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January 2006 News Roundup

Analysis of News Events
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Recent news headlines hail Microsoft's release of a new build for Windows Vista Community Technology Preview (CPT) beta testers, a harbinger of its second Vista beta. Datastream Systems Inc. and Infor Global Solutions announced a definitive agreement for Infor to acquire Datastream, thereby expanding and enhancing Infor's solution portfolio. Meanwhile, IBM, in a dramatic early January announcement that will impact tens of thousands of the company's current employees, is changing its U.S. pension plan. Moreover, vendor pundit IDC in this month's IDC FutureScan forecasts U.S. IT spending growth to be 5% in 2006.

Microsoft Windows Vista: RAS or Razzle Dazzle?

Microsoft Windows Vista is the next-generation Microsoft operating system. Vista is still technically in its first beta, with a second beta planned for early this year and a late-year final release. The big focus for Vista—in addition to greater integration of disparate features along with increase in performance, reliability, and ease of installation and upgrade—is greater security protection, the latter being one of the foremost features of eServer iSeries.

Microsoft recently indicated that it was going to deliver one system image of Vista to all its customers but would control which parts were enabled into various versions, and upgrades could be obtained "on demand" by purchasing a license key. For instance, if customers purchased the "home version" of Vista but wanted to move to the "professional version," they would simply contact Microsoft, purchase a license key, and receive the professional version. Sound familiar? In essence, this is what IBM has done with i5/OS and with both memory and disk for the iSeries. At present, Windows Server and i5/OS continue to have great differences in performance and reliability; however, some analysts believe that this value statement is one that is beginning to erode.

While still a vaporous product, some pundits indicate that Vista is coming together well, although there is speculation as to whether Microsoft may be trying to incorporate too much in this first release. According to a January 10 InformationWeek article, the company also appears to be making the operating system more complex to boot should a customer have more than one version of Windows installed. Microsoft is essentially marketing Vista in much the same way IBM has marketed OS/400 and i5/OS, with the difference being that the cost of Vista could be orders of magnitude lower than i5/OS.

While Vista is certainly in a space to be watched and evaluated, especially if and when Microsoft publishes beta program tester testimonials, it will still be, in this analyst's opinion, a nascent product. And, as with other nascent products (including the early releases of OS/400), it is advisable to wait a reasonable period until it adequately demonstrates reliability, availability, scalability, serviceability, and stability. While there will be a desire to implement Vista in Intel-only environments or in heterogeneous environments employing Intel servers, patience and caution are advised. Regarding dismantling i5/OS and its accompanying iSeries and converting to Windows Vista, only time will tell, but that may be a long time in coming.

More Merger Mania

Keeping in step with the merger and acquisition trend that has beset the IT industry during the last several years and that will likely continue for a long time, Infor, an enterprise application vendor, has announced plans to acquire Datastream, an asset performance management vendor. Echoing my colleague Lee Kroon's number one prediction in his "2006: A Year in Preview" article published last Monday, the move by Infor to acquire Datastream appears to be a maneuver toward merging traditional enterprise applications with a set of more service-oriented ones.

This gambit by Infor is important for several reasons. First, it demonstrates that tier-two vendors and vendors that are not perceived as the most highly visible in the industry can follow the lead of Oracle and SAP AG. Second, it is also likely that these "tier-two" vendors can increase their hold on the market, especially in the industry verticals that they traditionally serve, and offer comprehensive solutions that are competitive and price-competitive with those of the bigger players. Finally, vendors such as Infor continue to remind customers that that there are other enterprise, best-of-breed, and niche players and that customers need not be beholden to the whims of single vendors.

It's the Economy, Again

While IBM has not yet released its fourth quarter earnings report, the company has announced that it has changed its U.S. defined benefit pension plans and that it plans to redesign its 401(k) savings plan, effective in January 2008. IBM says this action, along with 2006 retirement plan changes under consideration in several other countries, is expected to result in worldwide retirement-related expense savings of $450 to $500 million for 2006 and $2.5 to $3 billion for the period 2006 through 2010, based on year-end 2005 pension assumptions.

Events during the past several years—including fallout from the Enron and WorldCom scandals, the yet-to-recover economy, and (regardless of some pundit predictions) decreased and continuing-to-decrease budgets—are affecting all companies, even the Fortune 500. Uncertain sales futures have forced companies to contain costs and cut budget to make up for lower revenues. IBM is no exception. While IBM is phasing in pension and 401(k) changes gradually and protecting its retirees and soon-to-retire employees, the changing of the pension guard does, however, raise questions of continued employee loyalty.

IBM has always been a company comprised of employees who signed on after graduation and stayed until retirement. Loyalty, however, is a two-way street. While speculation at this date is malapropos, it will be interesting to see if some of the greatest talent in the world begins to migrate to new pastures.

The IT Spending Guessing Game

While this month's IDC FutureScan prognosticates a 5% increase in IT spending for 2006, the firm has also recanted this prediction. Its best guess is that IT spending will increase "modestly" in 2006.

In an era in which IT budgets have been, are, and will continue to be scrutinized by finance departments and even other lines of business, it seems to me that funding any new initiative, even if some post-Y2K applications are getting long in the tooth, will be rare and will be driven by business needs. Of course, some companies will increase spending, especially if they are spearheading a new business initiative. For others, spending may remain flat or even decrease for 2006—and this is across the board whether the company is small, medium, or large.

In conclusion, I maintain that IT professionals must continue to exercise caution in their purchases, whether hardware, software, middleware, and/or services. It is imperative that decisions to purchase new products or spearhead new initiatives are based on an airtight business case and that IT is not solely accountable. IT must work with its line-of-business brethren to ensure that technology decisions are based on business requirements that will deliver value on investment.

Maria A. DeGiglio is President of, and Principal Analyst for, Maria A. DeGiglio & Associates, an advisory firm that provides clients with accurate and actionable information on business and technology initiatives. You can reach Ms. DeGiglio at This email address is being protected from spambots. You need JavaScript enabled to view it..

MARIA DEGIGLIO

Maria DeGiglio is president and principal analyst of Maria A. DeGiglio & Associates. Current clients of Maria A. DeGiglio & Associates include the Visiting Nurse Service of New York ; Experture, LLC; and MC Press. Ms. DeGiglio has more than 20 years of experience as an IT consultant, industry analyst, and executive. From 1997 to 2005, she worked for Andrews Consulting Group and the Robert Frances Group.

 

Ms. DeGiglio received her Masters Degree in Health Advocacy from Sarah Lawrence College and graduated Cum Laude from Cornell University with a Bachelor of Arts Degree.

 

 

Ms. DeGiglio has worked with IT and C-level executives to enable IT alignment with business goals and to implement best practices. She has experience and expertise in both large enterprises and in small- and medium-sized business. Ms. DeGiglio has authored over one hundred articles, reports, and white papers.

 

 

Since 2004, she has worked in the healthcare industry and in health IT investigating the legal, ethical, and regulatory aspects of creating, implementing, and exchanging electronic health records (EHRs). Ms. DeGiglio is an expert in security, privacy, and HIPAA regulatory compliance.

 

 

Ms. DeGiglio may be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it..

 

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