Beware, Humans. The Era of Automation Software Has Begun

By Ashlee Vance
Hewlett-Packard

The dominant story in the technology services industry in recent years has been the rise of massive, low-cost Indian workforces. And, now, according to Hewlett-Packard, we’re ready for a new mega-trend in services: the rise of automation software.

“The last five years have had a heavy component of labor arbitrage,” said Ann M. Livermore, the executive vice president in charge of H.P.’s vast enterprise business. “You could move work anywhere in the globe where you find good quality labor at a good price.”

“The next five years will all be about who can best use technology to automate the delivery of services,” she said.

As far as self-serving arguments go, this one nestles right into H.P.’s wheelhouse. Before it bought Electronic Data Systems, H.P. spent billions of dollars on management software companies like Mercury Interactive, Opsware and Peregrine Systems. These companies sold products that place software on servers and storage systems, move applications around data centers and fine-tune the performance of the whole shebang using policies set by a customer.

H.P. bills this software as a sort of secret sauce for keeping data centers running smoothly.

“People make errors,” Ms. Livermore said. “Not technology. We’ll have software that will automate all sorts of things that had to be done by humans.”

It seems fair to say Ms. Livermore is not a devotee of “2001: A Space Odyssey.”

Of course, as statements like those arrive from Ms. Livermore, H.P. continues to deal with the labor arbitrage issues. It’s in the midst of laying off 24,500 people, about half of them in North America, from the the old E.D.S., while hiring people in lower cost regions.

Thanks to such cost-cutting, H.P.’s services operating margins hit 13.8 percent last quarter – the highest such mark for the company in a decade. But I.B.M. and Accenture boast operating margins nearing 15 percent for their consulting and outsourcing services businesses, while Indian companies range from 19 percent to 30 percent, according to A. M. Sacconaghi, an analyst for the investment research firm Sanford C. Bernstein.

Will automation software that helps boost H.P.’s margins also save customers money? Well, that’s the massive question of the day.

Companies large and small have touted the panacea that automated management software brings for many years now without the software really living up to expectations.

H.P.’s own services group seems to have a mixed opinion about how great its software products are.

Before it was bought by H.P., E.D.S. was in the process of rolling out BMC’s management software across its data centers, according to Bob Beauchamp, the chief executive of BMC.

“E.D.S. stood up and said that it would move as fast as possible away from H.P. automation software to BMC software,” Mr. Beauchamp said. “A few months later, H.P. bought them, and I don’t think they’ve said anything like that subsequently.”

Still, H.P. placed the largest order for BMC’s integration software during the company’s fourth quarter, Mr. Beauchamp said.

As H.P. has bulked up in areas like services and networking equipment, BMC has unsurprisingly made a host of closer friends. Cisco Systems and Dell, in particular, have put BMC at the heart of their software automation plays.

According to analysts, it makes perfect sense for the services and hardware companies to hit on automation tools as their next major marketing push.

“Labor costs are often the largest operating expense line item for many data centers,” said Dan Olds, an analyst with the Gabriel Consulting Group.

“Replacing labor with software automation, or at least using software to reduce the need for new headcount, is one of the easiest ways to reduce overall I.T. costs. Where you have to have labor, getting it done in places where time is cheap is also a solid strategy.”

According to Mr. Olds, H.P. has hit on a decent mix of labor and automation.

As for data center operators? Well, even the fanciest software has a ways to go before it starts doing away with administrators en masse. Still, it would seem that the major technology companies are dead set on making sure that software trumps labor eventually.

“This is the circle of life in the global economic jungle and has been happening for generations as machines do things that people used to do,” Mr. Olds said.

Comments are no longer being accepted.

Jason September 28, 2009 · 4:24 pm

Software will be replacing humans, because humans are error prone. But software has bugs which causes errors themselves, because they’re programmed by humans. Makes plenty of sense.

Nick Leggett September 28, 2009 · 4:49 pm

If we keep displacing human workers, what is going to happen to the consumer economy and the future of capitalism?

Zeon September 28, 2009 · 4:56 pm

“Still, it would seem that the major technology companies are dead set on making sure that software trumps labor eventually.”

Great way to help the economy recover. If only we could find a way of eliminating more jobs.

Jojo September 28, 2009 · 5:18 pm

The NY Times has written about automation and robots in the past.

I regularly enjoy watching the TV show “Dirty Jobs” on the Discovery channel. One thing I always notice is the huge amount of manual labor that is required in almost every type of work. Much of this work seems to be possible to be replaced by robots or robotic processes as opposed to flesh and blood workers.

Much progress is being made in developing and replacing workers with robot automations, not only in factories but also in jobs like fire fighting (see: //news.bbc.co.uk/go/pr/fr/-/2/hi/technology/8172739.stm ) or in green houses ( //www.boston.com/business/technology/articles/2008/08/31/robots_on_the_move ) and other areas. In the next 10-20 years, we will see cars that drive themselves, robots that build and maintain roads, paint houses, perform medical operations, etc.

Automating the delivery of white-collar services is a further beachhead in the ultimate displacement of human workers with robots and computers.

Automation will change the world and the metrics that we use to measure the economy, our society and human progress. For instance, the replacement birth rate number may not be accurate in a technologically driven world. With ever more robot workers and automated processes, we will need less workers. But with less workers, how will the government find the money to care for the many people unable or unqualified to work? The government will have to raise taxes on those people still working and businesses still operating!

We face a severe dichotomy. On one hand, technology improvement tends to eliminate more jobs than it replaces. On the other, people refuse to accept that the birth rate needs to be reduced in response, for otherwise there will an excess of people with no work to do.

Unfortunately, as a society, given our poor history of anticipating the future and properly preparing for it, I have no doubt that we will be overrun by an excess of population long before the majority are willing to acknowledge that the birth rate must be reduced or the robots killed.

Nova September 28, 2009 · 5:24 pm

“If we keep displacing human workers, what is going to happen to the consumer economy and the future of capitalism?”

Viva la Revolucion

CH September 28, 2009 · 6:12 pm

By what possible measure can this be thought of as “progress”? I work for a company that is investing heavily in automation, in order that they can remove me from the payroll. How exactly does that differ from what Hyatt did to it’s workers? I’m reminded of the saying I learned long ago about the difference between capitalism and communism. Under communism, man exploits man. Under capitalism, the reverse is true,

Viva la Revolucion indeed.

peter September 28, 2009 · 6:33 pm

Previous comments seem to misunderstand the role of technology. Did cell phones hurt the economy because they put payphone makers and repair people out of business? Did tractors damage the economy because it means that far fewer farmers are required to feed the nation? Of course not, technology frees workers to do other jobs that cannot be automated. Advances in agriculture have allowed all those would be farmers to go into other industries and grow the economy.

Automating data centers will allow their services to become cheaper to other businesses, allowing them to hire additional staff for jobs that aren’t handled by a data center.

bobby September 28, 2009 · 7:21 pm

Oddly, the more ‘automated’ we get, the more hours Americans work and the more stagnant their pay (for those still employed).

What’s wrong with this picture?

Could it be that the tremendous gains in productivity are translated to more and more wealth for the top couple percent, which gets richer and richer while the rest of us run an endless treadmill just to stay in place with our world class expensive crappy health insurance, rip-off mortgages and blood sucking credit cards?

Erik September 28, 2009 · 8:32 pm

Frankly, as someone directly impacted by this trend (I’m an very senior IT systems administrator), there’s two aspects here:

(1) automation is welcome in the field, because we’re chronically understaffed. In a modern, highly-automated and controlled datacenter, 1 administrator to 1,000 machines is a reasonable limit. Given that densities of servers are now 50 per square meter of floorspace, and a typical datacenter has 10,000 sq m inside, that’s 500 administrators needed. Yeah, right. Current staffing levels might be 20% of that, max. We need a 10x improvement in automation levels just to get to full staffing (assuming server densities continue to increase), let alone start replacing people.

(2) Current automation software falls pretty much into two major categories: monitoring for faults, and software installation. The second field has seen significant innovation, and is a real help. I expect this area will continue to make significant improvements over the next decade, and we may get our 10x improvement this way. As for the first field, well, it’s stagnated, and unlikely to improve at all. And, notice, that the most important field (fault diagnosis and recovery) is in its infancy. Frankly, this field is as complex as building an auto-doctor. I.e. not going to happen anytime soon (decades away, at best). We will continue to see incremental improvements in tools designed to help the human, but the human is going to be required.

What all this means is that HP’s announcement is PR. They’ve got nice tools – indeed, probably the best in Network and System monitoring. And I’m sure their new ones are nice, and even very useful. They’ll improve the quality of job that can be done, which reduces the theoretical staffing levels needed – however, since we are nowhere near required staffing levels, there’s no concern about replacing people (despite what HP says).

Just to give laypeople an idea about the complexity of the datacenter management problem, consider this: it’s fare more difficult than a self-driving car or a pilotless airplane. It’s easier than creating a robotic ER doc, but probably about equal to replacing your GP doctor.

Also, as an aside, consider that datacenter administration has all the complexity and training levels that a Hospital has – we’ve got our equivalent to orderlies, nurses, P.A.s, doctors, and brain surgeons. All different skill levels and needs. At the current technology level, is it really a good idea to theoretically be able to replace a few orderlies with a multi-million-dollar piece of software? That’s something that people don’t mention – these software app start well above the million-dollar mark, and require 10-15%/year maintenance fees. Right now, companies pay for them simply because they can’t find enough qualified people, so it’s either pay for the software, or the entire datacenter becomes unmanageable. They’re not replacing people – they’re tools to help the job get done.

Dan Burke September 28, 2009 · 9:59 pm

We are past the time where jobs were the center of the economy. Now we produce more stuff than ever before, and there are not enough jobs to keep people employed, even in richer countries. The idea that you can only survive by having a job is obsolete. We need to restructure the economy around new ideas, that result in producing what is needed and providing a variety of options to make a living – that is to acquire enough resources to have food, shelter, health care, education, etc. There must be other options to provide for yourself and your family, other than getting a (frequently nonexistent) job.

rc September 28, 2009 · 10:05 pm

so ALL those who said in the 1980s that IBM was the evil one. or those who said in the 1990s that microsoft was evil, or those who said in 2000 that google was evil.

turns out everybody was wrong, it was the quiet guy you least expect, hewlett packard is the one who will introduce skynet to mankind.

Shanghai Expat September 28, 2009 · 11:30 pm

“People make errors,” Ms. Livermore said. “Not technology. We’ll have software that will automate all sorts of things that had to be done by humans.”

I agree with Jason, this is just nonsense. Technology does make errors, and if Mr. Livermore’s doesn’t I want to know what he uses (obviously not an HP, since that’s what I use at work, and despite being relatively new and virus free is still riddled with errors). If technology was perfect every time it came out, why have patches? Why upgrade? Wouldn’t it just mean that you sell something once and it’s good forever?

Beyond that, there are simply too many perils to full automation. What happens when you’ve gotten rid of a large number of people in favor of this software, and someone infects it with a virus (perhaps one of those disgruntled people you fired)? Depending on the virus, this could completely gut your entire business with potentially no one available to stop it or fix it.

Simply stated, there is no such thing as perfection. Humans are imperfect, and that which they create is imperfect. There will never be a perfect answer to every problem, if there is, there really wouldn’t be much of a point in us being around.

Daniel Coffey September 29, 2009 · 2:26 am

To state that HP is leading in this respect is to ignore the behmoth in this business. Despite recent acquistions, HP’s value is in the consumer business – printers and ink its razor and blades.

Peter Bournias September 29, 2009 · 3:56 am

Let’s see now, oh yea, one of the original ideas of IT was to eliminate work that was so repetitive that people were making mistakes due to boredom.

HP Solution – eliminate all jobs because all jobs are boring in the end, then eliminate all costs of living since there won’t be anyone to collect the money anyway.

Hey, that might work after all.

Simply writing from utopia.

Marvin September 29, 2009 · 8:52 am

Like death and taxes, obsolescence happens. Workers tend to fail to anticipate their own obsolescence and thus fail to obtain new “valuable” skills or move in work with additional lifespan.

This is not technology’s fault or the “man’s” fault. The “man” like the Grim Reaper has his job to do. Our job is to outrun them as long as we can.

Perhaps as workers we should be demanding 32 hour work-weeks and 8 hours of training a week in new skills as part of our compensation package, because like life, jobs are not forever.

Jacob September 29, 2009 · 10:24 am

“People make errors,” Ms. Livermore said. “Not technology…”

Last I checked, people create technology. Thus, technology is just as error-prone as people. Just ask Microsoft.

Peter Spielvogel September 29, 2009 · 2:40 pm

Automating data centers is really about taking people out of medial, reptitive tasks (and there are plenty in IT operations). If you can automate 70% of common functions (resetting services, pulling log files, etc.), which is certainly within the ability of current technologies, you can have people focus on important issues that require true intelligence.

HP is conducting a webinar on this topic on 9/30/09.
//www.communities.hp.com/online/blogs/managementsoftware/archive/2009/09/29/automating-operations-management-free-webinar-and-white-paper.aspx

If you read this after that date, the link will go to a recording of the session.

Jojo September 29, 2009 · 8:02 pm

@ Peter Spielvogel – I assume you made both comment #7 and #17? The tone sounds nearly exactly alike. According to linkedin, you appear to work at HP as a Product Marketing Manager. The content of your posts indicate that you have drunk the vendor kool-aid.

Having worked for vendors nearly my whole career (30 years), what you parrot is exactly what we always pitched when trying to sell products that improved productivity by wiping out jobs. Take people out of medial, repetitive jobs and allow them to “spread their wings”. Sure….. So why is HP laying off 25,000 people from EDS? Doesn’t HP have challenging tasks that need intelligent people to work on?

No, the reality is that 95% of the time, what happens is that the money saved through more efficient processes goes directly to corporate profits and/or additional executive compensation. Most of the displaced people lose their jobs. They are not retrained or given the opportunity of focusing on more “important things”.

At some point automation and technology improvement displace too many people and the underpinnings of the economy crumbles. Unemployed people cannot buy services and products!

Like India and China, we have an excess of available people willing to work for for lower wages. What we DON’T need right now is more efficiency or automation, which will simply lead to even more people out of work. We can afford to be inefficient. What we need is MORE work for the unemployed, even if it is merely make work. There are simply too many people and not enough jobs.

See:
September 27, 2009
U.S. Job Seekers Exceed Openings by Record Ratio
//www.nytimes.com/2009/09/27/business/economy/27jobs.html

Jean October 2, 2009 · 6:41 pm

Kudos to post #9 (Erik) for an unemotional and well-supported commentary on this topic. Automation software is a long long way from replacing the human mind. Even if some functions can be automated, human workers will still be needed for unforeseen situations where complex analysis and judgment are required. And as Erik implies, human workers may actually be less expensive than a vendor software contract when costs are compared over a period of years.

As a system manager with over 25 years experience, I have watched the server/system administrator ratio explode. When I joined my last employer 1994 (a large international manufacturer), our ratio was 10/1. By 2004, the ratio was 300/1, a 30x increase. In the same span of time our staff merely tripled. To this growth, add the increased complexity of going from a single O/S shop running on hardware from one vendor in one machine room to 7 different operating systems running on hardware from at least 4 vendors in machine rooms around the globe.

We were all eager to jump on the bandwagon when vendors promised to reduce our workload with monitoring and automation software. The most serious oversight in this reasoning was our failure to note that the software couldn’t actually fix problems, it could only report them. The fact that this software also had to be evaluated, budgeted, purchased, installed, configured, diagnosed and repaired along with everything else we supported meant it actually did more to compound the workload than to ease it.

We became so overwhelmed that we were constantly in reactive mode. Our pagers would go off about every 30 seconds (no exaggeration) with critical messages from the “automation” software. We never had time to really manage the systems to prevent critical problems from developing; we were already too far behind the 8-ball.

Experienced staffers fled to other departments and other companies, if they possibly could, to escape the madness and stress. These people, having been with the company for years, were difficult if not impossible to replace and new qualified employees came at a much higher price.

In retrospect, if even a fraction of the millions of dollars spent on “automation” software had been spent on staffing, we would have been far better off. Management finally figured that out, but too late. Seems we couldn’t replace people with software, and people were ultimately cheaper. With the IT operations department in shambles, management decided to outsource to India, and the server/administrator ratio (so I am told) is now down to about 50/1.

History has shown that technological advancements have merely shifted human effort from one set of tasks to another. Automation software is no exception, and given the infancy of its development, has only created more tasks for the average system manager.

Hpee Slave October 3, 2009 · 1:38 am

Nice story, sell it to readers digest!! We are quite a way from this happening. Servers crash, chips fry, power goes out, people drop stuff into vents, heaters etc. Life is dirty and oragnica, get used to it.

We_the_people October 7, 2009 · 10:56 pm

No worries. We will then have to deal with the magical ratio of nothing to nothing. How liberating! And everywhere I go, there is something to remind me, that by automating everything, I am free. Want to change some batteries with me, mate? It’s a great day…

Michael Rooney October 13, 2009 · 2:54 pm

Ann Livermore is completely correct. We at RingMaster Software have seen, over the last several years, a rise in the pressure on especially IT Departments to get more done with existing staff. Systems like HP’s management tools from OuterBay, Mercury Interactive, Opsware and Peregrine Systems and those from other companies like Hotsos, Mentis Software and RingMaster, are designed to automate everything possible and make it easier for people in IT, Finance, Compliance Auditing, Manufacturing, Sales, etc. to get their job done. We see this trend only increasing even in this tight economy and perhaps because of it.

Shola Abidoye November 16, 2009 · 11:59 pm

The time has come for business strategists, IT experts and operations managers to see the big picture. Automation is a way not only to reduce costs but to grow the top line as well. What is not clear to some is the impact on a company’s cost structure that automation can have – specifically automation’s impact on reducing marginal and variable costs simply because with each iteration, through factor specialization both the automation software and the person using it becomes “smarter”. Additionally automation allows leaders to be true knowledge workers, where more time can be spent on processing useful information that can affect profitability and less time delegating. With automation, one can instantly standardize and routine best practices which ultimately means being able to jump on business opportunities faster (sales growth), cut costs (the machine can do the work of many human workers) and ultimately sky rocket profits.

Imagine if small, medium and large corporations had a simple means to institute automation across an entire organization quickly, easily and cost effectively? One of the best things to happen to our organization this year was coming across a software application called WinAutomation (see //www.easymacrorecorder.com) run by a lesser known but well respected greek automation company. This company can revolutionize desktop automation the way that MS Word did word processing or Excel did data manipulation. I’m mentioning these guys because you folks should really check them out. Anyone who really values his or her time should make automation a priority. If you want to grow you business by leaps and bounds automation is the way to go. Once more, with automation, decision makers and business owners, those responsible for going out and getting business can focus on their highest income producing activities knowing that all the pieces of the puzzle needed to get the final result (at least many of done) are handled by the machine. Lastly, fast learning employees should not be threatened by automation but embrace it – employers should share the benefits of automation by increasing performance-based compensation of employees who embrace automation and not just keeping the profits which may dis-incline employees from embracing automation (as they may see it as a threat).