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.”

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App Stores For Supercomputers Enroute

A major problem facing supercomputing is that the firms that could benefit most from the technology, aren’t using it. It is a dilemma.

Supercomputer-based visualization and simulation tools could allow a company to create, test and prototype products in virtual environments. Couple this virtualization capability with a 3-D printer, and a company would revolutionize its manufacturing.

But licensing fees for the software needed to simulate wind tunnels, ovens, welds and other processes are expensive, and the tools require large multicore systems and skilled engineers to use them.

One possible solution: taking an HPC process and converting it into an app.

This is how it might work: A manufacturer designing a part to reduce drag on an 18-wheel truck could upload a CAD file, plug in some parameters, hit start and let it use 128 cores of the Ohio Supercomputer Center’s (OSC) 8,500 core system. The cost would likely be anywhere from $200 to $500 for a 6,000 CPU hour run, or about 48 hours, to simulate the process and package the results up in a report.

Testing that 18-wheeler in a physical wind tunnel could cost as much $100,000.

Alan Chalker, the director of the OSC’s AweSim program, uses that example to explain what his organization is trying to do. The new group has some $6.5 million from government and private groups, including consumer products giant Procter & Gamble, to find ways to bring HPC to manufacturers via an app store.

The app store is slated to open at the end of the first quarter of next year, with one app and several tools that have been ported for the Web. The plan is to eventually spin-off AweSim into a private firm, and populate the app store with thousands of apps.

Tom Lange, director of modeling and simulation in P&G’s corporate R&D group, said he hopes that AweSim’s tools will be used for the company’s supply chain.

The software industry model is based on selling licenses, which for an HPC application can cost $50,000 a year, said Lange. That price is well out of the reach of small manufacturers interested in fixing just one problem. “What they really want is an app,” he said.

Lange said P&G has worked with supply chain partners on HPC issues, but it can be difficult because of the complexities of the relationship.

“The small supplier doesn’t want to be beholden to P&G,” said Lange. “They have an independent business and they want to be independent and they should be.”

That’s one of the reasons he likes AweSim.

AweSim will use some open source HPC tools in its apps, and are also working on agreements with major HPC software vendors to make parts of their tools available through an app.

Chalker said software vendors are interested in working with AweSim because it’s a way to get to a market that’s inaccessible today. The vendors could get some licensing fees for an app and a potential customer for larger, more expensive apps in the future.

AweSim is an outgrowth of the Blue Collar Computing initiative that started at OSC in the mid-2000s with goals similar to AweSim’s. But that program required that users purchase a lot of costly consulting work. The app store’s approach is to minimize cost, and the need for consulting help, as much as possible.

Chalker has a half dozen apps already built, including one used in the truck example. The OSC is building a software development kit to make it possible for others to build them as well. One goal is to eventually enable other supercomputing centers to provide compute capacity for the apps.

AweSim will charge users a fixed rate for CPUs, covering just the costs, and will provide consulting expertise where it is needed. Consulting fees may raise the bill for users, but Chalker said it usually wouldn’t be more than a few thousand dollars, a lot less than hiring a full-time computer scientist.

The AweSim team expects that many app users, a mechanical engineer for instance, will know enough to work with an app without the help of a computational fluid dynamics expert.

Lange says that manufacturers understand that producing domestically rather than overseas requires making products better, being innovative and not wasting resources. “You have to be committed to innovate what you make, and you have to commit to innovating how you make it,” said Lange, who sees HPC as a path to get there.

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Motorola To Close More Locations

Motorola Mobility will shut down most operations in South Korea in 2013 as part of an ongoing restructuring under Google ownership.

The decision is estimated to displace about 500 jobs in South Korea and follows a decision made a month ago to close down most international Motorola websites and to lay off about 4,000 workers.

Motorola Mobility said in a statement that it began telling staff in South Korea on Monday about “plans to close most of our operations in Korea, including our research and development and consumer mobile device marketing organization.”

The statement said the changes “reflect our plans to consolidate our global R&D efforts to foster collaboration, and to focus more attention on markets where we are best positioned to compete effectively.”

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Samsung And Yahoo Ink A Deal

Yahoo announced a deal on Tuesday with Samsung to integrate its Broadcast Interactivity service into the company’s Smart TVs.

The agreement will allow Yahoo to push real-time content alongside TV shows and advertisements on Samsung TVs, such as “subtle, on-screen prompts” that inform viewers of additional content that they can watch.

“With the touch of a remote, connected tablet or phone, Samsung Smart TV viewers can easily surface content or offers related to the TV shows and commercials they are watching,” Samsung said.

TV programmers can use the integration feature to provide Samsung TV customers with “complementary content” such as trivia, additional information about the show being watched and interactive gaming.

Showtime Networks and National Geographic Channel are two of the first TV programming partners that will take advantage of the agreement, Yahoo said.

If TV ads aren’t annoying enough, Yahoo said the partnership also creates new forms of advertising by “extending traditional 30-second commercials into immediate actions”.

In other words, with broadcast interactivity enabled commercials, advertisers can embed “calls-to-action” for downloading apps or digital media, providing coupons, ordering samples, reading reviews or viewing product information. Just in case you really want to know more about that Mr Muscle sink unblocker, or the next JML cleaning gadget that is set to transform your home life forever.

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Yahoo To Release Secret Documents

Yahoo has ceased its efforts to keep documents related to Microsoft’s failed bid to buy the firm sealed.

Yahoo tried to keep documents relating to the failed 2008 buyout attempt by Microsoft sealed from investor Dan Loeb. Loeb, who runs the Third Point hedge fund with a five per cent stake in Yahoo led a shareholder’s revolt against Yahoo’s board and wanted to see documents related to Microsoft’s bid to buy the company.

Microsoft tried to take over Yahoo in 2008 with an offer of $31 a share, over double Yahoo’s share price now. According to Loeb, the documents will highlight the then Yahoo board’s “misjudgments and failures”.

Loeb is after documents that made up part of a shareholder lawsuit that was settled. According to Yahoo, its decision to cease efforts at keeping the documents sealed was due to the lawsuit being settled and unable to be reopened.

Loeb had tried to get his preferred board members onto Yahoo’s board or directors including himself, however the firm announced that it had appointed three new board members, none of which were on Loeb’s list.

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Will AOL Merge With Yahoo?

AOL is trying to engineer a merger with Yahoo in order to lower costs.

AOL’s CEO Tom Armstrong reportedly has been working hard to generate support from shareholders for a deal with Yahoo. According to Reuters, Armstrong is presenting the deal as an alternative to going it alone as an internet media company in order to reap cost and advertising reach benefits.

Apparently Armstrong is claiming that a merger with Yahoo, which itself is at the centre of acquisition rumours, would bring in savings of between $1bn and $1.5bn by combining datacentres and consolidating content on areas such as news, sports, entertainment and finance.

Since AOL was spun out of its disastrous merger with Time Warner, the firm has been trying to remake itself into an internet media company by buying popular websites such as The Huffington Post and Techcrunch. While many question whether that is a workable plan, the financials can’t mask the deep trouble AOL is in, with the company reporting a $11.8m loss for the second quarter.

While talk of AOL being bought up has cooled considerably in the last few months, the firm still has a few worthwhile assets. According to Reuters’ sources, shareholders like the idea of merging with Yahoo but are not convinced that Armstrong can pull it off.

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Microsoft Goes After Yahoo

Just three years after a failed attempt to acquire Yahoo, Microsoft may be considering whether to give it another shot, Reuters reported today.

According to the report, Microsoft executives are split on whether the company should bid for Yahoo. A final decision has not been reached, the report noted.

Citing an unnamed “high-ranking Microsoft executive,” the report said Microsoft is evaluating whether to pull in a partner for a joint effort to buy Yahoo.

Microsoft said it doesn’t comment on rumors or speculation. Yahoo didn’t respond to a request for comment on the report.

“As long as Microsoft is committed to growing its online presence, this makes sense,” said Ezra Gottheil, an analyst with Technology Business Research. “Yahoo has a large number of subscribers and regular visitors, many of whom are not considering going elsewhere. And that would be a good boost for Microsoft.”

He also noted that Yahoo Mail, Yahoo’s popular free email service, would combine well with Microsoft’s own Hotmail service to create a very large base of email users.

In 2008, Microsoft tried to acquire Yahoo. Yahoo’s argument that the bid was tool low prompted Microsoft to finally give up.

Since then, Yahoo has been dealing with some significant problems.

No longer the high-flying Internet pioneer of its heyday, Yahoo last month fired Carol Bartz, who had joined the company as CEO with high hopes that she could return the company to its past glory.

Once Bartz was out the door, industry analysts began speculating that Yahoo’s board might be open to a solid acquisition offer.

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RIM Cuts 11% Of Workforce

BlackBerry maker Research In Motion Ltd plans to slash approximately 11 percent of its workforce to curb costs as it struggles to compete against Apple Inc and Google Inc.

The announcement of 2,000 job cuts on Monday came a month after the Canadian company acknowledged that it would reduce headcount for the first time in a decade.

One analyst said the job cuts were slightly deeper than expected but were key to RIM’s recovery from a slump triggered by product delays and intense competition from Apple’s iPad and iPhone as well as devices powered by Google’s Android software.

RIM’s U.S.-listed stock, already near multi-year lows, was down as much as 2 percent before the market opened. It was trading down 1.8 percent at $27.40 on the Nasdaq
just before the open.

“This is not totally unexpected. I think the size of (the cuts) is a little bit bigger than what they were intimating before,” said Jefferies & Co analyst Peter Misek. “I think this is obviously realigning the cost structure to a new growth, or sales, reality.”

RIM said one-time charges from the job cuts were not included in its outlook for the second quarter or for the full year, and it would explain the financial impact of the cuts when it reports second quarter results on September 15.

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Data Center Emissions Concerns Citizens

Some residents of Quincy, Washington, the location of massive data centers operated by Microsoft, Yahoo and others, are growing concerned about pollution from backup diesel generators at the data centers, and on Wednesday they’ll have the chance to discuss the issue.

The Washington State Department of Ecology is conducting a public meeting on Wednesday evening in Quincy for residents to voice their concerns over on an application from Dell for permission to use 28 generators powered by diesel engines.

Quincy, a town of around 6,000 people, will have 141 back-up generators once those belonging to Dell, and others that have been permitted or are in line for permission, are put in place. While the generators are designed to be used only in the rare case of an electricity outage, the data center operators turn them on regularly for testing.

On average, the companies are permitted to turn on each generator for 103 hours per year. If they use that maximum running time, data center generators in Quincy would run for the equivalent of 40 hours per day on average.

The Department of Ecology says diesel emissions, when breathed in, have been known to create or worsen a variety of health problems, including heart disease, asthma and
lung cancer.

Some residents, including former mayor Patty Martin, wonder about the health impact of the diesel emissions on the community. She thinks the generators should use the same types of devices to reduce emissions that are required by other Washington cities such as Olympia and Moses Lake.

Such devices aren’t necessary in Quincy, said Karen Wood, section supervisor for air quality in Eastern Washington for the Department of Ecology. Because Olympia is a much bigger city it already has high diesel emissions from other sources, so a new data center there was required to reduce its emissions, she said.

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