September 2011 Archives

HP shenanigans highlight unprecedented changes in IT industry

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What exactly is going on at HP?

The world's largest technology company is now onto its third CEO in little over a year. First Mark Hurd resigned after allegations of sexual harassment and false expense claims. Hurd was an aggressive cost cutter, not popular among the rank and file of the supplier, but loved by shareholders who saw the value of their investment increase.

The choice of Hurd's successor came as a surprise to many. Leo Apotheker was a Germanically efficient CEO of SAP, but would have been on few outsiders' shortlist to take arguably the top job in the IT industry.

Apotheker then shocked observers even more with his announcement in August that HP was to offload its $41bn PC business - the world's largest - ditch its 55-day old Touchpad tablet range, and buy UK software firm Autonomy for over £7bn.

He achieved a notable hat-trick of shocks by being sacked barely six weeks later, walking away with a $13.2bn pay-off that will cause many to question the rewards of failure.

HP even managed one further surprise of its own, appointing former eBay CEO Meg Whitman to the top job that has become something of a poisoned chalice. Nobody could doubt Whitman's success and leadership ability at the online auction site, but she has no experience of running a major technology supplier.

Meanwhile, HP's share price continues to plummet, leading cheeky critics to suggest a takeover bid from highly acquisitive, cash-rich Oracle.

HP's travails are a symptom of an unprecedented restructuring of the IT industry, as so-called consumerisation turns consumer technology into the driving force of business IT, and the cloud promises to break traditional supplier strongholds in out-of-date, command-and-control style IT departments.

HP is at least insulated by relative sales success, unlike struggling Nokia, Cisco, Blackberry-maker RIM, and no doubt others to come.

The IT sector has caused great disruption in many of its customers' industries, as technology and the internet break old business models, reduce barriers to entry, and promote innovation. That same disruption is now changing the IT industry itself, and when the biggest supplier in the world is affected, you can't help but feel we're reaching a significant tipping point in IT.

Safe, steady, boring - why Microsoft should give up on "cool"

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There will have been three dominant reactions to the previews of Windows 8 demonstrated by Microsoft at its BUILD developer conference in California this week.

If you're a Windows developer or Microsoft geek, you probably thought, "Great! Look out Apple and Google, we're coming back atcha!"

If you're the average PC user, you maybe thought, "So what?"

If you're the average IT manager, you undoubtedly thought, "Oh no, not another upgrade."

But let's be clear about one thing - Windows 8 will be a success. It doesn't actually matter whether the product is better than Windows 7, or if it's better than iOS or Android or Linux or any other operating system. Despite the growing claims of the death of the PC, millions of people will end up using Windows 8, simply through the same natural refresh cycle and the default of buying PCs with Windows pre-loaded that allowed Microsoft to hail Windows 7.

The importance of the PC may be declining, but it's not going away. However, every new iteration of Windows presents an opportunity for users to have a rethink, and becomes a catalyst for more people deciding that maybe another form factor - whether tablet, smartphone or netbook - is the right choice for them.

It's a bit of a cleft stick for Microsoft - it needs to bring Windows into the tablet/smartphone arena, but every new version will inevitably lead to users deciding to try an alternative.

Windows 8 has had a generally positive reaction, but for me it smacks of following not leading, catching up not innovating. (You might like the new Metro interface, but best not to mention Aero in the same breath).

For safety-first corporate buyers, the prospect of a unified Windows environment across PC, tablet and smartphone offers a solution to the clamour from employees to use consumer devices in the workplace.

But for consumers - who these days are increasingly leading the direction that business technology will take - Windows 8 seems to lack the spark that will allow it to take away the "cool" edge that Apple and Google have established.

Perhaps, though, that is the future for Microsoft. The company clearly wants to convince people that it still has the elan of its 1990s heyday, when it released what was probably the last truly disruptive version of its flagship operating system - Windows 95. But maybe it is time that Microsoft gave up on cool.

For IT buyers, the best innovation that Microsoft could add into Windows 8 would be a new method of upgrading and software licensing - a cloud-style, pay-as-you go subscription type model, rather than the conventional up-front licence fee and upgrade charge. That, and an upgrade path that minimises disruption - why not, if you pay a monthly fee to use Windows, just auto-upgrade to the latest version, instead of requiring a major planned roll-out? That would certainly stop corporate buyers moving away from Windows.

The traditional cycle of launching great new versions with massive fanfare has worked for Microsoft in the past, but perhaps it would benefit from a more low-key approach now.

Microsoft became a success by changing the basis of decision in buying PC software - pre-loaded Windows killed every major rival in the heyday of the PC. It could change the basis of decision now by removing the upgrade cycle entirely, if only it could engineer Windows in such a way as to be fully and easily backwards-compatible with other software running on the previous version. Easier said than done perhaps, as the unlamented Vista showed, but if CIOs no longer face the technical challenge of version upgrades, when and why would they ever think about moving away?

Safe, steady, predictable, boring - these may not be the words that Microsoft wants to be associated with. But they may just be the words that ensure its longevity.

Banking reform should be a boost for UK IT skills - but probably won't be

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As one of the biggest users of IT in the UK, the way the financial services sector deals with the recommendations of the recent Independent Banking Commission (IBC) report will have significant ramifications for IT professionals.

The need to ring-fence retail banks from the risky investment operations that caused the 2008 economic crash will underpin finance firms' IT strategy for the next few years. It could go one of two ways.

The IBC proposals to ensure the continuity of consumer-facing operations could lead to high demand for IT skills, and for major software development projects to migrate away from legacy systems and the complexity that has built up in banks' IT systems for many years. It's a great opportunity for creating IT jobs and driving up the UK skills base.

However, given the cost of implementing the reforms, banks could equally look for the cheapest way to meet the requirements - and that would almost certainly mean more outsourcing, most likely to low-cost offshore destinations. Much like the Millennium Bug preparations in the late 1990s, it's a great opportunity for globalised IT services providers.

It's an obvious statement to say that the former option would be the best for the IT profession in the UK. It's almost as obvious to suggest that the latter is the most likely path the banks will take.

After laying off thousands of IT professionals after the crash, financial services firms recently realised they had gone too far, and the sector has become the busiest recruiter of IT skills again. But major structural reform will only accelerate a process that started as a result of the downturn - a clear division between core value-adding IT, such as trading systems, where the banks' competitive edge lies, and back-office technology, where outsourcing, shared services and the cloud will play a growing role.

Given this trend, the likelihood is that structural separation will be focused on those back-office areas, leading over time to fewer IT jobs.

As global firms, banks have little loyalty to any one location and will justifiably source skills where they are most cost-effective. But if they do, reform of the finance sector becomes an opportunity missed for improving the UK IT skills base.

Quietly, cautiously, carefully, government IT may just be getting it right

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Public sector IT remains - rightly - under great scrutiny in the UK. Right now, it faces a set of challenges unique to the political cycle, but they are challenges that warrant patience from the many critics of Whitehall IT policy.

Last year, a new government promised new ways of working, widespread IT reforms, an end to the headline-grabbing IT failures. Now, a little over a year has passed with any honeymoon period long-since elapsed, and critics are expecting to see tangible evidence that things are really different, not simply empty political promises.

It's easy to point fingers at government IT policy today and highlight the lack of progress on implementing open source; to point out how often contracts still go to the big oligopoly of systems integrators instead of SME suppliers; or to criticise major legacy problems such as the NHS IT contracts.

It is right, of course, to hold government to account on these and any other intentions - and Computer Weekly has been at the forefront of that.

But there is a real sense that, quietly, thoughtfully, behind the scenes, genuine change might just be taking place.

Transforming years of public sector IT culture and moving away from complex legacy systems is not so much like turning round the proverbial oil tanker, it's like taking all the oil and trying to push it back into the well too. It takes time.

Bill McCluggage, the deputy government CIO, talked to Computer Weekly readers at a recent CW500 Club meeting, and described the welcome improvements in attitude and environment within the Cabinet Office and among the Whitehall IT community over the past year.

He talked about the greater collaboration, more openness, more honesty about mutual difficulties and failings. He highlighted the desire to look beyond traditional IT providers and take advice from other voices - but also the acceptance that Whitehall has outsourced too many of its IT skills. Outsourcing service provision is one thing, but government needs to re-build its in-house IT capabilities to better hold those service providers to account.

When you talk to Bill and his IT leadership peers in government, they have the air of knowing the things they need to change, and give the impression they know how to do it. They also bear the weariness of knowing that everyone expects them to have done so yesterday.

I get the distinct feeling they are absolutely genuine in their desire to use more open source, to move away from big contracts and projects, to work with more innovative SMEs, to be more agile, and tackle the failings of the past.

But more than that, I detect the confidence that they believe they are on the right path, and that they are slowly proving it.

For example, former Guardian digital supremo Mike Bracken recently took on the role of government digital director, responsible for delivering the "digital by default" agenda for public services. He arrived to quite a fanfare having made The Guardian a leader in digital media. In his first interview since taking on the role, he told Computer Weekly that he has to do the boring things first - get the organisation structure right, get the right people in place, agree a budget - but that he knows what is possible once all that is in place.

Another example - BBC technology correspondent Rory Cellan-Jones wrote a thoughtful article recently based on a Freedom of Information request to Whitehall departments asking for a breakdown of their software spending between proprietary and open source. Not surprisingly, it showed lots spent on proprietary, not much on open source. Critics jumped on this as proof that government is failing to deliver its commitment to open source.

Rory was kind enough to share the data he received with Computer Weekly in advance to get our opinion - and there was little revelatory in there. All it showed is that over the last 12 months government spent its software budgets in the same way they always used to - it's far too soon to see major shifts to open source. The figures highlighted the difficulty of introducing a policy to encourage open source - but gave no indication that it wouldn't be achieved.

And a final example: we recently talked to a number of SME IT suppliers to find out their real-life experiences of trying to win government contracts, and it wasn't pretty. Many had stories that help build a picture that government will always favour big, apparently safe, suppliers.

One of the biggest critics of the "big company" procurement policy is Mark Taylor, CEO of a small open-source specialist, Sirius, who has added plenty of personal experience to the debate. So what has the government done as a result? It asked Taylor to chair a working group on how to bring new suppliers to Whitehall. That's not yet a sign that things have changed, but it shows an openness to listen to critics in a positive way that has often been absent in the past.

We have of course been here before. It's by no means the first time we've been told government IT is changing, only to be disappointed. And such bitter experience means that every cynic is entirely justified in questioning any of the latest initiatives.

But slowly, cautiously, carefully, there are signs that this time might, actually, be different.

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