2006: A year of IT highs and lows

Bold moves, huge blunders defined year in tech

It happens every year: as the calendar gets ready to turn over, we get an itch to pause, to be quiet, to reflect. That’s probably why “year in review” stories are so popular at this time of year: they channel a seasonal compunction among editors and readers alike.

But what to make of 2006? It’s a year in which some enterprises and IT firms made bold moves to set themselves on a new course, while others failed, in spectacular fashion, to learn the lessons of the past. For this penultimate Tech Watch, we review the year with the aid of some pithy quotes.

“If I knew then what I know now, I’d have done things differently.”
-- Patricia Dunn, former Hewlett-Packard chairwoman
Sometimes you come across a product or corporate initiative -- let’s take Sony’s recent DRM spyware as an example -- that is so patently wrongheaded you can’t imagine how it ever came to see the light of day. When you dig into the history of those decisions, you often find that they were made by people who were trying, earnestly, to solve a very specific problem without seeing how their “solution” might affect the company as a whole. That’s what makes the scandal that led to the resignation of HP Chairman Patricia Dunn and the criminal charges against her, HP legal counsel Kevin Hunsaker, and three outside investigators all the more exceptional. These were the folks at the top of the totem pole.

The dispute arose over the handling of an investigation by HP to see which members of its board of directors leaked information, including arguments about the ouster of former CEO Carly Fiorina, to the press. Hurd and other board members, it seems, became distracted by a “plumbing” expedition, as it was called in the Nixon White House, and contracted with a company to use “pretexting,” a controversial technique where investigators pretend to be the people being investigated in order to access private information.

Despite intense media and legal scrutiny, though, the squabble has not fazed HP shareholders or customers. Under Mark Hurd, CEO and newly appointed chairman, the company is fulfilling the promise of the controversial HP-Compaq merger engineered by Fiorina: It has overtaken Dell as the leading PC maker and IBM as the biggest IT company. The spy scandal has broad implications, however. Congress is now considering federal laws against pretexting, and increased oversight of corporate governance is becoming a shareholder rallying cry.
--Marc Ferranti, IDG News Service

“‘Free has to have a price?’ That’s nonsense.”
-- Sun CEO Jonathan Schwartz
After years of staving off open source proponents, Sun Microsystems in November 2006 bit the bullet and made Java available via open source, and doubled down on that by offering up Java to the GNU General Public License, ensuring that revisions to Java are submitted back to the community at large.

Naturally, the move raised as many questions as it answered. Chief among them: Can Sun’s Java gurus adapt to the new paradigm and relinquish some degree of control?

Looking at the evidence, it seems likely that Sun can. Java already has spawned a whole industry’s worth of open source projects such as the popular Spring Framework. Sun’s Solaris OS has thrived under open source.

Inside Sun, however, not everyone shared Schwartz’s optimism. Graham Hamilton, a Sun Fellow for the Java team, departed the company over the momentous announcement, according to one insider. Outside Sun, IBM protested that it wanted Java placed under the jurisdiction of the Apache Software Foundation.

Schwartz’s decision regarding Java will be remembered as a high point of 2006, and further proof that commercial vendors must find a way to ride, not fight the open source wave.
-- Paul Krill

“I am having personal difficulty looking veterans in the eye.”
-- VA CISO Pedro Cadenas
With mega blow-ups like the hack of CardSystems, many labeled 2005 the “Year of the Data Breach.” But that year seemed to extend, seamlessly, into 2006, as well.

No incident epitomized the bumbling of sensitive data than the U.S. Department of Veterans Affairs’ loss of a laptop containing personal data of more than 26 million vets. The device in question was stolen from the home of a VA analyst, and was later recovered.

Stories like the VA’s were sadly common this year. Chevron, GE, AT&T, Starbucks, and Wells Fargo all reported losing customer or employee data. One of the common themes in many cases was that data was being carried around, unencrypted, on portable PCs stolen from or lost by employees of third-party companies.

That troubling trend bears out in a study that Vontu and the Ponemon Institute conducted this year, which found that 81 percent of the 500 companies surveyed “reported the loss of one or more laptops containing sensitive information during the past 12 months.”
--Ted Samson

“I wouldn’t be surprised to see SaaS services (at) $5 per month, per user.”
-- Josh Greenbaum, EAConsult
2006 didn’t quite make it as “The Year of SaaS,” but it came darn close. Spurred by the success of firms such as Salesforce.com, Microsoft, Oracle, and SAS created SaaS CRM products with integration to their on-premises software as a differentiator. Even more important: SaaS providers, led by Salesforce, laid down a solid foundation on which to build new services in 2007 and beyond.

Take, for example, AppExchange, an online market of sorts that Salesforce launched in October. AppExchange allows third-party providers to post their wares, and gives users the ability to pick and choose from applications and features that enhance the Salesforce.com software.

AppExchange implies a recognition by Salesforce and, we can now assume, other SaaS providers that if enterprise-level companies are to adopt SaaS, then SaaS solutions can’t be siloed. Integration of CRM with ERP, business intelligence and product lifecycle management are a must for the enterprise.
-- Ephraim Schwartz

“the best season to visit Italy”
-- search query by Thelma Arnold, aka AOL user No. 4417749
Connect users to the world of information … then betray their trust. It’s not exactly the long-term strategy AOL had in mind, nor one to stay on top in today’s Web 2.0-influenced Internet. Yet AOL’s infamous search data leak in August, which resulted in the ousting of CTO Maureen Govern, was just one headline head-scratcher involving the online giant this year.

AOL, with its huge user base, has a track record of developing innovative new services to keep users loyal. That should have put the company at the forefront of the Web 2.0 wave that gave birth to sites such as FaceBook. But AOL, like other “old line” dot-coms Yahoo and Microsoft, proved too slow on the uptake, as firms with bigger visions and faster feet cherry-picked hot properties and left them standing on the sidelines.

AOL hurt itself, too, with news reports of horror stories from customers who tried to cancel accounts, and a “badware” label for AOL 9.0. By the time The New York Times’ triangulated Thelma Arnold, a 62-year-old widow from Lilburn, Ga., from the search record of AOL user No. 4417749, it was merely putting a face on AOL’s already eroding relationship with its expansive user base.

By year’s end, firms such as AOL and Yahoo were taking bolder steps to right their listing vessels: AOL dropped its subscription-services model and a quarter of its workforce, including CEO Jonathan Miller.

Yahoo also shook up its boardroom, amid disappointing earnings and signs of discontent from senior management.

Shortly before he lost his job, CEO Miller had observed in a keynote speech that “the big companies will stay big companies” as the Internet evolves. Going into 2007, AOL isn’t alone among big companies that are praying that adage rings true.
-- Jason Snyder

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