Monthly Archives: December 2010

Changing the World Through Outsourcing

 

How Outsourcing Changes the Way the World Does Business

Outsourcing has been defined as a strategic tool that can have a powerful impact on your company’s growth and financial stability. As a matter of fact, business experts agree outsourcing is essential for a company to prosper in the 21st century. Why not? Business Process Outsourcing is now the fastest growing segment within IT services by which in 2007, that offshore BPO is most likely to account for 14% of the total BPO market, compared with only 1% in 2003.

Now, that is just a one among the many ways outsourcing has changed the way business people do their business. It is for a better one. While they benefit from it, it helps most people’s lives.

On the other side of it, rumors highlight that when companies shift to outsourcing, the fast-paced changes can be harsh and deep. Some people might easily adopt, others may not. But a more enlightened, strategic view of global sourcing is starting to emerge as managers get a better fix on its potential. The new buzzword is "transformational outsourcing." It is a change for a faster and better way business people do their business. Many executives are discovering it’s really about corporate growth, making better use of skilled U.S. staff, and even job creation in the U.S., not just cheap wages abroad. It is indeed true that through outsourcing the labor savings from global sourcing can still be substantial. But it’s peanuts compared to the enormous gains in efficiency, productivity, quality, and revenues that can be achieved by fully leveraging offshore talent.

Outsourcing is a modern day boon. For the employers, it grants businesses the freedom to dump non-core, yet important sectors of its administration on companies specializing in those very individual aspects, leaving the businessman free to wholly concentrate on those areas of the company. The most enticing advantage of outsourcing is the cost effective factor. Human resource and IT services in the United States or Europe are not exactly inexpensive. Complicated business jargon should be avoided and say that outsourcing is basically an option that offers these services at a much, much lower rate such as a cheap but highly productive mass work force and with this concern, the best examples are India and the Philippines in Asia, which are having a lot of call centers and other outsourcing related industries.

Furthermore, it has been highly noted that outsourcing gives you access to knowledge pools that sometimes, or often, can’t be found in the company. Instead of trying to build your own creative design department, you could, for instance, outsource your web design and marketing materials development to specialized agencies. In the old economy, big companies had their own departments for every business requirement. In the network economy, companies go back to their core business and use a network of external partners to take care of the rest.

This is the new trend of businesspeople of today. This is the vivid change in most of the industries, where we can really think its advantage, most of its advantages can be seen in the side of employers finance-wise.

Source: http://www.associatedcontent.com/article/5753736/changing_the_

world_through_outsourcing.html?cat=55

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Business outsourcing is smart business

 

Whenever anyone hears the word outsourcing the first thing that comes to their mind is overseas. The next thing that comes to your mind is I’m losing my job! Then its revenge, my company is a trader they will not stand behind their employees.

The world is getting smaller every day, you can go anywhere in the world and it’s just hours away. Whether you work for a large corporation or a small business your company need to compete globally. The more competition your company has the more they might need to outsource.

When you hear the dirty word "Outsource," it does not always mean you’re losing your job. A company can outsource to help keep your job. This can lower the average total operating costs, which can help keep your job, wages and benefits. By outsourcing part of the company product, this can help support their employees by giving them stability. When your company gets slow they can cut back on the outsourcing instead of you getting laid off. If the product orders increase, they can outsource more to keep from hiring employees then getting rid of them when it gets slow. Employees are better off if they don’t get laid off every year or every few years, it brings them income stability.

Outsourcing can also bring jobs in to your company. A company I worked for outsourced to a company to make the part because they had the expensive machinery to produce it more efficiently. In the process it was learned that the company we outsourced to, realized that we had the expertise for a product that they are making. So we outsourced to them and they outsourced to us.

I have seen products getting made in plants that employees would love to have it outsourced. The reasons where: the temperature is too hot for the employees, smells really bad, it’s too dirty, too smoky, too boring or too labor intensive. So if you hear that dirty word "Out sourcing." Just maybe, it could possibly lead to a better job or a promotion.

Source: http://www.associatedcontent.com/article/6046206/business_

outsourcing_is_smart_business.html?cat=3

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IT Outsourcing: Company Managed or Third-Party Provider – Part 2

 

The issue of trust is very important when considering outsourcing. Ensuring that the service provider; who has access to personal and confidential information, is protecting that information from inappropriate disclosure and from misuse is paramount. The inherent risk is to the organization in this case because if personal and confidential information is misused the organization is held liable. This will damage their reputation and may have a negative impact on their ability to sustain growth. Support and performance is always a risk that needs to be evaluated when looking at a service provider. Service level agreements should be designed to account for levels of performance of the services. Measures such as capacity, through-put, response time and availability are sometimes used in SLAs. Not having or being provided with this document will also put the organization at risk to low levels of service. Another risk to outsourcing is the lack of expertise within the service provider. Many time organizations outsource part of their IT function because they don’t have access to the right people with a specific skill set. Working with a service provider that does not have the professional staff with the required skill sets defeats the purpose of outsourcing in the first place.

Outsourcing is looked at as a means of reducing spend. The cost of new equipment is expensive; outsourcing provides a means of avoiding new capital expenditures while enabling the organization to take advantage of the latest technology. However, there is the risk. The outsourced relationship may in fact cost the organization more money than keeping it in-house. Certain cost may be overlooked or hidden from the initial analysis and due diligence. Some costs are very hard to quantify and some are very unpredictable leaving the organization vulnerable. Another risk to outsourcing is the lack of control over customizations and enhancements. At the start of the relationship it appears that the system may fit all the needs of the organization but more often than not those needs change. Due to the nature of the relationship and the fact that the service provider services many other organizations it’s almost impossible for them to customize their systems to the needs of one organization. The risk is that the service provider can no longer meet the needs of the organization with the existing system. If this occurs the organization will either need to spend money with the service provider for custom work or move to another service provider all together. In either case the impact to the organization may be significant.

Service providers are in the business to support many organization’s infrastructures simultaneously creating a shared environment. Shared environments potentially create issues for many organizations; especially those in highly regulated industries such as financial institutions and medical organizations. The risk is that the information can be shared amongst the organizations in the shared environment or even worse; competitors may gain access to the information. Maintaining personal information in-house would reduce the chances of this occurring. Always ask the service provider for a vulnerability analysis and test as well as enterprise security evaluations and certifications.

Legal and regulatory issues also pose issues for organizations in outsourcing relationships. The risk of not protecting customer data adequately apply not only to the individuals tasked with managing those information assets but also to the senior leadership and management. Certifications and stringent requirements can mitigate the risks.

The cost of outsourcing ranges depending on the function being outsourced, length of the contract, SLAs, etc. Typically there are two ways to look at the costs associated with an outsourcing agreement. Outsourcing costs generally revolve around the primary activities which an organization wants to contract for. Activities such as shipping, packing, etc. are all primary activities. Secondary activities occur during the relationship but after the initial activities are complete such as billing, customer service and invoicing. Incremental costs are costs that are associated with fluctuations in the outsourced process.

Source: http://www.associatedcontent.com/article/6148490/it_outsourcing_

company_managed_or_thirdparty.html

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IT Outsourcing: Company Managed or Third-Party Provider – Part 1

 

The words IT outsourcing can take on many meanings. Typically IT outsourcing is described as the practice of seeking resources or subcontracting outside of the organizational structure for all or part of an information technology function. There are many functions that organizations would look to outsource to third-party providers; including software development, maintenance and support, data storage to name a few. Often organizations look to outsource a portion of their IT function because it is more cost effective and quicker than building a whole infrastructure. IT outsourcing has been in existence since the beginning of the computing age. It began in the 1950′s with the service bureau operations of major hardware vendors such as IBM, Burroughs, Univac and Control Data. They started realizing that IT outsourcing is a way to reduce costs, improve operational flexibility, increase service levels, reduce management overhead and rapidly deploy new capabilities.

Although there are many factors that may lead to a organization making the decision to outsource a portion of their IT function most often it comes down to cost and the bottom line. Many times organizations are limited to the number of employees they can hire; outsourcing gives them access to resources and experienced professionals that they may not have access to normally. To hire and train professionals with specific skill sets is costly and time consuming. Reducing the need for capital expenditures on IT infrastructure may also lead an organization to consider outsourcing. Outsourcing allows management to put more money back into the organization and spend less on equipment, services and maintenance. Another determining factor that may lead an organization to consider outsourcing is the need to focus more attention on their core business. Typically organizations are concerned with producing quality goods and services and increasing customer service allowing them to grow and prosper. Spending valuable time and resources focusing on maintaining and supporting an IT infrastructure takes away from that mission. Outsourcing allows them to pass part of the responsibility to a third party provider.

Corporate cultural and the way the organization does business may sway the decisions of management to look at keeping the IT function in-house. With outsourcing; management would lose some element of control over their crucial business service. Changing the way organizations do business is a difficult thing especially if the organization has a long history and is deep rooted in the way they conduct themselves. Many times the corporate cultural and the culture of the service provider are not compatible; which leads to a non-productive relationship and poor service.

Although, outsourcing is often a positive experience for organizations there are always risks associated with it. Loss of control is one of the most common reasons why organizations look to keep their IT functions in-house. The perception is that the organization hands over the IT function to the service provider and their responsibility for the function is no longer. Unfortunately that is not the case because often times the service provider does not share the same level of commitment to the organization as the management does and some service providers have different goals and attitudes of the organization towards the service, profits, and growth. This leads to a loss of control over the service and the relationship.

Source: http://www.associatedcontent.com/article/6148490/it_outsourcing_

company_managed_or_thirdparty.html

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More growth expected for the cloud in 2011

 

In 2010, cloud computing matured and became a prominent, mainstream technology in the enterprise. According to a recent ZDNet report, 2011 will be noted for the cloud’s continued maturation and overwhelming impact on businesses. By the time the year is over, the cloud will have transformed numerous process and created an important revolution in the technology industry, the report said.

One of the first areas impacted by the cloud revolution will be software development, the report said, as companies shift their design focus toward mobile devices. Cloud computing has coupled with increased mobile device deployment to create powerful mobile applications that business users are using to maximize their productivity.

According to the report, software development has traditionally focused on desktop and laptop environments first. This is changing because more business users are turning to mobile devices and the cloud is empowering smartphones and tablets to run complex programs. As a result, mobile-first is becoming the rallying call of developers who are quickly turning their efforts away from desktops and emphasizing mobile deployment in the software design process, the report said.

The report also expects the public cloud model to become more popular because many private clouds will fail to meet expectations in the new year. The report said some private cloud models fail to deliver the benefits associated with public clouds, leaving companies disappointed with the technology. The shortcomings of private clouds could result in increased popularity for public cloud options, the report said.

The report also expects the cloud’s relationship with IT management to improve over the course of 2011. Older cloud models used to be hidden away in the data center, leaving companies with little knowledge of where their information was, how the vendor worked and what their service level agreement entailed. As the cloud has grown and competition has increased between vendors, companies are experiencing a sense of transparency and openness in the industry. This is removing some of the fear associated with the cloud and giving businesses more power to negotiate service level agreements, the report said.

According to a recent report from CRM Buyer, many companies have struggled with the cloud because they could not find a vendor to match their needs. That is changing because the technology has become so economically profitable that businesses are willing to take more vendor-related risks, the report said.

Source: http://www.centerbeam.com/news/news_categories/More-growth-expected-for-the-cloud-in-2011-CBOID73737720/View.aspx

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How to enter the app-development world

 

Making your own apps for mobile devices isn’t an easy proposition. But if you’ve determined you need one, and you’d rather not spend thousands on consultants, there’s a growing number of companies that would like to ease the way for you.

Apps for mobile devices such as iPhones and Android handhelds are programmed on PCs, or Macs, using a downloadable software suite called a Software Development Kit. The software is free, but the years of computer science courses to learn how to program with are not.

But not all apps are so complicated that they need to be designed from scratch. For instance, apps that are primarily informational can be boiled down to simple elements: a page for a description of the business, a page for contact information, a page for photos, and so on.

For businesses that would like an app that fits this template, there are tools that make app-creation a code-free affair, designed using a point-and-click interface – or even just by filling out a questionnaire.

Of course, there’s a trade-off between simplicity and flexibility: the more flexibility you’re looking for in the design and functionality of your app, the more complicated the tools to create it will become.

The more flexible approach involves downloading a software-development program on your PC that puts a point-and-click interface on the app-making process. (It’s analogous to the way that programs such as DreamWeaver once hid the process of coding websites behind a drag-and-drop interface.)

TapLynx ($599), for instance, is a downloadable software framework that puts a point-and-click interface on the iPhone app-making process. Like many entrants in the app-making market, the platform is geared toward taking the kind of content that might already be published on the Web – articles, updates, blog posts, photos – and packaging it as an app. However, you’ll have to compile the results yourself by downloading Apple’s iPhone Software Development Kit, and paying the $99 it requires developers to pay to register.

On the Android side of things, Google has released a similar program called App Inventor, which lets users build applications by dragging and dropping icons that represent both interface elements such as buttons and fields, as well as the actions that they represent.

Then, there’s a category of app-making services that use a web interface to step users through a simple mix-and-match, fill-in-the-blanks process.

MobBase ($20 setup plus $15 a month) offers to put together apps that are specifically geared toward bands and musicians. Working through its spare web interface, would-be app owners use custom graphics to personalize an app that bundles together biographical information and upcoming-show data with streaming music clips and their own YouTube feed. In addition to a setup fee, MobBase charges a monthly fee, as well as a $5 charge for every further 1,000 installations.

Other services offer variations on this model. SwebApps ($399 plus $29 a month) offers a more robust set of app-making tools aimed at a general audience. Its prices start at $399 for a basic application, built with predefined elements, and $1,799 for a layout put together by their own designers. In addition to standard content-publishing tools such as photo galleries and republishing web content, SwebApps offers features that make better use of apps’ capabilities, such as Google Maps integration that lets you pinpoint multiple locations on the map.

Meanwhile, AppMakr ($999), which boasts some big-name clients, provides a simple way to wrap feeds of existing data – particularly blog feeds, in their various formats – in an app’s wrapper. A limited-time (almost) free version offers to create the app for you, provided you pay Apple’s $99 developer levy.

There’s a proliferation of similar tools out there, so be careful – not all automated app-generators are created equal. Before committing time, energy, and your brand, try downloading and using apps made using the same process. Make sure that they use an interface that’s native to your phone, that they’re visually pleasing, perform well, and – perhaps most importantly – give your users a compelling reason to download an app instead of just visiting a mobile website.

And that brings us back to a familiar Catch-22: A business should think twice about making an app in the first place if the content is so simple, it could go on a website. A mobile-oriented website is a better match for displaying simple information. Good apps, meanwhile, are immersive, engaging, and practical.

Falling short of this standard will leave customers scratching their heads at why they bothered. But if you can just make users glad they’ve downloaded your app, a booming marketplace of prospective clients awaits.

Source: http://www.theglobeandmail.com/report-on-business/your-business/business-categories/web-strategy/how-to-enter-the-app-development-world/article1850768/

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India No. 1 for outsourcing, China catching up

India is still the world’s favourite destination for offshore outsourcing, but attractive cost structures in the Philippines, Vietnam and Indonesia and the rapid growth of the business in China are posing tough competition, according to a new study by Gartner Inc.

In the study, the IT research and advisory firm identified the Top 30 countries around the world for globally sourced activities in 2010-11, rating them on the basis of 10 criteria.

Many organisations that choose to move IT services to lower-cost countries are daunted by the task of determining which country, or countries, would best suit their requirement. Gartner conducted an analysis of these countries to assess their capabilities and potential as offshore services locations, it said.

India retained its position as the most successful country among global offshore locations, as per the Gartner study. It scored well across all 10 criteria. While its cost-competitiveness is being challenged due to the rising rupee, this is compensated by its strength in other areas, as per Gartner’s study.

"Clients continue to seek a portfolio of offshore countries and with India again experiencing increasing labour costs and attrition, this is creating opportunities for other offshore locations to target the services needs of more-mature Asian clients," said Gartner Research Vice-President Ian Marriott.

China improved its scores for "political and economic environment" from "good" to "very good", and "culture compatibility" from "fair" to "good".

Contributing to the increased rating for China is its rising global political and economic leverage, especially in the wake of the recent global economic crisis.

China experienced a steady positive growth rate, spurred by a USD 583.9 billion stimulus package, in 2009. The Shanghai 2010 World Expo has helped increase cultural awareness within China, which has helped the growth of the business in the country, according to the study.

Gartner’s scores for the Philippines remain largely unchanged, although its rating for "global and legal maturity" fell from "good" to "fair".

Gartner continues to see foreign companies being attracted to the Philippine’s young, experienced labour pool specialising in contact centres and finance and accounting (F&A) business process outsourcing (BPO), complemented by its good language and cultural compatibility with western economies.

Source:  http://profit.ndtv.com/news/show/india-no-1-for-outsourcing-china-catching-up-130727

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Choosing An Outsourcing Firm Will Become Easier

 

Companies often ask potential outsourcing vendors “how do you work and how do we engage?” A simple question but hard to answer because of what’s implied: how do we work today with others? How would we work with you in the future, when our engagement ramps up? Most people play it safe and come up with whatever they think will sound plausible to the client’s ears, but the simple truth remains–outsourcing is an industry in constant transition, and its not-too-distant future may look quite different from its present.

While the exact shape of the industry as large and diverse as outsourcing is impossible to predict, it is quite easy to see a few things that are ripe for change. Chief among them is transparency in vendor selection and engagement. Today, buying outsourcing services for all but the largest firms involves a remarkable leap of faith. Yes, vendors tout their past performance records, client references and offer full transparency along the way. But all of this data is provided by the vendor and rarely verified by the marketplace. I have yet to meet a vendor (including myself) who would not take pains to only make public its most marketable successes, hide its failures and largely leave the bulk of the actual on-going client work without mention. No one provides references of unhappy clients.

In recent years, clients have rightly responded to this information asymmetry by doing deeper due diligence, including site visits and pilot projects. Vendors welcome it as a chance to prove their worth. Yet this trend will take us much further. There will be databases, public or subscription-based, that will profile vendors and their staff in great detail. Prospective buyers will see all projects and sort through various parameters that may be relevant for them– geography, industry, functionality, technology and delivery methods.

Client references will be provided by the marketplace, not cherry-picked by vendors. Most well-established vendors maintain in-depth databases of their staff’s capabilities and are able to model how a certain team member would perform in a new client engagement. Once standardized and shared beyond company walls, this data will allow buyers to make much better team assembly decisions, including cross-vendor teams which have become increasingly important in an emerging multi-sourcing world.

This industry has made false starts with standardization before. A few short years ago, CMM certifications were all the rage, yet today no one remembers what it stands for. Buyers learned that a single stamp of approval on an entire organization is a poor indication of how a small group of employees will perform on a given task. Emerging data management technologies will help deal with the inevitable deluge of data from going from a company-level certification to individual staff search and verification.

The painful issue of measuring ROI of outsourced business is also about to change as more data becomes public. Today, companies have learned to measure simple things, such as cost savings realized through outsourcing vs. doing the job in-house. But the specific methods vary greatly from one place to another, often involving creative accounting and cost allocation. Numerous surveys show that companies, big and small, struggle to measure the full impact of outsourcing on their bottom line. There is no way for buyers to reliably compare their outsourcing stories to others or the industry average. What will make it easier is bringing large amounts of data about outsourced projects into light. The industry will have to work out a way to break complex problems down to small, measurable pieces that can be compared across projects and companies.

This “deduce and compare” process will be aided by the wave of cloud-based services sweeping through the technology industry. Once clients get comfortable with the security and operational implications of running their systems in the cloud, they will get used to picking and choosing increasingly smart cloud services and will extend the same logic to their vendors. Many software projects will look like “virtual assembly plants” with multiple vendors operating in a shared cloud environment.

Better visibility and more granular analysis of each group’s capabilities will also mean that there will be a further push for vendors to specialize. In order to stand out in the field of large, can-do-anything outsourcing firms, vendors will need to understand a client’s business deeper than ever and offer implementation methodology and metrics tailored for their industry. Clients will increasingly shift to hiring niche outsourcing firms whose expertise can be verified beyond fancy websites and impressive salespeople.

Will vendors resist making sharing all this data with the public? No doubt. But clients will eventually refuse to buy from those who don’t, and smart vendors will find this to their benefit.

Source: http://blogs.forbes.com/ciocentral/2010/12/28/choosing-an-outsourcing-firm-will-become-easier/

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10 IT-Related Predictions for 2011

 

We were wrong — so far — that Carol Bartz would be ousted as Yahoo (YHOO) CEO by the end of this year, but we were right that Apple’s tablet, whose name wasn’t known at the end of last year, would be huge. OK, so that second one was probably a given, but not all of our 2010 predictions were so easy. We think the same is true with our 2011 predictions.

Sometimes a cliche works best

We hesitate to call 2011 "the year of the tablet" since that sounds like a tired cliche already, but the coming year will be pivotal for that market and for applications developed for tablets. While tablets will increasingly find use in enterprises, we agree with Jeremy Liew, Lightspeed Venture Partners managing director, that a tablet "doesn’t necessarily live in your office or outside your home. I think it lives in your living room — that’s the natural place for it." As such, games that are more complex and take longer to play, compared to those that are suitable for smartphones or other mobile devices, will increasingly be developed, and tablet applications will more and more befit the device’s "natural home," which is relaxing on the couch.

And while Android-based tablets will be competitive, none will catch up with the iPad in 2011.

Ellison gives Benioff the ultimate comeuppance

The perennial rumor that Oracle (ORCL) will buy on-demand software vendor Salesforce.com will come true. Salesforce.com CEO Marc Benioff and Oracle CEO Larry Ellison have a long history, marked of late by public acrimony that belies the fact that Benioff once worked for Ellison.

Salesforce.com’s Force.com platform is powered by Oracle’s database and its Apex programming language has roots in Oracle-owned Java. Salesforce.com also has something Oracle doesn’t: Tens of thousands of small to medium-size companies as customers of its CRM (customer relationship management) software. In turn, Oracle’s ownership would give Salesforce.com greater cachet in the largest enterprises, potentially enabling it to strike global deals for CRM and its emerging portfolio of complementary, social-enabled applications.

IBM (IBM) or HP (HPQ) will buy SAP

SAP is among the last big stand-alone business apps vendors; it’s also the largest of that breed. It’s getting harder and harder to stay independent these days, with the trend inexorably toward integration and consolidation. Oracle is building highly integrated systems from its own servers, database and hardware, and IBM and HP may need to do the same to compete. It would be a big change in strategy for IBM, but then the tech landscape has never looked quite like this. HP is now run by SAP’s ex-CEO, Leo Apotheker, so he knows the business inside out.

SAP is also reeling from a US$1.3 billion verdict for corporate theft against Oracle, so its reputation is damaged and its online efforts are struggling.

Enterprises get flashy

We agree with Barry Eggers, managing director at Lightspeed Venture Partners, that the biggest trend that scarcely anyone knows about just yet will lead to a huge year for the use of flash memory in the enterprise. The reasons are simple, as Eggers notes: "Flash memory is 100 times faster than rotating disks. It’s also more expensive, but the cost is getting down to where it’s not really that much more expensive for 100 times faster." He foresees a $1 billion dollar market in the next couple of years, driven by insatiable data-center needs.

WikiLeaks goes on

WikiLeaks founder and editor Julian Assange will have a rugged year of legal travails in Sweden, where he is wanted for investigation of sex-crime allegations. In the U.S., the Department of Justice will spend a lot of time and money pursuing possible charges against him related to WikiLeaks’ publication of stolen U.S. Department of State documents. He will not, however, be charged — this time. He will continue to achieve rock-star status in some quarters and be held in great contempt in others. Those inclined to provide WikiLeaks with government and corporate secret documents will continue undeterred.

Cyberwarfare becomes reality

Real cyberwarfare will occur (in fact, there are growing signs as the year closes that it already is occurring), with Iran’s nuclear plant at Bushehr hobbled. Industrial and infrastructure systems will also prove susceptible to cyber-espionage, moving toward fulfilling analyst firm Gartner’s prediction that "by 2015, a G20 nation’s critical infrastructure will be disrupted and damaged by online sabotage."

A few words on the cloud

IDC forecasts a 30 percent rise year-over-year in 2011 in spending on public IT cloud services as more business applications are moved to the cloud.

We think that John Vrionis, a principal at Lightspeed, is spot on with his prediction that startups will emerge as important players in the ongoing migration of data to the cloud, addressing security, performance and reliability issues that have been roadblocks. "You’ve got to keep this stuff around," he says of data such as archived e-mail and other information that has to be kept for regulatory purposes or because you never know when you might need to dig up some old piece of data. "The cloud is really the perfect place because it’s so cheap. You know, it would be great if you could keep your junk in someone else’s garage."

Source: http://www.cio.com/article/647783/10_IT_Related_Predictions_for_2011?page=1&taxonomyId=3089

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SAP has No Interest in Paying Interest to Oracle

 

SAP is fighting back against Oracle’s (ORCL) demand it fork over US$212 million in interest on top of a $1.3 billlion sum a jury awarded Oracle last month in its corporate-theft suit against the German software vendor, according to a court filing last week.

Oracle sued SAP in 2007 over illegal downloads the company’s former subsidiary, TomorrowNow, made in the course of delivering reduced-price service to Oracle software customers. SAP has accepted liability for TomorrowNow’s actions, but called the award’s size unreasonable and so far, hasn’t ruled out an appeal.

The judgment was based on "hypothetical" fees that SAP would have had to pay if it licensed Oracle’s software legally. Oracle wants interest on the $1.3 billion dating as far back as Jan. 2005.

"The jury’s award, if it stands, more than adequately accomplishes the goals of the Copyright Act, as it at least fully compensates, and, really, overcompensates Oracle (particularly considering that by receiving its money today, Oracle completely avoided the economic collapse of 2007," SAP’s Dec. 23 filing in US District Court for the Northern District of California states.

SAP’s filing also took issue with the calculation method used by Oracle’s expert witness to determine the interest amount.

"If the Court were to choose to award interest … it should, like so many other courts, follow 28 U.S.C. § 1961 and award interest at a flat rate equal to the weekly average 1-year constant maturity Treasury yield (which is currently .30%), compounded annually."

By this method, Oracle’s pre-judgment interest on the $1.3 billion dating back to Jan. 19, 2005 — the day SAP announced it had bought TomorrowNow –would amount only to about $22.7 million through Dec. 23, according to SAP.

Source: http://www.cio.com/article/649564/SAP_has_No_Interest_in_Paying

_Interest_to_Oracle

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