All Posts in Policies and Procedures

|In: Business Ethics|Last Updated:

There was a time it would have pained me to give Microsoft a compliment. But no more.

There are those in the industry who see all of Microsoft through a Windows 8 lens. Not that it has anything to do with this week’s missive; my opinion is that Windows 8 is best understood as Vista 2 — what matters isn’t Windows 8 itself, but what Microsoft learns from Windows 8 as it figures out Windows 9.

No, this isn’t a Windows 8 column. It also isn’t a Visual Studio column, although from what I’ve read, Visual Studio is outstanding. Nor is it an Azure column, even though Azure might just be the most interesting and enterprise-ready PaaS platform available, especially given the enterprise need to integrate the development environment (that would be Visual Studio) and identity management (Active Directory) into the whole shebang.

Nope. This isn’t a technology column. It’s a human-resources-management column (aka “human capital management,” aka “how you treat the men and women who work for you” column).

Microsoft has made a cutting-edge discovery: Stack rankings are a terrible idea and must be stopped.

To understand why stacked ranking … insisting that ten or twenty percent of every manager’s direct reports must be classified as “doesn’t meet expectations” … is a terrible idea you have to start by understanding where and in what circumstances they were a good idea, namely, General Electric when Jack Welch first took the helm.

Welch had been put in charge of a flabby, complacent company. He was quite sure it was overstaffed, and equally sure it had more than its share of mediocre-or-worse employees. It wasn’t hard to go from there to an inescapable inference: GE also had more than its share of managers who were quite comfortable drifting into the future on the efforts of mediocre employees.

These managers were too numerous to terminate en masse, so the only practical alternative was to give them no choice in the matter. Every year, every manager had to cut the bottom ten percent of their workforce.

Which had two salutary effects. First, General Electric got rid of its least profitable employees. And second, managers learned it was okay to terminate employees who weren’t worth keeping.

But just because it made sense in that restricted set of circumstances doesn’t mean it makes sense as an HR practice that pervades American industry.

As pointed out here years ago (“Staff inflections,“ KJR, 9/11/2006):

 Jack Welch popularized cutting the bottom ten percent of the workforce every year. Because it was Jack Welch, too many business leaders decided it must be a great idea. If you inherit a complacent, flabby organization this might be just the ticket … for a year or two. Beyond that limit, forget it — it’s both statistically and socially invalid.

Statistically: If you trim the worst performers, and choose strong replacements, then after two years your average performers must be well ahead of the industry average. And if you give other managers credit for brains, those they’ve terminated were the ones who didn’t do their jobs well, dragging down the average among the currently unemployed. If you can continue to strengthen your workforce by churning those rated lowest among your employees, you’ve been doing a poor job of recruiting and retaining great employees. You won’t fix this by continuing to cut.

Socially: How do you think your best employees will respond to the annual ritual? My guess — they’ll find companies that take a more surgical approach to dealing with problem performers. So in the effort to cut your worst employees you also lose your best.

Even worse: The more you churn your workforce, the less employees will trust each other, or you, because trust takes time to develop. Without trust there is no teamwork; without teamwork few organizations can achieve anything important.

Sorry to quote myself so extensively and self-congratulatorily, but I have nothing new to say on the topic, other than to congratulate Steve Ballmer.

Yes, Steve, your name is on several seriously bone-headed moves. Fair’s fair. If you’re going to get nailed for them, you also deserve credit: for making Microsoft’s products far more enterprise-ready than when you took over; and for building Microsoft’s enterprise infrastructure product portfolio. And especially now, you deserve credit for getting rid of stacked ranking at Microsoft.

It’s a fine legacy. Even more important, it just might make it okay for the HR departments in other companies to abandon the practice in favor of alternatives that have the advantages of making … what’s the word I’m looking for? Oh, yeah, now I have it.

Sense.

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|In: Cloud|Last Updated:

I don’t get it.

Amazon will now sell businesses virtual PCs for $35 per month. I’m trying to figure out how this makes sense.

Let’s run the numbers. You can buy a pretty decent desktop computer … from Amazon, to take one variable out of the comparison … for $400. Plus a monitor, keyboard and mouse, but they’re the same either way — a wash.

For the Amazon offering, unless you’re planning to run it directly in your frontal lobes you’ll need a cloud client to run it on. Typical cloud clients run around $350.

Imagine you expect the desktop PC to last 3 years … a typical rotation … but because you’re using a cloud-based PC you expect your cloud client device to last twice as long. That’s probably too generous, but I’m a generous guy.

The raw numbers say that over six years you’ll spend $800 for a traditional PC. For the Amazon alternative you’ll spend $350 + 12*6*$35 = $2,870.

Presumably, what you get for the additional $2,000 and change … $333 per year … is …

I don’t get it. Because you’ll still have to handle software installations, user support, and so on. The big benefit is that if a cloud client dies, there’s no disruption when you replace it. (And, by the way: Dear Microsoft … this is 2013 and it’s still an awesome pain to migrate from one PC to another. Why haven’t you fixed this yet? Love, Bob)

Probably, this is the wrong comparison. What we should be comparing Amazon Workspaces to is running your own VDI infrastructure. It’s a much more plausible comparison, because without Amazon you need to server capacity to run the virtual desktops, and storage capacity for user data.

Enter a nice piece written by Network Computing’s Art Wittmann earlier this year (“Calculating the True Cost of VDI,” 4/15/2013). Wittmann’s bottom line comes to $900 to $1,000 to provision a cloud-client system. The picture is complex enough that I’m not going to try to put a side-by-side comparison together.

Building a side-by-side comparison is complicated by quite a few little details, like how many times you’d replace the data center hardware over the six-year span we’ve allowed for VDI desktops (if it’s every three years add $320 per desktop for this, spent in year 4 of the cycle), and whether you or Amazon will upgrade the desktop OS, and if it’s Amazon whether the upgrade license is at no additional charge.

If you’re running low on space or AC, factor that in too.

Oh, one more quibbling little detail: If it’s your server, your local users get to operate at wire speeds. If you use Amazon’s service they’ll share Internet bandwidth. Yes, VDI is pretty efficient in its bandwidth use. You still need to determine whether you’d need to beef up your network.

Or add to it, because now that everyone is completely dependent on the Internet connection, you’ll need two, from two different ISPs, connecting to two different points-of-presence at opposite sides of your building. You should have this already, of course, and if you don’t, stop reading right now and make the proper arrangements.

I’m far too lazy to perform the detailed analysis, although if you’d like to put one together and send it my way I’d be happy to share it with the rest of the KJR community.

My guess is that managing your own VDI will win, but not by a lot.

But what this really points out is that after all these years of VDI being touted as the just-makes-sense alternative to putting real PCs in front of employees, the raw economics still favor the real PC.

VDI’s “value proposition” (if you aren’t an initiate: “Why you might want to buy it”) has always been the same. It isn’t hard cash. It’s headache reduction.

But reducing IT’s headaches doesn’t improve revenue, costs, or risks.

It’s long past time for a hard-edged look at the trade-offs between using VDI-provisioned desktops and real PCs. Not just how the costs compare … I trust regular KJR readers don’t need me to explain why total cost of ownership is such a useless metric yet again … but how they compare with respect to the business benefits they enable as well.

But this will probably prove impossible, because much of the benefit of real PCs comes from “shadow IT.”

It’s something most IT departments still try to stamp out, because IT only sees the headaches it causes. Its benefits are, by definition, hidden in the shadows where they’re devilishly hard to dig out.

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