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CIO Trendwatch: Outsourcing, grids, new Windows heat up the headlines

Hot topics or dead horses getting beaten again? You make the call as says a "monthful" and rounds up three of April's biggest IT newsmakers.

Truly hot topics, or just dead horses getting another beating? You make the call as says a "monthful" and rounds up three of April's biggest IT newsmakers. And it doesn't seem to be any coincidence that all three topics toot the same horn -- cost savings.

Tour de outsource

For people outside IT, April was National Poetry Month, National Minority Health Month and National Soyfoods Month.

But for CIOs and other IT managers, April 2003 seemed more like I Can't Believe I'm Not Outsourcing Month.

Any kind of cost-cutting concept has been been pulling lots of press lately, as the inert economy puts more pressure on CIOs to make IT leaner and meaner in order to cut a more impressive figure with the figures folks in the business department.

Right now, outsourcing seems to be the in thing.

Gartner analysts served up a survey tin April that said business process outsourcing (BPO) vendors are courting more middle market firms, although Global 500 companies are still the grand prizes.

Jupiter Research also shot out a survey that showed the outsourcing obstacles of today are pretty much the same ones of yesterday, namely a lack of control and flexibility –- the same concerns IT execs expressed four years ago. Companies that claimed to clear those hurdles said the secret to their success was staffing their overseas IT centers with workers who aren't contractors, but real employees who get the same training, use the same software development tools, and work within the same business processes as their stateside peers.

The biggest difference? Paycheck size.

But saving money doesn't always come cheap. Gartner warned U.S. businesses to beware of labor unrest in other countries if they're planning to take their outsourcing needs overseas.

And unrest is hardly limited to outsourcing hotspots like Ireland, India and The Philippines. Companies that take those jobs and shove them across the ocean are bound to run into some problems at home. Pink slips tend to turn tempers red, and in April, the feds announced that they might get into the fray. Government officials in both the U.S. and Europe are mulling legislation to control offshore outsourcing. Even if the ideas don't become law, ado over the issue may change the way outsourcing is done.

And yet another Gartner study showed what a wasteland outsourcing can be. According to the research firm's data, Western European firms blew more than $9.5 billion last year on bad outsourcing deals.

What caused all the waste? Haste.

Those firms signed deals to save money in the short term and didn't pay enough attention to the long term and had trouble coping with change. Expensive reviews, re-done deals and trashed contracts didn't help things.

Microsoft releases Windows Server 2003 -– software for the ailing budget

This new, long-awaited server platform from Gates, Ballmer and company finally left the Redmond nest April 24, accompanied by an ad campaign designed to appeal to the modern CIO –- the ROI-stressed CIO who's looking to save money.

The company claims Windows Server 2003 will help you "Do More with Less" -- one of the ads shows employees doing a dance that looks a lot like the "Electric Slide" because the workhorse software is doing all the heavy lifting.

Some industry execs said that the product's parsimonious nature could bring IT spending out of its slide. They singled out its server consolidation capability as a strength that will appeal to CIOs looking to save some money and flex some ROI.

And Microsoft recommends you look Down Under for proof of Windows Server 2003's pudding. Seven customers in Australia have already deployed it, and according to Microsoft, these firms are running their server infrastructures up to 30% more efficiently than NT 4.0, have cut deployment costs in half; and have slashed downtime eight-fold. One customer says the new system will save the company $620,000 over the next year.

Good on ya, Microsoft.

But analysts don't expect April releases will bring May upgrades. Many firms are still running NT 4.0 or upgrading to Windows 2000 and are in no mood to fix what "ain't broke." IDC analyst Dan Kusnetsky told that customers may view the cost of change as exceeding the cost to leave their systems as they are and deal with the graying hairs and support issues of NT 4.0

"If Microsoft can show that this new product will result in a net reduction of staff, they may be able to sell the business managers on the reduction in cost," Kusnetzky said.

Get your grid on

Another potential money-saver, grid computing, was the third limelight hog in April.

Mr. Grid Computing himself, Ian Foster of Argonne National Laboratory, told that grid computing should really start to "arrive" commercially next year. He sees the concept, which has been used for years in the sciences, becoming more appealing to enterprises because of the way it enables new solutions and business models based on outsourcing, and the way it uncouples the providers of computing and their users.

CIOs, Foster said, should start looking at areas where they can make more efficient use of the resources they already have or enabling new capabilities by coupling resources. "Starting internally on a small level is the most promising direction," he said.

So who are the biggest "grid kids" on the block right now? HP, Oracle and Sun are developing grid technologies, but Big Blue is the busiest of the bunch.

IBM and a handful of its business partners announced in April several new software products aimed at delivering grid computing capabilities to mainframes running Linux. Big Blue also boasted of four new grid packages it has in the works. They're designed for the agricultural-chemical industry, electronic design and engineering, university research, and petrochemical industry research.

But grid computing is more than just a hot topic. It's a cosmic thing.

Big Blue is also trying to get some Big Bang for its grid bucks. The company has teamed up with the European Organization for Nuclear Research (CERN) to forge the biggest data grid on the planet. CERN physicists will use the grid to recreate the "big bang" beginning of the universe. IBM's Storage Tank storage visualization and management technology will be handling the astronomical amount of data CERN will be using.

Far out.

Could this be the next arena where IBM, Sun, HP, Oracle and Microsoft butt heads? Stay tuned.


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