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IBM, COMMON Launch iSeries Innovation Awards

It is in the nature of humans to reward innovation and effort and to use a good example to encourage others to emulate that behavior. And in that spirit IBM and COMMON, the iSeries community's user group, have launched the iSeries Innovation Awards.

The two plan to give five different awards to innovative iSeries shops. The first is the Industry Solution Award, which is a showcase for the best implementation of third-party applications on the iSeries. The second is the Insurance Award, which is not restricted to those in the insurance industry but, rather, focuses on high availability and business continuity. While the first award focuses on the core applications, the second focuses on the high-availability software and business practices that keep a set of applications going. The Invention Award gets down into the guts of home-grown-application code, rewarding customers who create custom applications using RPG, COBOL, Java, CL, and other programming languages on the iSeries. Mark Shearer is the new general manager of the iSeries line, and his big topic over the past year at IBM has been infrastructure simplification, so it comes as no surprise that he is promoting an award in this area. On the iSeries, infrastructure simplification basically means server consolidation of multiple platforms (OS/400, AIX, Linux, or Windows) onto an iSeries or i5 server, along with the use of virtualization software to push up overall server virtualization. If you do this in your own shop, you might be eligible for the Infrastructure Simplification Award. The last prize is the Intellectual Award, which will be given to the IBM customer, college, or university that has demonstrated an outstanding commitment to the OS/400 community. That means all of you OS/400 evangelists, so don't be shy.

You can sign up on IBM's site. IBM and COMMON are taking submissions until February 18. The winners will be announced on February 28 and will be honored at the COMMON spring user group meeting in Chicago, being held March 13 through 17. The prize is a free year of membership to COMMON and some other COMMON freebies, plus a crystal award that you can show off to your boss.

Wary CIOs to Spend 2.5 % More on IT in 2005, Says Gartner

The analysts at Gartner have dusted off their crystal balls and finally joined the shrinking crowd of analysts (last year Forrester bought GIGA and Gartner bought META Group) in prognosticating about IT spending growth in 2005. According to a survey of 1,300 chief information officers, who have a combined spending budget of $57 billion (or about $44 million each, on average), across a cross section of industries that is representative of the worldwide economy, IT budgets are expected to rise only 2.5 percent in 2005. This is considerably lower than all but the most pessimistic estimates for IT spending growth that came out as 2004 was coming to a close, which had growth pegged at somewhere between 5 and 7 percent.

The respondents of the Gartner survey showed why the budget numbers were lower than expected, and why that number is increasingly irrelevant. First and foremost, two-thirds of the CIOs polled say that there is a disconnect between what they believe and what their CEOs believe they can and need to do with IT systems, and these CIOs portrayed themselves as being "at risk" because of the way CEOs view the performance of their IT departments.

And while CIOs ranked business process engineering (BPO), beefing up security, cutting operating costs, supporting the competitive advantages of their business, and revenue growth as key business factors, the top IT priorities do not map one-to-one, with IT executives saying that they want to have better security tools, more business intelligence and analytics, wireless and mobile access to systems for the workforce, and ERP upgrades. There is a big disconnect here, and that does not bode well. The other disconnect, which companies like IBM and Accenture are hoping to exploit, is one between the skill sets for business process engineering (which involves a rethinking of the processes that get automated into systems to simplify business and streamline the applications that support those processes) that companies have in IT and other departments and the skills that IT directors believe they will need to do BPO. Some 61 percent of IT executives polled said they did not have the skills they needed in general, and of those who ranked BPO in the top five of priorities for this year, 80 percent said they didn't have the skills to actually do BPO. Yikes.

Survey Says IT Salaries Stagnated in 2004

IT Salary survey specialist Janco Associates, based in Park City, Utah, has just released the results of a salary survey for the second half of 2004, and the results seem to indicate that IT salaries in North America are still under pressure from the combined effects of weak economic conditions and offshoring.

We keep hearing how IT budgets grew in 2004 and are expected to grow again in 2005, but Janco's surveys suggest that average compensation across all IT jobs and business sizes that Janco surveys (midsized and large enterprises) actually fell by 0.75 percent from June 2004 to January 2005, to $77,841. For many job titles, including operators, analysts, customer service managers, Webmasters, office automation managers, graphics and forms designers, and project managers, average salaries fell by 5.1 to 13.2 percent over that time. Salaries for voice and wireless telecom managers fell by 15.2 percent, which is stunning. At large enterprises, salaries for IT administrators, Web application developers, data warehouse managers, LAN application managers, and other hot areas--where the average salaries tend to be larger--grew from 5.1 to 8.5 percent. Only nine of 24 non-executive positions tracked by Janco saw average salary growth, but the salaries that these top people command are large enough to raise the class average and to mute the declines across all titles. To put it bluntly, the IT industry average salary masks huge declines in salaries for key IT positions.

In the executive ranks, Janco says, total average compensation for CIOs at large enterprises was up by 4.2 percent in the six months, to $169,601. At midsized companies, the average salary was up only 1.4 percent, to $171,791. Those numbers are not typos. You see it right; on average, CIOs at midrange companies are getting paid a little more than those at large enterprises. That's because big companies have been cutting executive compensation (mostly by paying less for new people) since it peaked in 2000. Across all industries and job titles, Janco says, many people who had planned to retire in 2003 and 2004 have still not seen their retirement portfolios recover from the recession of 2000 to 2003, and they have opted to keep working and not push for big pay raises.

IBS Partners to Move into the Russian Market

International Business Systems, one of the biggest OS/400-based ERP application software vendors in Europe and a Swedish company with aspirations in North America, announced it has partnered with Cinimex Informatica to attack the exploding market for ERP applications in Russia.

Cinimex is an IT services company based in Moscow, and it is already an IBM business partner. Russia is a vast industrial country desperately in need of modernization, and the ERP market in that country is expected to grow by 30 percent in 2005, making it one of the hottest growth areas on the planet. (IDC reckons that the ERP market will expand from 13,000 systems in 2001 to 50,000 in 2007.) IBS has just translated its IBS Virtual Enterprise ERP suite into the Russian language, and is now ready to jump into Russia and get its share of the ERP pie. IBS had revenues of over $300 million in 2004 and is one of the few remaining all-iSeries ERP players that can span the globe.

Lawson Posts Loss on Declining Sales in Second Quarter

Lawson Software, the midrange and high-end ERP software vendor based in St Paul, Minnesota, that is increasingly focusing on the OS/400 server, has released its second quarter financial results for fiscal 2005. The company said that sales in the quarter, ended November 30, 2004, were down, partly due to the fight between Oracle and PeopleSoft, which have now merged. Jay Coughlan, Lawson's president and CEO, said that software license sales came in as expected at $13.2 million, down 24 percent. About 60 percent of the licensing activity at Lawson was from existing clients, with the remaining 40 percent coming from 15 new clients.

Lawson's overall sales for the quarter were $83 million, down 2 percent, and the big drop in license sales was offset in part by a 4 percent increase in services fees, which hit $69.8 million in the quarter. Lawson said that the increase in services fees was due mostly from support for products that were acquired in early 2004, which now have to come in under maintenance. This is why getting new customers always matters.

The company still spent more than it took in, posting a $3 million loss, compared with a net loss of $1.3 million a year ago. Lawson, a 30-year-old software company from the System/38 days, went public three years ago. So it still has a bunch of cash, which it managed to increase in the quarter to $209 million. However, Lawson said that the Securities and Exchange Commission has launched an informal investigation into its revenue recognition practices, which has caused the company to spend $2.2 million for a special accounting firm to do an independent investigation to satisfy the SEC's inquiries, which are continuing at this point.

Jack Henry Sees Big Increase in Revenues, Profits in Second Quarter

Midrange financial application software specialist Jack Henry & Associates says that business was pretty good in its second fiscal quarter ended December 31. The company reported that sales were $136 million, up 21 percent, with net income of 17.7 million, up 22 percent. This was the strongest quarter in JHA's 29-year history. Software license sales were up 64 percent in the quarter, to $22.1 million. The company's support and services revenues were up 14 percent in the quarter, while hardware sales (including special gear used by regional banks and credit unions) increased 10 percent, to $26.1 million.

McDATA Acquires Storage Rival CNT

Storage networking specialists and sometimes brutal competitors McDATA and Computer Network Technology announced last week that they will merge. The companies, which both sell specialized switching equipment for storage area networks and services for implementing SANs, have agreed to merge to take on bigger competitors, like Brocade and Cisco Systems. Both companies are occasionally brought in to midrange accounts by IBM or its business partners when they need to create more sophisticated SAN environments than those embodied in IBM's Shark arrays or the file storage architecture embedded inside the iSeries and i5. McDATA acquired CNT for about $235 million, which includes a big block of McDATA stock, and assumed the company's debts.