Triumphs and Travails of 2007

 
 
By Lawrence Walsh  |  Posted 2007-11-30
 
 
 

It's been a busy year in and out of the data center. Over these past 12 months, Baseline has explored the triumphs and travails of the technology world, the companies that use technology to their advantage, the challenges faced by enterprises and their IT practitioners, and, of course, the downfalls of those who missed the digital mark.

To mark the completion of another trip around the sun, Baseline recounts the best and worst of 2007 through the eyes of our intrepid staff.

The Upside ...

Through November, crude oil prices flirted with the dreaded $100-per-barrel milestone, fueled by ever increasing global demand. The skyrocketing cost of electricity to power and cool energy-hungry servers got many enterprises rethinking their data center and computing strategies.

As Baseline reports this month (see CIO Power Report, p.54), agro-chemical giant Monsanto put power conservation front and center when it decided to build a new 20,000-square-foot data center at its St. Louis headquarters. The use of virtualization technology and innovative building design cut power consumption by 20 percent and reduced the company's need to add more hardware to meet its insatiable computing demands.

Energy conservation and cost reduction was a huge driver behind the VMWare IPO, which raised more than $1 billion on the company's Wall Street debut. Traders' demand for this new stock shows the confidence investors have in the technology-a reflection of enterprises' growing demand.

Technology vendors lead the way toward improving the environmental impact of data centers and computing devices. This year saw the establishment of the Green Grid, a consortium of vendors including AMD, APC, Dell, Hewlett-Packard, IBM, Intel, Microsoft, Sun Microsystems and VMware, collaborating to make data centers more efficient. IBM's Think Green initiative and the Schneider Electric Technology Center are also searching for ways to minimize IT environmental impact. IT managers are realizing the benefits of going green, in terms of both cost savings and corporate responsibility, and this year saw action on their part to buy more energy-efficient equipment.

Pacific Gas and Electric expanded its effort to encourage energy conservation by offering rebates and cost-saving incentives to companies that deployed energy-saving virtualization software or upgraded to power-efficient servers.

But power isn't just about oil and electricity. Google continued to flex its market and technology muscle, and is now one of the five most valuable U.S. companies with a market cap greater than $217 billion. For those keeping score, that's more than IBM or Hewlett-Packard, and just $100 billion shy of Microsoft. Not bad for a 10-year-old company.

Google threatened old-guard technology companies in 2007 with a series of moves that may make it the most powerful IT company ever. Last spring, it unveiled Google Gears, a project designed to make its free Web-based applications work offline (hello, Microsoft Office). It made significant security acquisitions-Green Border (Web browser security) and Postini (e-mail security services)-wake up Symantec and McAfee. And this fall it announced efforts to expand apps and targeted marketing to cell phones and mobile devices (knock-knock, telecom). If that wasn't bad enough, Google is also the lead contender for the old UHF spectrum, which could give it the ability to launch a nationwide Wi-Fi phone network.

Google continues to surprise and outpace the technology stalwarts, but its rivals aren't taking the threat lightly. Microsoft did beat Google for a share of Facebook, which is rapidly becoming the social network of choice. And Yahoo, as Baseline reported in November, is rapidly developing new technologies, tools and marketing models to compete against the search giant.

Despite Google's dominance, hats off to the plethora of innovative search engines that are winning in their niches. GlobalSpec, a search site devoted to engineers, has carved out a loyal following of 3.6 million registered users. Lesson: Focus on what you're good at, serve your market well and you will succeed.

Google painting a target on the wireless world may threaten the traditional telecos, but everyone is playing catch-up with Apple and its iPhone. The debut of the iPod on steroids that can phone home as well as play the latest Fallout Boy single proved once again that Apple's strategy for focusing on the user experience and ease of use wins the day. Even better for Steve Jobs & Co. is the iPhone's sale drag; Apple's share of the PC and notebook market continues to climb.

Even as HP jockeyed ahead of Dell for the lead in notebook and PC sales, IBM debunked the myths that mainframes are dead. Big Blue released two new mainframes this year, which provided a healthy 10 percent boost to its topline revenue. IBM has been teaming with businesses to help them not only use mainframes for conventional purposes, but to innovate with them. One shining example of this is Hoplon Infotainment, a Brazilian video gaming company that uses mainframes instead of servers to run its online gaming applications. Just like mainframes, social networking and virtual worlds also seem to be here to stay. As Baseline reported in March, Second Life has made an indelible mark on the concept of 3D virtual worlds as a means for commerce and business as much as for connecting enthusiasts for everything from Star Trek and badminton to astrophysics and mythology.

Some may dismiss Second Life and similar "worlds" as passing flights of fancy for graduates of Worlds of Warcraft, but the concept of the 3D Internet is making steady progress. Progressive Insurance has trained more than 4,000 claims adjusters in a virtual environment provided by Proton Media. Second Life, leader of the virtual universe, has attracted major companies such as American Apparel, AMD, Cisco Systems, Dell, Sun Microsystems and Toyota. Where is all this going? If IBM, Sun and Cisco have their way, the walls between Second Life and its peers will come down and create a vast 3D version of the Internet in the next five to seven years.

Virtual worlds are just one of many examples of social network platforms, of which the more mainstream models showed no signs of slowing down this year. Facebook and MySpace announced plans to expand their advertising engines, sparking the next wave of targeted Web advertising. Even public CRM apps LinkedIn and Plaxo showed signs of expanding beyond their origins as Web-based Rolodexes. Is social networking truly ready for business? If it isn't, it will be soon. Some say content is dead and the world is all about connectivity. If that's the case, social networking may soon evolve from a connection tool to the actual platform for conducting business.

Next Page: Triumphs and Travails of 2007: The Downside2007: The Downside">

And the Downside ...

Even the best laid plans run afoul, especially in the world of technology and businesses that rely on IT to conduct business. This was a banner year for examples of how things can go terribly wrong when technology fails, implementation projects turn bad or IT management takes its eye off the prize.

Each year brings a new record for the size of a security breach that exposes personal data to would-be thieves and miscreants. In 2005, it was the loss of a Bank of America backup tape that contained the payroll information of 2 million federal workers. In 2006, it was the Veterans Affairs stolen laptop containing 26.5 million records of every active and inactive soldier, sailor and pilot since 1975. And this year TJX, parent company of retailers TJ Maxx and Marshalls, outdid them all with a breach initially pegged at 45.6 million credit card records and later revised up to the vicinity of 94 million. Credit card processors and banks are slugging it out with TJX in court over damages, but so far no state or federal lawmaker has stepped up to propose new controls to slow the escalating pace of identity theft and corporate breaches.

Perhaps one of the reasons the feds haven't enacted new laws to control identity theft is that they're having a hard enough time controlling passports. When the U.S. required passports for entering and exiting Mexico and Canada, it forced 17.5 million Americans to acquire a passport. Unfortunately, the new processing center could only handle 150,000 applications a month, causing a six to 12 week backlog. The feds are still digging out of the hole.

Passports and credit card breaches are big problems, but an even bigger IT problem may be looming for state and federal officials as the presidential election season draws near. Reports are beginning to surface about worms and phishing scams masquerading as presidential messages and appeals for support.

If that wasn't bad enough, the perennial problem of electronic voting machine security is resurfacing. California's Secretary of State reported in July that three of the state's e-voting systems, including those in four heavily populated southern counties, can be easily hacked, potentially compromising millions of votes. A team of experts penetrated both the physical and software security of every e-voting system they tested, including machines built by Diebold, Hart InterCivic and Sequoia.

Speaking of California, you'd have thought Kiefer Sutherland's Jack Bauer in Fox's hit show 24 had shut down Los Angeles International Airport for security's sake, but it was just a wireless card that decided to go haywire, stranding tens of thousands of international passengers at one of the world's busiest airline terminals in August. The ensuing meltdown of a U.S. Customs and Border Protection system caused 17,000 arriving passengers to be stuck on planes for hours and stranded another 16,000 departing passengers at their gates.

Few will forget the Valentine's Day snafu that besieged JetBlue. Foul weather wreaked havoc first with the airline's flight schedule, which overloaded its computer network and exacerbated the traffic flow problems. Without accurate information for adjusting flights and routing plans, JetBlue was quickly paralyzed and thousands of passengers were stranded. Some passengers sat in their planes on the tarmac for as long as 11 hours. The incident fueled calls for a passenger bill of rights and caused airlines to adjust their flight delay policies to guard against similar PR nightmares.

Ironically, the failure of software intended to improve aircraft design and manufacturing was behind the $6 billion setback suffered by Airbus and the delayed launch of the massive double-decker Airbus 380. Design and engineering teams were using different versions of Dassault Systemes' product lifecycle management software, which caused discrepancies in measurements for critical aircraft components. Initially, the design problems were good news for rival Boeing, which was racing forward with the production of its new Dreamliner 787. However, Boeing suffered a similar setback; supply chain and software integration issues forced the American aircraft company to delay delivery of the first 787 until late 2008 and put the rest of its aggressive production schedule in jeopardy.

Some things are more important than flight schedules and making money, such as preserving human life. Kaiser Permanente, the nation's largest health maintenance organization, shut down its new kidney transplant center in San Francisco in 2006 after a whistleblower tipped state and federal regulators about the center's problem: Twice as many patients had died waiting for kidneys as had received transplants. Last July, California fined Kaiser $3 million for failing to address patients' complaints about the transplant program. Kaiser had incomplete, paper records on many patients and had trouble transferring data to the United Network for Organ Sharing (UNOS), which maintains a national database of patients and available organs. Information on some patients was temporarily lost.

Finally, the disappointment of the year goes to the Recording Industry Association of America, which finally won a lawsuit against an individual for illegally downloading copyrighted music. The group won a $220,000 judgment against Jammie Thomas, a single mother and low-income Native American.

Many technologists are lamenting the proceedings, claiming Thomas' lawyer didn't understand the technology enough to mount a legitimate defense. The RIAA, though, is taking most of the PR heat, given the disproportionate size of the award.

Baseline staff and contributors Lawrence M. Walsh, David F. Carr, Deborah Gage, Doug Bartholomew, Mel Duvall, Laton McCartney and Ericka Chickowski produced this report.

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