What's Going to Happen?Despite uncertainties in economics and world affairs, IT must lead toward smarter infrastructuresFear. Uncertainty. Doubt. As I write this column in the early days of February, an invisible vapor of FUD envelopes every activity, big and small. Yes, the sun continues to rise in the east; my car, after a few false starts and wheezes, starts up every day and shoots down the highway to the office. Toast crumbs and coffee stains mingle with unnerving headlines written in dark letters upon the newspaper spread across the shotgun seat. I punch buttons on the car radio: a dash of inane sports talk, an update from gun-shy stock exchanges, opinions pro and con about diplomacy, intelligence, power, and the uncertain aftermath. Right now, much of the world seems caught in suspended animation, afraid to commit to anything of significance until we know better how the crisis over Iraq will be resolved. "Decisive days that lie ahead," to use President Bush's words from his Jan. 28 State of the Union speech, could present a far different reality by the time you read this column than the one before me as I write these words. In any case, matters of war and peace, though large, aren't the only fretful concerns hovering over the strategic thinking of many organizations — and reaching down into tough dilemmas facing IT management and executives in the high-tech industry. Tectonic shifts and decisive days are giving pause everywhere you look. A case example is AOL Time Warner, the product of a merger that was supposed to lead us proudly into the "clicks and bricks" promised land. The company now resembles something more like the Titanic sinking into the frigid waters off one of those shifting tectonic plates. In 2002, the media conglomerate recorded the largest annual corporate loss ever: $98.7 billion. The gaudy valuations that greeted the merger are but a painful memory to investors; according to The Wall Street Journal, AOL's share price drop over the past 18 months wiped out $100 billion in market value. Leaking goodwill like a sieve, the company is experiencing the opposite of "get big fast." Certainly, the worst advertising recession in a generation has been brutal to all in the media business. The "synergies" AOL Time Warner thought it would realize from the merger have fallen victim as much to hard times as to strategic confusion in the executive suite. However, the rise of the Internet has been tough on many giant conglomerates that grew quickly in the 1990s and now straddle multiple and conflicting industries, market channels, and customer relationships. The deflationary impact of the Internet, while allowing consumers to lower their own total cost of operation, has exposed cost structures throughout corporations. Consumers of financial and travel services, for example, are enjoying the ability to automate out costs and streamline their operations. Behind the scenes, however, there's a tough struggle going on to determine which IT systems still define and differentiate the organization from competitors — and which no longer represent a strategic advantage directly related to what the organization perceives as its core ability to build profits. In IT, the real competition now is over who can lower costs the fastest. IT: Shipping Out?Strategic reassessment of IT systems is accelerating the pace of outsourcing, according to several reports that came across my desk at the beginning of 2003. The biggest beneficiaries appear to be offshore service providers located in India, Russia, and other locations, such as Eastern Europe (U.S.-based service providers, such IBM, EDS, and USi are also getting a lot of attention). While some organizations have pulled back from massive outsourcing due to contractual difficulties, it's clear that stressed out CFOs are flinching less often at pulling the trigger on opportunities to move IT infrastructure systems that are merely running in cost-containment mode. What's interesting is that the software industry seems to be following IT offshore — to lower their own internal IT and call center costs, but more significantly to lower the cost of software development. Naturally, as the industry consolidates, the remaining behemoths reduce cost by farming out programming to where it can be done far more cheaply: China, India, South America, and other places. For Silicon Valley, this outsourcing trend means that the much-anticipated "Detroit effect" — in which the high-tech industry imitates the movement of jobs overseas by auto manufacturers 20 years ago — seems to have finally materialized. Given world tensions and the threat of terrorism, some are raising concerns — although, according to a Jan. 6 article in The New York Times, the source of protest is often programmers who are trying to hang on to their livelihoods. Nonetheless, "nervousness is beginning to grow at companies and in the government about the possibility of abuse by hackers, organized crime agents, and cyberterrorists," the Times reported. "The question of whether the booming business in exporting high-tech jobs is heightening the risk of theft, sabotage, or cyberterrorism from rogue programmers has been raised in discussions at the White House, before Congress, and in boardrooms." Worms, sleeper bugs, and back doors left open for intruders who might have nefarious purposes are a serious concern no matter where programs are developed and IT systems are managed. And the world is watching: The damage and lengthy recovery from the January "slammer" database security virus that hit Microsoft SQL Server 2000 systems succeeded in turning press attention away from Wi-Fi networks, smart gadgets, and robots that do vacuuming — the most frequently cited product growth areas for 2003. As high-tech development disperses around the globe and its products become diffused into complex networks — managed from a distance, supporting global transactions and data access via gadgets and smart personal devices — opportunities will rise for those who intend to do harm. The days when IT managers could control their computing environments are fast becoming a quaint memory, that is, if there's anyone still employed who remembers those days. The size and complexity of these challenges must be met by sophisticated IT security and management systems that employ intelligent, autonomous agents that allow systems to recognize when something's amiss and heal the problem quickly, with as little damage and downtime as possible. Infrastructure InnovationDifficult and uncertain our times may be; yet, these times also present opportunities for IT leaders to seize the moment and lead the way toward an intelligent, cost-effective infrastructure ready to scale up to the challenges. Recent meetings with several IT solution providers left me optimistic that after being knocked on their heels, several have found their bearings and are focused on the right problems. Two vendors in particular bear watching. The first is Veritas Software, a leading storage software provider. Although bruised by recent news that it would have to restate earnings — in part due to confusion over business dealings with AOL Time Warner — the company made critical moves in 2002 that will enlarge its role in the development of intelligent IT infrastructure. According to Jeremy Burton, chief marketing officer, the key move was the December 2002 acquisition of Jereva Technologies, a provider of software for automated server provisioning. The Jereva infusion, coupled with application performance management from its earlier Precise Software Solutions acquisition, will allow Veritas to integrate and automate management of storage and servers for specific applications and users. Data and application integration continue to be difficult and costly problems for IT managers. Data Junction, a 2002 Intelligent Enterprise Readers' Choice Award winner and member of the 2003 Integration Companies to Watch list, continues to garner favor, particularly among cost-sensitive small- to medium-sized businesses. "At their root, all integration problems are data integration problems," says Michael Hoskins, president of the company. Based on that perception, Data Junction is applying its solutions to unify management of the seemingly separate worlds of data and application integration. The result could enable IT to reduce costs and develop an intelligent infrastructure for handling the dizzying array of integration issues on the horizon. David Stodder [dstodder@cmp.com] is editorial director of Intelligent Enterprise.
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