2008: The Year for Greener and Leaner IT

Even though the leaves have fallen and there is a feel of winter in the air, there seems to be a lot of green around -- and it is not just in the evergreen boughs on your mantle, but rather it is in the drumbeat of change for business and society. Concerns about the environment have not been at this fever pitch since the 1960's. Simply put, green has become red hot.

And with the steady demand for green action on the part of corporations as well as governments, it is no surprise that organizations turn to information technology (IT) providers, like EDS, to address many of the issues surrounding their need to "go green".

To help corporations and governments kick-off the new year right, the EDS Fellows have highlighted eight ways CIO's can extend the life of existing facilities and reduce the environmental impact of computing in 2008.

1. Virtualize Servers. The first option is to move from the "one application - one server" paradigm many organizations have fallen into. Server virtualization allows multiple applications to operate securely within the same physical server. Moving the current average server utilization from 15-20 percent to 80-90 percent allows fewer servers to do more work using the same energy profile.

2. Turn off Unused Servers. The easiest power to save is the power that isn't used. Servers and disk drives should be on only when they are needed, so sophisticated operating processes must be in place to bring servers back online whenever increased demands require them to do so.

3. Employ Power Saving Techniques. The third option is to employ power saving techniques now familiar to most laptop users. When demand allows it, organizations can run their servers at reduced speed which lessens their consumption of energy. In addition, an enterprise should always choose a server with the highest power supply efficiency available with the selected configuration.

4. Optimize Applications. The fourth option is to optimize applications being run in the data center. Bloated software, inefficient software, or even software that produces very little business value all need to be pruned, optimized and even discontinued to put a lesser load on servers.

5. Perform Rigorous Maintenance. The fifth option is more fundamental, but also very achievable. Data center managers can improve the efficiency of their facilities by rigorous maintenance to ensure all equipment is operating at the peak of efficiency as well as modifying layout and configuration of equipment to reduce cooling requirements. These and many more efficiency steps will increase overall data center efficiency and lower the carbon footprint.

6. Move to Higher Density, Multi-Core CPUs. The movement to newer, multi-core CPU designs will deliver significant efficiencies, because of their lower voltage requirements. Eight, 16, 24 and higher "processors on a chip" allow for fewer server blades in a rack driving up efficiencies and driving down electricity usage.

7. Pay More Attention to Operating the Infrastructure. We have become so accustomed to "cheap computing" that we have become lax in our process of procuring, deploying and operating the infrastructure upon which so much of our modern society depends. However, when an enterprise looks at total cost of ownership and electricity costs exceed the purchase price of a server, the equation shifts in favor of higher efficiency and rigor which is good for the bottom line as well as for the environment.

8. Cash in on Being Green. It is important to look for innovative applications of IT that makes real impacts for an enterprise and its customers. For example, an enterprise can use Dimmable Addressable Lighting Interface (DALI) in electronic ballasts networked to sophisticated lighting control software that reduces electrical usage by up to 40 percent, or use programmable thermostats and schedules to standardize the temperature, pressure, humidity and set points for occupied and unoccupied periods in all buildings. These technologies require integrated IT to function and provide a rapid return on investment. The world will see an explosion of IT being deployed as we move to a lower energy regime in new and existing buildings throughout society over the next several years. The business advantage of consuming less electricity reduces both the cost structure and carbon footprint of the enterprise, which is good for business and the planet.

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Customer Satisfaction with Web Holiday Shopping Stays Strong

Shopper satisfaction with retail websites remains strong this week, according to the latest release of the ForeSee Results Holiday Retail Benchmark. While aggregate customer satisfaction for the week between December 10 and December 16 slipped 0.7 percent from last week to a score of 77 on a 100-point scale, it remains 2 percent higher than customer satisfaction the same week last year.

The weekly ForeSee Results benchmark shows continued strong performance in key financial metrics regarding future behaviors that are influenced by customer satisfaction. In terms of purchase behavior, likelihood to buy from the retailer’s offline channels (84.8) is up 4.1 percent over last year, while likelihood to buy online (75.2) is up 3.3 percent over last year at this time.

The ForeSee Results Holiday Retail Benchmark is produced using the methodology of the University of Michigan’s American Customer Satisfaction Index (ACSI), a proven predictor of future sales (online and offline), word of mouth recommendation and financial performance.

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ISVs and Customers Will Reap Tremendous Benefits from Virtual Appliances

The Yankee Group announced that virtual appliances will enable the delivery of better-quality software and an improved user experience. The virtual appliance is an emerging new development for the software industry.

According to the recently published Yankee Group Report, Virtually Possible: Virtual Appliances Ready to Shake Up Application Delivery, IT infrastructure and its relationship with applications has dramatically changed with the rise of Anywhere computing enabled by server virtualization. ISVs now have a new way of delivering their software through virtual appliances -- a virtual machine that consists of an application and an integrated OS. A customer-created virtual machine would normally consist of an OS such as Windows or Linux on top of an installed application. But virtual appliances also escalate the war between Windows and Linux. Open source (primarily Linux) beats proprietary (Windows) in a virtual environment.

As virtualization progresses and the concept gains acceptance, virtual appliances may become the predominant and only platform for ISVs. Some of the benefits of virtual appliances for ISVs and customers are:

Lower support costs: Supporting a myriad of customer OSs, all with different versions, patch levels, and configurations is becoming a support nightmare.

Better quality software: By removing the variables of customer-installed and –configured operating systems, ISVs can have complete control of their software operating environment.

Easy scalability: Virtual appliances can easily be moved to a faster machine.

Quick deployment: Virtual appliances plug into existing virtual infrastructure and come pre-installed, pre-configured and ready to start.

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Phishing Attacks Escalated in 2007; More than $3 Billion Lost to These Attacks

Phishing attacks in the United States soared in 2007 as $3.2 billion was lost to these attacks, according to a survey by Gartner, Inc. The survey found that 3.6 million adults lost money in phishing attacks in the 12 months ending in August 2007, as compared with the 2.3 million who did so the year before.

According to a survey of more than 4,500 online U.S. adults in August 2007 (which was representative of the online U.S. adult population) the attacks were more successful in 2007 than they were in the previous two years. Of consumers who received phishing e-mails in 2007, 3.3 percent say they lost money because of the attack, compared with 2.3 percent who lost money in 2006, and 2.9 percent who did so in 2005, according to similar Gartner surveys during those years.

The average dollar loss per incident declined to $886 from $1,244 lost on average in 2006 (with a median loss of $200 in 2007), but because there were more victims, $3.2 billion was lost to phishing in 2007, according to surveyed consumers. There was a bit of relative good news, however; the amounts that consumers were able to recover also increased. Some 1.6 million adults recovered about 64 percent of their losses in 2007, up from the 54 percent that 1.5 million adults recovered in 2006.

PayPal and eBay continue to be the most-spoofed brands, but phishing attacks increasingly employ devious social engineering attacks, impersonating, for example, electronic greeting cards, charities and foreign businesses.

Thieves are increasingly stealing debit card and other bank account credentials to rob accounts -- targeting areas where fraud detection is weaker than it is with credit card accounts. According to the survey, of those consumers who lost money to phishing attacks, 47 percent said a debit or check card had been the payment method used when they lost money or had unauthorized charges made on their accounts. This was followed by 32 percent of respondents who listed a credit card as the payment method, and 24 percent who listed a bank account as the method (multiple responses were allowed).

Phishing and malware attacks will continue to increase through 2009 because it's still a lucrative business for the perpetrators, and advertising networks will be used to deliver up to 30 percent of malware that lands on consumer desktops.

Gartner sees no easy way out of this dilemma unless e-mail providers have incentives to invest in solutions to keep phishing e-mails from reaching consumers in the first place, and unless advertising networks and other "infection point" providers (which theoretically can be any legitimate Web site or service) have incentives to keep malware from being planted on their Web sites to reach unsuspecting consumers.

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IT Project Underperformance Accepted as the Norm by Global Business Management

One in 3 companies' IT projects fail to perform against expectations, research from Tata Consultancy Services (TCS), has revealed. Yet despite these worrying levels of failure to deliver, 43% of organizations say that their business managers and the Board accept problems as the norm. This attitude is especially common in Europe (44%) and AsiaPac (48%).

Despite the general poor performance of IT projects globally, such results do not evoke a sharp reaction from management. In fact, 69% of respondents said that their managers and the Board continued to provide the necessary financial support for these projects. Common problems cited included overrun on time (62%), budget (49%) and higher than expected maintenance costs (47%). In addition, 1 in 4 companies said that they find business users are reluctant to adopt the new systems once implemented.

As a result of the research, Tata Consultancy Services is urging businesses to re-think their IT services and outsourcing strategies. Organizations need to work with partners that can explain the value of their work at a Board level and provide Key Performance Indicators to show the benefit of the investments made.

In addition, they should work with businesses that can demonstrate a clear ability to execute on time, on budget and to plan.

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Contact Center Quality Monitoring/Liability Recording Market to Exceed $2.3 Billion in 2007

DMG Consulting has published its 4th annual Quality Monitoring/Liability Recording Product and Market Report, an authoritative guide to developments in the contact center QM/Liability Recording and Workforce Optimization (WFO) market. DMG forecasts more than $2.3 billion in sales of QM/Liability recording and WFO products by the end of 2007, a 10% increase over 2006. This counts sales from all vendors of quality monitoring, liability recording, coaching and eLearning, performance management, workforce management, surveying and speech analytics.

According to the report, Internet Protocol (IP) was also on the upswing in 2007. Sales of IP recording grew 40% in 2007, and that number should increase to between 50% and 55% in 2008.

Sustained robust growth is being driven by migration to IP recording, valuable new applications and significant refinements to established offerings. A new generation of mid-tier vendors is entering the market, many of whom are focusing on sales to small and mid-size businesses. This segment has historically been under-penetrated, and is likely to be a growth market in 2008 and beyond.

The QM/Liability Recording Product and Market Report, one of a series of reports published by DMG annually, covers more than 45 companies and provides in-depth profiles for 14 leading firms and contenders.

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Reportable and Multiple Privacy Breaches Rising at Alarming Rate

Personally identifiable information (PII) of customers and employees is being exposed -- frequently and repeatedly – potentially putting hundreds of thousands of individuals at risk and exposing organizations to increased liability, according to a new survey by Deloitte & Touche and the Ponemon Institute LLC.

A shocking 85 percent of privacy and security professionals in North America surveyed acknowledged having at least one reportable data breach of PII within their organizations during the last 12 months, according to the “Enterprise@Risk: 2007 Privacy & Data Protection Survey.” More alarming is the fact that 63 percent acknowledged multiple reportable data breaches occurred within their organizations during the same period. As a result, privacy and security professionals continue spending most of their privacy-focused time on incident response and relatively little time on more proactive activities, such as strategy, training and root cause analysis.

More than 800 North American privacy and security professionals responded to the online survey sponsored by Deloitte and the Ponemon Institute, which was conducted to better understand the emerging privacy function. The survey, now in its second year, analyzed the roles, activities and time allocation preferences of dedicated privacy and security professionals, as well as their organizational status and reporting relationships. Specifically, respondents were asked to describe actual versus “ideal” time spent on activities and requirements to effectively manage and protect personal data in the enterprise.

Additional key findings and analysis include:

- Only slightly more than 7 percent of a professional’s time is allocated to employee training and no more than 10 percent is allocated to establishing an incident response team, management reporting and conducting root cause analysis.

- Resource allocation associated with notification activities alone could be a significant hidden cost of privacy and data protection within the enterprise. The percentage of incidence-related time spent notifying stakeholders is the second highest among incident-related activities reported by survey respondents.

- While 61 percent indicated their organization has processes in place to identify and assess the impact of new regulations, only 23 percent reported a change management process in place to respond to developments impacting privacy.

- Due to the dichotomy between the management and protection of PII and the distributed nature of the privacy function itself, reporting structures varied greatly for privacy and security professionals. An analysis of primary reporting structures indicates privacy professionals report most often to the General Counsel (38 percent) or Compliance (21 percent). According to respondents, security professional’s reporting structure is concentrated at the CIO (76 percent).

- Despite significant technical advances, most organizations are still too dependent on standalone point solutions. For example, most enterprises (55 percent) are implementing some type of encryption; with 37 percent currently encrypting both data at rest and data in motion.

The survey pointed out a couple of realities. The privacy function is siloed between legal and compliance on one hand, and IT security on the other hand. The privacy program itself is still immature. And, there does not appear to be real integration with the risk function and business processes of the enterprise. Until that integration occurs, it is likely that privacy incidents and reportable data breaches will continue.

There is, however, some good news coming out of the survey, and that is the attitudes of security and privacy professionals are converging.

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Midsize Enterprises Will Increase ERP Budgets by 5.1% in 2008

AMR Research released the “Midsize ERP Spending Report, 2007-2008,” which found midsize enterprises will increase their ERP budgets by 5.1% on average in 2008.

Growth in ERP spending was fueled by several factors. As midsize organizations fight for market share against increasingly diverse global competition, increased profitability, revenue growth, and customer satisfaction become priorities. And, with globalization, the pool of potential customers is ever-growing, creating a need for streamlined processes to help meet demand.

The survey found an increased interest in pure software-as-a-service (SaaS) and on-demand purchasing models. 39% of larger midsize companies (500-999 employees) are planning to purchase SaaS or on-demand software in 2008. And the numbers are rising. AMR Research predicts that over the next three years these new purchasing models will become a mainstream purchasing method.

In addition, by 2010, 43% of companies would like to employ a single, global financial and shared services ERP system.

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Business Intelligence / Analytics Technology Drives 42% Improvement in Customer Retention in Best-in-Class Companies

A recently published study by Aberdeen, a Harte-Hanks company, found that leading field service organizations are adopting business intelligence and data analytics technology and best practices to enable better and faster decisions and reporting within post-sale service organizations. They are also beginning to deploy simulation modeling within their organizations to perform sophisticated “what-if” planning and forecasting.

Among the service organizations recently surveyed, companies that have implemented technology for reporting and decision support have improved:

• Service profitability by 17%

• Customer retention rates by an average of 29%

• Service Level Agreement (SLA) performance by 33% Best-in-Class organizations are showing greater improvements, with service profitability up 18%, customer retention increase of 42%, and a 44% improvement in SLA compliance.

Other service organization Best-in-Class characteristics include:

• 80% have enterprise-wide balanced scorecard initiatives in place

• 71% have a vice president or higher executive overseeing service functions

• 40% have established enterprise-wide standards and process to ensure data accuracy

Aberdeen recommends that service organizations consider the following strategies to drive efficiency and decision support within their service organization:

• Implement technology and process to ensure data accuracy within the service operation.

• Provide service organization with total visibility into parts, workforce and knowledge across the enterprise.

• Implement technology to enable “what-if” simulations.

• Focus attention on longer-term customer-facing metrics like retention as well as profit.

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Global Tech Spending Growth to Slow in 2008

Growth in global technology spending will slow next year, hurt by a U.S. economic downturn that could crimp spending on computer hardware, research firm IDC said in a report with predictions for 2008. IDC estimates worldwide technology spending growth to range between 5.5 percent and 6 percent in 2008, down from about 7 percent this year. U.S. spending growth will dip to 3 percent to 4 percent next year from 6.6 percent in 2007, IDC said.

Companies will target faster-growing emerging markets along with small and medium-sized businesses to offset slower U.S. spending growth, IDC predicted, and in some cases they will need to make acquisitions to launch into promising sectors. IDC sees tech spending in Brazil, Russia, India, China and nine other emerging countries, including Poland and Mexico, growing 16 percent in 2008.

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Don't Be Seduced by Consumer PC Bargains, Gartner Warns Business Users

Some organizations are incorrectly assuming that less-expensive, consumer-class PCs are suitable for business use. Gartner recently warned organizations that invest in consumer PCs and notebooks risk higher total cost of ownership (TCO) in terms of platform instability, less quality control and limited support.

Gartner acknowledged that given the current low cost of consumer hardware, IT managers might find themselves under pressure to justify the higher costs of enterprise PCs to senior management. Gartner urged them to fully explain the likely TCO implications of purchasing consumer PCs and notebooks for the workforce.

For corporate buyers standardization is essential because it affords less complexity and lower TCO. Even minor changes to a corporate system have the potential to create incompatibility and require additional testing and system support. For this reason, corporate buyers are less interested in the latest new features, focusing instead on the following attributes:

1. Platform stability (a base level of predictable functionality)
2. Longer product cycles (at least 18 months or longer)
3. System design and features
4. Quality assurance programs
5. Security and manageability
6. Consultative relationship with the sales channel
7. PC life cycle services

Since consumers usually purchase one system at a time, consumer-class PCs and notebooks have no investment in platform stability and no concern for standardized system image. Consumer systems also lack corporate features such as docking stations and often come with consumer versions of the Windows operating system and software applications. These systems have limited quality assurance programs, having undergone less rigorous testing than corporate hardware which can result in a 50 per cent higher failure rate incurring higher repair costs and user down time. Lastly, there is little support available from the retail channel when things do go wrong, with warranty support typically restricted to a much shorter time.

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Despite Agreement About IT’s Strategic Importance, Only One in Three CEOs are Champions of Technology

While 83 percent of business and technology executives predict IT will either increase competitive ferocity, enable new market entrants, or both, a mere third of CEOs champion technology and include CIOs in strategic planning, according to the “Diamond Digital IQ Study™,” released by Diamond Management & Technology Consultants, a business and technology consulting firm

For example, IT is still not integral to strategic planning. The Diamond study found that only 30 percent of C-level executives believe that their company CIO is involved in the strategic planning process.

In addition, both business and IT leaders underestimate the importance of some key management practices that are fundamental to getting value from every dollar spent on IT. About half of the respondents downplayed the importance of enterprise architecture (EA) planning and design, program management skills, and the governance required to convert business/IT alignment into high-value IT investments.

The Diamond Digital IQ study surveyed 456 C-level business and technology executives at large companies (90 percent of the companies represented had annual revenues greater than $1 billion) to measure attitudes about a variety of strategy, management and technology issues.
Attitudes about the role of technology in merger and acquisition activity underscore the finding that business/IT alignment doesn’t necessarily lead to demonstrable value. Fewer than six of 10 C-level respondents ranked their last post-M&A IT integration effort as effective. Similarly, only 61 percent agreed that their business integration efforts were effective.

Just 19 percent of the respondents “totally agree” that their company’s strategic planning process is highly effective. Only about one in four of the respondents “totally agree” that strategic planning helps them forecast the opportunities and threats to the business that information technology will introduce.

By analyzing the responses from 10 different industries across two dimensions – strategy and operations -- Diamond was able to calculate how different industries stack up in terms of their commitment to information technology. Healthcare and pharmaceutical companies tend to view IT of both strategic and operational importance and are confident in their ability to harness IT to power their companies. Financial services, insurance, and high tech firms also demonstrated a high Digital IQ. The average utility industry Digital IQ was lower than any other industry.

Sixty percent of IT respondents and 57 percent of business executives feel their systems are totally or somewhat flexible when it comes to adding features and functions. A deeper analysis of the responses found that high correlation between system flexibility and attitudes toward strategic planning. Companies that ranked high in flexibility were more likely to be effective strategic planners that take into account IT’s impact on the business, have an executive charged with integrating business and IT, and a CIO who is very involved in business strategy.

Data mining/data analysis is the tool most often cited (25 percent) as a means to transform the business. Approximately 40 percent of respondents believe that several technologies -- including data mining/analysis, search technologies, and service-oriented architecture are ripe for growing the business. Finally, biometric identification/identity management and virtual collaboration/presence technologies are more commonly viewed as technologies with the potential to help run the business more efficiently.

While only 9 percent of respondents say that greater than 50 percent of their company’s IT operations are outsourced, 21 percent expect that a majority of IT operations will be reassigned to a third party vendor by the end of the decade. Similarly, 22 percent of the respondents outsource somewhere between 26 percent and 50 percent today. By 2010, that number will be 28 percent. Further, the percentage of companies that outsource 25 percent or less of their IT operations will decline in both product and service companies.

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New Study Measures Customers’ Satisfaction with IT Support

HDI, a membership association for IT help desk and service management professionals, released the results of a landmark study measuring customers’ satisfaction with internal and external IT support. The study’s results are based on more than 257,000 customer satisfaction surveys collected from more than 200 help desks and support centers. Some key findings include:

Overall customer satisfaction ratings were quite high, averaging mid-to-high 4s on a scale of 1-5 (1 being “Very Dissatisfied” and 5 being “Very Satisfied”)

Participating support centers were asked to determine their “maturity level” – based on HDI’s Maturity Model – from “Reactive,” to “Proactive,” “Customer Centric,” and ultimately “Business Centric.” Not surprisingly, those support centers that classified themselves as “Business Centric” (the highest level of maturity) had the highest customer satisfaction ratings. However, somewhat more surprising and ironic was that those that considered their support centers to be “Customer Centric” had the lowest customer satisfaction ratings of the four groups.

The survey rated customer satisfaction on five different factors: courtesy of the analyst; technical skills/knowledge of the analyst; timeliness of the service provided; quality of the service provided and overall service experience. Customers consistently reported that their highest level of satisfaction was with the courtesy of the analyst, and their lowest level of satisfaction was with the timeliness of the service provided. These results suggest that while the frontline analysts may be polite to their customers, the incidents are not being resolved as quickly as the customers expect them to be.

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The Emerging Green Technology Consumer

Twelve percent of US adults — some 25 million Americans — are willing to pay extra for consumer electronics that use less energy or come from a company that is environmentally friendly according to a new survey by Forrester Research, Inc. These "bright greens" are the vanguard of an emerging consumer market segment that will be an attractive target for technology companies.

The Forrester survey identified three distinct segments of US technology consumers:

Bright greens are 12 percent of US adults. These consumers are concerned about the environment and strongly agree that they would pay more for consumer electronics products that save energy or come from a company that is environmentally responsible.

Green consumers are another 41 percent of US adults. These 90 million consumers share concerns about environmental issues, but do not strongly agree that they would pay more for environmentally friendly products.

Non-greens are the remaining 47 percent of US adults. The rest of the population, 96 million Americans, do not (yet) share the greens' concerns about the environment or global warming.

Among the major PC brands, Apple's customer base is the greenest, with 17 percent of its customers in the bright green consumer category. HP's Compaq brand ranks second, with 13 percent of its customers in the bright green category.

Many of the major consumer electronic manufacturers, including Apple, Dell, HP, Sony, and Toshiba, have taken early steps to green their operations and products. But moving forward, marketers and designers of consumer technology products and services will change product marketing and product design to embrace green principles like energy efficiency, lower-impact manufacturing, longer product life cycles, and recycleability.

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