920 MD Mark Chote gets a few minutes with Brett O’Reilly, CEO of NZICT

920 MD Mark Chote gets a few minutes with Brett O’Reilly, CEO of NZICT

As New Year business plans were drawn up, cost effective, time efficient and sustainable options were a high priority, making cloud computing a serious contender for IT services. Enterprises can expect the following…

By Lizelle Hughes - CIO | Wednesday, January 27 2010

This year, it is expected many companies will stop talking about cloud computing and finally do something about it. This is where we will see the uptake of cloud services.

As New Year business plans were drawn up, cost effective, time efficient and sustainable options were a high priority, making cloud computing a serious contender for IT services. Enterprises can expect the following:

Manageability of the cloud is becoming a critical success factor
As different vendors clamour to be part of the cloud, unified management of the entire technology stack is critical. Whether public or private, tying together the different infrastructure layers including applications, VMs, systems, networks and storage, along with a comprehensive set of management tools will reduce complexity by providing end-to-end service visibility, performance monitoring and automated provisioning.

Natural selection will begin in the cloud service provider space
Although it is still early in evolutionary process, Darwinian selection is already starting to happen in the cloud service provider space. Super efficient aggregators are emerging who have figured out how to get the most out of a virtualised infrastructure. Some early adopters of the cloud business model will decide to abandon offering services from their own datacentres and partner with successful service providers, who have demonstrated they can offer enterprise class IT as a service cheaper and with better service levels.

Secure multi-tenancy will become imperative
Datacentres today that are deploying cloud architecture are making a profound shift from application-centric silos to virtualised shared infrastructures. This shared environment results in multiple ‘tenants’ or users occupying the same virtualised infrastructure. As a result, the tenants need to be assured that safe sharing occurs both from a security perspective and a performance perspective. A secure, multi-tenancy solution enables this.

Companies will need a better grasp of how to standardise, consolidate, and virtualise their IT environments
Most IT departments over time have accumulated a diverse set of hardware and software platforms. This model may be fine in a siloed structure where each business application has its own server and storage resource. However, in a cloud environment, this model will pose serious challenges. As a result, companies who want to realise a true service-oriented architecture will need to start by planning to standardise and consolidate, in order to build a shared virtualised infrastructure.

Security and privacy issues will come more into focus
Data security is a challenge today even in closed IT infrastructure environments. For many financial, military defence and public security companies this issue will be even more profound in a shared and open cloud environment. Cloud service providers will need to develop a proven practice, to gain the confidence of those wary customers who value data security as the number-one criteria in choosing a service provider.

It will be important to define SLAs to effectively measure IT performance
The cloud will fundamentally change how IT services are offered, both internally and externally. For emerging cloud service providers, offering the right-sized SLA will be critical to winning business and market share with potential customers. For internal cloud deployments, IT departments will need to create the right SLA and the appropriate visibility associated with the SLA, so that the business units and IT can determine the most efficient use of resources.

More internal enterprise IT departments will be measured against the service levels, costs and provisioning speeds that are offered in comparison by public cloud providers
Many IT organisations are recreating themselves as “internal service providers” in the effort to standardise offerings and reduce costs, yet still meet the requirements of the business. By implementing “service catalogues”, – meaning a finite set of configurations with associated service levels, costs and delivery times – IT organisations are able to reduce their procurement and management costs. The limited set of resources available in a catalogue enables standardisation which in turn creates a more predictable cost model and increases time to market.

Cloud architectures will be driven by standardisation (Ethernet), virtualisation (servers, storage), and efficiency (asset, operations, environmental)
Standardisation is critical to any service offering because it gives both the provider and the consumer a set of repeatable, measurable resources. Without standardisation every offering would be custom, which would not only increase up front deployment costs and on-going management costs, but also make it difficult to measure the effectiveness of each offering as there would be no baseline. Additionally, by standardising on lower cost network technologies such as Ethernet and a virtualised server and storage infrastructure, cloud architectures will drive up efficiencies – allowing service providers to drive down their costs and focus on value-added services to differentiate and drive their own revenue.

Companies will move towards shared, but self-hosted infrastructure behind virtualised servers (whether public or private) and co-existence of siloed application stacks
The move toward cloud architectures will not happen overnight. Most companies have a number of critical legacy applications in traditional siloed architectures that they will not change for any number of reasons including the introduction of too much risk, politics, organisational inertia, and so on. Shared, virtualised infrastructures will become the de facto choice for new application rollouts, but enterprise organisations will continue to maintain a hybrid environment for years to come – witness the number of IT organisations investing in and maintaining mainframe systems even decades after their projected lifespan.

Platform as a Service (PaaS) will become a major focus
The potential for cloud computing extends beyond hypervisor-centric Infrastructure as a Service resource-sharing. Successful Software as a Service (SaaS) Cloud offerings today include powerful underlying PaaS engines such as Force.com, Google Apps, and Intuit QuickBase Online. These PaaS engines offer the necessary customisation of otherwise rigid SaaS workflows and reports. The advent of Microsoft’s Azure, coupled with a huge and loyal developer base, will accelerate adoption of next-gen Cloud-centric applications. VMware’s purchase of SpringSource also confirms and reinforces this trend.

As more and more vendors enter the cloud server provider space, the prices will become more competitive, quality of service will increase and issues of standardisation, security and privacy will be addressed.

On Tuesday, Google is launching a Google Voice web application that runs on iPhone devices with the 3.0 OS or later versions, as well as on Palm WebOS devices.

By Juan Carlos Perez Miami - Computerworld | Wednesday, 27 January, 2010

Google has found a way to let iPhone owners use Google Voice, the telephony management service whose iPhone-specific application Apple rejected last year.

On Tuesday, Google is launching a Google Voice web application that runs on iPhone devices with the 3.0 OS or later versions, as well as on Palm WebOS devices.

The Google Voice application leverages HTML 5’s functionality for running sophisticated web applications on a browser at speeds matching those of native applications, Google said.

The application lets users tap into a “streamlined” version of the Google Voice inbox, display their Google Voice numbers in caller ID systems, listen to voice-mail messages, read voice-mail transcripts, exchange text messages free and make international calls billed at Google Voice rates, Google said.

To access the application, users need to go to the URL http://m.google.com/voice and sign into their Google Voice accounts. They don’t need to download anything to their phones.

Google and Apple, former corporate buddies turned snarling rivals, got into a spat last year when Apple rejected a Google Voice application for the iPhone. Apple reportedly justified the rejection by arguing that Google Voice duplicates some native iPhone functionality, which Apple wants to avoid in third-party iPhone apps, while Google called the decision unfair.

The Google Voice-iPhone conflict is one of several issues putting the companies on a collision course. Google’s release of its Android mobile OS and devices based on it, as well as the development of the Chrome browser and Chrome OS all put it in a competitive position against Apple.

Citing increasing areas of competition, Google CEO Eric Schmidt stepped down from Apple’s board of directors last year.

CIOs who survived 2009, during which IT budgets dropped by 8 percent on average, don’t expect to see business recover or IT dollars return immediately in 2010. They do, however, intend to makeover IT departments as leaner, more lightweight entities ready to respond to business needs, according to Gartner research released Tuesday.

By Denise Dubie - CIO New Zealand | Wednesday, January 20 2010

CIOs who survived 2009, during which IT budgets dropped by 8 percent on average, don’t expect to see business recover or IT dollars return immediately in 2010. They do, however, intend to makeover IT departments as leaner, more lightweight entities ready to respond to business needs, according to Gartner research released Tuesday.

A survey of 1,600 CIOs worldwide shows that while many speculate economic conditions will recover, 41 percent of IT leaders globally are planning for “continued business contraction.” Worldwide, 53 percent expect to see stabilisation in 2010, and 6 percent expect to see growth.

Among US CIOs polled, 47 percent expect continued contraction, 23 percent believe business and budgets will stabilise this year, and 26 percent see some recovery and some growth. The remaining 4 percent in the United States say they will see revenue growth above 2008 levels in 2010, according to Mark McDonald, group vice president and head of research, Gartner Executive Programs.

Gartner’s annual CIO survey, in its 11th year, polled 1,600 CIOs worldwide representing US$120 billion in IT spending between September and December 2009. The goal, McDonald says, is to understand the priorities of IT leaders and the resources available to these CIOs. The message for 2010 was clear: transition. CIOs will use another tough economic year to transition from: recession to recovery and growth; strategic cost-cutting to raising enterprise productivity; and owner-sourced technologies to lightweight social technologies.

“Two things came out of the survey: 2009 was the toughest for IT on record, and CIOs reported that 2010 would be another tough year,” McDonald says. “IT budgets are projected in 2010 to have a modest recovery off of their lows in 2009, but they are not expected to be anywhere near enough to recoup the cuts they took. CIOs recorded final budgets at 8.1 percent lower than the year before, and 41 percent reported they took multiple budget cuts during the year.”

Gartner estimates 2010 budgets in the United States will be 2.5 percent higher than 2009, which is on par with 2005 budgets. The economic conditions are driving CIOs to reshape their focus from cost efficiencies to productivity. As part of the economic recovery, McDonald says IT leaders realize they need to produce more services, respond to the business more quickly and deliver more value with significantly less resources. Another significant find in Gartner’s survey is that IT doesn’t expect to return to previous operating models following this recession.

“When we asked CIOs if they thought IT would return to the way it was, 50 percent said no. From talking with case-study companies, the basic economic funding model of IT is changing,” McDonald explains. “The cost profile and technical needs associated with virtualisation and cloud computing, for instance, are different, and already about 40 percent of CIO budgets are allocated for services outside of the company. We found that the whole nature of the IT budget has changed.”

While 36 percent surveyed by Gartner expect IT to move back to pre-recession ways and 14 percent simply weren’t sure, McDonald says many IT leaders are planning to revamp their departments by way of new technologies and skill sets to help businesses return to growth in 2010 and to streamline IT for future business needs. According to Gartner, this evolution of IT is needed and the recession helped kick CIOs into high gear to enable technology groups to transition to more business-relevant organizations within a company.

“We are seeing leading CIOs making deep structural changes in IT to put it on a completely different trajectory, one that is leaner, lighter weight, more responsive and more business-relevant,” McDonald says.

Google’s rivalry with tech firms is likely to get more intense in 2010. With Google, tech firms are up against the internet’s most-trafficked website and a money-making machine. Google is poised to rack up more than US$23 billion in revenues in 2009, with margins over 30%. With its huge cash reserves, Google has money to buy innovative start-ups (recent examples include On2, ReCAPTCHA and AdMob) to keep itself at the cutting edge.

By Carolyn Duffy Marsan US - COMPUTERWORLD |

The biggest tech industry news story of the 2000s was undoubtedly the dramatic rise of Google. But will the search and online advertising juggernaut continue its dominance over the internet economy in 2010? Time will tell.

Until now, Google’s biggest frenemies were the traditional media. (”Frenemy” is a term used to describe someone who looks and acts like a friend but is actually an enemy). But as Google’s portfolio has grown to encompass more than 150 products — including free, hosted versions of popular software applications — it has attracted an array of tech industry competitors.

Google’s rivalry with tech firms is likely to get more intense in 2010. With Google, tech firms are up against the internet’s most-trafficked website and a money-making machine. Google is poised to rack up more than US$23 billion in revenues in 2009, with margins over 30%. With its huge cash reserves, Google has money to buy innovative start-ups (recent examples include On2, ReCAPTCHA and AdMob) to keep itself at the cutting edge.

Here is Network World’s list of 10 tech vendors that are likely to shape up as Google’s biggest rivals in the year ahead and the areas in which they will compete hardest:

1. Amazon

On track to rack up US$22 billion or more in sales this year, Amazon has the financial wherewithal to battle Google in e-books and cloud computing. Indeed, Amazon CEO Jeff Bezos is a true frenemy of Google’s, having been one of the search firm’s initial investors back in 1998.

Analysts agree that 2010 is shaping up to be the battle of the e-books. Since 2002, Google has been scanning millions of out-of-print books and incorporating them into its search service. In October, Google said it was opening up an e-book store called Google Editions that will allow customers to buy and read electronic books on any device with a browser.

With e-books, Google is taking on Amazon, whose Kindle e-book reader has a commanding lead in the market. The Kindle is the best-selling item at Amazon’s website, which is now offering more than 360,000 e-books in its Kindle store. Amazon said in December that it would release a free Kindle book reading application for BlackBerry users, which will complement a similar application for PC users.

The other main area where Google is taking on Amazon is in cloud computing, a market that is poised for significant growth in 2010.

In April 2008, Google debuted its Google Apps Engine, which is a cloud computing platform that allows developers to create their own web applications and run them on Google’s infrastructure. Users pay for the amount of compute, storage and bandwidth resources that they use. In April 2009, Google added features to make its cloud computing platform more attractive to enterprises.

Amazon’s Elastic Computing Cloud (EC2) pay-as-you-go compute service was released in 2006, and it has been upgraded several times, including the addition of load balancing, auto scaling and monitoring services. In December 2009, Amazon added Symantec’s security and storage offerings. Usage of EC2 is on the rise with business customers , who find it a low-cost way of handling bursty network traffic although security concerns remain.

2. Apple

In 2009, Apple and Google went from being partners — with common board members — to rivals in the mobile phone and online music businesses. With US$36 billion in sales and legendary engineering prowess, Apple is more than up to the task of battling Google in these areas as well as browsers, where Google Chrome competes against Apple Safari.

Headlines about a looming Google vs Apple war centre around the smartphone market.

In July, Apple rejected Google Voice, which allows users to share a single number across multiple phones, as an application for the iPhone. In August, Google CEO Eric Schmidt resigned from Apple’s board, citing conflict of interest. By October, Google and Apple eliminated all overlapping board members amidst a US government antitrust investigation. Meanwhile, Google’s Android mobile device platform — with more than 1 million units sold as of April through T-Mobile — is gaining ground against the popular Apple iPhone.

The iPhone continued to be one of Apple’s bestsellers in 2009, with more than 20 million units sold in the last four quarters.

The digital music market is poised for strong growth in 2010, with Google and Apple both in hot pursuit.

In October, Google launched a music search service that lets a user preview a song when making a music-related query. Google’s music search partners include MySpace and La La Media, a streaming music website that was purchased by Apple in December. Another music partner of Google’s is Pandora, a streaming music service that’s available on Android-based mobile phones.

All of these online music upstarts like Pandora and La La Media are out to unseat Apple’s iTunes. Although sales of its popular iPod device are slowing, Apple still reported sales of more than 54 million iPods in the last four quarters.

3. AT&T

AT&T is a rival of Google’s politically (they are on opposite ends of the network neutrality debate) and in the smartphone market, where AT&T is the exclusive carrier of the iPhone in the United States until June 2010. With more than US$123 billion in sales in the last four quarters, AT&T dwarfs Google and isn’t afraid to flex its regulatory muscle, as in its complaints about Google Voice to the US Federal Communications Commission.

In its battles with Google, AT&T is out to protect its iPhone-related revenue, which averages out to US$1,000 per iPhone customer per year, experts say.

In the last four quarters, AT&T has activated 11.5 million iPhones, producing a significant stream of wireless data revenue. That’s why AT&T is pushing Apple to extend its exclusive contract for another year. In the meantime, AT&T is hedging its bets and could partner with Google in 2010. Rumor has it that AT&T will offer its first Android phone from Dell  in 2010.

During 2009, AT&T and Google lobbyists argued strenuously before the FCC about Google Voice. AT&T wants Google Voice to be required to connect expensive calls through rural telephone companies like AT&T is required to do under “fair access” rules. Google argues that it isn’t a carrier, can’t offer a free application if it is required to meet carrier regulations, and shouldn’t be required to connect expensive porn and conference calling services through rural carriers. For now, Google Voice is still in beta mode and isn’t available on the iPhone.

4. Facebook

Google has been eyeing the rapid rise of Facebook — which has attracted 350 million active users in just six years — with concern. Although venture-funded Facebook’s financials are not publicly available, analysts estimate that its 2009 revenues will top US$500 million, much of it from an advertising deal with part-owner Microsoft, another Google rival.

The Google/Facebook rivalry is based on the question of where users will get their information in the future: in search or in social networks?

Google is worried enough about users turning to their social networks for information and advertising that it has sidled up Facebook rivals MySpace, LinkedIn and Twitter for various applications. Indeed, rumours of Google buying Twitter were rampant this year. Google also has its own social networking application, Orkut, which was upgraded in December. And it offers Google Friend Connect, a tool for web publishers to add social networking content to their sites, in direct competition with similarly named Facebook Connect.

Meanwhile, Facebook has sought out relationships with several arch-enemies of Google, including Microsoft and Yahoo. Back in 2007, Facebook sold a 1.6% stake to Microsoft rather than Google and chose Microsoft’s search engine for its site. Facebook also has added features this year such as Open Stream API, which allows developers to export Facebook data to other applications. Two outstanding issues facing Facebook in 2010: protecting the privacy of users’ information and keeping hackers at bay.

5. Hulu

Google has owned YouTube for four years, but it hasn’t figured out a way to turn a profit from the fast-growing video streaming site. YouTube’s closest competitor in this segment is Hulu, which has the benefit of deep-pocketed media ownership.

Online video usage exploded in 2009. The question for 2010 is whether YouTube will continue to dominate this market.

YouTube is best known for featuring video clips and user-generated content. The website attracted more than 126 million viewers and served up 10.3 billion videos in September, according to internet market research specialist Comscore. YouTube’s weakness: it doesn’t make enough money to cover its massive network bandwidth costs. Analyst firm Credit Suisse estimates YouTube will lose US$470 million in 2009.

Hulu is second to YouTube, with 39 million viewers and 583 million videos viewed in September, Comscore reported. But Hulu only provides professionally created content from its owners, which include Fox, NBC and Disney. Though not profitable, Hulu may start charging for its content in 2010, which would shake up this market.

6. IBM

Google’s rivalry with IBM could heat up in 2010 with the release of new collaboration tools such as Google Wave. With IBM, Google is up against a financial powerhouse; IBM has racked up more than US$95 billion in sales in the last year and reported profit margins between 43% and 47% in each of the last four quarters.

In the midst of a deep recession, more companies are experimenting with low-cost hosted collaboration tools such as Google Apps.

Google Apps is a suite of hosted applications including email, calendaring, instant messaging and document sharing. Google Apps competes against IBM’s Lotus Notes and Microsoft Exchange.

In September, Google introduced Google Wave, a hosted application that combines email, instant messaging and document sharing. In December, Google bought AppJet in a bid to add features to Google Wave.

In October, IBM introduced LotusLive iNotes, a web-based email, calendaring and contact service priced to undercut Google Apps. Also this year, IBM improved the social networking features in its LotusLive Connections, which now includes blogging, book marking and file sharing.

7. Microsoft

Google’s biggest rival across the board — in search, collaboration tools and browsers — is Microsoft. Though it’s not as dominant a player in the IT industry as it once was, Microsoft is still a fearsome rival that has racked up US$56.3 billion in sales over the last four quarters.

For the last decade, Google has reigned supreme in search — at least in the United States.

The search situation may be changing with Microsoft’s May 2009 release of Bing, which ranks search results based on relevancy to other users. Microsoft has inked Bing-related deals with Twitter, Facebook and Yahoo. After the launch, Microsoft continued to enhance Bing, adding image search and mapping.

Google is worried enough about Bing that it is beefing up its own search capabilities. In December, Google unveiled real-time search, which include Twitter results. Google also added a photo search capability, a dictionary and a translator that finds relevant content in 40 languages. Entering 2010, Google still dominates search, with more than 70% of the market.

For 2010, the battle between Microsoft and Google is likely to focus on cloud-based collaboration tools.Google Apps is designed to undercut sales of Microsoft products, including Exchange and SharePoint. Microsoft has responded with Office Web Apps, free web-based versions of Word, Excel, PowerPoint and OneNote that are due out in 2010. Office Web Apps is part of a push by Microsoft to embrace the hosted, subscription-based model of selling software applications. Microsoft’s approach is to provide integration between its hosted applications and SharePoint, which is due for an upgrade in 2010.

Meanwhile, Google is developing real-time, cloud-based collaboration tools with Google Wave, which is in an invite-only preview mode. The developer community has responded positively to demonstrations of Google Wave, which also competes against Microsoft’s overlooked Silverlight offering.

The launch of Google’s Chrome browser poses the question of whether 2010 will spark another browser war, this time between Microsoft and Google.

Microsoft’s Internet Explorer has been the premier browser since the late 1990s. Microsoft introduced version 8 of IE in March 2009, claiming it is the fastest, most stable and secure browser on the market. So far, Google’s introduction of its Chrome browser — currently in version 3 — hasn’t chipped away at Microsoft’s dominance. Chrome had just 3.7% of browser market share in October, according to Janco Associates.

The question is whether this dynamic will shift when Google unveils its Chrome OS in 2010, which is designed specifically for netbooks. The first netbooks with Chrome OS installed — including a system that Acer is developing — aren’t expected until the second half of 2010.

8. Nokia

Nokia is the world’s number one mobile phone manufacturer, providing four out of every 10 mobile phones sold. Although Nokia has lost market share to Apple and RIM, it still shipped more than 108 million units in the third quarter of 2009 alone, racking up billions of dollars in sales.

The rivalry between Nokia and Google is in the area of operating systems for smartphones.

Nokia has its own Symbian open source operating system, which competes against Google’s Android. Despite rumours last year, Nokia says it’s sticking with Symbian and has no plans to sell an Android-based mobile phone or netbook . In the meantime, Nokia is teaming up with Microsoft to bring Office Mobile to Symbian devices. Nokia’s CEO, Olli-Pekka Kallasvuo, said in December that a new-and-improved version of Symbian will ship soon. Nokia also will ship high-end devices that run the Linux-based Maemo operating system.

Meanwhile, Google’s Android is poised for major developments in 2010. More than 50 Android-based devices are expected to ship in 2010, compared to 10 in 2009, according to mobile sector market research firm CSS Insight. Among the vendors who have committed to Android are Acer, Sony Ericcson, HTC and Motorola. Market researcher ABI predicts that Android devices will own nearly a quarter of the smartphone market by 2014.

9. Verizon

Google and Verizon are true frenemies. They’ve tussled over spectrum space, but they’re teaming up on smartphones. Google has a powerful ally and sometime rival in Verizon, which has rung up more than US$105 billion in revenues in the last four quarters.

Verizon is teaming up with Google for one reason: to slow the growth of Apple’s iPhone and the revenue it brings to arch-rival AT&T.

In October, Verizon and Google announced an agreement to jointly develop Android-based smartphones, PDAs and netbooks. Verizon’s first Android-based smartphone is the Motorola Droid, which hit stores in November. Verizon also said it would support Google Voice on its Android handsets.

Verizon hasn’t always been Google’s buddy. In 2008, Verizon chose Microsoft as its mobile phone search provider. This decision came after Google complained to the US Federal Communications Commission that Verizon wasn’t moving quickly enough to open up access to its wireless data network. In a surprising move, Google and Verizon in October released a joint position on network neutrality in which they called themselves “unlikely bedfellows”.

10. Yahoo

When it comes to search, one of Google’s biggest competitors besides Microsoft is Yahoo. Although it was bloodied by the failed Microsoft take-over in 2008, Yahoo still churned out more than US$1.5 billion in revenue in each of the first three quarters of 2009.

Yahoo competes against Google in news, email and, most importantly, search.

Yahoo has made some improvements in 2009 by integrating search with its rich content. Users can watch videos or stream music straight from the Yahoo search results page. Yahoo also helps users find travel deals and compare product prices. Yahoo recently added Twitter to its search pages.

Yahoo’s search capabilities could change dramatically in 2010, if a joint search and advertising deal between Yahoo and Microsoft is approved by federal regulators. The deal — inked in December — would allow Yahoo to integrate Microsoft’s Bing search engine into its portal, while Yahoo would provide search advertising results to both companies. The Yahoo/Microsoft deal is aimed at helping the two companies compete against Google.

Much has been said about best practices in IT management to tide over the economic downturn. Under ever-increasing pressure, many CIOs are now looking at IT Infrastructure management as an effective means to drive business transformation. While most organisations are keen to join in, there are some strategies that may be employed to get quick wins.

By Rama Murthy Prabhala and Rahul M. Joshi - CIO New Zealand|

In these trying economic conditions, CIOs must utilise all available strategies and avenues to deliver more with less.

Much has been said about best practices in IT management to tide over the economic downturn. Under ever-increasing pressure, many CIOs are now looking at IT Infrastructure management as an effective means to drive business transformation. While most organisations are keen to join in, there are some strategies that may be employed to get quick wins.

The sheer pace of change in the technology space has allowed organisations to outsource key activities that would have otherwise consumed crucial internal resources. Management of IT Infrastructure is one of the areas that can be outsourced to a third party. Studies indicate that up to 80 to 85 percent of management activities can be done remotely thus offering an opportunity to decrease costs*.
* Source: “Remote Infrastructure Management Services: Igniting India’s leadership”, NASSCOM-McKinsey report 2008

In the past, IT Infrastructure management usually consisted of asset-based transformations. However, with the emergence of solutions such as cloud computing, SaaS and utility computing models, enterprises can now offload their IT assets by subscribing to IT service components without having to actually acquire hardware. This has proven to be useful especially at a time when almost every other day a new technological acronym is born.

CIO Strategies for Improving Productivity and Rationalising Costs
As hard pressed CIOs continue to focus on boosting productivity while reducing costs, large projects may not be financially viable at this time. However, all is not lost since there are proven strategies available for CIOs to address the challenge of supporting the business with a reduced IT spend. We recommend a three-phased approach to tackle the issue of cost optimization, innovation, and business-IT alignment to achieve the overarching objective of a lean and efficient IT driving business growth.

Before implementing these strategies, CIOs need to do a robust risk assessment and benefit analysis to determine how these will impact the organisation. Rather than being swayed by the hype surrounding some of these strategies, they need to gather information and evaluate the impact carefully.

Many of these strategies assume that the organisations have capabilities to undertake such transformation programs. However, it is necessary that CIOs do a realistic capability analysis and if required, moderate the goals. CIOs will need to prepare a detailed roadmap on how to acquire the required capabilities. A prudent selection of partners and trusted vendors can significantly hasten the process of acquiring the capability.

A critical element is to balance tactical objectives with long-term strategic objectives. While the downturn has forced many CIOs to cut deeply into the organisation costs to gain tactical advantage, it is also imperative that they not compromise on the long-term strategies and put the organisation at risk during the upturn.

We believe that by following this three step approach where each step builds on the other, CIOs can deliver the promised benefits to the enterprise. CIOs need to consider realistic benefits that can be achieved through the strategies.

Short Term: Cleanup
Defer discretionary spending - This is relatively easy to achieve, but care must be taken in identifying the projects that are to be shelved. While application upgrade projects are underway, CIOs should scrutinize the benefits of these projects and defer implementation of these upgrades if they are not critical for business. CIOs should review all projects and prioritize them depending on the cost-benefit outcomes. It is also recommended that future direction and growth be accounted for while doing the rationalisation exercise.

Decommission little or never used applications - CIOs should consider rationalisation of applications as a strategy for reducing costs of IT operations. Elimination of redundant applications is a must in cleaning up the application inventory and reducing support costs. Such a move is an extremely useful lever while dealing with organisations that have grown through M&A or that are organised based on lines of business.

Application portfolio based view of support costs - CIOs need to re-evaluate the cost of managing application portfolios and adjust the service levels based on the utility and criticality of these portfolios in consultation with business partners. One approach for achieving this is to build an inventory of applications, classify the applications maintenance and support needs based on core, sunset and new generation applications and then build appropriate support models with relevant service levels. This allows IT to reduce service levels of up to 30 to 40 percent of application portfolios leading up to 20 percent reduction in costs.

Medium Term: Reduce Complexity
Consolidate support, platforms and technologies - After elimination of redundant applications, it is prudent to consolidate the application infrastructure and support. Strategies for consolidation could include:

• Shared Services - Setting up a shared services model for application support and maintenance activities: Implementation of a mature shared services model leads to support staff rationalisation that can help in releasing the work force and re-deploying them to strategic projects. Retraining the support staff will help increase productivity and application per person ratio.

• Infrastructure consolidation - Consolidation of application infrastructure and leveraging virtualization wherever appropriate helps drive down data center costs.

• Enterprise Architecture consolidation - CIOs need to use this opportunity to assess the application platforms and build long-term and near-term strategies to consolidate and guide the organisation toward next generation architecture. This will enable CIOs to be ready for the upturn and position them to support fast changing business demands.

• Consolidation of application support - After the standardisation of processes, IT managers should look at consolidation of support and maintenance both within and across application portfolios. We have observed savings of 5 to 10 percent in overhead as well as operational costs due to consolidation.

Why not open source? - Open source products can be considered a feasible alternative to proprietary products. There are positives and negatives to this, based on the criticality of the use for which an open source product is being implemented. The adoption of open source products is recommended after taking into consideration the maturity of the product and its supportability. Lack of available support is a major hindrance to adoption. CIOs need to make a decision on the correct time to implement these products in their environment. Based on the available data, niche implementation of open source in the Web and middleware platforms has delivered more than 25 percent reduction in licensing costs for customers.

Standardise IT processes and operations - CIOs can bring in service management best practices; apply six sigma and lean principles to streamline the process of maintenance and support. Typically, organisations may achieve ˜ 5 -10 percent savings in operational costs due to standardisation of processes through improved productivity. These savings vary depending on the nature of the operations.

Automate Manual IT tasks - CIOs need to automate routine activities to reduce manual effort and achieve higher process maturity in operations. Some activities that are natural candidates for automation include reporting, weekly and daily application check, alert monitoring, problem identification etc. We have seen organisations achieve ˜ 10 to 20 percent savings due to automation of processes. Companies must investigate the cost benefits of implementing Run Book Automation (RBA) solutions for operations. RBA tools have matured over the past couple of years and have helped organisations realize substantial savings on operational costs. A task based automation approach could lead to benefits of up to 8-10 percent within the first three months. We have seen this consistently work well across 40 varied IT environments with varying degrees of maturity.

Process control - There is a need to evaluate the change and release management processes of applications, infrastructure, etc. CIOs need to implement stringent change control mechanisms to curb unauthorized change, which lead to unavailability of business applications and productivity loss. IT organisations could save ˜ 5 -8 percent in unplanned costs and better compliance to federal regulations and de-risk the IT operations by achieving process control.

Long Term: Business Innovation
Assess alternate delivery models - CIOs need to consider alternate delivery models to get faster cost benefits. Some of the delivery models that can be successfully deployed include:

• Transaction-based pricing models for support and maintenance.
• Pay-as-you-go models.
• Catalog-based pricing models.
• Unit of Work (UoW)-based pricing models have delivered an immediate cost benefit of up to 15 percent reduction in OPEX to customers who moved from traditional time and materials (T&M) and fixed price (FP) model.
• Managed Application Operations Models.
• Cloud computing: Source e-mail and office productivity applications through the cloud.

The above strategies have been used well as transformation levers in banking and healthcare verticals. Our experience suggests that significant upfront benefits can be achieved by choosing strategies that can be implemented without significant change management to begin with. For example, a leading investment bank saw a 15 to 20 percent reduction in TCO due to consolidation of service desk and movement from a T&M to a UoW model. The second phase is a strategic initiative that could involve multiple levers like automation, consolidation of technology and standardisation of processes.

In the case of healthcare customers, rationalisation of technology and software licenses lead to a reduction of ˜ 5 percent TCO to the IT organisation. Platform consolidation and automation can lead to a further savings of more than 10 percent in the next six months.

While the above mentioned strategies are capable of achieving significant cost savings in the short and medium term, it is important to have frameworks in place to sustain these activities. Many organisations tend to look for immediate returns through IT transformation - however, most are unaware of the level of effort and investment that is required to sustain the rewards. As is evident from Figure 1, most of the strategies mentioned above will plateau after sometime.

A key point to remember is to document the business value of the strategies mentioned above. While some strategies may bring immediate cost savings, others may not - but they will be crucial nevertheless. For example, building a framework around Configuration Management Database (CMDB) may require a significant one time effort - but the rewards are visible when a platform migration is underway.

In conclusion, it is important that in these trying economic conditions CIOs utilise all available strategies and avenues to deliver more with less. They must use this opportunity to build a strong process and technology foundation to prepare their organisation for the next upturn.

About the authors
Rama Murthy Prabhala is a delivery manager with Infosys Technologies. He specialises in program management of large application and infrastructure programs with focus on banking and capital markets and manufacturing sectors. Rahul M. Joshi is a principal consultant with Infosys Technologies. He specialises in IT strategy and provides consulting in the area of complex IT transformation programs.

By Marc Ferranti, New York - Computerworld

While the computer industry in the 1990s thrived as corporations re-engineered business processes to incorporate IT, this decade has seen technology truly become part of mainstream culture and commerce via the internet and ever-cheaper and smaller computing devices.

Yes, the internet revolution began in the ’90s, but it was not until this decade that 14-year-olds raced ahead of professionals in figuring out how to tap social networks with hundreds, and sometimes thousands, of contacts.

Here, in not-quite chronological order, are the top technology stories of the decade, selected by the IDG News Service for their singular impact on the industry as well as their emblematic status as examples of the trends that shaped the course of IT.

The dot-com deathwatch
Just months after concerns about the Y2K bug fizzled, the tech-heavy Nasdaq, symbol of the “new economy” because of the many IT companies it lists, hit a high of 5048 … for the decade. From that date (March 10, 2000, to be exact), over the next two and a half years, the index plunged almost 4,000 points, and never fully recovered. During those first years of the 2000s, companies burned through venture capital and IPO funds only to find that they couldn’t stay in business long enough to raise cash the old-fashioned way — offering actual products that people are willing to pay for.

Lesson learned: The e-commerce companies and IT vendors that survived figured out how to deal with a more sceptical customer base and did not suffer as much as other sectors during the Great Recession at the tail end of the decade. Now IT appears poised to help lead the economy back on a growth path.

Microsoft is busted
In April 2000, US District Court Judge Thomas Penfield Jackson issued the first big ruling in a series of antitrust decisions to hit the software giant during the decade. Jackson found that Microsoft maintained its monopoly power by anticompetitive means and illegally attempted to monopolise the web browser market.

The final judgment in the US federal case established restrictions related to licensing agreements and ordered that Microsoft release some of its intellectual property. Microsoft also faced private and government antitrust cases involving individual US states, Sun Microsystems, and the European Union, which fined Microsoft US$794 million in 2004.

Ramifications persist. Microsoft still meets with US officials who monitor its behaviour, and the European Commission just this month accepted the company’s promise to allow Windows users to choose which internet browser they use, ending a browser-market investigation. The cases were a huge distraction for Microsoft but ultimately made its software work better with competing technology. They also provided a template of sorts for antitrust cases brought against Intel this year in the US and Europe.

Apple launches the iPod, and gets back on track
Several years after his return to Apple, after being banished in the 1980s when company growth stalled, co-founder Steve Jobs realized that though the mainstream market for digital devices was booming, music players were not very well designed. The iPod, launched in October 2001, was Apple’s game-changing entree into the consumer mass market.

It was an immediate hit, and a year and a half later, Apple completed the content part of the picture with the launch of the iTunes Store, which opened up the floodgates for legal music on the ‘Net. The concept of convergence among consumer electronics, communications, and computer technology took root in the ’90s, but it wasn’t until this decade that the consumer market, with Apple leading the way, became the holy grail for even traditional IT vendors.

By 2003, mainstream PC makers like Dell offered LCD televisions and Hewlett-Packard announced digital cameras. But the iPod was, and remains, a clear category leader and became a symbol of the consummation of the marriage between IT and the consumer market.

HP ties the knot with Compaq
Carleton Fiorina came to Hewlett-Packard with a plan for sweeping changes at the old-school tech vendor, going public in September of 2001 with a bold gamble to buy Compaq for $25 billion. An ugly battle ensued, as investors dumped shares, analysts warned of the massive risks associated with complex tech mergers, and heirs to HP’s founding fathers went public with their opposition to the merger, setting the stage for one of the largest corporate proxy fights in history.

Fiorina prevailed in 2002, but the next few years were rocky, and she was forced out in 2005. Ironically, her grand plan for the company ultimately worked out under her replacement, the low-key former NCR President and CEO Mark Hurd. Hurd brought operational efficiency to the company, which is now the biggest IT company in the world, surpassing archirval IBM. The acquisition also pointed the way for an M&A trend in the decade that saw the biggest IT bellwethers grow even bigger in an effort to become one-stop shops for customers.

Google superstar
Google’s initial public offering in August 2004 was probably the most talked-about business story of the past 10 years. A year later its share value ascended to the point where the company became the most highly valued media company in the world, beating Time Warner. Its stock and its dominant position in search and related advertising is still the envy of just about every other company on the planet, a testament to the company’s tech savvy and ability to figure out how to monetize its position. Ad dollars have enabled the company to branch out, offering a host of online apps including Gmail, the Android mobile phone platform and the upcoming Chrome OS.

The company is leading the way to a future in which most people access most data and applications from the web, rather than a hard drive. One of the big stories of the next decade will be whether the company can make money from its non-search technology, and successfully complete its end-run around Microsoft, which still dominates software for the PC.

Vista delays …. and launches
After numerous setbacks, Microsoft in November 2006 launched Vista, along with Office 2007 and Exchange 2007. Though Microsoft CEO Steve Ballmer at the time called it “the biggest launch in our company’s history,” it didn’t have that feel. Consumer versions of Vista and Office wouldn’t be available until 2007, and the operating system itself was painfully slow, buggy, rife with annoying system alerts, and failed to offer working drivers for a range of peripherals.

Customers did not buy it. By the time Windows 7 was launched this October, Vista’s predecessor, Windows XP, was still being used by 72 percent of computer users, compared to 19 percent for Vista. Though Win7 has been greeted with relative enthusiasm, the Vista episode left an indelible mark on Microsoft, which as it struggled to repair the faulty OS and burnish its tarnished image, saw Google and Apple race ahead in internet search and the consumer market.

The battle over Facebook: Social networking hits prime time
Facebook’s decision in October 2007 to sell a $240 million minority share to Microsoft, which had been fighting Google for the stake, solidified social networking’s central place in technology this decade. The Microsoft stake valued Facebook at $15 billion total, even before it figured out how to monetise its services.

While social networking had been a growing trend for years, Facebook led the way, offering interactive features and a development platform that had the social networking site MySpace and others playing catch-up.

The problem of monetisation, however, has been compounded by privacy issues. The ability of Facebook’s Beacon ad system to track user actions whipped up a controversy two years ago that Facebook is still struggling to deal with. Just this month, Facebook introduced new privacy settings aimed at making them simpler to figure out by its end-user base, which has grown to a whopping 350 million people worldwide.

The rise of the botnets: Security tops web worries
Here’s a pop quiz from the annals of top 10 lists this decade: Why are US presidential candidate Ron Paul, the “Storm Worm,” e-card invitations, and the country of Estonia all alike? Within the span of one year they all became associated with botnets, which let criminals control computers in numbers up to tens of thousands. Botnet perpetrators use so-called “zombie machines” to flog useless products and inflict all sorts of damage, as when Estonian government web sites were crippled in April 2007.

Botnets got so sophisticated that they began to be offered as, essentially, software-as-a-service packages to criminals. That’s what happened six months after Estonia was attacked, when the Paul campaign was hit. Nearly 200 million spam messages supporting Paul for president were sent without permission from the campaign.

The botnet phenomenon very publicly marked an overall problem for the web: As more and more people use the internet globally, an ever-increasing number of hackers use their talents for online fraud. Until international cybercrime laws and enforcement procedures are in place, victories against cybercriminals are only temporary.

Gates moves on … baby boomers, move over!
Bill Gates’ June 2006 announcement that he would step out of his daily role at Microsoft in 2008 to focus on philanthropy came at a transition time. Microsoft has been criticized for being rarely, if ever, a “first mover,” as for example Apple has been. But by combining deep technical knowledge with entrepreneurial acumen, Gates embodied the great American knack of seizing a great idea and commercialising it beyond expectations.

His deal to provide the operating system for the IBM PC in 1981 fueled the personal computing revolution in IT originally sparked by the Apple II, establishing an industry. Gates led Microsoft to dominate the desktop market, bring the graphical interface to the masses, and navigate the currents of the early internet era.

While it can be argued that Gates’ withdrawal from daily operations at Microsoft did not have a direct impact on tech, it marked a milestone: As the baby boomer leaders of the PC era begin to be usurped by internet upstarts, so too is technology moving away from a desktop-centric view of the world. Meanwhile, Gates may prove to have a great second act if he can revitalise philanthropy, as he did computing.

The iPhone: Apple redefines a market, again
Yes, Apple products warrant two entries in the decade’s top 10 tech stories. That’s because while some companies reinvent themselves. Apple, under the guidance of the mercurial Jobs, reinvents markets.

After redefining IT in the 1970s with the Apple II and then pushing the envelope in personal computing with the Mac in the 1980s, Apple stalled when its business model ended up giving the company a loyal — but tiny — user base. The company started to ride high again after launching the iPod, and in 2006 breathed new life into the Mac by moving to Intel-architecture chips.

Before the iPhone, there were many multifunction phones. But amid a June 2007 launch that had people lined up at stores from Tokyo to San Francisco, Apple proved its design mojo still worked. The iPhone combination of cool design, phone functions, internet connectivity and multimedia features raised the bar for any manufacturer of connected handheld devices.

(This article includes items from the IDG News Service’s annual top 10 technology stories, and contributions from staff worldwide.)

Speaking to global CIOs in a virtual panel discussion, the research firm argues that these emerging trends are important cogs in information technology’s shift toward “business technology” and none of them should be resisted.

By Rafael Ruffolo - CIO New Zealand | Thursday, December 17 2009

The consumerisation of IT, the rise of agile software development and the explosion of cloud computing technologies are three big trends that today’s CIOs must embrace, says a group of analysts at Forrester Research.

Speaking to global CIOs in a virtual panel discussion, the research firm argues that these emerging trends are important cogs in information technology’s shift toward “business technology” and none of them should be resisted.

Sharyn Leaver, a research director covering IT leadership with Forrester, says this shift will drive CIOs to expand IT’s focus on business enablement. This will change IT from a project management organization to a consultant or broker to the business, she says, which means the delivery of services might not necessarily be coming from the IT department itself.

Tech populism
The influx of consumer products in the enterprise has been staggering over the last decade, with smart phones and laptops now being joined by social media and collaboration tools like Google Docs, Twitter, SmartSheet, and WebEx.

Ted Schadler, a principal analyst focusing on real-time collaboration tools with Forrester, says avoiding this trend and trying to prevent these technologies from entering the organisation is a career-limiting move for any CIO. He adds that Forrester research has found employees typically use online apps to get access to features and functions they need to do their job and to solve customer problems.

“I asked you for help, you’re unable to help me, but here’s the website that can do what I need,” he says, referring to a frequently recurring discussion between employees and their IT shops.

While it’s important not to simply “release the hounds” and let everything into the enterprise, the CIOs that outsource some of this app procurement to employees will be the most successful in the future, according to Schadler. When you have 450 business units, it’s impossible to pick the right apps in all areas, Schadler adds.

“Outsource it to employees,” he says. “What you need to do is draft an inventory and make sure you know what’s going on.”

In addition to creating this “watch list,” CIOs should also focus on scale, he says, acting more like a “chief service officer” or “chief process officer.”

As for security, a move to data centre security as opposed to application-centric security might also be necessary, Schadler adds.

Lean software
An agile software development philosophy aims to build and roll out applications quickly and to meet an immediate need. Of course, while these apps should have an eye for the future, the idea of buying up a suite of all-encompassing products or working on massive, multi-year IT projects should be a thing of the past.

John Rymer, a principal analyst with Forrester specialising on middleware for the enterprise, referred to the rise of lean software as a developer-led counter-culture driven by Web 2.0 and open source technologies.

“It’s about delivering the right product, providing hard values, and simplifying the platform,” he says.

To get with the agile software development program, Rymer says, CIOs must start changing the way an IT project team is put together. This means that IT people should be interacting with the business people that will eventually use the app.

Other key components to creating lean software: use as much open source as possible, shorten the maintenance cycle to no more than six months to a year, and set project deadlines to three or four months.

“You need a big emphasis on executing for today, with an eye to the future,” Rymer says.

The design of an applications’ interface is also crucially important when moving to lean software, he adds. The interfaces must have a very narrow and specialised purpose as opposed to what you would find in a big, broad product.

Rymer adds that this shift will impact enterprise architects as well, forcing them to change into real-time architects. “They have to be willing to have applications evolve and way more quickly than before.”

Cloud computing
The cloud computing hype machine seems to be getting bigger every day, which might actually be overwhelming for some. But according to Rymer, the cloud value proposition is simply too good to ignore for today’s CIOs, and the technology should be encouraged in many situations.

The software-as-a-service market is actually a lot more mature than most people think, Rymer sys. In the SaaS category, some products have been out for years and are actually very well tested. Examples include Cisco’s WebEx, Google Apps, Microsoft Exchange Online, and Salesforce.com.

For Schadler, the benefits to cloud computing include deployment speed, better financial alignment, reduced outsourcing hassles, a safety value for peak computing times, and potentially lowered operational costs.

Email applications, batch jobs, testing and Q&A, Web 2.0-style collaboration tools, and back-office transaction systems are all systems which CIOs should feel comfortable running in the cloud, Schadler.

“Disaster recovery is also a good place to use the cloud because it lives somewhere else,” he adds.

Because of compliance and regulatory risks, Schadler says, apps that manage sensitive data or require tight integration should probably be left on-premise for now.