deal architect

Utility Computing: wish it was so easy...

Nicholas Carr loves to write about "utility computing". I am not sure he has seen too many outsourcing MSAs or SLAs - or lived through multi-year cycles of managing an outsource relationship (though he could argue he has a hosted blog and has experience managing that vendor) - but he continues to put a lot of faith in utility computing.  It is an underpinning of his premise that outsourcing has become so easy that we can start thinking about the end of corporate IT. In a recent post he projects that an increase in fuel prices may create the shock to make utility computing more attractive.

I am myself a "buy" as against a "build"  fan - and in the business of helping CIOs outsource.  But to me, the most successful outsourcing is selective outsourcing.  Most of today's "IT utilities" - the large vendors - just have not made economics or performance compelling for wholesale outsourcing. And frankly, many buyers even after 2 decades do not know how to  measure and manage outsourced IT performance, even as they run complex industrial supply chains.  So you have to negotiate the deals hard.  Then monitor performance like a hawk. So by their nature, they take way more time and attention than "utilities" deserve. If each of us had to negotiate that hard and spend that much time monitoring our electric, water, gas, lawn service - our utilities -  we would have little budget or time left for anything else.

Why selective outsourcing?

1)  Today's "IT Utilities" already have scale, but have not done much with it

EDS has over 100,000 employees. The average Fortune 500 CIO has 500 IT employees. Infosys has delivered over 18,000 projects using its GDM. The average CIO has done fewer than 10.  Microsoft spent $ 6 billion in R&D last year. The average Fortune  500 CIO's total IT budget (not just on software) is less than $ 50 m. Yet vendors cannot price their products or deliver performance on a utility scale model? How much more scale do they need?

2)  Today's "IT Utilities" have not passed along falling prices in a number of areas

Accenture has over 10,000 resources in India and Philippines. IBM has even more in low cost markets. Yet when it comes to pricing they reluctantly showcase these resources. Most software vendors are starting to leverage open source components. Most have also moved at least some of their R&D to low cost markets - Oracle has over 6,000 resourceas in India. Why is this not being passed along? And how long before they would pass along any fuel related increases Carr talks about?

3) Today's "IT Utilities" have been inconsistent in delivery - and buyers still do not know how to buy such services

The media has written about several high-profile outsourcing failures - JP MorganChase, Sears  among others - but even in deals that go the entire term there is more churn and re scoping than gets reported. Gartner says 80% of outsourcing deals are re-negotiated over their typical 3 year term. Also see the Deloitte analysis here. This is not always the vendor's fault, but the fact is buying and selling of these services is still an evolving art.

OK, so how about more "bite-sized" utility offerings? Like salesforce.com? While  the initial experiences are promising and AppExchange will bring more to the fray, today there just are not as many viable SaaS offerings available. Their predecessors, the ASPs, scared off too much investment in the model till recently.

Business 2.0 has a story on Joe Kraus this month. The co-founder of Excite says he needed $ 3 m to go from idea to launch. At hia new venture, Jotspot the comparable cost is $ 100,000. Cheaper hardware, open source software, global labor, newer search driven marketing costs have made building new technology that much cheaper in the last few years. CIOs read such stories. Till utility computing delivers those kind of efficiencies, it is a lot more efficient for CIOs to continue to build their own "generators".

The "fuel" that keeps today's utility computing unattractive is not the kind we can blame Arab sheiks for.

Because of the National Enquirer...

let's malign all print media?  Because of Howard Stern..let's give up on TV? That is the basic message behind a Forbes tirade on blogs

The article "Attack of the Blogs" goes "Web logs are the prized platform of an online lynch mob spouting liberty but spewing lies, libel and invective. Their potent allies in this pursuit include Google and Yahoo."

Hey, consumers know how to distinguish between Forbes and the Enquirer and they will similarly learn to cultivate certain blogs and ignore others.

I had an interesting discussion recently with some of my ex colleagues at Gartner. If Google or Yahoo are becoming the universal search tools, us bloggers, followed by print media, followed by analyst firms are getting more hits and getting our perspectives read. The ratio from what I can tell is almost 7 to 2 to 1 for tech topics. So from the Google channel, many of us have more of a following than a Forbes journalist or an industry analyst. Of course, they have their own proprietary channels where their visibility is much higher than the average blogger's. But whose channel is growing quantum times quicker? If they are not worried, they should be. Of course, per written word the price paid is in reverse and they can afford to keep their journalists and analysts focused full time (though an analyst only spends 10-15% of his/her time writing) - most of us do it as a hobby, but with economics changing, who knows?

And yes some blogs will end up resembling Forbes, others Enquirer...each with their own audiences...

Emerging Technologies: ExtremeTech

In keeping with the theme of Florence during the Renaissance, this is part of a series of posts around what various industry influencers consider promising - or in some cases over hyped - technologies. It goes way beyond the current buzz around Web 2.0. Some technologies/tools are available today - others are still a work in progress, and applications will take a while to be commericially viable. Not all may directly influence information technology, but as we know advances in most branches of science eventually impact others.

I liked the taxonomy ExtremeTech, a Ziff Davis site uses to organize its materials on emerging technologies

3G Networks- The evolution of wireless networks into voice, video and data. 

Bio Chips- Technology inside the body.

Digital Paper- Foldable, persistent electronic displays and e-ink. 

Digital Rights Management- The war over content, and the rights to use it.

eBooks- Publishing in the electronic age. 

Fiber- Last-mile, high-speed broadband.

Fuel Cells- Techniques and implementations of alternative fuels. 

GPS- Finding your way in the digital age.

Grid Computing- Distributed computing, thousands of servers, one Web site.

Identity Management - The pros and cons of warehousing personal information.

Internet2- How the next-generation Internet is being used. 

IPv6 -Tracking the shift toward the complex, next-generation IP addressing scheme.

LCOS- Liquid Crystal on Silicon technology, displays and enhancements.

Mesh Networks - How WiFi networks are being tied together into municipal broadband.

Nanotechnology - Enhancements in science, medicine and technology at the molecular level. 

Organic LEDs - The problems and potentials of low-cost, self-luminous displays.

Photonic Computing -Computing with light—instead of electricity. 

RFID -Dog tags for the digital age—the devices and the deployments.

Robots - The evolving robot, in automation, medicine, and the home. 

RSS -The evolution of content distribution on the Web.

Satellite Radios - Coast-to-coast radio, in your pocket and your car. 

Sensors -Without sensors, there is no detection. And with no detection, there is no control.

Smart Home - How technologies like voice recognition, Bluetooth, and Z-Wave will automate the home of the future. 

Solar Power- How researchers and corporations are using the sun as an alternative fuel source.

Ultrawideband - From Wireless USB to wireless surround sound, UWB is leading the way. 

VOIP -The handsets, services, and technologies allowing you to make phone calls over the Internet.

WiMax - Intel has high hopes that this will replace DSL and cable broadband. We’ll tell you if it will. 

Zigbee -Making sense of this cool-sounding technology for unwiring home automation.

The Web generation gap

Courtesy of Jeff Tash I saw Joel's rant here about Web 2.0. If a young man, a software entrepreneur, recently out of Microsoft feels this way...what about corporate types?  Some folks there still work with Assembler code and VSAM file formats. They have heard "you just don't get it!" during so many cycles - Web 1.o, client/server computing,  the debate over "green v/s graphical" UI, AS/400s will take over world, PCs/MACs are it.  Somehow they still control budgets! Gartner is right to talk about convergence between consumer and corporate oriented markets in 2012 terms...maybe...

I did enjoy the Billy Madison quote. Want to make sure my kids do not use it when I rant...they can stick with "you just don't get it!"

More on VoIP wars

as a follow up to this post, Om Malik on his blog and his readers take the debate further. The incumbents are not going to roll over and die, but hopefully they battle with smarter packaging and pricing (and the consumer wins), not port blocking

Would you wash with this SOAp?

Ask most software companies what their big innovation these days is, and the likely answer is Web services or Services Oriented Architectures - SOA.

In general, architectural shifts are scary for customer bases.   May be an  extreme example but in the mid 90s Oracle went from a character based user interface to its Smartclient to its Network Computing architecture in less than 3 years - thin, fat, thin...Who paid the price for this architectural thrashing? Customers.

SOA is even more ambitious - involving integration with outside applications and services. Over the last decade integration in the SAP world has meant ALE, EDI, IDoc, RFC, BAPI, DCOM, .NET, Java Connector. So now their ESA will be THE solution?

Why should users feel comfortable about Oracle's SOA when it is being compared to Frankenstein? Or when SAP's definitions are still fluid?

Innovation to me is when you go "wow", not "gulp"....

Emerging Technologies - Gartner Hype cycle

In keeping with the theme of Florence during the Renaissance, this is part of a series of posts around what various industry influencers consider promising - or in some cases over hyped - technologies. It goes way beyond the current buzz around Web 2.0. Some technologies/tools are available today - others are still a work in progress, and applications will take a while to be commericially viable. Not all may directly influence information technology, but as we know advances in most branches of science eventually impact others.

Gartner tracks a number of emerging technologies - and uses the filter and feedback of its large enterprise user base - to position them on its "hype cycle"

While each CIO has different needs and comfort zones based on their vertical, geography, risk profile and creates his/her  own version of the "hype cycle", Gartner's list is a useful, periodic guide to the innovation in the tech world.

Below is the latest one they released in August 2005 and presented at last week's ITExpo. Gartner's terminology often ends up defining various market categories - esoteric as they sometimes sound.

Click on graphic to enlarge

Emerging Technologies - MIT Technology Review

In keeping with the theme of Florence during the Renaissance, this is part of a series of posts around what various industry influencers consider promising - or in some cases ove rhyped - technologies. It goes way beyond the current buzz around Web 2.0. Some technologies/tools are available today - others are still a work in progress, and applications will take a while to be commericially viable   Not all may directly influence information technology, but as we know advances in most branches of science eventually impact others.

Technology Review, asssociated with MIT, had this list in May 2005

Airborne Networks - An Internet in the sky could let planes fly safely without ground controllers
Quantum Wires - Wires spun from carbon nanotubes could carry electricity farther and more efficiently
Silicon Photonics - Making the material of computer chips emit light could speed data flow
Metabolomics -A new diagnostic tool could mean spotting diseases earlier and more easily
Magnetic-Resonance Force Microsocpy:  The promise is a 3-D view of the molecular world
Universal memory: Nanotubes make possible ultradense data storage
Bacterial Factories: Overhauling a microbe’s metabolism could yield a cheap malaria drug
Enviromatics: Computer forecasts enhance farm production and species diversity.
Cell phone viruses: Wireless devices catch bad code through the air and then infect supposedly secure computer systems
Biomechatronics: Mating robotics with the nervous system creates a new generation of artificial limbs that work like the real thing.

Tim O'Reilly on Web 2.0

Of  O'Reilly Media fame, Tim provides a nice tutorial on many elements of the "New web" - from blogging to RSS  to Ajax to bubble charts.

One surprising lack of emphasis - the mobile internet...but a nice, well written overview

"Evil" Google?

Nicholas Carr summarizes growing emotions about Google - quite a few negative.

My 2c:

Compared to some of the "lock-in" pricing I see (and have written extensively about) from the larger tech vendors in the enterprise IT budget, Google is still an angel - it probably will pick up bad habits along the way. Any time you can charge on a performance (or clicks) basis you are at least on the right track. And so long as you are delivering innovation - and few would argue about Google's stream of new products - it is tough to question when you compare to what we are still paying for accounting software written 30 years ago, for tweaks to RDBMS written 20 years ago, for outsourcing contracts written a decade ago and routinely renewed.

On the thornier issue of whether Google is "exploiting the web" ... Does the NY Times pay everyone it writes about? Should John Battelle pay Google, Yahoo, Andressen and others some of the royalties for his new book "Search"?  Does Gartner pay start up vendors for ideas that show up as research on emerging market trends? Do consulting firms pay Gartner for re-using, sometimes wholesale, Gartner research in their own consulting deliverables? Do software companies pay users for enhancement ideas and reported bug fixes? Does Equifax pay for data specific to each of us without which they would not have a credit product? Will  book publishers also sue amazon.com which now allows you to run searches of selected pages of books it sells? 

Clearly, as we get more in to the "Deep Web", we will have more bruising fights. Google and other search engines will try to catalog protected intellectual property and hopefully equitable royalty sharing arrangements will emerge.

One question I have. What is Google doing about all the queries which show what's on their minds as they type in key words? Just over this weekend, looking at the tracking stats I get for my blog I see 3 users accessed Google from around the world and used words which suggest they are not happy with a particular vendor's annual maintenance pricing. I can deduce a pattern from the limited tracking tool I have.  Think of how much money Google could make packaging or analyzing its data, not just linking you to other web pages....and the ethical and legal issues around that...