But Wait, There's More

Professional Services Industry to Bypass Discrete Manufacturing as Dominant IT Buyer

It's a sign of the times, and not necessarily a good one. According to the analysts at IDC, the professional services industry in the United States is to become the dominant buyer of server and storage technology by 2009, overtaking the discrete manufacturing sector. IDC reckons that server sales in the U.S. will grow by a compound annual growth rate of 4.8 percent from 2005 through 2009 to reach $23.9 billion and storage for those servers will grow by 6.8 percent (compounded annually) to hit $7.6 billion. IDC didn't want to give away the specific data about how much money discrete manufacturers and professional services companies, the latter of which mean accountants, consultants, lawyers, PR firms, and the like. While IDC didn't say this, I will: When we offshore our manufacturing, it is no surprise that services will take over. The decline in manufacturing would seem to be the real story here, and that is nothing to brag about. It is something to be concerned about, and something that needs to be fixed. There's a word for a country that doesn't make things: colony.

Tech Workers in the U.S. Are Getting Pessimistic about the IT Biz

The Washington Alliance of Technology Workers is probably the closest thing to a trade union that the IT industry has for workers, and in April of this year, WashTech commissioned survey firm Evans/McDonough and Harris Interactive to get a statistically sound sampling of the IT workforce in the United States and poll them on important issues. They got 369 respondents to the survey, and the levels of pessimism out there in IT land seems to be growing according to the survey.

In 2003, when the economy was appearing to get back on its feet and the echoes of the various IT booms from the late 1990s were still in memory, 65 percent of the full-time IT workers polled said that they believed that the demand for IT workers would increase. In the early 2005 survey, only 54 percent of respondents thought demand would increase. The interesting bit is that contract workers are (understandably) more pessimistic now as well as then. Only 57 percent of contract workers contacted two years ago by WashTech's surveyors believed jobs would pick up, and this year, that has dropped to 41 percent. The other interesting aspect of the survey is that 48 percent of respondents have seen a pay increase in the past year, but 37 percent say their pay has remained the same and 15 percent saw a decline. Some 56 percent of workers say that they put in more than 40 hours a week, and 37 percent say they put in more than 50 hours a week.

IBM Further Consolidates Grand Slam Systems, iSeries Still Seeded

IBM has been a sponsor of the Grand Slam tennis events for the past 14 years, and this year, once again, it is rejiggering the systems in use by Wimbledon, the US Open, the French Open, and the Australian Open. While last week the upset of number four seed Andy Roddick (and returning US Open champion) by number 58 seed Giles Muller in straight sets (7-6, 7-6, 7-6 with three tie breakers) was the big news, IBM was bragging about the big iron in small packages that it is bringing to bear to support the US Open's Web sites. I was one of the lucky few who watched the Roddick-Muller match as part of a tour of the IBM systems behind the US Tennis Association's facilities in Flushing Meadows, Queens.

IBM sponsors the Grand Slam events, the Master's golf tour, and the Tony awards for a number of reasons, just as it used to do with the Olympics before the Olympics Committee started making demands that Big Blue felt were not justified given the benefits to IBM of being the technology supplier to the summer and winter games every four years. In exchange for lots of direct and indirect advertising--the IBM serve speedometer is in just about every shot, and prominent IBM ads are all over the US Open's Web sites and TV coverage of the US Open--the sponsorship also gives IBM a chance to use its latest technological wonders in a production environment that really stresses the systems. In 2003, the Grand Slam cycle profiled IBM's Tivoli Intelligent Orchestrator, which IBM used to dynamically provision Linux server capacity on the various xSeries systems that drive the scoring systems and Web sites. In 2004, IBM consolidated the scoring systems and Web content management systems that had been running on various Linux servers to a loosely clustered pair of i5 520 servers with three Linux partitions each. These servers and their associated storage and networking are shipped around the world in metal racks on wheels and shared by the Grand Slam events. Because of bandwidth requirements for linking the scoring and content management systems to local users at the tennis events, IBM cannot deliver these functions remotely, although it has thought about how it might do it. But the whole server front end of the US Open sites can be run elsewhere, and this year, it is.

IBM has carved out three areas in three data centers in the United States to act as the Web farms for the Grand Slams; they are located in the East, West, and Central parts of the county, and IBM won't be more specific about where they are. In each one of those centers, there are clusters of Linux and AIX servers that run WebSphere middleware that drives the US Open Web sites, which had 2.8 million visitors (spending an average of 90 minutes on the site) and 15.4 million page views in the two weeks of the US Open last year. Traffic is up maybe 50 percent so far this year, and IBM's internal budget for the event sure isn't. So server consolidation is the theme this year.

You can't take server consolidation too far, however. Although this may seem illogical at first, having three data centers is better than two because you can split the aggregate workload between two centers and have one as a hot spare for failover in the event one fails; with two data centers, you would need two fully configured setups that act as hot spares for each other. Last year, these data centers each had eight xSeries Web servers, four pSeries Web logging servers, and two pSeries application servers. This year, the workloads of one of these centers was moved to a four-core p5 550 and an eight-core p5 570, which each have Linux and AIX partitions dynamically allocated as workloads change. The new workload with the US Open is called Point Tracker, and it is an animated presentation of the tennis ball's movement as each game is played so people who cannot watch a match on TV can see what the ball is doing on their PC screens and see what the shot-by-shot game looks like. It is akin to an old radio announcement with text and pretty pictures instead of a voice. Whether or not fans think this is great (and most tennis fans seem to so far), one thing is for sure: Point Tracker burns up a lot of computing power. So do the polling, player stats, and video production applications that run on these machines. The i5 520s will store the database behind Point Tracker, which is built in real-time using cameras mounted in the two tennis arenas that literally track the ball, while the p5 machines will display the graphical representation of the ball's course throughout a game. Any excess capacity in these systems is being pumped into the World Community Grid, which IBM founded a few years ago to give free capacity on its systems to medical research organizations fighting cancer, AIDS, and other diseases.

Stonesoft, IBM Expand Their Partnership for Network Security

Stonesoft, the Finnish software company that created the Linux-based StoneGate firewall and VPN appliance that several years ago ported that software to iSeries Linux partitions and more recently to zSeries Linux partitions, has re-upped is development and sales partnership with IBM. Stonesoft is co-located in Helsinki, Finland, and Atlanta, Georgia, and has been working with IBM to sell its products in Europe and the United States, and with the extension of the agreement, the two will now co-market StoneSoft's tools in Canada as well.

Stonesoft is noteworthy not only because it delivered a native iSeries and zSeries implementation of StoneGate, but also because it was the first firewall vendor to figure out maybe the firewalls should be clustered for load balancing and high availability. Firewalls and VPNs appliances are, after all, single points of failure in a lot of networks. Stonesoft sells StoneGate as a preconfigured appliance based on a stripped down, minimalist Linux kernel or as a Linux software package that you can install on your own servers (also using its own secure, stripped down kernel.) This Linux kernel is a custom one built by Stonesoft from the raw Linux kernel, and it is built up from there rather than being a stripped down version of Red Hat or Novell Linux. The StoneGate appliance software only uses a fraction of a processor on the iSeries or zSeries machine once it is set up, according to sources. Together, the iSeries and zSeries platforms make up about a fifth of Stonesoft's sales, according to sources.

ABN AMRO Outsources IT Operations and Development, Including iSeries Boxes and Apps

Dutch bank ABM AMRO Holdings last week threw up its hands and dumped its whole IT infrastructure into the laps of five IT consultancies, including the support and extension of applications written for the OS/400 platform. The company is shelling out $2.2 billion over five years to IBM, Accenture, Infosys, Tata Consultancy Services, and Patni Computer Systems. Patni, which is based in Mumbai, India, is providing application development outsourcing services, and it did not say how much it got out of the deal. But Tata, which is the consulting arm of the dominant Tata conglomerate in India, is getting a $240 million piece of the deal for providing support for the bank's current applications and has the right to bid on future application development projects. (Watch out, Patni.) Infosys, which is one of the big names in outsourcing, got a $140 million piece of the ABN action and has the ability to bid on future applications as it provides support for current applications. These are the first of what will probably be big scores in Europe for Tata and Infosys. IBM is the main IT hardware infrastructure outsourcing provider, but about $1.5 billion of the five-year budget is for future application development dollars, and it is up for grabs among the five vendors. Accenture was chosen as an application development provider as well, as was IBM. That outsoucing involves iSeries, mainframe, Unix, and countless other platforms, since big banks tend to have a little of everything when it comes to IT.

ABN says that the outsourcing of IT operations will result in approximately $315 million in IT expense savings a year as the company moves from having the equivalent of 5,000 full-time IT employees (which is a mix of full-time, part-time, and contractual works) down to 1,800 full-time equivalents (FTEs) at ABN and the transfer of 2,000 FTEs to the consultancies (mostly going to IBM). ABN expects to shed 1,500 FTEs over the next 18 months.

Geac Board in Proxy Battle with Outside Investors

The board members of ERP application software provider Geac, which impinges upon the OS/400 market through the former JBA Holdings that it acquired several years ago, is finding itself in a proxy battle with an outside investor who is trying to get two of its own members on the board.

In early August, a group led by Crescendo Partners, a hedge fund located in New York, took out a 5 percent stake in Geac, which is based in Markham, Ontario, and asked for representation on the board, specifically asking for the board to increase its seat count from eight to 10. Geac declined, saying that this was against its governance rules, and Crescendo thereupon launched a proxy battle and took the issue directly to Geac shareholders. Now, Crescendo is asking for two directors to be removed from the Geac board and replaced with representatives from the hedge fund. Crescendo seems to be annoyed that Geac has $180 million in cash and a $150 million credit facility and might use this dough to make another ERP acquisition (these figures are in U.S. dollars). Geac bought JBA in 1999 for $92.5 million when it was raking in about $215 million a year in ERP sales in the prior year. However, that was the triple witching time of the Y2K boom, the ERP boom, and the dot-com boom, and sales quickly imploded.

In its fiscal 2005 year ended April 30, Geac reported sales of $444.4 million, down a smidgen, with net earnings of $77 million, up 35 percent. Geac had sales of $836.4 million in fiscal 2001, but lost $234.7 million. The company's sales declined through fiscal 2003, and leveled off in fiscal 2004 to about fiscal 2005's levels. Geac has been decently profitable since fiscal 2001, and has almost wiped out that loss from fiscal 2001. Exactly why Crescendo is throwing a tantrum is unclear, but then again, very little about hedge funds is clear.

Geac has its shareholders meeting on September 13.

Police Arrest Two Zotob Suspects, with More Arrests Likely

The alleged writers of the Zotob worm that wreaked havoc on Windows 2000 systems two weeks ago have been caught. Turkish and Moroccan law enforcement authorities, working with the cooperation of the FBI and Microsoft, arrested two suspects and charged them with crimes related to the creation and distribution of the Zotob and Mytob worms. Meanwhile, Turkish authorities have reportedly identified an additional 16 suspects involved in the creation of the destructive worms, which made thousands of Windows 2000 computers unusable. Microsoft's top lawyer, Brad Smith, commended the response to the Zotob worm. "This arrest demonstrates the value of public-private collaboration--the first-class investigative work by the authorities and round-the-clock technical and investigative support provided by our Internet Crime Investigations Team here at Microsoft," Smith says. "The results show clearly that cybercriminals will be identified, apprehended and held accountable for their actions." The Zotob worm and related worms were the work of increasingly aggressive gangs of cyber criminals, according to anti-virus software companies that have analyzed the worms' source code. If additional suspects are arrested, it could be the largest such bust of virus writers in the history of the Internet.