by Steff Gelston

Trendlines from 6/1/08: New, Hot, Unexpected

May 28, 200811 mins
Data CenterIT Leadership

In this issue: Net neutrality; SaaS in the enterprise; Airlines and broadband; Business execs and IT; State of the CEO; Pitney Bowes goes mobile; and Google's new CIO.

Net Neutrality’s Second Chance?

Two Democrats in the U.S. House of Representatives have introduced a bill that would subject broadband providers to antitrust violations if they block or slow Internet traffic.

Rep. John Conyers (D-Mich.), chairman of the House Judiciary Committee, and Rep. Zoe Lofgren (D-Calif.) have sponsored the Internet Freedom and Nondiscrimination Act.

The bill requires Internet service providers to interconnect with the facilities of other network providers on a reasonable and nondiscriminatory basis. It also requires them to operate their networks in a reasonable and nondiscriminating manner so that all content, applications and services are treated the same and have an equal opportunity to reach consumers.

ISPs that don’t follow these Net neutrality rules would be subject to antitrust enforcement.

The legislation, introduced in May, earned praise from some consumer and online rights groups. Large broadband and mobile phone service providers have begun to discriminate against some content, with Comcast saying it has slowed some customer access to the BitTorrent peer-to-peer protocol during times of network congestion, they say. Other broadband providers have talked about managing their networks or asking some popular websites to pay more for fast service, Net neutrality advocates have said.

“The bill squarely addresses the issue of the enormous market power of the telephone and cable companies as the providers of 98 percent of the broadband service in the country,” says Gigi Sohn, president of Public Knowledge, a public-interest advocacy group. “The bill restores the principle of nondiscrimination that allowed the Internet to flourish in the dial-up era, making certain that the same freedom and innovation will flourish in the broadband era without burdensome regulation.”

But broadband providers and some congressional Republicans have argued that Net-neutrality legislation isn’t necessary. They say the broadband market is becoming more competitive and Net-neutrality regulations could hamper investment in broadband networks.

Competition is happening at “all levels of the Internet,” Rep. Fred Upton (R-Mich.) said this week. “Our hands-off policy is working.”

Conyers and Lofgren were cosponsors of a similar bill introduced in 2006, when Republicans held a majority in the House. With significant Republican opposition, the 2006 bill died, but Democrats were elected to the majority late that year.

“Americans have come to expect the Internet to be open to everyone,” Conyers said in a statement. “The Internet was designed without centralized control, without gatekeepers for content and services. If we allow companies with monopoly or duopoly power to control how the Internet operates, network providers could have the power to choose what content is available.”

-Grant Gross

Report: Enterprises Adopt SaaS Aggressively

Software as a service (SaaS), which lets organizations access software over the Web instead of locally on a desktop, is rapidly pervading the enterprise space, with nearly 73 percent of large companies saying they have adopted it or plan to adopt it in the next 18 months, according to a recent survey by Kelton Research.

The survey, commissioned by Acumen Solutions, a business and technology consulting firm, polled approximately 100 IT and business executives from Fortune 500 firms. The participation by business executives in the survey shows just how disruptive an innovation SaaS has been for IT: If a line-of-business department doesn’t want to wait for IT to provide a piece of technology, an SaaS offering is only “a credit card purchase away.”

“Two years ago, that was exactly what was happening,” says Donita Prakash, chief marketing officer of Acumen Solutions. “Now we see IT embracing SaaS and doing replacements of on-premise software.”

Prakash says most implementations of SaaS software center around CRM, as evinced by the success of Productivity software, such as Google Apps, has been slow to catch on. “That area of software is still heavily in the desktop environment,” she says. SaaS adoption, the survey noted, is being driven by speed to market, easier maintenance and price. Enterprise customers still hold some reservations about SaaS, however. More than half (56 percent) worry about how SaaS offerings can integrate with existing installed data. In addition, since SaaS vendors typically host the data for their customers, many enterprises (62 percent) worry about the security of data that is not behind their firewall.

-C.G. Lynch

In-flight Broadband Prepares for Takeoff

Road warriors, start up your laptops: High-speed Internet access will be returning to aircraft next year through a new service being offered by Panasonic.

ExConnect should be available in early 2009 and will be the first intercontinental, high-speed Internet service available on aircraft since 2006, when Boeing’s Connexion service was shut down because of mounting losses. Like the Boeing service, Panasonic’s ExConnect will offer speeds comparable to public Internet hot spots and also will allow airlines to feed live television into the aircraft’s in-flight entertainment system. Pricing is yet to be finalized, but Panasonic is looking at approximately $12 per hour or $22 per day, which is also close to the pricing of the defunct Connexion service. Panasonic says airline customers have already signed up for the service, but their identities have not been disclosed.

ExConnect will work off the back of the GlobalConnex satellite broadband service that is offered by Intelsat and is currently used by corporate clients and telecom operators. The service to aircraft will initially be introduced in targeted regions of the globe and expanded with demand, says Panasonic.

While it’s best known for consumer electronics, the company is a major player in the in-flight entertainment market through its U.S. subsidiary Panasonic Avionics. In-flight Internet was first launched in mid-2004, when Luft­hansa rolled out the service on its long-haul jets. Many major Asian and European airlines followed with the service but the big U.S. airlines, still reeling from the chaos of the 2001 terrorist attacks, never signed on to the service. In the end, Boeing decided to close Connexion before it took off.

-Martyn Williams

IT Scores Low With Business Execs

Why do corporate executives hold a low view of the IT departments in their own organizations? Non-IT executives see the technology group as less able to deal with change, less aligned to business strategy and even unable to fulfill business strategy, according to a survey by Booz Allen Hamilton and CIO. The survey was done online; respondents included 1,650 executives worldwide.

IT groups were rated “healthy” by 34 percent of respondents and “unhealthy” by 50 percent. When divided by industry, the IT group fared best in banking and insurance. Among respondents working at banks, 45 percent rated their IT groups healthy. In insurance, it was 40 percent.

“IT executives are more insular than others and don’t communicate with business counterparts well,” says Corrie DeCamp, a principal at Booz Allen who led the survey. IT managers are often criticized for not communicating well with business counterparts. Aligning IT with business strategy is a peren­nial to-do item in CIO’s annual “State of the CIO” research.

The structure of the IT group may contribute to a perception of being “unhealthy,” DeCamp says. For example, a shared services model, in which business units contract with a central IT group for technology tasks, may make economic sense for conglomerates. But creating a shared services group may create more bureaucracy for business units to cut through. “Business units perceive that if they have their own IT organization, that group can do things just for them,” says DeCamp. Shared services can be viewed as “less nimble.” At companies where the CIO reports to the CEO, IT is seen as more healthy, the survey found. There’s better translation of decisions to action, and such IT groups are more likely to innovate and improve business processes.

-Kim S. Nash

What Keeps Your CEO Up at Night?

CEOs face major organizational changes and feel their companies are not responding as well to those challenges, including new ways to take advantage of technology, according to an IBM survey.

The 2008 survey of more than 1,000 CEOs worldwide found that they ranked change as the top business issue facing their organization. Eighty-three percent say their company is facing substantial change in the next three years, up from 65 percent in 2006. There is also a growing gap between the amount of change expected and the ability of CEOs to tackle it successfully. In 2008, this gap reached 22 percent, nearly triple what it was in 2006, according to the survey.

The survey identifies the top change drivers as market factors (48 percent of respondents), people skills (48 percent), and technological factors (35 percent). People skills have continued to grow in importance since 2004, when they weighed in at 42 percent; such importance is largely due to a growing lack of technical and management talent created by Baby Boomers exiting the workforce, the report says.

To meet those challenges, many CEOs are adapting their business models: Sixty-nine percent say they are making extensive changes to the way they do business. The study suggests many of these changes will capitalize on virtual technologies and real-time feedback. CEOs are also spending more time responding to green issues; concern about the environment rose during the last four years, according to the study. Twelve percent of CEOs in the Americas say environmental factors are a top business driver, whereas 21 percent of European and Asia Pacific CEOs prioritize green issues.

What’s driving this change? The study points to a rise in customer and employee expectations around corporate social responsibility.

-Diann Daniel

Pitney Bowes Delivers With Mobile CRM and ERP

At Pitney Bowes, a provider of mailing products and services, drivers and service representatives rely on mobile applications to get them to their next job sites, ensure they’ve got the proper parts and inventory in their vans, and more. Pitney is not alone: Almost 95 percent of enterprises use some form of mobile data applications, according to In-Stat.

However, Pitney saw the value in business-specific mobile applications early on. After deploying Siebel customer relationship management (CRM) software in 2003, Pitney saw that getting that information—along with ERP data from its SAP system—into the hands of its field service techs could improve customer service.

Paul Weston, Pitney’s VP of CRM systems, decided to deliver CRM and ERP information to techs’ handhelds via Antenna Software’s Antenna Mobile Platform (AMP) and its AMPower Service application. The software interacts with corporate systems and manages transactions between them and mobile devices. “It’s how they get their days’ work,” says Weston. “When they finish a job and want to know where they’re going next, they get that location from their mobile devices.”

Pitney now spends less time and money on callbacks and return visits to customers due to its improved inventory controls and management. It has reduced excess parts inventory by 22 percent. Field workers handle more service requests per day because they spend less time on each call. Pitney also improved management of its customer service agreements due to the application’s real-time field progress reports, ability to prioritize service calls, and intelligent notification for urgent calls. Field techs enter progress data into corporate systems in real time, so call center reps have better visibility in the service process and can provide better service to customers, says Weston.

Weston chose Antenna’s mobile technology for three reasons. First, other solutions he considered were largely Web-based, which meant field workers wouldn’t be able to access systems or information in areas without cellular connectivity. Second, Antenna specializes in mobile applications and offers a higher level of usability and device portability. Finally, Antenna is a Siebel-certified offering for mobile CRM, so support through Siebel is available, according to Weston.

-Al Sacco

New CIO a Perfect Match for Google

Last month, Ben Fried began his new job as CIO of Google. The search giant recruited Fried from Morgan Stanley, where he was managing director of its applications infrastructure, to replace Douglas Merrill, who left Google in April to become president of EMI’s new digital music business.

Executive recruiters and Wall Street analysts agree that Google’s pick of Fried is mutually beneficial: Google gets an executive with experience managing complex technology on a global scale, and Fried gets one heck of a new job.

Jeffrey Lindsay, a senior analyst who covers Internet companies, including Google, for Sanford C. Bernstein, says Google was smart canvassing for a new CIO. “Morgan Stanley is operating around the globe and doing real-time trading worth billions of dollars. You can’t afford to have outages,” he says. “If you look at the average trading floor, you’ll see traders with six to eight screens, totally disparate systems that must be integrated. A CIO coming out of that environment is likely to be extremely good.”

Lindsay expects Fried’s knowledge of financial systems and corporate IT to advance Google Finance and Google Apps. “There are a lot of things Google is getting into…that will be much more familiar territory for Ben Fried because of his [corporate] background,” he says. “If Google is looking to sell Google Apps to Wall Street, he will be a particularly good CIO to help them.”

Shawn Banerji, a recruiter with executive search firm Russell Reynolds, says the Google job is a big step up for Fried. For one thing, it gets him out of an industry in financial turmoil. What’s more, says Banerji, “He’s going from a place where he was a quasi officer in the cadre of the CIO to the number-one IT job at Google.”

-Meridith Levinson