Business Tech

In its quest to acquire Tandberg, Cisco is close...but no cigar yet.

The network giant has won 89 percent of the outstanding shares of Tandberg, a healthy amount, but still 1 percent short of the 90 percent needed under Norwegian law to close the deal. The company had issued a deadline of December 3 to capture the required shares or it said it would walk away.

But as of Friday, Cisco is giving every indication that it will forge ahead, citing tendered shares that would put it over the 90 percent mark.

Looking to capture the growing videoconferencing market, Cisco has been aggressive in its pursuit of Tandberg. Based in Oslo, Norway, and New York, Tandberg sells a range of low-cost and high-end videoconferencing tools and systems to companies large and small.

After initially offering $3 billion for Tandberg on October 1, a bid that received a thumbs down from the Norwegian company's shareholders, Cisco bumped its price to $3.41 billion on November 16. Cisco said it still expects the deal to close in the first half of 2010.

In a press release issued Friday, Cisco confirmed that 99.8 million Tandberg shares had been tendered, representing 89.1 percent of all outstanding stock. It also said that additional shares, tendered on November 18 and 20, amount to an extra 2 percent, totaling 91.1 percent of all shares. Though Cisco may see that as a done deal, tendered shares essentially mean that it has gotten a promise to receive those remaining shares at a certain time--they're not in Cisco's pocket just yet.

Assuming Cisco scoops up the necessary shares to satsify Norwegian law, the company still faces regulatory approval from the U.S. Department of Justice. The company said Friday that it has received a Request for Additional Information, or a "second request," from the Justice Department on its purchase of Tandberg. This type of request is not uncommon among mergers of this scope. But it requires a prompt response from Cisco to present specific information to the government, which may be concerned about potential anti-competitive effects of the deal.

Cisco said it intends to respond expeditiously to the Justice Department's request and continue to work with the agency in connection with the agency's review.

We hear a lot of talk about enterprises moving IT toward a shared-services model. That raises the question: Where do they think they're going?

Roughly speaking, moving to a shared-services model means adopting a centralized, standardized, streamlined approach to IT. Like all idealizations, real enterprises can only imperfectly implement it. Nonetheless, it serves as a useful goal and measuring stick. Common elements and aspirations include:

Service-oriented: IT is thought of as a provider of services to a business--or, in some cases, multiple businesses. Every IT process, asset, and outcome is understood, operated, and judged in terms of services that IT provides, and how they map to business requirements.

Viewing IT as an organization building, maintaining, and operating a collection of business services--rather than one overseeing a collection of equipment and a pile of code--is a radical departure from the historical IT-is-a-cost-center approach.

Shared and consolidated: Many organizations traditionally created IT "silos." Many formed amid line-of-business (LOB) boundaries; each LOB had its own little IT department. Others formed around technology specialties such as servers, storage, networks, mainframes, virtualization, and app development. Financial services organizations have been the most siloed; some have had nearly 100 distinct IT operations.

Unfortunately, silos fragment IT into many little IT shards, introducing gratuitous complexity and variability. One silo does things this way; another does basically the same thing, but in a different way, or with a different product. Silos don't necessarily work together well. Even when they have overlapping responsibilities, silos often work at cross-purposes to "protect" their fiefs. IT as a whole cannot enjoy economies of scale in staffing, training, procurement, and operations. Often, it's hard to even get visibility to see where economies or simplifications might lie.

A shared-services approach consolidates operations, eliminating and minimizing silos, and making them actively cooperate. This consolidation is a prerequisite to globally sharing resources and capabilities.

Standardized and simplified: Consolidation and sharing allows approaches, vendors, strategies, and procedures to be standardized. Vendors can be pared; rather than "one of this, one of that," rational vendor management can be used, such as strategic dual-sourcing. Standardization leads to competition. Less variety also means simpler. Instead of various management approaches (many of them ad hoc), "best practices" can be used. Skills can be shared. External resources, learning, and tools can be brought in, rather than homegrown. And because the systems and interfaces used are regularized, they can be increasingly automated, further simplifying the environment. Standardization and simplification is an iterative process, with each pass enabling further standardization, further simplification. Simplification, in turn, eases scaling, as well as whatever technology or process transitions are required over time.

Agile and effective: Whether you call the desired IT future state agile, flexible, adaptive, dynamic, or whathaveyou, everyone agrees that IT should operate "at the speed of business." IT should be able to wrangle both internal and external resources to design, build, and run the services the business needs.

What the business needs will change over time, given new products, opportunities, mergers and acquisitions, geographic expansion, economic upturns and downturns, and seasonal surges and quiet periods. But whatever that changing mix of needs might be, IT wants to agilely and efficiently satisfy them. That's a tall aspiration, given the relatively static, backroom support orientation of IT of old. But that is the goal of forward-looking IT.

Summing up: A shared-services model seeks to create a virtuous cycle between shared and consolidated, service-oriented, and standardized and simplified approaches in order to establish an agile and effective IT capability.

The shared-services model is a mature conception of what IT is, what it provides, and what it should be. It's not a product, nor a process, nor a methodology. It's an ideal, a target, a desired state. It organizes IT around business outcomes--and, one level down, operationally, around the services that IT provides. It requires a change in thinking, priorities, and operational style--and change is never easy. Nonetheless, we see organizations everywhere adopting large swaths of the shared-services approach--though using varied terminology, and doing so over time, at different paces, depending on their starting points and the urgency of their evolution.

Third-quarter sales of servers across the globe showed a 17.3 percent decline from the same quarter in 2008, sagging to $10.4 billion, according to IDC's Worldwide Quarterly Server Tracker.

But server shipments improved, falling only 17.9 percent for the quarter, compared with 30.1 percent in the second quarter, noted the IDC report released Wednesday. Even more promising, shipments grew at a healthy 12.4 percent over the second quarter, the market's largest sequential quarterly gain since 2005.

All three server segments tracked by IDC--volume, midrange enterprise, and high-end enterprise--saw lower third-quarter sales compared with the same quarter last year. Revenue for midrange enterprise servers fell 23.4 percent, while sales of high-end enterprise servers dropped 19.3 percent.

But revenue for volume servers, the lower end of the market, improved over the second quarter and experienced their lowest drop since the third quarter of 2008.

"The worldwide server market exceeded expectations in the third quarter with improving x86 server demand leading the way, which was driven in part by the infrastructure refresh momentum that is building in many geographies," said Matt Eastwood, IDC's group vice president of Enterprise Platforms, in a statement. "In fact, x86 server revenues experienced their largest sequential quarterly revenue increase in nearly five years."

(Credit: IDC)

Among the major players in the server industry, IBM and Hewlett-Packard vied for first place in both sales and market share with a statistical tie. Big Blue took a 31.8 percent slice of the market, with a 12.9 percent drop in third-quarter sales to $3.3 billion. HP grabbed a 30.9 market share as its revenues fell 16.8 percent to $3.2 billion.

Third-place Dell saw its sales decline only 6.8 percent to $1.4 billion, helping it capture a 13.5 percent share of the market.

With its future cloudy, pending regulatory approval of its takeover by Oracle, Sun Microsystems suffered a 35 percent drop in third-quarter sales to $778 million. Reports have surfaced that IBM and HP, among others, have taken advantage of the uncertainty surrounding Sun to lure over several of its customers.

Bringing up the rear of the top five was Fujitsu, which saw an 8.2 percent drop in sales to $594 million, carving out a 5.7 percent slice of the market, an improvement over its position from last year's third quarter.

Though optimistic that the market will continue to improve in the fourth quarter and beyond, IDC is still waiting to see how the recovery plays out.

"IDC believes that platform migration is once again gaining steam in the market and the post-recession server deployment patterns will establish the technology agenda in the datacenter for the next business cycle," said Eastwood. "For server vendors, after five quarters of market contraction, the next few quarters will be critical to determining the technology platform winners and losers in the years ahead."

information technology is expected to play an important part in the global economic recovery, according to a new survey released Wednesday.

Some 72 percent of business and information technology executives say their "organizations place greater value on the IT function today than they did before the economic crisis" and that they "view IT as an important part of their economic recovery efforts," according to Accenture's Global Survey on IT Investments.

This is not an unfamiliar sentiment and is one we've heard from United States CIO Vivek Kundra as he's attempted to use IT to kick start a variety of programs on the federal level that will set the pace for innovative new uses of technology across the globe.

The results of the Accenture survey are similar to last week's Goldman Sachs cautiously optimistic survey results that suggested IT spending would trend upward in 2010 and normalize to pre-recession levels with the majority of countries represented planning to increase investment selectively next year.

2010 IT spending

(Credit: Accenture)

All top five server vendors globally saw declines in revenue and shipment in the third quarter of 2009, with Sun Microsystems registering the biggest fall, according to the latest figures from Gartner.

In a report released Monday, the research firm noted that Sun saw its server revenue drop 32 percent and unit shipments dip 38 percent in the third quarter, compared to the same period last year.

IBM experienced a 12 percent decline in revenue growth, though it clocked the highest revenue in the market for the quarter at $3.4 billion. Hewlett-Packard and Fujitsu saw their revenue decline 15 percent and nearly 11 percent, respectively. Dell was the only vendor with a single-digit revenue decline (5 percent) among the top 5 vendors, Gartner said.

Read more of "Sun sets lowest in server market at ZDNet Asia.

It's getting harder to focus on the vision of cloud computing these days. While there are still plenty of critical and complex problems to solve, and many, many implications of this disruptive operations model that have yet to be understood, the truth is that we've entered a new phase in the evolution of cloud adoption. Real work now exceeds theory when it comes to both new online content and work produced.

This kind of snuck up on me, but it shouldn't have. I myself witnessed many of the early events that greased the skids for real cloud success: the introduction of revolutionary products from Salesforce.com and Amazon Web Services; great blogs that discussed practical applications of early cloud environments, followed by books that explained step-by-step what should be considered in application architectures destined for the cloud.

The rapid adoption of "software as a service"-style offerings from the likes of Salesforce.com, Google, Zoho, and a wide variety of others in both the consumer and business markets belied new computing options delivered at Internet scale.

However, what really made me aware of the changing cloud buzz is what's happening in the software development space. I was shaken awake by Microsoft's brilliant launch of its Azure cloud service. I loved almost everything about how Ray Ozzie and crew positioned and discussed Azure's services to its target market: developers of the next generation of business applications.

The recent (re)unveiling at Microsoft's Professional Developers Conference in Los Angeles included an impressive array of services, customer testimonials, and partner announcements. If it had stopped at that, I would have assumed it was just "Mister Softy's" massive marketing machine in action.

However, I began following the "#azure" tag on Twitter from that day forward, and I've been blown away by the amount of content being generated by developers for developers. For example, this step-by-step guide to installing SQL Server on Azure. Or, how about this list of sessions from PDC from a variety of vendor and customer presenters, covering topics ranging from development basics to "making sense out of ambient data".

But it's not just Microsoft. Other cloud platform and infrastructure service vendors are building significant volume. Ruby on Rails platform service vendor Heroku reportedly hosts more than 40,000 applications now. At their Dreamforce conference in San Francisco, Salesforce.com mentioned they had approximately 135,000 applications running on their Force.com platform. (Of course, the number of these respective applications that are generating revenue or even used on a regular basis was not disclosed. Still, these numbers are impressive.)

Amazon Web Services has seen tens of billions of objects stored in its S3 environment (64 billion as of August 2009), and reportedly has several hundred thousand instances running at any given time. Google App Engine doesn't seem to do much marketing, but anecdotal evidence suggests there is a large body of Web application developers running on both the Java and Python instances.

Development and test services, such as SkyTap and Soasta, are thriving. The cloud model really works well for the dynamic resource usage model of software engineering. In fact, it works so well that IBM is putting some real muscle into the game.

There is other evidence that cloud is seeping into mainstream IT thought. This year's Gartner Data Center conference has a "virtual track" dedicated to cloud computing and its impact on the data center. Several vendor conferences leaned heavily on cloud computing in the last year. Professional associations are getting into the act by considering the impact of the cloud on their respective best practices and standards.

There is growing evidence that new and existing independent software vendors and consultancies are finding the cloud to be fertile ground. Of course, that could be a double-edged sword, as some firms will try to use the cloud as leverage to pry their way into otherwise closed doors. However, real projects do exist, and there are signs that that opportunity is growing.

If you are wondering if cloud computing is a fad, the evidence to the contrary is all around you. I heartily recommend that you really listen to what is being said, understand how the cloud is being used, and seriously evaluate how this disruptive model will change your projects, your organization, and even your career. Clearly, there are many technologists who already have.

Hewlett-Packard on Monday reported fourth-quarter earnings that were in line with a preliminary release last week, when the company announced plans to acquire 3Com.

For the quarter, the company reported earnings of $1.14 per share on $30.8 billion in sales. Analysts had been expecting $1.13 per share on $30.4 billion.

For the full year, the company reported earnings of $3.85 per share on sales of $114.6 billion.

Looking ahead, the company forecast earnings of $1.03 to $1.05 per share on sales of $29.6 billion to $29.9 billion for the first quarter--which would include the holiday season....

Read more of "HP reports Q4; raises outlook for 2010" at ZDNet's Between the Lines.

Cloud computing is luring more businesses with its promise of minimal maintenance and low costs. But are companies putting their data at risk?

A new, free report released Friday by the European Network and Information Security Agency (ENISA) outlines the benefits and potential pitfalls of cloud computing. Based on an ongoing survey, the 123-page report, "Cloud Computing: Benefits, Risks and Recommendations for Information Security" (PDF), also offers recommendations to businesses on how to minimize the risks of entrusing their data to a cloud provider.

The benefits of cloud computing as described by ENISA are clear. Business content and services are always available. Companies can reduce costs by not overspending on the capacity of their own data centers. They can also scale up or down, depending on the services they use, and pay for those services only as needed. Internal IT is freed up by not having to implement or maintain certain hardware or software.

As more businesses hop onto the cloud, IDC expects worldwide spending on cloud services to hit $17.4 billion, revving up to $44.2 billion by 2013.

But cloud computing poses certain key risks.

"The picture we got back from the survey was clear," Giles Hogben, editor of the ENISA report, said in a statement. "The business case for cloud computing is obvious--it's computing on tap, available instantly, commitment-free and on-demand. But the number one issue holding many people back is security--how can I know if it's safe to trust the cloud provider with my data and in some cases my entire business infrastructure?"

Though cloud-service providers promise 24-by-7 availability, their data centers can go down. Security is out of the hands of the customer, who must place trust in the service provider. Customers become dependent on a single provider and may face challenges if data and services need to be migrated to a different provider. By entrusting data to the cloud, companies could face risks and challenges from regulatory audits. Further, some cloud providers may not fully and properly delete data even if a customer requests it.

In its report, ENISA outlines measures companies can take when dealing with cloud-service providers.

Companies must perform risk assessments, comparing the potential risks of storing data in the cloud with keeping files in an internal data center. Companies must also compare different cloud providers to narrow the list and then obtain service-level assurances from selected providers. Further, customers should clearly specify which services and tasks will be handled by internal IT and which by the cloud provider.

The report includes a checklist and detailed questions that customers can use when shopping for a cloud provider.

With the right provider, data can be safe and secure in the cloud. In fact, security with a cloud provider can be even more robust, flexible, and quicker to implement than when done internally. ENISA Executive Director Udo Helmbrecht noted in a statement: "The scale and flexibility of cloud computing gives the providers a security edge. For example, providers can instantly call on extra defensive resources like filtering and re-routing. They can also roll out new security patches more efficiently and keep more comprehensive evidence for diagnostics."

Intel Labs Europe is joining a handful of French institutions to investigate large-scale computing challenges that face today's information technology industry.

The Exascale Computing Research Center will investigate machines that can perform 1,000 times more calculations than today's top supercomputers, Intel said, and the chipmaker is spending millions of dollars on the three-year partnership.

The effort also includes Commissariat a l'Energie Atomique, Grand Equipement National de Calcul Intensif, and the Universite de Versailles Saint-Quentin-en-Yvelines. Those organizations will jointly match Intel's investment, Intel said.

"France has taken a leading role in driving high-performance computing research in Europe. We chose to work with these three organizations because of their world-class software competency in exascale and high- performance computing," said Steve Pawlowski, general manager of the Intel Architecture Group's central architecture and planning, in a statement.

The move also raises the company's profile in a jurisdiction that's been tough on Intel. The chipmaker ended up on the losing end of a European Commission antitrust judgment, and is now appealing the resulting fine of 1.06 billion euros ($1.58 billion). Intel just settled a separate antitrust case brought by rival AMD.

Intel Labs Europe employs 900 researchers in Europe, the chipmaker said.