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Characteristics of the Korean IS Industry
By Tom Coyner
KOREA IT TIMES
April 2006
URL : http://www.ittimes.co.kr/en/node.asp?em=M&mcode=200604&subcode=109&idx=1216
Essays / Part I
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The following article is the first in a six-part series, written by Tom
Coyner, President of Soft Landing Korea Ltd.... Ed.
The Korean information systems (IS) industry is unique. It mainly consists
of specialists often found within very large customer organizations, largely
staffed by generalists. 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 lie of the land in the IS 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 IS knowledge and skills, with one of the highest number
of information specialists per capita in the world. These IS 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 on their own -
without foreign assistance. I have labeled this mentality as ''IS Juche''
after the North Korean economic-political theory of being independent of
outside dependencies. Like Juche of the North, IS 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 factionalized around strong personalities
who compete within the organization for position, power and survival. This
in turns 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 with 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
''Pak-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.Ds in the world. In
any event, Koreans are well known to be quick to study - and quick to
proclaim mastery of a subject matter.
Once a new pak-sa appears to have mastered a new subject within his or her
organization, that person often becomes highly resistant to outside advice
and intervention.
''It's Technical''
Organizations routinely go through reorganizations formally once a year and
often more frequently, depending on business conditions. General managers as
they approach middle age can expect dealing with the ''promote or out''
paradigm.
For the survivors, the higher one climbs, the more likely for a lateral
transfer. As a result, most supervising executives of IS have an inadequate
understanding of their subordinates' work beyond general management
considerations.
IS departments are perhaps the most extreme since they are often the sole
technology centers of the company and beyond the comprehension of most
executives. Yet IS executives do share common major political considerations
with their peers: headcount, budget size, operational impact on the overall
organization, etc. Meanwhile, the true IS professionals work in relatively
isolated supervision and are content that their supervisors are largely
ignorant of what they are doing.
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 ageing 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 IS 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 ''IS Juche,'' ''pak-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.
Moving on to the Next Generation
There is a trend with many large companies to have their IS departments
request every four or five years the overall haul of mission critical
systems. Officially, the rationale is the company needs the latest
technology to remain competitive. Actually, too often the IS departments
have created through internal development software houses of cards.
Given the ongoing pressures to make changes in the software as business and
other demands dictate, often modifications are undocumented, resulting in
''spaghetti'' code that requires extensive regression testing to ensure that
new changes will not bring the systems down. Because of face of the company
pak-sa, next generation systems must comply in functionality and sometimes
in design with prior systems - no matter how illogical or inefficient. This
practice has resulted in what many regard as ''Korean-style'' systems that
are often mistaken by employees as a reflection of ''our company's unique
way'' of doing business.
What Does the IS Industry Teach About Korean Business?
Most IS 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.
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