative AI technology poses. Some IT professionals predict that ChatGPT will be used in a successful cyberattack within the year.
2. CIO-CFO relationship key to optimize tech spend
Bottom line– Alignment of Finance and IT is a MUST to ensure security is not sacrificed on the altar of cost reductions.
Less than half (43%) of the 1,100 C-suite and top-level executives polled say their organizations’ finance and cyber teams work together as needed, and do so “with inconsistent closeness and consistency.” Just 1 in 5 are closely aligned.
Meanwhile, CFOs may put IT spend on the back burner in the face of unfavorable economic headwinds. Only 14% of CFOs expect to prioritize IT infrastructure in 2023, while the top priorities are cost management and financial performance, according to Deloitte’s most recent CFO Signals report.
3. The Mainstream Media Is Wrong About Jobs
Bottom line — Don’t believe everything you hear. We are near record-low unemployment levels in the U.S. The current number of job openings exceeds the labor force by nearly 5 million. And there are still sectors within tech that continue to grow, SVB and its progeny notwithstanding.
Being a “data guy” is endlessly frustrating. On one hand, you constantly hear the mainstream media shout about whatever the narrative of the day is. And on the other hand… you see what the data shows.
More often than not, the data doesn’t align with the narrative of the day. That’s happening again right now with the labor market…How many stories have you seen about layoffs?If you watch the news on TV or check out media outlets on the Internet, it likely feels like everyone is losing their jobs right now. And that’s especially true in the tech sector.Now, it is true that some big-name companies are laying off employees. Alphabet (GOOGL), Amazon (AMZN), and Microsoft (MSFT) have all cut their workforces in recent months.But you might be surprised to learn we’re near record-low unemployment levels in the U.S. overall. And beyond that, the current number of job openings exceeds the labor force by nearly 5 million. The data is clear..
The U.S. economy has an unprecedented number of job openings today. Take a look…
This chart shows the total number of job openings in the country, excluding farm workers. And it involves some specific criteria. Here’s how the Federal Reserve explains it…
A job is considered open if a specific position exists and there is work available for it, the job can be started within 30 days, and there is active recruiting for the position.
As you can see, job openings in the U.S. are near record highs. That’s true even considering the recent round of layoffs that the media is so hyper-fixated on. And the gap between the current “civilian labor-force level” and the number of job openings is massive, too. As of February, that gap was roughly 4.7 million.
In other words, employers need more employees. But the U.S. labor pool just doesn’t have enough people right now to close the gap. And as long as it stays that way, we’ll see continued growth.
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