Debate swirls around getting an edge from IT

IT does matter -- and it matters in a big way.

That was one of the main themes that emerged from Vortex 2005, a two-day smorgasbord that included a spirited CIO debate on utility computing, provocative presentations by industry thought leaders and insightful discussions on the future of IT from the perspective of investors, vendors, observers and practitioners. And all without PowerPoint.

Nicholas Carr wasn't in the conference room at the Palace Hotel in San Francisco, but his presence was felt nevertheless. Author Geoffrey Moore, co-executive producer of Vortex, opened the show by refuting Carr's assertion that IT doesn't matter. Moore said IT can play a vital role in the success of any business by helping the company re-establish differentiation.

The key is to automate or outsource IT functions that aren't core to the business in order to free up IT talent to innovate in areas where the company can gain a competitive advantage, according to Moore.

For example, David Watson, CTO at Kaiser Permanente, said one of his goals is to use data mining to give Kaiser an edge when it comes to patient care. Another big IT group, Fidelity's, is using technology to move more financial tools and services to the Web, and to improve customer satisfaction when it comes to voice calls.

Ed Kamins, CIO of Avnet, which distributes components and enterprise products, said his philosophy is to figure out what's important to the business and then determine a way to do it better. He revamped the company's request-for-quotes system, and has even launched an effort to offer IT services for a fee to certain customers.

One of the highlights of Vortex was a dinner discussion sparked by a survey of how Vortex attendees see the future.

For example, 63 percent of respondents said it's very likely that services-oriented architectures will be the dominant computing model by 2015; but only 35 percent thought that outsourced utility computing will be the dominant model by then.

On other topics, 78 percent said it's very likely that U.S. homes will have access to 20M bit/sec broadband by 2015, while only 15 percent believe it's likely that vendors will solve our security problems by 2010.

Google was a major topic of conversation. Industry veteran Mitchell Kertzman, now a partner at Hummer Winblad Venture Partners, pointed out that the smartest young people are now flocking to Google the way they used to flock to Microsoft. But the consensus among Vortician attendees was that Google will remain primarily a consumer-oriented business and will not try to challenge Microsoft in the enterprise. Still, 18 percent of survey respondents thought Google would own the desktop by 2010.

Utility computing is another area that provoked quite a bit of discussion, especially in light of Carr's latest argument that utility computing -- computing provided by a service provider -- means the end of the corporate IT department. In a debate format, Ryan Granard, CIO at Dolphin Search, took the pro-utility computing side, while Hasbro CIO Douglas Schwinn argued against it.

Schwinn disagreed with Carr's premise that IT doesn't matter. He said IT does matter because it is inherently strategic and that it creates business opportunities. He said outsourcing the entire computing function is a bad idea because it goes against the whole notion of IT and the business working together to improve business processes.

Schwinn added that two pieces of the utility computing puzzle -- virtualization and billing tools -- are still immature. ``In the near term I don't see it happening. It's critical that we don't let our heartbeat run somewhere else,'' Schwinn said. As an alternative, he said data center consolidation and standardization are two steps that can provide significant benefits, without the risk of outsourcing.

Granard said treating IT resources as a utility that can be measured, priced and billed to customers on a usage basis is already happening in his company. By using a commodity infrastructure, VMware for provisioning and tools to help with policy-based decision making, he can re-provision on the fly based on business needs. The advantages are cost savings and faster implementations.

Granard added that utility computing, whether in-house or outsourced, does not mean the end of the IT department. It means IT staffers can move from maintenance jobs to more creative and business-focused roles.

Software as a service is another trend that seems to be gaining traction, according to Vortician attendees. Ray Ozzie, formerly of Lotus and Groove, said his role as one of three CTOs at Microsoft is to push the services model at his new employer.

Other thoughts and predictions from Vortex:

Open source will continue to spread across the enterprise computing scene, but not to the desktop because of the huge cost associated with getting off the Windows platform.

The desktop of the future will not be limited to a single 15-inch monitor, it might look like a wall-mounted flat-screen TV with multiple channels or it might be another device entirely, like a souped-up cell phone.

Commoditization of computer hardware and software will continue to happen. In fact, 49 percent of respondents said it's likely that by 2015 the computer, network and storage markets will be dominated by foreign manufacturers of low-cost commodity products.

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