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IRS Reducing Size Of Cybersecurity Staff
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The Internal Revenue Service, which confirmed rumors of a breach of 100,000 taxpayer accounts, has been consistently reducing the size of its internal cybersecurity staff as it increases its security spending. This may seem paradoxical, but one observer suggested it could signal a shift to outsourcing.
In 2011, the IRS employed 410 people in its cybersecurity organization, but by 2014 the headcount had fallen by 11% to 363 people, according to annual reports about IRS information technology spending by the U.S. Treasury Department Inspector General.
Despite this staff reduction, the IRS has increased spending in its cybersecurity organization. In 2012, the IRS earmarked $129 million for cybersecurity, which rose to $141.5 million last year, an increase of approximately 9.7%.
This increase in spending, coupled with the reduction in headcount, is an indicator of outsourcing, said Alan Paller, director of research at the SANS Institute. Paller sees risks in that strategy.
“Each organization moves at a different pace toward a point at which they have outsourced so much that the insiders do little more than manage contracts, and lose their technical expertise and ability to manage technical contractors effectively,” said Paller.
An IRS spokesman was not able to immediately answer questions about the IRS’s cybersecurity spending.
This breach is drawing congressional scrutiny. On Tuesday, U.S. Senator Orrin Hatch (R-Utah), who heads the Senate Finance Committee, called the breach “unacceptable.”
The IRS’s total IT budget in 2014 was $2.5 billion, an increase from the prior year’s $2.3 billion, with 7,339 employees last year, little change from 7,303 reported in 2013.
The agency’s IT budget has fared better than the agency overall. Congress has been cutting spending at the agency. IRS funding has been reduced by $1.2 billion over the last five years, from $12.1 billion in 2010 to $10.9 billion this year. An IRS official told lawmakers earlier this year that the budget cuts have delayed critical IT investments of more than $200 million, which includes replacing aging IT systems.
IT Dissatisfaction Growing
Companies want to reduce spending on IT operations and infrastructure and shift resources to revenue-producing areas, according to two new studies. But businesses leaders and IT executives are also registering higher levels of dissatisfaction with IT as more demands are placed on technology.
The reports, by the Hackett Group and McKinsey & Co., both agree that business executives want IT to do more to improve the bottom line while companies spend less on infrastructure in the process.
The bad news for people who work in IT operations is that large businesses expect to cut IT staff positions by about 2% this year, thanks to automation and outsourcing, according the Hackett’s survey of 160 businesses with revenues above $1 billion.
One path to improved automation will likely be through adoption of software-defined infrastructures, something Bank of America plans to do.
IT budgets will grow by 1.7% this year as IT pivots, increasingly, from a service-providing operation to a revenue-generating one, the Hackett Group said in its study.
IT managers are being told that “you’ve got to grow the business, not just run the business,” said Mark Peacock, an IT transformation practice leader and principal at Hackett.
McKinsey & Co., in its online survey of more than 800 executives — with 345 having a technology focus — also found that executives want less of their budgets to go to infrastructure so more resources can be shifted to analytics and innovation.
The McKinsey survey found that business executives are less likely to say now that IT performs effectively, compared to their views two years ago.
“The IT executives are even more negative,” wrote McKinsey, with only 13% of them saying their IT organizations “are completely or very effective at introducing new technologies faster or more effectively than competitors.” That percentage was down from 22% in 2012.
The negative results “likely reflect the overall rising expectations for corporate IT,” wrote McKinsey.
When asked how to fix IT shortcomings, respondents cited improved business accountability, more funds for priority projects and a higher the level of IT talent, the report said.
The Hackett Group survey didn’t report on dissatisfaction, but it did find that the top goal for IT organizations this year is “to strengthen partnership and goal alignment between IT and the business.”
Cisco Goes To The Cloud
April 4, 2014 by admin
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Cisco Systems Inc will offer cloud computing services, pledging to spend $1 billion over the next two years to make a foray into a market currently dominated by the world’s biggest online retailer Amazon.com Inc, the Wall Street Journal reported.
Cisco said it will spend the amount to build data centers to help run the new service called Cisco Cloud Services, the Journal reported.
Cisco, which mainly deals in networking hardware, wants to take advantage of companies’ desire to rent computing services rather than buying and maintaining their own machines.
Enterprise hardware spending is dwindling across the globe as companies cope with shrinking budgets, slowing or uncertain economies and a fundamental migration to cloud computing, which reduces demand for equipment by outsourcing data management and computing needs.
“Everybody is realizing the cloud can be a vehicle for achieving better economics (and) lower cost,” the Journal quoted Rob Lloyd, Cisco’s president of development and sales as saying.
“It does not mean that we’re embarking on a strategy to go head-to-head with Amazon.”
Microsoft Corp last year said it was cutting prices for hosting and processing customers’ online data in an aggressive challenge to Amazon’s lead in the growing business of cloud computing.
Cisco could not be immediately reached for comment by Reuters outside regular U.S.business hours.
Samsung Joins OpenPower
Samsung has joined Google, Mellanox, Nvidia and other tech companies as part of IBM’s OpenPower Consortium. The OpenPower Consortium is working toward giving developers access to an expanded and open set of server technologies to improve data centre hardware using chip designs based on the IBM Power architecture.
Last summer, IBM announced the formation of the consortium, following its decision to license the Power architecture. The OpenPower Foundation, the actual entity behind the consortium, opened up the Power architecture technology, including specs, firmware and software under a license. Firmware is offered as open source. Originally, OpenPower was the brand of a range of System p servers from IBM that utilized the Power5 CPU. Samsung’s products currently utilize both x86 and ARM-based processors.
The intention of the consortium is to develop advanced servers, networking, storage and GPU-acceleration technology for new products. The four priority technical areas for development are system software, application software, open server development platform and hardware architecture. Along with its announcement of Samsung’s membership, the organization said that Gordon MacKean, Google’s engineering director of the platforms group, will now become chairman of the group. Nvidia has said it will use its graphics processors on Power-based hardware, and Tyan will be releasing a Power-based server, the first one outside IBM.
GM Adds IT Jobs
General Motors Co said on Monday it will add 1,500 jobs at a new software development center in Michigan as part of the U.S. automaker’s previously announced plan to move information technology work back into the company.
GM said it will hire the software developers, database experts, analysts and other IT positions over the next four years for the office in Warren, Michigan. It is the second of four software development centers GM plans to open, following one it announced last month in Austin, Texas.
In July, the Detroit automaker said it would reverse years of outsourcing IT work. GM now outsources about 90 percent of its IT services and provides the rest in-house, but it wants to flip those figures in the next three to five years.
The IT overhaul is spearheaded by GM Chief Information Officer Randy Mott, who outlined the plan to GM’s 1,500 IT employees in June. The former Hewlett-Packard Co executive believes the moves will make GM more efficient and productive.
GM, which has not disclosed the cost or savings of its strategy, plans to cut the automaker’s sprawling list of IT applications by at least 40 percent and move to a more standardized platform. GM will also simplify the way it transmits data.
IBM Freezes Employee Salaries
IBM this year won’t be granting any pay raises to its executives or to many of its workers in its Global Technology Services division.
The company said it is only giving pay raises to workers with high-demand skills that the company needs.
IBM customarily issues pay raises during the mid-year period.
“There are targeted skill groups of employees that are eligible for salary increases in 2012,” said Trink Guarino, an IBM spokeswoman. “No executives will be eligible for salary increases.”
Business Insider Tuesday published an internal IBM memo announcing the action that was sent to employees from Global Technology Services executives.
One IBM employee, who didn’t want to be identified, said he believes the lack of pay raises “is part of IBM’s hyper-aggressive plan to meet its 2015 roadmap.”
That IBM roadmap lays out an aggressive growth strategy, which calls for increasing the company’s earnings per share by $20 by 2015.
The employee noted that the company has been spending billions in stock buybacks, but says it can’t afford pay increases.
Rather than reaching profit goals “the old-fashioned way by increasing market share, developing and selling new products,” the company is “maniacally focused on cutting labor costs and off-shoring work to low-cost countries,” the employee said.