Original Post From Michael Hickins
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Good morning and welcome to 2013. Cutting-edge information technologies are changing how Western economies literally fuel their growthRoyal Dutch Shell BPand Chevron are leveraging predictive analytics, visualization technologies and automation to reach deep into ocean depths and raise production levels to previously unattainable heights. Shell gave CIO Journal’s Steve Rosenbush access to the Noble Bully 1, a new kind of drill ship outfitted with some of the world’s most advanced technology, which the company is using to to help extract oil in once-inaccessible regions.
The areas from which these companies are trying to extract resources are inhospitable to say the least – as Shell’s current struggles in the Arctic attest – but the new technologies have already helped Shell and others extend the life of oil fields thousands of miles below the ocean surface. Technology has dramatically extended the life of the largest oil field in North America, Prudhoe Bay on the North Slope of Alaska. BP originally expected to recover about 10 billion barrels of oil, or 40% of the field’s capacity, Bruce Williams, BP’s Alaska operations manager said. Now the company expects to recover 60%, or 15 billion barrels. Mr. Williams tells CIO Journal technology provides a “way to extend the life of the facility in the safest manner possible.”
Why Big Data won’t go the way of the pet rock. The term “big data” is being used by many vendors “to describe even the most prosaic reporting” capabilities, writes CIO Journal guest columnist Thomas H. Davenport, leading some to assume the technology will go the way of other passing tech fads. But as the oil and gas exploration example above illustrates, this technology truly represents a “sea change” in business software. “We are moving beyond automating transactions to analyzing the data they generate,” he writes. “God knows what terms we will use to describe what we do in the areas of big data, analytics, BI, and so forth, but we will certainly be doing it for the foreseeable future.”
Creating more intelligent organizations. CIOs should keep track of continuing research at MIT that could help ensure group collaboration results in better thinking, not worse, writes regular guest columnist Irving Wladawsky-Berger. ”The Internet has given us the means to leverage collective intelligence to an extent greater than ever before; it has also given us the means to leverage collective stupidity. Fortunately, there is research ongoing into group dynamics that could help business and IT leaders predict the nature of the collaborative groups they empower with technology. And it seems possible for us to create the conditions necessary for collective work to reflect a sum that’s greater than the total of its parts, rather than reflecting a most common denominator,” he writes.
Antivirus makers struggle to adapt. Consumers and businesses spend billions of dollars a year on antivirus software, but these programs rarely block freshly minted strains because the malware creators move too fast, writes the NYT’s Nicole Perlroth. A new study by Imperva, a data security firm, and students from the Technion-Israel Institute of Technology, is the latest confirmation of this. According to the study, which compared 82 new computer viruses against more than 40 antivirus products, made by top companies like Microsoft Symantec , McAfee and Kaspersky Lab, the initial rate at which antivirus products were able to detect new viruses was less than 5%. On average, it took almost a month for antivirus products to update their detection mechanisms and spot the new viruses. And two of the products with the best detection rates — Avast and Emsisoft — are available free.
Cable companies feel heat from faster Internet rivals. Broadband revenue growth has helped cable operators offset a stagnant pay-TV market, but they’re falling behind when it comes to ultrafast Internet service, writes the WSJ’s Shalini Ramachandran Google and other companies are building up fiber-optic networks that offer speeds of a gigabit per second, while cable companies are balking at the cost of upgrading their networks. Cable executives say consumer demand for gigabit broadband is lacking, and there are too few applications requiring such speeds to justify more investment in fiber. But some big U.S. cities are setting goals for more access to ultrafast broadband and offering to help offset the cost of laying fiber. John Tolva, Chicago’s chief technology officer, said he would bring a gigabit fiber network to Chicago whether the incumbent operators want to build it or not, though he would prefer their cooperation.
TV makers set sights on ‘Ultra HD.’ TV makers are gearing up to promote “ultra high-definition” televisions at next week’s Consumer Electronics Show in Las Vegas. Such TVs create images using more than eight million pixels, compared with about two million pixels of today’s full high-definition televisions. At the moment, however, a major obstacle stands between consumers and sharper pictures: price, writes the WSJ’s Daisuke WakabayashiSony andLG Electronics have introduced 84-inch ultra high-definition sets priced at $25,000 and $20,000, respectively.
Intel’s Web TV push hits delays. Intel’s effort to develop Internet-based TV service and associated hardware is taking longer than expected, in part due to delays in reaching content agreements with media companies, the WSJ’s Don Clark and Christopher S. Stewart report. Intel plans to discuss new chips for PCs and mobile devices at CES, but not its TV plans.
Mobile’s path to glory. As the fury with which iPhone users reacted to Apple booting Google Maps for its own inferior offering reveals, so-called “discovery” tools are important to determining which mobile platform dominates in the years to come, reports the WSJ’s Rolfe Winkler. So far Google, with its search engine expertise and a vast data library, including assets from Zagat and Frommer’s, stands poised to deliver increasingly sophisticated tools that offer users guidance beyond the quickest way to the interstate. Recently Google launched a predictive tool called Google Now for its Android OS. Users give the tool access to their location, email and calendar. In return, it provides useful information before they have even asked for it. Apple has massive third-party development support for its iOS devices, but third-party apps don’t let Apple control its own destiny, he writes. The company may still feel pressure to beef up its own services With $121 billion in cash, Apple could easily boost its investment in data.
The full economic impact of today’s technology has yet to hit. Count Paul Krugman, NYT columnist and winner of the 2008 Noble Prize in Economics, as a believer in the power of Big Data and other technological innovations to fuel economic growth. He sees machines playing a larger role in performing human tasks as technology, such as speech recognition, continues to improve. Of course, smarter machines “may make higher GDP possible, but also reduce the demand for people — including smart people.” In the future, wealth gains will go to the owners of the smarter machines. “And then eventually Skynet decides to kill us all, but that’s another story,” he writes.
Banks fight ‘password creep.’ The value of the password as a security mechanism has been eroded by a proliferation of malware that can intercept them, and a preference on the part of users to opt for easy-to-remember convenience over security, reports John Adams of American Banker. This has led a number of financial institutions to explore new ways to authenticate users, including using smartphones to allow people to identify themselves using biometrics such as voice or facial recognition.
Huawei partner offered H-P gear to Iran. An Iranian partner of telecommunications giant Huawei Technologies was behind efforts to sell 1.3 million euros worth of H-P equipment to Iran’s largest mobile operator. The deal, which ultimately failed to develop, still raises questions about the China-based company which has been trying, in the face of resistance from the U.S. House Intelligence Committee, to do more business in the U.S., reports Reuters’s Steve Stecklow. Washington has embargoed the sale of U.S. technology to Iran.
Pressure builds on FAA to open up device usage. Dealing with FAA resistance to allowing people to use their devices during takeoffs and landings is “like arguing with a stubborn teenager,” writes the NYT’s Nick Bilton, who says the agency has no hard proof that such usage can harm a plane’s avionics. Recently the FCC and Sen. Clair McCaskill (D., Mo.) have stepped into the fray, telling the FAA to drop the restriction if it can’t show proof of danger.
Damaged lithium batteries pose flight risks. The real potential threat from devices during flight may come not from radio-interfering emissions, but from the lithium batteries used to power smartphones, tablets and others personal electronics. In the wake to two “fiery crashes of jumbo-jet freighters,” believed to have been caused or abetted by fires originating in bulk shipments of batteries, the U.N.’s air-safety arm adopted stricter shipping standards set to take effect Jan. 1, report the WSJ’s Daniel Michaels and Andy Pasztor. Meanwhile pilot unions and air safety experts are calling for further protections, including strict controls on the number of batteries permitted in individual shipments, along with greater safeguards for damaged batteries and certain oversize versions that power vehicles.
Big in China: Apple’s smaller offering. Nearly all models of Apple’s iPad mini sold out in China and Hong Kong last week. A Topeka analyst called demand “insatiable” noting that the iPad mini’s popularity has already outstripped that of the fourth-generation iPad. All ThingsD’s John Paczkowski believes that Apple’s latest offering is creating new markets and not cannibalizing sales of the full-size iPad, which is starting to feel the squeeze from Android tablets.
IN CASE YOU MISSED IT
Amazon outage hits Netflix, other AWS customers. Netflix was one of the most prominent customers hurt when Amazon’s cloud-based infrastructure service, Amazon Web Services, suffered an outage Christmas Day, reported the WSJ’s Greg Bensinger. The latest outage should cause CIOs to look into new options, including cloud-to-cloud continuity services, to prevent mission critical functions running on public clouds from going dark, Forrester Research analyst Rachel Dines told CIO Journal. Short of re-examining its use of outsourced cloud computing, Netflix may not have many attractive alternatives; but CIOs at other organizations may want to evaluate how much it would be worth spending to mitigate an outage of this magnitude. “It’s a tradeoff,” says Ms. Dines. “You are giving up some level of control when things go wrong, but the cloud allows you to put your resources towards something that you hope will move the business forward.”
Google Apps takes on Microsoft in business. Google is muscling in on Microsoft’s turf as it wins over more business customers with its cloud-based software. In the past year Google Apps has notched up a big string of wins, including at the Swiss drug maker Hoffmann-La Roche, where over 80,000 employees use the package, and at the Interior Department, where 90,000 use it, the NYT’s Quentin Hardy reports. CIO Journal’s Rachael King wrote earlier this month that CIOs still want to see some improvements to Google Apps – particularly improved security and integration between Google Plus and Gmail.
New breed of consultants ‘sherpa’ CIOs to the cloud. Consultants such as Cloud Sherpas, which just raised $40 million in VC funding, help companies migrate data from applications residing locally on computers to Web applications hosted by the likes of Google and Salesforce.com . Paul Lones, CIO of Fairchild Semiconductor,tells CIO Journal he considers those cloud vendors “new business innovation partners,” and the new breed of consultants are important facilitators, ultimately allowing him to focus his staff on building systems that help the company better compete versus rivals, such as Intel and IBM .
Microsoft’s new tech strategy chief is no stranger to Microsoft. Eric Rudder, stepping into Craig Mundie’s shoes, has been with the company since 1988. He takes over the position at a key moment in the company’s history, however, as mobile devices are upending the way people conduct business. Rudder’s tenure may well be measured by how successfully he rallies application developers to the company’s new mobile-friendly Windows 8 operating system. Michael Cherry, an analyst with independent consulting firm Directions on Microsoft, tells CIO Journal the success of Windows 8 “hinges totally on the Windows 8 store and getting app developers over there – even for apps that exist on other platforms, making sure the Windows version is the one that stands out will be key.” Without those apps, consumers are unlikely to flock to the new platform, forcing CIOs to turn to technology vendors that appeal more to their employees.
IT Deals: 2012 Was the Year of Social Software.Throughout the year, big corporations were on the hunt for potentially disruptive smaller companies that are socializing IT functions such as messaging. Microsoft led the way in June by acquiringYammer, a Twitter-like short-messaging service for business use, for $1.2 billion. Microsoft plans to integrate Yammer into its other productivity offerings, a sign that social media is being integrated into the way businesses operate at every level. In other highlights, Facebook bought Instagram and Salesforce.com acquired Buddy Media. Deal volume for publicly and privately held tech companies declined on a global basis to $168.4 billion for the year to date on Dec,. 19, down from $219.5 for the year to date on Dec. 19, 2011. Volume for full-year 2011 was $224.6 billion, 451 Group said.
Delivery problems: online grocer FreshDirect lets domain name expire. FreshDirect failed to do a simple but vital task for an Internet retailer—renew its website address, reports the WSJ’s Dana Mattioli. The company’s site was unavailable for much of Christmas Day and Wednesday, so instead of customers seeing its trademark orange logo and pitches for fresh vegetables, they were greeted by a generic Web page for domain registrar Network Solutions, saying the freshdirect.com address needed to be renewed. ”Renewing a domain name is ecommerce 101,” said Sucharita Mulpuru, a retail analyst with Forrester Research. Increasingly, retailers use auto-renew to prevent a gaffe like this from happening, she said.
Job creation in the digital era is job number one. Technology advances are running so far ahead that large numbers of people may not be able to keep up, and the future will bring even more serious economic disruptions, Guest Columnist Irving Wladawsky-Berger writes. These technological advances have given rise to a sharply polarized labor market that is hitting middle-income workers the hardest. Policymakers, business, labor and the research community must work together to try to come up with innovative answers to this critical societal question, he says.
Little holiday cheer for Microsoft. The holiday shopping season didn’t turn out quite the way Microsoft might have wished. PC sales are still sluggish and while there are lots of tablets running Windows 8, “they have so far failed to emerge from the shadow of competing products from Apple and Amazon and other devices that are being snapped up by holiday shoppers,” writes the NYT’s Nick Wingfield. Emmanuel Fromont, president of the Americas division of PC maker Acer, tells Wingfield that sales of the company’s Windows 8 PCs had been lower than expected. He said the new operating system’s unfamiliar design appeared to be making consumers cautious. “There was not a huge spark in the market,” he said. “It’s a slow start, there’s no question.” Research firm NDP backs up Fromont’s assertion. U.S. stores sold 13% fewer Windows devices from late October — when Windows 8 made its debut — through the first week in December, than in the same period last year, it says.
The year in quotes. Between high-profile stock market glitches, the roll-out of one eagerly anticipated operating system, an endless docket of patent battles, accusations of financial improprieties and the usual assortment of disses, challenges and chest-thumping meted out by technology’s most influential (and loudest) executives, 2012 was blessed for good quotes. CIO Journal offers some highlights.
EVERYTHING ELSE YOU NEED TO KNOW
Cliff dive averted. Economic disaster has been averted – for now. The House of Representatives voted 257-167 last night to approve legislation to block most of the tax hikes coming due, while postponing the spending cuts. The vote culminated a day of high drama, the Hill notes, as Republican leaders considered and then abandoned a plan to attach big spending cuts to a measure passed by the Senate in the early morning hours Tuesday. The final deal forced Republicans to swallow the first major tax increase in two decades, Politico says and President Obama “was able to at least partially fulfill a campaign promise of raising taxes on upper income Americans.”
But the deal disappointed business leaders who had hoped for a grand bargain that could tackle the deficit and ease uncertainty, the WSJ says. And the compromise sets the stage for another showdown because in two months, the delayed $110 billion in spending cuts will kick in – at about the same time Congress will need to raise the debt ceiling. Leaving that in the air is bound to cause anxiety among businesses, potentially crimping hiring, investing and consumer spending, the Washington Post says.
How some companies are preparing for Obamacare rollout. One of the biggest decisions for many companies this year will be what to do about their health benefits, writes the WSJ’s Anna Wilde Matthews. Companies trying to blunt the impact on their expenses will have to weigh the possible downsides in morale and recruitment – and potential consumer backlash, as Darden found out when it said it wouldn’t expand coverage. Ernst & Young partner Kate Barton touched on some of these issues in a guest CFOJ piece last month. Dots, a women’s-clothing chain, projects that its health costs could go up by around a third because of the law. So it’s been trimming its costs with moves such as boosting workers’ premium contributions and putting new employees into a more basic health plan for their first year.
China manufacturing heats up. Manufacturing activity in China expanded for a third straight month, adding evidence that the rebound will extend into the new year,Bloomberg reports. The PMI report came in at 50.6 in December – just over the 50 mark that indicates expansion. Along with a separate manufacturing gauge yesterday showing the fastest expansion in 19 months, the report reflects increased infrastructure spending that’s helping drive a rebound from a seven-quarter slowdown as a new generation of Communist Party leaders takes the nation’s reins.
Fallout from U.S.-China audit spat could spread. As U.S. regulators and Chinese authorities spar over the right to oversee audits of companies in China, some U.S. firms could suffer collateral damage, the WSJ’s Michael Rapoport writes. Electronics maker Sanmina has major operations in China and is partly audited by KPMG affiliate KPMG Huazhen, which is one of five Chinese accounting companies facing legal action from the SEC over their refusal to turn over audit work papers. If the SEC prevails, the firms could be banned from auditing dozens of Chinese companies listed on U.S. markets. An SEC victory also could affect U.S. multinationals like Apple Qualcomm and Kimberly-Clark that have major Chinese operations.
Tom Loftus contributed to this article.
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