Browsing articles from "August, 2012"

The HP, Oracle, SAP Dance

Aug 29, 2012   //   by admin   //   Blog  //  No Comments

Lead Analyst: Cal Braunstein

Hewlett-Packard Co. announces reorganization and write-downs and gets good news from the courts that it has won its Intel Corp. Itanium lawsuit against Oracle Corp. Oracle must now port its software to Itanium-based servers. In other news, Oracle agreed to a $306 million settlement from SAP AG over their copyright infringement suit. However, the soap opera is not over – Oracle may still push for more.

Focal Points:

  • CEO Meg Whitman, in her continued attempt to turn the company around, is writing down the value of its Enterprise Services business by $8 billion and making management changes. HP paid $13.9 billion to acquire EDS back in 2008.  John Visentin, whom former HP CEO Leo Apotheker anointed to manage the Enterprise Services behemoth a year ago, is leaving the company.  Mike Nefkens, who runs Enterprise Services in the EMEA region, will head the global Enterprise Services group, which is responsible for HP’s consulting, outsourcing, application hosting, business process outsourcing, and related services operations. Nefkens, who came from EDS, will report to the CEO but has been given the job on an “acting basis” so more changes lie ahead. In addition, Jean-Jacques Charhon, CFO for Enterprise Services, has been promoted to the COO position and will “focus on increasing customer satisfaction and improving service delivery efficiency, which will help drive profitable growth.” HP services sales have barely exceeded one percent growth in the previous two fiscal years. HP further states the goodwill impairment will not impact its cash or the ongoing services business. The company also said its workforce reduction plan, announced earlier this year to eliminate about 27,000 people from its 349,600-strong global workforce, was proceeding ahead of schedule. However, since more employees have accepted the severance offer than expected, HP is increasing the restructuring charge from $1.0 billion to the $1.5-1.7 billion range. On the positive front, HP raised its third-quarter earnings forecast.
  • HP received excellent news from the Superior Court of the State of California when it ruled the contract between HP and Oracle required Oracle to port its software products to HP’s Itanium-based servers. HP won on five different counts: 1) Oracle was in breach of contract; 2) the Settlement and Release Agreement entered into by HP, Oracle and Mark Hurd on September 20, 2010, requires Oracle to continue to offer its product suite on HP’s Itanium-based server platforms and does not confer on Oracle the discretion to decide whether to do so or not; 3) the terms “product suite” means all Oracle software products that were offered on HP’s Itanium-based servers at the time Oracle signed the settlement agreement, including any new releases, versions or updates of those products; 4) Oracle’s obligation to continue to offer its products on HP’s Itanium-based server platforms lasts until such time as HP discontinues the sales of its Itanium-based servers; and 5) Oracle is required to port its products to HP’s Itanium-based servers without charge to HP. Oracle is expected to comply.
  • Oracle said it agreed to accept damages of $306 million settlement from German rival SAP to shortcut the appeals process in the TomorrowNow copyright infringement lawsuit. Oracle sued SAP back in 2007 when it claimed SAP’s TomorrowNow subsidiary illegally downloaded Oracle software and support documents in an effort to pilfer Oracle customers. SAP eventually admitted wrongdoing and shut down the maintenance subsidiary. In November 2010, Oracle had originally won a $1.3 billion damages settlement, the largest ever awarded by a copyright jury but it was thrown out by the judge, who said Oracle could have $272 million or could ask for a retrial. To prevent another round of full-blown trial costs, the warring technology giants have agreed to the $306 million settlement plus Oracle’s legal fees of $120 million; however, Oracle can now ask the appeals court judges to reinstate the $1.3 billion award. SAP stated the settlement is reasonable and the case has dragged on long enough.

RFG POV: HP suffers from its legacy product culture and continues to struggle to integrate services into a cohesive sales strategy. The company does well with the low-level technical services such as outsourcing but has not been able to shift to the higher margin, strategic consulting services. While the asset write-down was for the EDS acquisition, HP had its own consulting services organization (C&I) that it merged with EDS and atrophied. It took IBM Corp. more than 10 years to effectively bring its products and services sales groups together (it is still a work in progress). RFG therefore thinks it will take HP even longer before it can remake its culture to bring Enterprise Services to the level Meg Whitman desires. The HP Itanium win over Oracle should remove a dark cloud from the Integrity server line but a lot of damage has already been done. HP now has an uphill battle to restore trust and build revenues. IT executives interested in HP’s Unix line combined with Oracle software should ensure that the desired software has been or will be ported by the time the enterprise needs it installed. The Oracle SAP saga just will not go away, as it is likely CEO Larry Ellison enjoys applying legal pressure to SAP (especially since the fees will be paid by the other party). It is a distraction for SAP executives but does not impair ongoing business strategies or plans. Nor will the outcome prevent other third parties from legally offering maintenance services. IT executives should not feel bound to use Oracle for maintenance of its products but should make sure the selected party is capable of providing a quality level of service and is financially sound.  

Unnecessary Catastrophic Risk Events

Aug 24, 2012   //   by admin   //   Blog  //  No Comments

Lead Analyst: Cal Braunstein

Knight Capital Group, a financial services firm engaged in market making and trading, lost $440 million when its systems accidentally bought too much stock that it had to unload at a loss and almost caused the collapse of the firm. The trading software had gone live without adequate testing. In other news, Wired reporter Mat Honan found his entire identity wiped out by hackers who took advantage of security flaws at Amazon.com Inc. and Apple Inc.

Focal Points:

  • Knight Capital – which handled 11 percent of all U. S. stock trading so far this year – lost $440 million when its newly upgraded systems accidentally bought too much stock that it had to unload at a loss. The system went live without adequate testing. Unfortunately, Knight Capital is not alone in the financial services sector with such a problem. NASDAQ was ill-prepared for the Facebook Inc. IPO, causing losses far in excess of $100 millions. UBS alone lost more than $350 million when its systems resent buy orders. In March, BATS, an electronic exchange, pulled its IPO because of problems with its own trading systems.
  • According to a blog post by Mat Honan “in the space of one hour, my entire digital life was destroyed. First my Google account was taken over, then deleted. Next my Twitter account was compromised, and used as a platform to broadcast racist and homophobic messages. And worst of all, my AppleID account was broken into, and my hackers used it to remotely erase all of the data on my iPhone, iPad, and MacBook.” His accounts were daisy-chained together and once they got into his Amazon account, it was easy for them to get into his AppleID account and gain control of his Gmail and Twitter accounts. It turns out that the four digits that Amazon considers unimportant enough to display on the Web are precisely the same four digits that Apple considers secure enough to perform identity verification. The hackers used iCloud’s “Find My” tool to remotely wipe his iPhone, iPad and then his MacBook within a span of six minutes. Then they deleted his Google account. Mat lost pictures and data he cannot replace but fortunately the hackers did not attempt to go into his financial accounts and rob him of funds.
  • All one initially needs to execute this hack is the individual’s email address, billing address and the last four digits of a credit card number to get into an iCloud account. Apple will then supply the individual who calls about losing his password a temporary password to get access into the account. In this case the hacker got the billing address by doing a “whois” search on his personal domain. One can also look up the information on Spokeo, WhitePages, and PeopleSmart. To get the credit card information the hacker first needed to get into the target’s Amazon account. For this he only needed the name on the account, email address, and the billing address. Once in, he added a bogus credit card number that conforms to the industry’s self-check algorithm. On a second call to Amazon the hacker claimed to have lost access to the account and used the bogus information in combination with the name and billing address to add a new email address to the account. This allows the hacker to see all the credit cards on file in the account – but just the last four digits, which is all that is needed to hack into to one’s AppleID account. From there on, the hacker could do whatever he wanted. Wired determined that it was extremely easy to obtain the basic information and hack into accounts. It duplicated the exploit twice in a matter of minutes.

RFG POV: The brokerage firm software failures were preventable but executives chose to assume the high risk exposure in pursuit of rapid revenue and profit gains. Use of code that has not been fully tested is not uncommon in the trading community, whereas it is quite rare in the retail banking environment. Thus, the problem is not software or the inability to validate the quality of the code. It is the management culture, governance and processes that are in place that allows software that is not fully tested to be placed into production. IT executives should recognize the impacts of moving non-vetted code to production and should pursue delivering a high quality of service. Even though the probability of failure may be small, if the risk is high (where you are betting the company or your job), it is time to take steps to reduce the exposure to acceptable levels. In the second case it is worth noting that with more than 94 percent of data in digital form commercial, government, and personal data are greatly exposed to hacking attacks by corporate, criminal, individual, or state players. These players are getting more sophisticated over time while businesses trail in their abilities to shore up exposures. Boards of Directors and executives will have to live with the constant risk of exposure but they can take steps to minimize risks to acceptable levels. Moreover, it is far easier to address the risk and security challenges in-house than it is in the cloud, where the cloud provider has control over the governance, procedures and technologies used to manage risks. IT executives are correct to be concerned about security in cloud computing solutions and it is highly likely that the full risk exposure cannot be known prior to adopting a vendor’s solution. Nonetheless, Boards and executives need to vet these systems as best they can, as the risk fiduciary responsibility remains with the user organization and not the vendor. 

Progress – Slow Going

Aug 13, 2012   //   by admin   //   Blog  //  No Comments

Lead Analyst: Cal Braunstein

According to Uptime Institute‘s recently released 2012 Data Center Industry Survey, enterprises are lukewarm about sustainability whereas a report released by MeriTalk finds federal executives see IT as a cost and not as part of the solution. In other news, the latest IQNavigator Inc. temporary worker index shows temporary labor rates are slowly rising in the U.S.

Focal Points:

  • According to Uptime Institute’s recently released 2012 Data Center Industry Survey, more than half of the enterprise respondents stated energy savings were important but few have financial incentives in place to drive change. Only 20 percent of the organizations’ IT departments pay the data center power bill; corporate real estate or facilities is the primary payee. In Asia it is worse: only 10 percent of IT departments pay for power. When it comes to an interest in pursuing a green certification for current or future data centers, slightly less than 50 percent were interested. 29 percent of organizations do not measure power usage effectiveness (PUE); for environments with 500 servers or less, nearly half do not measure PUE. Of those that do, more precise measurement methods are being employed this year over last. The average global, self-reported PUE from the survey was between 1.8 and 1.89. Nine percent of the respondents reported a PUE of 2.5 or greater while 10 percent claimed a PUE of 1.39 or less. Precision cooling strategies are improving but there remains a long way to go. Almost one-third of respondents monitor temperatures at the room level while only 16 percent check it at the most relevant location: the server inlet. Only one-third of respondents cited their firms have adopted tools to identify underutilized servers and devices.
  • A survey of 279 non-IT federal executives by MeriTalk, an online community and resource for government IT, finds more than half of the respondents said their top priorities include streamlining business processes. Nearly 40 percent of the executives cited cutting waste as their most important mission, and 32 percent said increasing accountability placed first on their to-do list. Moreover, less than half of the executives think of IT as an opportunity versus a cost while 56 percent stated IT helps support their daily operations. Even worse, less than 25 percent of the executives feel IT lends them a hand in providing analytics to support business decisions, saving money and increasing efficiency, or improving constituent processes or services. On the other hand, 95 percent of federal executives agree their agency could see substantial savings with IT modernization.
  • IQNavigator, a contingent workforce software and managed service provider, released its second quarter 2012 temporary worker rate change index for the U.S. Overall, the national rate trend for 2012 has been slowly rising and now sits five percentage points above the January 2008 baseline. However, the detail breakdown shows no growth in the professional-management job sector but movement from negative to 1.2 percent positive in the technical-IT sector. Since the rate of increase over the past six months remains less than the inflation rate over the same period, the company feels it is unclear whether or not the trend implies upwards pressure on labor rates. The firm also points out that the U.S. Bureau of Labor Statistics (BOL) underscores the importance of temporary labor as new hires increasingly are being made through temporary employment agencies. In fact, although temporary agency employees constitute less than two percent of the total U.S. non-farm labor force, 15 percent of all new jobs created in the U.S. in 2012 have been through temp agency placements.

RFG POV: Company executives may vocalize their support for sustainability but most have not established financial incentives designed to drive a transformation of their data centers to be best of breed “green IT” shops. Executives still fail to recognize that being green is not just good for the environment but it mobilizes the company to optimize resources and pursue best practices. Businesses continue to waste up to 40 percent of their IT budgets because they fail to connect the dots. Furthermore, the MeriTalk federal study reveals how far behind the private sector the U.S. federal government is. While businesses are utilizing IT as a differentiator to attain their goals, drive revenues and cut costs, the government perceives IT only as a cost center. Federal executives should modify their business processes, align and link their development projects to their operations, and fund their operations holistically. This will eliminate the sub-optimization and propel the transformation of U.S. government IT more rapidly. With the global and U.S. economies remaining weak over the mid- to long-term, the use of contingent workforce will expand. Enterprises do not like to make long-term investments in personnel when the business and regulatory climate is not friendly to growth. Hence, contingent workforce – domestic or overseas – will pick up the slack. IT executives should utilize a balanced approach with a broad range of workforce strategies to achieve agility and flexibility while ensuring business continuity, corporate knowledge, and management and technical control are properly addressed. 

Surprises at IBM, Infosys and Microsoft

Aug 7, 2012   //   by admin   //   Blog  //  No Comments

Lead Analyst: Cal Braunstein

IBM Corp. announced second quarter financial results with lower revenues but improved profits while Infosys Ltd. had weaker than expected first quarter 2013 results. In other financial news, Microsoft Corp. reported mixed fourth quarter and fiscal year 2012 results.

Focal Points:

  • IBM reported second quarter revenues of $25.8 billion, a drop of three percent year-over-year. However, net income on a GAAP basis increased by six percent to $3.9 billion from the previous year’s quarter. Asia Pacific and the BRIC countries showed single digit growth while all other geographies declined. Europe/MidEast/Africa delivered the worst performance with a nine percent decline, although using a constant currency basis the revenues were flat. Similarly, the services sectors (GBS and GTS) were off four and two percent respectively from the same quarter last year. Global Financing and Software were flat while the Systems and Technology Group (STG) experienced a nine percent fall in revenues year-over-year. IBM’s Smarter Planet initiative saw its revenues increase more than 20 percent in the quarter while its Power Systems gained market share through competitive displacements. Year-to-date IBM states its growth market revenues were up nine percent year-over-year while business analytics revenues grew 13 percent and cloud revenues doubled year-over-year. The company also saw its gross profit margins climb by 1.5 percentage points.
  • Infosys had less than stellar results for its first quarter 2013. While revenues grew 4.8 percent to $1.75 billion and IFRS net income climbed eight percent to $416 million year-over-year, on a sequential quarter basis, the company saw revenues drop by one percent and profits slide by more than 10 percent. Repeat business accounted for 99.1 percent of sales; the top 10 clients were responsible for 25.3 percent of the revenues. Utilization levels excluding trainees have been slowly dropping from 77.8 percent over the 12 months ending June 2011 to 71.6 percent in the current quarter. The split between onsite and offshore dropped slightly from 25.5 to 74.5 percent in the year ago quarter to 24.7 to 75.3 percent in the first quarter 2013. Attrition improved slightly to 14.9 percent. All geographic sector revenues declined with the exception of North America, which grew by 1.6 percent sequentially. As expected, Europe was the worst performer with a decline of 8.1 percent sequentially.
  • Microsoft announced fourth quarter 2012 revenues of $18.1 billion, an increase of four percent from the previous year’s quarter. On a GAAP basis the company reported its first net loss of $492 million due to writing off $6.2 billion for its 2007 aQuantive acquisition. For the full fiscal year Microsoft reported revenues of $73.7 billion, a five percent jump from its fiscal year 2011 revenues. On a GAAP basis net income was $17 billion, a 26 percent decrease from the prior year. The Server and Tools business revenue grew 13 percent for the fourth quarter and 12 percent for the full year while the Business Division revenue increased 7 percent for the fourth quarter and full year reflecting continued momentum in Office 2010 sales. The Windows and Windows Live Division revenue declined 13 percent for the fourth quarter and 3 percent for the full year whereas the Online Services Division revenue advanced 8 percent for the fourth quarter and 10 percent for the full year reflecting growth in its search business. The Entertainment and Devices Division revenue jumped 20 percent for the fourth quarter and 8 percent for the full year, mostly due to the addition of Skype.

 

RFG POV: Most vendors note the difficulties that lie ahead over the next few quarters due to Euro zone problems, a slowdown in China, and a weak economy in North America as well as fears over oil prices and Middle East crisis. How well enterprises will do will depend upon the sector(s) they are in, the geographies they serve, and the agility and innovation of the firm. IBM, which has huge backlogs, is able to plow forward through the good times and bad. Its STG products continue to fluctuate depending upon age of the systems but overall IBM is on track to deliver against its five year growth plan. On the other hand, Infosys is failing to keep up with some of its outsourcing competitors and may be running into a management of growth problem. The drop in its utilization levels is a further indication that backlog and revenue management is not mapping to usage at the desired mix. Thus, while this is an overall corporate issue, the company still maintains tremendous customer loyalty and repeat business rate. In that the company is seeing weakness in most of its markets, IT executives should be more aggressive in negotiating blended rates and the overall deal. Microsoft marches on and continues to grow its enterprise businesses. The Windows business is impacted by the decline in PC sales (and growth in the Apple Inc. iPad market). There is the perception that enterprise business will improve when Windows 8 comes out later this year but that is unlikely. While slightly more than 50 percent of enterprises are on Windows 7, the other half are on Vista and XP. It takes years before companies migrate to new releases and the move to Windows 8, in that it is designed more for the personal world and tablets than the business world, most likely will not happen for most companies. RFG expects the majority of firms will wait for Windows 9. However, RFG does expect Skype and Yammer to be leverageable in the enterprise space but it is unclear whether or not Microsoft can leverage these cloud services to get organizations to move to its other cloud offerings. IT executives will continue to have more and more business platform alternatives available to them and therefore should not feel locked into Microsoft. Given that, IT executives should carefully analyze their business software requirements and negotiate for the best deals. Since Microsoft pricing can be complex and expensive, IT executives should consider using outside assistance (from RFG or elsewhere) to simplify the experience and obtain the best contractual prices and terms.

EMC, Intel, SAP, and VMware on the Move

Aug 3, 2012   //   by admin   //   Blog  //  No Comments

Lead Analyst: Cal Braunstein

 

EMC Corp. announced preliminary second quarter financial results along with executive changes at EMC and its subsidiary, VMware Inc. In other financial news, Intel Corp. reported its second quarter results, which saw its earnings drop while SAP AG reported strong second quarter financials.

Focal Points:

  • EMC and VMware made surprise announcements when word leaked out that VMware CEO Paul Maritz was being replaced. Joe Tucci, EMC Chairman and CEO stated the IT industry is in the midst of an extraordinary transformation unlike anything we have seen before – a major shift to Cloud Computing, Big Data applications and delivering IT-as-a-Service.  To capitalize on this shift Pat Gelsinger, EMC President and COO of Information Infrastructure Products, has been appointed CEO of VMware while Paul Maritz is joining EMC as Chief Strategist, reporting to Tucci. Both changes are effective September 1st. David Goulden, Executive Vice President and CFO, will assume the additional roles of President and COO of EMC effective immediately. On the financial front, EMC announced preliminary second-quarter 2012 results with record second quarter consolidated revenues of approximately $5.31 billion, up 10 percent year-over-year. The company also had record second quarter non-GAAP earnings per weighted average diluted share (EPS) of $0.39, up 11 percent over the previous year’s quarter. Meanwhile, VMware is projecting second quarter revenues of $1.123 billion, an increase of 22 percent from second quarter 2011.
  • Intel reported second quarter revenues of $13.5 billion, up 3.6 percent year-over-year. Net income was $2.83 billion, down 4.3 percent from $2.95 billion a year earlier, as operating expenses rose faster than revenues. Consumer demand in North America and Western Europe is not recovering as fast as Intel expected, according to CEO Paul Otellini. He also stated growth in emerging markets such as China and Brazil is also slowing down. For the full fiscal year, Intel now expects sale to grow three to five percent from last year, rather than the “high single digit” level the company predicted earlier. He also noted that Ultrabooks are still relatively expensive but prices are expected to drop to $699 this fall.
  • In the quarter just ending, SAP announced it had total revenues of €3.9 billion, an increase of 18 percent over the €3.3 billion booked in second quarter of 2011. The company booked €1.06 billion in new license sales, up 26 percent compared to the year-ago period when it reported €0.84 billion. Software and support revenues for the quarter came to €3.12 billion, a jump of 21 percent. On an IFRS accounting basis, operating profits only rose by 7 percent in the quarter to €920 million. The company boasted of posting its tenth consecutive quarter of double-digit growth in non-IFRS software and software-related service revenues. The company also claimed it had stellar results in SAP HANA, mobile and cloud computing in all regions.

 

 

 

 

 

 

RFG POV: The management teams at EMC and VMware continue to expand and execute their visions of the future of IT and deliver top-tier products and services in a timely manner. The removal of Paul Maritz at VMware was first thought to be a rare management error but once the total set of announcements was made, the logic was compelling. With Pat Gelsinger at the helm of VMware and Maritz as EMC’s chief strategist, the companies should be able to keep up the double-digit growth momentum that the firms have delivered over the past few years. IT executives with strategic relationships with either or both companies should get a strategic update by yearend so that they can understand the new vision and determine how it fits with the corporation’s strategy and target architecture. Given the slowing demand and the decline of PC sales, it is not surprising that Intel did not perform as well as it has in the past. Until the company gets its Ultrabook and Atom product lines selling well, growth will be diminished or possibly shrinking. Apple Inc. is a formidable competitor and its products are expected to take market share from Intel for the next few years. The company has made some very significant advances in driving data center efficiency internally and if it can get its customers to follow suit, it might be able to get data center product and services sales making up for the slack in PC revenues. IT executives should add Intel to the list of IT firms to talk to about slashing the cost of data center operations.  SAP continues to plow on and remain a thorn in Oracle Corp.‘s side. It has been able to revise its business model so that it can capture the new revenue streams without doing much damage to its traditional revenue routes. The company is well poised to address the new hot areas of cloud, mobile and high performance in-memory computing for business intelligence and analytics. IT executives should keep abreast of Oracle’s and SAP’s strategies and visions and, where appropriate, incorporate relevant components – and possibly products – into their future visions and target architectures. 

Gray Clouds on the Horizon

Aug 3, 2012   //   by admin   //   Blog  //  No Comments

Lead Analyst: Cal Braunstein

 

According to two recent studies global IT spending is slowing while cloud adoption (excluding service providers) is occurring at a slower rate than projected. Elsewhere, according to a report released by outplacement firm Challenger, Gray & Christmas, layoffs in the technology sector for the first half of 2012 are at the highest levels seen in three years. Lastly, an Oracle Corp. big data survey finds companies are collecting more data than ever before but may be losing on average 14 percent of incremental revenue per year by not fully leveraging the information.

Focal Points:

  • According to a new Gartner Inc. report, global IT spending percentage growth for 2012 is projected to be 3.0 percent, down from 2011 spending growth of 7.9 percent. The brightest spot in the analysis was that the telecom equipment category will grow by 10.8 percent – however that is down from 17.5 percent in the previous year. All the other categories – computer hardware, enterprise software, IT services, and telecom services – are growing slowly between 1.4 percent (telecom services) and 4.3 percent (enterprise software). The drop in spending is attributed to the global economic stresses – the eurozone crisis, weaker U.S. recovery, a slowdown in China, etc. For 2013 Gartner is projecting higher spending on hardware and software in the data center and on the desktop, better growth on telecom hardware (but down from 2012), and slightly higher spending on telecom services. In support of these projections is the latest Challenger, Gray report that shows during the first half of the year, 51,529 planned job cuts were announced across the tech sector. This represents a 260 percent increase over the 14,308 layoffs planned during the first half of 2011. Job cuts are so steep this year that the figure is 39 percent higher than all the job cuts recorded in the tech sector last year. Three tech companies are responsible for most of the job losses – Hewlett-Packard Co. (HP) announced it was slicing headcount by 30,000 and Nokia Corp. and Sony Corp. are each reducing staffing by 10,000. While the outplacement firm expected more cuts to be made over the course of the next six months, it does see bright spots in sectors of the business.
  • According to Uptime Institute‘s recently released 2012 Data Center Industry Survey, cloud deployments have significantly increased globally over the past year. 25 percent of this year’s respondents claimed they were adopting public clouds while another 30 percent said they were considering it. Additionally, 49 percent were moving to private clouds while another 37 percent were considering it. In 2011 only 16 percent of respondents stated they had deployed public clouds whereas 35 percent claimed they had deployed private clouds. 32 percent of large organizations use the public cloud, whereas 19 percent of small organizations and 10 percent of “traditional enterprises” employ public clouds. When it comes to private clouds, 65 percent of large organizations have claimed to have deployed private cloud but only 39 percent of small and mid-sized organizations were doing so. Public cloud adoption rates are 52 percent in Asia, 28 percent in Europe, and 22 percent in North America. Private cloud adoption rates are 42 percent in Asia, 52 percent in Europe, and 50 percent in the U.S. Cost savings and scalability were the top two reasons given for moving to the cloud while security was the major inhibitor for not adopting cloud computing (27 and 23 percent respectively), followed distantly by compliance and regulatory issues (64 and 27 percent respectively).
  • Oracle announced the results of its big data study, in which 333 C-level executives from U.S. and Canadian enterprises were surveyed. The study examined the pain points that companies face regarding managing the deluge of data that organizations must deal with and how well they are using that information to drive profit and growth. 94 percent of respondents claimed growth with the biggest data growth areas in the areas of customer information (48 percent), operations (34 percent) and sales and marketing (33 percent).  29 percent of executives give their organization a “D” or “F” in preparedness to manage the data influx, while 93 percent of respondents believe their organization is losing revenue opportunities. The projected revenue loss for companies with revenues in excess of $1 billion is estimated to be approximately 13 percent of annual revenue from not fully leveraging the information. Most respondents are frustrated with their organizations’ data gathering and distribution systems and almost all are looking to invest in improving information optimization. The communications industry is the most satisfied with its ability to deal with data – 20 percent gave their firms an “A.” Executives in public sector, healthcare and utilities industries stated they were the least prepared to handle the data volumes and velocities. 41 percent of public sector executives, 40 percent of healthcare executives, and 39 percent of utilities executives rating themselves with either a “D” or “F” preparedness rating.

 

RFG POV: The global economic appears to be weak, with parts of Europe in or close to recession, Asia slowing rapidly, and the U.S. in weak positive territory. Economists see more storm clouds on the horizon – few see things improving in 2012. This will trickle down to IT budgets, with many companies requesting deferrals of capital spending and/or headcount growth. IT executives need to continue their push to slash operational expenditures through better resource optimization and improvements in best practices. RFG still finds a most IT executives pursue practices that are no longer valid, which results in up to 40 percent of operational expenditures being wasted. Cloud computing can assist enterprises in their quest to reduce costs but there are tradeoffs and they need to be understood before leaping into a cloud environment. Most corporate data is no longer an island and needs to be integrated with applications and systems that already exist. Thus, before moving to an off-premise cloud environment, IT executives should ensure that the cloud environment and the data are well integrated into existing systems and that the risk exposure is acceptable. There is no doubt that big data is coming and the volumes and velocity of change will only get worse as time marches on. The systems required to handle the increased influx of data may not look like those that exist in the data center today. It is conceivable that the big data and its incorporation into day-to-day operations could require an entirely new data center architecture. Business and IT executives should strategize on how to deliver on their goals and vision, and find a way to work together to transform their shops to address the new ways of conducting business and processing data while staying within budgetary constraints.