Enterprise Outlook conference eyes technology trends

Growth cited in Linux, SOAs, Indian offshoring, e-mail threats

SAN CARLOS, Calif. -- Perspectives on technology trends such as SOAs (service-oriented architectures), Indian outsourcing, and e-mail management were the focus of the day at the Enterprise Outlook private equity conference here on Wednesday. Featured were executives from Hewlett-Packard, IBM, and BEA Systems, as well as venture capitalists.

HP expects Linux, Unix, and Windows to continue to be the dominant operating platforms, with Linux the company’s highest growth area, according to Ann Livermore, executive vice president for HP's technology solutions group. “For us, as we look out over the next 10 years, we believe that all three operating environments are going to remain very widespread and under heavy use,” Livermore said.

Linux is “clearly our fastest growing area,” she added. Initially deployed in testing environments and in edge-of-the-network Web applications that did not require much services, HP in the past year has seen an uptake in Linux being deployed in mission-critical applications such as CRM, Livermore said.

“As that happens, you start getting more and more services opportunity around the Linux environment,” she said.

HP also is optimistic about the IT services outsourcing market. “We still believe the IT outsourcing market is one of the fastest growing, most attractive markets in the IT industry,” Livermore said.

She disagreed with a 2003 article in The Harvard Business Reviewentitled “IT Doesn’t Matter,” which argued that IT no longer offers a competitive edge to enterprises. “Our view is yes, it’s true that everybody has IT, but no, it’s not true that all companies use IT as effectively as they can,” Livermore said.

From HP’s vantage point, the company sees relatively low corporate spending on IT but strong spending from small and midsize businesses and consumers. What large corporations are focusing on, however, is driving out costs while increasing business agility, she said.

“We see strong interest in business agility, in how [businesses] can make themselves more adaptive,” she said. Some investment is going on in new projects, she noted.

A BEA official, meanwhile, reiterated the company’s belief in SOAs. Rhonda Hocker, senior vice president and CIO at the company, touted the vendor’s own experience with the concept, in which applications are quickly composed and deployed as services.

“I wanted to make sure we could build business capability in weeks. Not months, not years,” she said.

“[With] the old IT, which a lot of companies are still stuck in, it was all about integration. You build every time you need it,” she said. “[With] the new IT, the value can be realized in weeks,” Hocker said.

BEA is now in its second generation of SOA, building composite applications rapidly, she said. A new sales portal, for example, was developed in six weeks by leveraging existing services.

“In terms of the packaged application vendors, I see SOA as a big threat to them,” because they become service providers and their technology becomes commoditized, Hocker said.

IBM’s Gary Cohen, general manager of pervasive computing at the company, touted the need for improved client-side computing in which sessions can be maintained regardless of whether clients are connected to the network by wires or are wireless. He cited how a wireless data connection must be restarted from the beginning after a disconnection, unlike wireless phone connections, where conversations can be picked up from where they were left off.

“We’re seeing diversity, we’re seeing heterogeneity, but we’re not necessarily seeing consistency in availability,” Cohen said.

As a solution, he touted IBM’s “managed clients” initiative, to provide a consistent operating model between the server and client.

Panelists during a session on e-mail management opportunities and threats cited various figures, such as instances of 80 percent of e-mail being unwanted.

“There is a problem here,” said Pavni Diwanji, CEO at MailFrontier.

While 30 to 40 companies already focus on e-mail filtering, there are other areas of opportunity, such as in e-mail regulatory compliance, retrieval, and backup, said Vivek Mehra, a partner at August Capital.

E-mail phishing scams represent “a big, emerging threat,” said Steve Munford, president of the United States division of Sophos. Control of wireless e-mail also is an issue, said Ken DeJarnette, principal for Enterprise Risk Services at Deloitte & Touche.

Panelists featured during a session on the issue of outsourcing product development to India noted the strength of this trend.

“A lot of VCs ask, ‘Are you offshoring yet?’" said M.R. Rangaswami, co-founder and strategic advisor at Sand Hill Group.

The outsourcing market that emerged in Bangalore, India, is spreading to other cities in that country because salaries in Bangalore are rising at a rate of 15 percent a year, he said. “That’s not sustainable,” Rangaswami stressed.

He advised companies pursuing an Indian development strategy to have internal processes to make sure they can succeed and to visit the countries being targeted for offshoring.

Offshoring has yielded 40 percent to 50 percent in cost savings, he said. “Don’t just go thinking of 10 to 1 cost savings,” Rangaswami said.

The growth in IT development in India has prompted some workers who migrated to the United States to head home, said Craig Chatterton, country manager for SupportSoft India. “People are going back to India because they think there are better job opportunities for them there than in the U.S.,” Chatterton said. He also said he did not think the recent change in government in India would have much of an impact on the Indian IT market.

HP, for its part, does not divulge a lot about its offshore strategies, not wanting to give away too much information to competitors, Livermore said during her separate presentation.

“Our view on this is we have a business to run and we have a responsibility to our shareholders and our customers to always be driving for the best quality and for the best price,” Livermore said. HP’s global delivery center in India is a major center for HP, though, Livermore said. The company first put research and development work in Bangalore in the late-1980s, she said.

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