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IT Industry Sets Managing Model
By Tom
Coyner
Korea Times
January 17, 2007
The Korean information
technology (IT) industry is unique. It mainly consists of specialists often
found within very large customer organizations, largely staffed by
generalists. At the same time, the IT departments can be examples of what
is happening in other parts of Korean corporations. Like anywhere, there
are both good and bad points that together dish up challenges. At the risk
of stereotyping, I will try to describe the lay of the land in the IT
industry from the perspective of a software vendor.
Characteristics of Modern Korea
There is a national
compulsion to be Number One. Also, Koreans rightly pride themselves on
their IT knowledge and skills with one of the highest number of information
specialists per capita in the world. These IT professionals often find
themselves working for companies driven in part by a desire to have the
latest, the best, and thereby be the most competitive.
Korea remains and perhaps is becoming
even more nationalist than ever. Out of national pride, there is a strong
temptation to do it by themselves -- without
foreign assistance. We have labeled this mentality as ``IT Juche'' after the North Korean economic-political
theory of being independent of outside dependencies. Like Juche of the North, IT Juche
has a strong emotional appeal but sometimes comes up lacking when it comes
to selecting and implementing the ideal or even appropriate solution.
Korean organizations
tend to be factional around strong personalities who compete within the
organization for position, power and survival. This in turn creates silos
of information that are often more political than technical. These
personality-centered power structures create an aura of uniqueness-- even
when there is little substantial differentiation with the external
competition.
Korea impresses foreigners daily as a
society seemingly always in a hurry. Without question, Korea has
one of the most competitive societies in the world. Koreans are among the
best educated in the sciences -- at the expense of liberal arts where rote
learning is less applicable. All of this leads Koreans to be early -- often
first -- adapters, but often slipshod in implementation.
This approach to often
reckless adoption can be traced to what I call the ``bak-sa''
(or Ph.D.) Mentality that has been a part of the Korean consciousness for
many years. That is, there is a traditional reluctance to admit inadequate
knowledge in this highly competitive environment. It is no wonder that South Korea
has the highest per capita Ph.D.s in the world. In any event, Koreans are
well known to be a quick study -- and quick to proclaim mastery of a
subject matter.
Once a new bak-sa appears to have mastered a new subject within
his or her organization, that person often becomes highly resistant to outside
advice and intervention.
Price, Price, Price
Operations are usually
price driven -- rarely value or even genuine ROI managed. It is not that
individual managers are unaware or unconcerned, but often large
organizations are staffed by aging general managers quietly desperate to
display their importance to the overall company by demonstrating that they
will tangibly and visibly lower costs -- i.e., increase their value to the
company.
As a result, vendors
normally compete on function and price -- often in the ``order taking''
capacity rather than selling. This is inherent to the traditional approach
of selling in Korea.
So the vendors are ultimately responsible in part for the preoccupation of
price over value.
The finance and
purchasing departments are generally ill equipped to evaluate technology
acquisitions and consequently push for the cheapest option. Consequently,
there is a strong temptation to beat down the vendors' prices or to grow
the scale of a project beyond vendor profitability as a way, once again, to
prove to others in the company either they are superior managers of
vendors, or to cover the fact they too narrowly defined the project in
order to reduce the price.
Often the beginning of
the end for many new vendors is getting their first contracts with a large
client. Often these start-up firms go bankrupt due to the associated costs
from project creep. In the end, their demise results in the lack of
external support, thus causing IT departments to justify expansion in head
count to create internal support of acquired, now unsupported, technology.
In time, some companies
conclude that it may make more sense to hire more engineers to reinvent the
wheel since vendors cannot be trusted to adequately support their needs.
Self-Made Steam Shovels
Due to a combination of
``IT Juche,'' ``bak-sa''
mentality, and ``we are unique,'' there is a strong tendency among large
Korean companies to build a steam shovel rather than buy a somewhat
expensive trowel. Building their own solutions often results in a strong
pride in self-development that also incidentally brings along job security.
Only the architects and builders really understand the nature of these
homegrown systems and often only they understand how these systems
integrate with other systems. The net results within many large Korean
companies are very large -- and inefficient -- systems that may require
extraordinary resources to maintain.
What is Likely to Work
As a foreign company
hoping to sell into the Korean IT industry, some general guidelines for
success are as follows:
Work with Korean
partners who have already established their own relationships with key
individuals in target accounts.
Hire competent Korean
employees who have both excellent people as well as technical skills.
Recognize tools that
allow customers to ``roll their own'' solutions are much likely to succeed
than turnkey and application systems.
Consider that
applications and turnkey solutions are much tougher to sell and to keep
clients on track with the rest of the global customer base since Korean
customers often wish to modify much more than most markets' customers.
Keep in mind
professional services are essential for long-term success in the Korean
market.
Understand that
``service,'' though now understood to possibly mean billable work, retains
the traditional meaning of ``free.'' Often customers expect the costs of
service to be somehow buried into maintenance and even license pricing of
the technology.
What Does the IT Industry Teach About Korean Business?
From an outsiders'
perspective, there is often a shocking lack of genuine management controls
or matrices. Even if the management systems are in place, there is a lack
of real diligence in using these management tools other than going through
the motion where often data used is not credible. This often includes not
sticking to structured programming and rushing ahead without documenting
modifications of the systems. Rapid growth of the Korean economy has
encouraged firms to take short cuts rather than lose out to the competition
in the break-neck pace of the Korean economic miracle. The results of this
mentality can be seen in the IT shops as well as other parts of many large
Korean companies.
Most IT departments and
businesses operate with relatively large numbers of people working
extraordinarily hard for extraordinarily long hours. Yet, this too is
changing. As the Korean economy opens up to world-class competition and as
the economy has its periodic business slow downs, Korean companies have
been reevaluating their hiring strategies and are keener than ever for
increased efficiencies. Given this, Korean companies are looking more
aggressively for new ideas and sometimes, new technologies from abroad. The
open question is how fast each company will move forward given each
organization's traditions and culture.
Tom Coyner, a long-term resident in Korea, runs consulting firm,
Soft Landing Korea.
Coyner can be reached on softlandingkorea.com.
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