Biometric ID systems face hurdles

Ziff-Davis has a long article on the difficulties that biometric identification systems are having, especially in the retail industry. The article starts with a particularly interesting anecodote on the problems that Piggly Wiggly has encountered with getting grocery customers to sign up for its Pay-by-Touch fingerprint checkout system.

Bolt [an IT executive at Piggy Wiggly] said she didn't appreciate how emotionally intense some of the opposition was until she visited a store and saw a 70-year-old woman literally throw a Bible at an employee trying to enroll people in the program.

"She told him that God was going to rain hellfire on him and that he was promoting the devil's work," Bolt said, adding that she took that to mean the customer was not interested in enrolling....

The 70-year-old customer was reacting to the concern of some in the religious community that RFID (radio-frequency identification) and biometric programs are similar to a Bible story known as "the mark of the beast." The story from Revelation speaks of limits to sales or purchases "save he that had the mark, or the name of the beast, or the number of his name."

Apart from religious objections, biometrics systems are not the panacea that some technophiles believe they are.

Read the whole article to get a view of some of the more significant problems with biometrics.

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Salesforce.com publishing real-time system status

Reacting to complaints about service outages, Salesforce.com has set up a new website, trust.salesforce.com, that reports real-time system availability for each instance of its systems worldwide.

The site reports historical information for the past month. For example, in North America, on February 16, the status reads,

Time: 6:28pm PST

Category: Service Disruption

Detail: The NA1 system experienced a disruption in service due to the failure of a hardware server in our cluster. a manual restart restored availability.

Root Cause: At 6:28pm PST, a primary hardware server in our cluster failed and one of our North American (NA1) servers did not automatically recover. This required a manual restart of the NA1 database, which completed at 7:30pm PST.

Although not a substitute for maintaining expected service levels, broadcasting the current system availability can go a long way toward satisfying customer demands for information. Salesforce.com's move to make this information publicly available, even to non-subscribers, is to be applauded, and I believe this sets a precedent for other on-demand providers. If on-demand computing is to take hold, this level of transparency is needed.

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How to cost-justify an IT investment

I'll be speaking on the subject, "How to Cost-Justify an IT Investment," at AFCOM's spring Data Center World conference in March. The presentation will explain how IT managers can use the concept of economic value added (EVA) to build the business case for IT infrastructure and data center investments.

Business executives aren't writing any blank checks to IT these days. Therefore, data center managers and other IT executives need to be able to present the cost and benefits for each IT project in terms that executives outside of IT can appreciate.

Too often an IT manager will present a new project in terms of why it is important. But, every project is important to somebody. With limits on funding, business executives think in terms of which project delivers more value to the organization.

For example, it may be obvious to the IT group that server upgrades are necessary. But when the request gets to the executive committee, it is competing with a new plant in Idaho, or a new warehouse in Buffalo, which are also important. So the IT group needs to find a way to show that those server upgrades either make money or save money. It's not always easy.

Part of the presentation will focus on application of economic value added (EVA) as a tool for IT investment analysis.

AFCOM's Data Center World conference is being held March 19-23, 2006, at the Georgia Word Congress Center in Atlanta, Georgia. To request a free conference brochure or to register for the conference, visit AFCOM's website at www.afcom.com

About AFCOM
AFCOM is the premier association representing the needs of enterprise and Internet data center executives and vendors around the globe. Established in 1981, AFCOM has become a forum for data center professionals, where they can share best practices and disseminate education on key management issues through the media, trade shows and conferences. The Data Center Institute--AFCOM's think-tank--provides the industry's most comprehensive insight and analysis on key issues affecting all data-intensive organizations. The association's members include data center managers, CIOs and other IS professionals from Fortune 1000 companies.

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IT security: large firms lag behind

At Computer Economics, we've just released our new IT Security Study. There are some interesting results regarding who's leading and who's lagging when it comes to IT security.

By nearly every measure, large firms lag behind mid-size organizations in IT security spending, staffing, technology, and management best practices.

According to our recently released 2006 IT Security Study: The Current State of IT Security Budgets, Management Practices, and Security Incidents, companies with over $750 million in annual revenues lag behind mid-size firms in relative spending for IT security, adoption rates for security technologies, and deployment of best practices for IT security management.

In addition, many companies of all sizes fail to implement a number of basic security management best practices. For example, 65% of all organizations do not provide periodic IT security training for their employees, and 67% do not conduct periodic software audits of desktop computers to ensure that unauthorized programs or content are not present. A number of other statistics from the study confirm this finding.

The study also found that, in spite of these deficiencies, most companies are not authorizing more money for IT security. The median company in our study had zero increase in IT security spending last year, and the budget increases that did occur were mainly among small and mid-size firms.

IT security may be a hot topic, but that doesn't mean that management is willing to spend more money on it.

The budget squeeze is most evident among small firms and large firms, where roughly half of the respondents said that their security budgets are not adequate to provide the level of IT security needed. In mid-size firms, only about a fifth of the respondents felt that way.

The study, based on a survey of North American IT security managers, analyzes information security spending, staffing, incidents, the rate of technology adoption, and the deployment of security best practices for large, medium, and small organizations.

The full IT Security Study, of 186 pages with over 150 charts, is available for instant online purchase from the Computer Economics website. An executive summary with key findings and trends is also available.

NetSuite scoops Microsoft resellers

A strong reseller channel is a key success factor for selling enterprise systems to the small and midsize business market. As I've noted in the past, the population of such resellers is limited, and its not easy to build a reseller organization from scratch. The reseller has to make a significant investment in hiring experienced salespeople and implementation consultants, then they must be trained specifically in the vendor's product. Sales cycles are long, and implementation projects can be risky, stretching out collections.

So, the easiest way for a vendor to build the reseller channel is to steal resellers from another vendor. This has been going on for years.

According to the Channel Insider, the latest example is Netsuite, an ERP on-demand vendor that appears to have picked up five former resellers of Microsoft Dynamics (formerly, Microsoft Business Solutions, MBS). The five are Altico Advisors (Marlboro, MA), Roux Business Systems (Baton Rouge, LA), VAR2 (Beaverton, OR), Premier Computing Technologies (Salt Lake City, UT), and Nolan Computers (UK).

The need for resellers is so important, that NetSuite, like other vendors, offers incentives to jump ship.

The NetSuite program offers Microsoft Dynamics VARs selling products such as Great Plains, Solomon, Navision, and CRM a 35 percent margin, a 50 percent discount on NetSuite for internal use, and free sales training for up to five people if they switch to its hosted ERP (enterprise resource planning) solution.

Not that Microsoft isn't also trying to poach resellers from other vendors.

Microsoft has announced its own program to grab Sage resellers for its Dynamics family. VARs selling Peachtree will receive a $200-per-seat discount up to $1,000 on Great Plains, Navision and Solomon products. VARs selling MAS90, MAS200, MAS500 can receive a $500-per-seat discount, up to a maximum of $10,000, on Dynamics Professional version.

eWeek has the story.

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Yet more outages at Salesforce.com

According to eWeek, Salesforce.com is not yet out of the woods with its service level problems. Customers report that the CRM on-demand pervice was down for several hours on January 30, and certain selected features have been unavailable from time to time during the month of January.

Wall Street takes note:

While the earlier outages have had little apparent effect on Salesforce.com's stock valuation, there are indications that "this morning's outage is apparently leading to more aggravated customer and prospect responses," analyst Michael Murphy wrote in a First Albany Capital Inc. market update.

From Salesforce.com customers' views, "the outage experience has transitioned from an isolated event into a recurring trend and the 'get out of jail free card' has been used," Murphy wrote.

Salesforce.com denies that the problems are as extensive as eWeek is reporting.

I think Salesforce.com is suffering from its success, as hundreds of new customers sign up each quarter. It reminds me of the problems that AOL had back with dial-up service in the 90s after it ramped up its marketing efforts. Eventually, AOL got the situation under control, but in the meantime there were many defections to competitors such as Earthlink.

Salesforce.com will eventually get its service levels back up to where they need to be. But in the meantime, how much damage will this do to Salesforce.com and to the software on-demand trend in general?

Update, Feb. 2. Computerworld has reactions from other users, many of which are not deeply concerned about service levels.

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Software industry predictions for 2006

Sandhill.com is running a good podcast regarding predictions for the software industry for 2006. Analysts M.R. Rangaswami, Erik Keller, and Vinnie Mirchandani provide the forecast. I'll summarize a few of the items that I think are right on the money:

Rangaswami believes that software as a service (or, software on-demand) will continue to thrive in 2006, although providers need to address service problems such as the recent outages at Salesforce.com. Kellerl points out, however, that buyers need to distinguish between software as a service as a license strategy (subscription pricing) and as a delivery strategy (hosted applications). He rightly points out that some vendors of on-premise software (e.g. SAS) have offered subscription pricing for years.

Erik Keller thinks that there will NOT be a big push to service-oriented architecture (SOA) anytime soon. He says, "The industry is not going to go off and spend a half-trillion dollars and make this upgrade in the next couple of years. No major vendor has given their customers a good reason to do the upgrade other than this techno-flash-babble about SOA being more flexible and more wonderful."

Keller also thinks that both Oracle and SAP are going to have a hard time meeting the growth expectations of Wall Street, primarily because customers do not have the maintenance budgets that these vendors need to grow. There's also concern about both vendors pushing customers into major upgrades that they just won't have the money for.

Mirchandani thinks that industry will finally be getting some relief from the tremendous burden of Sarbanes-Oxley (SOX) compliance. Corporate lobbying of Congress will finally result in some relaxing of the rules. The compliance burden is a hidden tax on U.S. companies that overseas providers do not have to pay.

You can listen to the whole podcast (about 35 minutes) for free at http://sandhill.com/opinion/editorial.php?id=64.

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Is Oracle's Fusion really half complete?

Josh Greenbaum attended Oracle's briefing on Project Fusion, where co-president Charles Phillips said that Oracle is "half-way to Fusion." Josh thinks that Fusion is more like 25 percent complete, based on a start date of January 2005 (when Oracle acquired PeopleSoft) and Oracle's projected completion date of 2008.

Josh is also questioning the timeline based upon the fact that Oracle is counting on functionality from acquisitions to fill out Fusion:

I'm still very pessimistic about these dates, mostly because I still see a lot of unfinished business that I'm not sure can be resolved in time. One of the main issues is CRM: with the Siebel acquisition still not closed, it's hard to imagine that Fusion CRM, and the all-important customer record and vertical functionality that are supposed to be coming from Siebel, will also be delivered in this 2008 timeframe.

Then there's all those yet-to-be-acquired vertical applications that are supposed to propel Fusion into serious competition with SAP's vertical functionality. I’m not sure how you can deliver by 2008 something you haven't even tried to buy, much less integrate. Call me negative, but it's hard to imagine that Oracle is anywhere near half-way to its stated goal of a broadly verticalized product suite.

Read the whole article on Datamation.

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Another service outage at Salesforce.com

Salesforce.com is not out of the woods yet with service reliability. In December, many customers in the U.S. were down for approximately five hours due to database problems in one of its network centers.

Now, apparently, many of its customers in Europe, the Middle East, and Africa, suffered an outage earlier this month.

News of the most recent outages come at a particularly bad time as Salesforce.com is
in the midst of releasing its "Winter '06" product suite, which includes a service dubbed Mirrorforce for disaster recovery.

I'm assuming that eventually Salesforce.com will get its act together with its redundant data centers, but in the meantime these service disruptions are going to slow the company's progress. As I've said in the past, one of the major attractions to the software on-demand model is that it frees the customer from having to worry about things like backups and disaster recovery. But these recent outages take away from that selling proposition.

eWeek has more.

Update, Jan. 18. Salesforce.com CEO Marc Benioff commented on the recent service outages yesterday. According to CNET,

Benioff, who has commented little about the incident publicly, said in an interview at a media and customer event here that outages are an inevitable part of computing and that they happen very rarely at Salesforce.

"We don't want outages and we're doing everything we can not to have them, but we'll occasionally have them," he said. "That's part of computing...nothing runs at 100 percent availability."

Not the right answer. Fortunately, Salesforce.com is taking a more proactive approach than Benioff's defensiveness would indicate. The firm is in the midst of rolling out a major infrastructure upgrade that includes database mirroring and instant failover from one data center to another in the event of a disruption.

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Quickpoll: IT spending on maintenance vs. new development

Companies are always asking the IT organization to do more with limited budgets. But much of the IT budget is spent just to maintain existing systems and capabilities. How much? We'd like to know.

At Computer Economics, we're running a new quick poll to try to get a handle on how much of the IT budget is going toward maintenance of existing systems.

Help us out by taking the poll now, in the right hand column of the Computer Economics website. It will just take five seconds. We'll write up our analysis of the results next month.