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Archives for October 2008

Is the credit crisis a boon for cloud computing?

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There is an interesting article in the WSJ by Ben Worthen and Bobby White on the state of the technology financing business, which frankly  isn’t good.  The article begins by citing an increase in tech financing defaults:

“Defaults on tech financings, loans that allow companies to purchase computers, software and other products, have spiked this year. The problems are surfacing after years in which such loans flowed freely…”

“…In September, 0.86% of equipment loans — which includes a range of office equipment — were written off as losses, up from 0.48% a year earlier, according to the Equipment Leasing and Finance Association, an industry group for 700 lenders.

While the numbers appear low, it’s about the same as the percentage of real-estate loans — around 1% — expected to be written off in the third quarter by the top 100 U.S. commercial banks, according to research firm Aite Group. Tech-financings will reach $88 billion, about 14% of the total amount spent on computer hardware and software this year, estimates research firm IDC.

Businesses are now defaulting on loans for tech purchases “all the time,” says John Dondey, national sales director for Baytree Leasing Company LLC, a Lincolnshire, Ill., unit of Baytree National Bank & Trust Co. that does tech financings.

While Baytree’s default rate used to be less than 0.5%, it’s now between 1% and 1.5% for commercial businesses, he says.”

Naturally, this increase in defaults has led to an increase of rates:

“Lenders are responding by tightening their tech-financing terms. While some businesses were once able to get loans for software that required no money down or had 0% interest, some tech-financing operations are now offering rates to small businesses of around 8.25%, according to lenders.”

And, hold on to your hats, some creative financing options by big tech companies:

“IBM, which has its own financing arm, says it has seen an “uptick” in the number of customers looking for credit. The Armonk, N.Y., company has responded by launching a new program this month that offers loans at below-market rates with no payment or interest due for 90 days.

Underwriting customer purchases “gives us a competitive advantage,” Mark Loughridge, IBM’s chief financial officer, said during a call with analysts on Oct. 16. IBM’s financing unit had $24.5 billion in loans outstanding at the end of 2007.

Still, IBM has seen its default rate rise from 1.1% in the June quarter to 1.3% in the September quarter. A spokesman says IBM is able to sell repossessed equipment at a higher price than other lenders because it can refurbish and warranty it.

Cisco also uses its own cash reserves to drive sales. The networking giant financed more than $4 billion in customers’ purchases, or about 10% of sales, in its fiscal year ending July 26. That’s up from $2.7 billion the previous year. Oracle tapped its reserves to finance $1.1 billion, or about 15%, of new software sales in the year ended May 31, up from $891 million the previous year.

Collecting on these loans when the economy sours can be a problem. Cisco was forced to set aside almost $900 million for bad loans in 2001 after lending to dozens of telecommunication and Internet start-ups during the dot-com bubble.

A Cisco spokesman says the company is conservative in its lending practices.”

Still though, some organizations are delaying or canceling spending because of the unfavorable credit environment:

“Nearly 20% of chief information officers say unfavorable credit terms caused them to recently delay or cancel purchases, according to 31 companies surveyed in October by the CIO Executive Council, a professional organization.”

And, as the article points out, tech financing carries different risks than say housing:

“Tech-financing loans carry special kinds of risks. In the case of hardware like computers, the equipment itself — a rapidly depreciating asset — typically serves as collateral. In the case of software, the loans are often unsecured because it is illegal to resell used software.”

Finally the cloud part…

What do people and organizations do when they can’t secure a loan to buy a core (critical, foundational) asset?  They rent said asset (housing, office space, transportation, machinery, computers, etc.) from someone else.  This allows the person or organization to access the assets they need, and benefits the supplier who receives an income stream on assets that remain in their control.

So, I can’t help but wonder aloud ‘does the convergence of the credit crisis and the spate of cloud computing articles, offerings and announcements provide the perfect storm for cloud computing adoption?’  Will financial market conditions rocket cloud computing through the hype cycle to adoption?  Or, might organizations choose stagnation over the risk of early adoption?

As I said, I’m merely wondering aloud, but I’m sensing a correlation here.  What do you think?  Is the credit crisis a boon for cloud computing?

Todd Biske’s SOA Governance Book: Buy-it, Read-it, Live-it

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image Back in August — when Todd Biske and I were talking about SOA Governance and football — I had the privilege to read the first draft of Todd’s now released SOA Governance book. I say privilege because Todd wasn’t looking for a back cover quote, he wanted honest feedback on his material.

Lucky for me, the job was easy. The draft was strong, in both content and readability. Along the way, Todd and I had some great interchanges, such as successful governance models beyond command and control. As well, I noted Todd’s guidance on pre-project, project and run-time policies to test the completeness of my service meta models.

Now that I’ve read the published book, I want to augment my “buy-it, read-it, live-it” book review tweet. So, here goes…

5 Reasons to Read Todd Biske’s SOA Governance Book

1. Todd’s view of SOA Governance is outcome, rather than product, centric. Todd defines SOA Governance as “the combination of people, policies, and processes within your organization that will ensure that the desired behaviors of your strategic SOA initiative are achieved“.

Examples of those desired behaviors, or outcomes, are “increasing the number of assets reused by 10% each year“, “decreasing the average time to produce a solution by 10%” and/or “increasing the number of projects delivered by 10% each year“.

While Todd does speak to the technology / product categories that enable SOA governance, at no point does he equate (confuse) SOA governance with the acquisition / implementation of a registry, repository, service broker or runtime monitor.

2. The management fable will resonate with any practitioner who has ever worked in corporate IT. Todd explains SOA Governance in the context of the SOA journey of a fictional corporation. The book follows Advasco’s SOA advocates, implementers and adversaries from an early win, to the trials of sharing, through the mysteries of problem detection and resolution, and finally to SOA success. As the tale unfolds, Todd points out problem areas, suggests corrective action and supplies best practices.

3. The reference chapter is worth the price of the book. Even if management fables aren’t your thing, you’ll find Chapter 8, Establishing SOA Governance at Your Organization, to be an indispensable reference. This chapter covers:

  • People: solution architect, business analyst, tech lead/domain architect, enterprise/technology architect, information architect, security architect, IT manager, service manager/owner, platform manager
  • Organization: Enterprise Architecture, COE/Competency Center, Review Boards
  • Policies: Pre-Project, Project and Run-time
  • Processes: Establishment, Education/Communication, Enforcement, Measurement
  • Technologies: Registry/Repository, Service Testing Platforms, ESB, XML Appliances, Security Gateways, Service Management Platforms, Service Invocation & Exposure Frameworks

4. The advice on governance — policy establishment, communication, enforcement, measurement and feedback — is pragmatic, not autocratic. During their SOA journey, the Advasco team faces challenges where what’s best for the architecture (long-run) isn’t necessarily best for the business that day. Instead of taking an architecture hard line, or business shortcut, the team considers options and implications, and makes pragmatic trade-offs.

5. Exhibiting good SOA form, the book is easily consumed and right-sized.

The book is available on Amazon and via the publisher.

[Disclosure: Todd Biske is a friend, one that I personally recruited into the SOA Consortium, for his thoughtful and pragmatic views on SOA, EA and business solution delivery].

Assorted Links – October 24, 2008

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You could say I was reading wide this morning, here an assortment of links that caught my attention:

6 Scripting Languages Your Developers Wish You’d Let Them Use – CIO.com – Business Technology Leadership

Esther Schindler “Since every programming language is a tool suited to solve a particular problem, it behooves each IT shop to use the best tool for the job. So in this article, I share a few up-and-coming scripting languages that really ought to be on your company’s radar, with a few passionate arguments from developers who have adopted them.” The 6: Scala, Groovy, Clojure, Lua, F# and Boo.

It’s True: There’s Fraud in the H1-B Visa Program – BusinessWeek

Is this fraud good for US tech workers? “The program for what are known as H-1B visas is designed to help U.S. companies bring workers with rare or specialized skills into the country. A Microsoft (MSFT) or IBM (IBM) can use the visas to hire someone from abroad if they can’t find an American citizen with equivalent skills. But in a recent study, U.S. Citizenship & Immigration Services (USCIS) found that 13% of the requests for H-1B visas were fraudulent and 7% contained technical violations. In one case, when a company requested a visa for a “business development analyst,” USCIS found the person would be working in a laundromat, doing laundry and maintaining washing machines.”

Stupid QA tricks: Colossal testing oversights | InfoWorld | Analysis | 2008-10-20 | By Andrew Brandt

J. Crew ‘upgrade’ “During the second quarter of fiscal 2008 we implemented certain direct channel systems upgrades which impacted our ability to capture, process, ship and service customer orders.”…Among the problems reported by customers was this whopper: A man who ordered some polo shirts received, instead, three child-size shirts and a bill for $44.97 for the shirts, plus $9,208.50 for shipping. And before you ask, no, they weren’t hand-delivered by a princess in an enchanted coach. As a result, the company temporarily shut down e-mail marketing campaigns designed to drive business to the Web site. It also had to offer discounts, refunds, and other concessions to customers who couldn’t correct orders conducted online or who received partial or wrong orders.. In a conference call with investors in August, CFO James Scully said, “The direct system upgrades did impact our second-quarter results more than we had anticipated and will also impact our third-quarter & fiscal-year results”

Service Oriented Enterprise: 16 Corrections on Cloud Computing

Jeff Schneider and his “crack team of cloud computing consultants” offer 16 corrections to James Governor’s “15 ways to Tell Its not Cloud Computing” post. James’ origninal post is focused (IMO) on the cloud computing providers (and pretenders). Jeff’s slideshow (IMO) is focused on enterprises/organizations who might purchase cloud computing services.

Enterprise Architecture: From Incite comes Insight…: Enterprise Architecture Confusion regarding Buy vs Build…

James offers some IT investment common sense in uncommon times: “Let’s start by acknowledging that an enterprise should only buy a product only when it decreases risk. If you don’t understand how the product works, or if you don’t believe claims about its capabilities, then don’t buy it until those issues are settled…Likewise, buy the simplest, cheapest product that meets your needs. Don’t buy expensive products with lots of features you don’t need, even if you think those features might be useful someday…More importantly, you need to remix your thinking and acknowledge that open source belongs in the buy side mentality. While you can avoid the arduous mind numbing negotiations around seat-based licensing, you can focus on getting something deployed in production that meets the business need a lot faster. Of course, you should consider buying support not just from the vendor itself but also in terms of contributing back to the community…”

Why I think Web Oriented Architecture is phony « Judith Hurwitz’s Weblog

SOA is about the business: “When we talk about SOA we really aren’t talking about protocols. Sure there are lots of protocols and interfaces that are an important part of service orientation. But the power of SOA is in the fact that it enables businesses to focus on two key enables: 1. creating business services that are key business functions 2. enabling these services to be used flexibly to create a variety of business processes that can be changed quickly to enable change and innovation. Companies are getting pretty creative with this approach. Not only are they creating business services involving software components, but they are tying those business services into business elements such as monitoring electric meters…25 case studies that are part of the forthcoming second edition of SOA for Dummies. What did we learn? Simply put, customers are implementing SOA from a business perspective. They are leveraging back end and web based capabilities and gaining huge business value.”

Note to self: marketing, marketing, marketing…

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…that was a tweet of mine on July 17, 2008.  It was inspired by a conversation with a prospect who thought I worked for ebizQ.  Yes, I blog over at ebizQ, but no, I’m not an ebizQ employee.  Nor, am I an employee of the SOA Consortium.  As readers here know from the rampant disclosures, the SOA Consortium is my client — a very good one I might add.

However, I can see why people might think I work for one or the other.  Context.  If your introduction to me, or exposure to my work, was through one of those organizations, then it’s a natural leap to presume employment.  Not helping my cause, over here I’m all about the topics I cover, hardly mentioning my business. 

Now, you’re thinking, great, from now on every third post is going to be "engage with me", "Elemental Links is the best".  No fear, that’s not the plan at all.  Instead, I added some clarifying verbiage over at ebizQ and more importantly, finally, launched an Elemental Links, Inc website.  The site has been up in a (more or less) stealth mode since late July, but in the spirit of "marketing, marketing, marketing", it’s time to tell people about it.

So, if you are interested in learning about engaging with Elemental Links, my 2009 research focus, or just what’s the deal with the disclosures, please visit Elemental Links.  When you see me in public, be sure to ask for one of my spiffy new business cards. 

Don’t fence me in…when the "C" in CEP is for Cow

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One of the many interesting articles in the most recent Economist Technology Quarterly was a piece on virtual fencing for livestock.  If pet containment systems at scale come to mind, you are on the right track.

The business problem:

“BUILDING and maintaining the fences needed to control livestock is an expensive and time-consuming business. The materials alone can cost more than $20,000 a kilometre. On top of that, there is the cost of repairing damage caused by wild animals and falling trees. And then there is the need to move some fences around, a bit at a time, so that grazing land can be used efficiently. Strange as it may seem, many ranchers would therefore like to get rid of fences—if they could.”

The science problem:

“According to Dean Anderson, an animal scientist at America’s Department of Agriculture, and Daniela Rus, a computer scientist at the Massachusetts Institute of Technology, the answer is to move from real fencing to the virtual sort. The idea of virtual fencing is not entirely new. Pet “containment” systems, such as collars that give dogs a small electric shock if they roam outside a particular area, have been around since the early 1970s. But attempts to come up with a system for controlling free-ranging animals have failed.”

The breakthrough idea (emphasis is mine):

“Dr Anderson and Dr Rus started from the observation that the job of a fence is merely to regulate an animal’s behaviour and asked if there was another way of achieving the same end. The result is a device dubbed the Ear-a-round, which acts both as a sensor of what an animal is up to and as a discipline on animals that are not behaving as their owner wishes.

The Ear-a-round consists of a small, light box that sits on top of a cow’s head, and a pair of earpieces made of fabric and plastic. The box contains a small computer, a GPS satellite-tracking device and a transceiver that enables it to be programmed remotely. The earpieces both keep the box upright and deliver commands—either sounds or electric shocks—to the animal wearing the device. The whole thing is powered by lithium-ion batteries topped up by solar cells.”

The event processing part — event detection, evaluation & response:

“The range that an animal is allowed to occupy is encoded using GPS co-ordinates. The GPS system determines the animal’s location, and an accelerometer and a compass housed inside the box track its rate and direction of travel. If an animal roams beyond the range specified, the device responds in a way determined by its wearer’s recent behaviour. The algorithms devised by Dr Rus are able to work out, based on past experience, how strong the message to turn back needs to be.

Minor transgressions lead to quiet sonic alerts or mild tingles; major ones to shouts or shocks. In both cases the cue is delivered to the ear opposite the direction that the animal is being nudged towards. Four years of research at a ranch in New Mexico have shown that cattle quickly cotton on to what they need to do.”

The cow as downstream actor — old fashioned stimuli:

“Not all the stimuli used to guide the animals are unpleasant—at least, not intentionally so. In April Dr Anderson set out to test whether a recording of him singing the “gathering songs” used during traditional round-ups would be as effective at herding cattle as irritating sounds such as barking dogs, or electric shocks. Four Brangus cows listened to recordings of him chirping “Come on, girls” at 30-second intervals. Almost immediately, he says, the herd began moving towards the corral. It is not clear whether they were encouraged by his singing, or were trying to get away from it.”

The ROI — cow leadership:

“Is all this really cheaper than fencing? At $600 a cow, not yet. But Dr Rus is working to get the price of the hardware down to the $100 that farmers will pay. Meanwhile Dr Anderson is about to start investigating how many cows actually need to be fitted with Ear-a-rounds to control an entire herd. He hopes that, by identifying a herd’s leaders and equipping them alone, this number can be reduced to a handful.”

If this peaks your interest to read more about event processing, go here.  On the other hand, if you’ve got “don’t fence me in” on the brain, here’s Bing Crosby and The Andrews Sisters.

Oh, give me land, lots of land under starry skies above,
Don’t fence me in.
Let me ride through the wide open country that I love,
Don’t fence me in.
Let me be by myself in the evenin’ breeze,
And listen to the murmur of the cottonwood trees,
Send me off forever but I ask you please,
Don’t fence me in…

Brenda M. Michelson

Brenda Michelson

Technology Architect.

Trusted Advisor.

(BIO)

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