CFO Europe Selects Grid as a Top Technology of 2002

10 TOP TECHNOLOGIES FOR 2002

IT budgets are tight, but there are some technologies that companies
can’t ignore. Anthony Sibillin reveals what every savvy CFO should
have on their radar screen.

December 2001/January 2002

“New technology buzzwords will be kept to a minimum next year and corporate IT
investment will focus on projects that make a solid business case,” pronounces
Klaus Elix, the chief technology officer of AMS Europe, a consultancy. While that
might actually be music to the ears of many CFOs, the underlying message is a
gloomy one for businesses that have grown accustomed to throwing lots of euros
at new technology over the past few years.

Do other consultants, analysts, vendors and venture capitalists share Elix’s
assessment? It seems so. CFO Europe spoke to a host of technology experts to
see what they have to say about technology trends in 2002. What we heard was
widespread agreement about the economy in general—each and every contributor
replied to our queries with a recessionary lament coupled with a mention of
September 11th.

With good reason. There is plenty of evidence to suggest that companies are
rejigging their IT budgets in response to the dismal economy and the ongoing
terrorist threat. Accordingly, two old buzzwords—return-on-investment (ROI) and
security—will be heard more frequently next year.

That’s not to say that there isn’t anything to look forward to in the world of
enterprise technology. In today’s environment, it’s clear that some technologies
that might have sat on the shelf for another year will be put on a “fast-track” rollout
across the enterprise, replacing formerly rising stars. After all, the basic tenets of
capitalism are still in place in Europe. Firms, as always, are under pressure to
lower costs, improve information flows around the organisation and protect their
valuable assets. And they will use technology to take the heat off.

To help companies do that, we’ve identified ten technologies that are worth getting
to know. *

1. WEB SERVICE

TALKING THE TALK

Connecting two applications over the internet—the foundation of
e-commerce—should be fast and cheap. Instead, says Forrester, a research firm,
it can take many months to achieve and it can soak up as much as E1m in
software and integrators’ fees.

The good news is that this could all change in 2002 when web services enter
mainstream enterprise computing. Applications created as web services are built
using industry standards, such as XML and SOAP. This common “vocabulary”
means web services running on different computer platforms can communicate
with one another without expensive “middleware”.

The bad news is that not all web services speak the same “dialect”. Essentially,
there are two camps. Microsoft, predictably, is responsible for one half of the
schism. The software colossus claims its .NET web services framework sticks to
industry standards. Critics counter that .NET doesn’t, making it difficult for users
to switch to Java-based web services, .NET’s main competitor. And while the
coalition around Java, which includes Sun Microsystems and IBM, is widely held
to be more faithful to open standards, it still leaves companies with an unenviable
choice to make.

The uncertainty leads Alexander Linden, a research director at Gartner, to warn
companies against “creating mission-critical web-services projects until a clear
case for revenue-generation opportunities can be made”.

Yet that shouldn’t stop companies from using the year ahead to put in place a
framework for web services, insists Paul Jones, at consultancy KPMG Metrius.
After all, he says, once issues such as standards and security are addressed,
these services will reduce dramatically the cost of adding new functionality and
consolidating IT systems. *

2. ARTIFICIAL INTELLIGENCE

BRAINY SOFTWARE

In his latest film, AI, Steven Spielberg envisions a day when boy-robots fool
humans into thinking they’re real. Robert Hecht-Nelsen also foresees a time when
machine and human become indistinguishable. The difference is, while Spielberg
makes fictional movies, Hecht-Nelsen makes real software used by some of the
world’s biggest companies.

His California-based company, HNC Software, has been putting artificial
intelligence (AI) to practical business use for some 15 years. Its software is based
on the idea of neural networks, which associate concepts and data in the same
way the human brain does. By unleashing this technique on millions of past
transaction records, HNC helps companies predict the future behaviour of “good”
and “bad” customers. The good customers detected by the technology are likely
to give a company more business and provide up-selling and cross-selling
opportunities.

AI tools will also soon go one step further. At the moment, human salespeople are
responsible for interacting with a company’s good customers. But in the future,
predicts Hecht-Nelsen, the task will be handed over to cheaper, conversational
computers. “This would make it possible for every consumer to enjoy the same
kind of personalised service the British Queen does today,” he enthuses.

Given the growing threat of terrorism, however, companies and governments will be
more interested in using AI to stop bad customers. Already, an alliance between
HNC and PROS Revenue Management, which supplies pricing optimisation
software to 15 major airlines, will help carriers flag suspicious flight bookings for
further investigation. And both HNC and UK-based rival Searchspace are pushing
AI technology aggressively as a weapon in tackling money laundering by terrorist
organisations. *

Don’t create “mission-critical web- services projects until a clear case for
revenue-generation opportunities can be made”. Alexander Linden, research
director, Gartner

In its early days, the power from grid computing will come in handy for genetic
research, weather modelling and other super- computing tasks.

3. GRID COMPUTING

GRID AND BEAR IT

Over the past few months, IBM has been busy unveiling several iterations of its
“Grid” computing architecture, a system that tackles complex problems by
harnessing the processing power of many computers connected by a high-speed
network.

In its early days, such power is likely to come in handy for genetic research,
weather modelling and other traditional supercomputing tasks. IBM is building a
Grid for America’s National Science Foundation, which will perform 13.6 trillion
calculations per second, making it 1,000 times faster than IBM’s chess-playing
Deep Blue. According to John Patrick, vice-president of internet technology at the
US computer giant, Grid computing should begin entering mainstream corporate
computing next year. Among the sectors that have an immediate need for Grid are
the pharmaceutical, energy and car industries.

For firms that shy away from the expense of building their own Grid, IBM points
out that its Grid can be used like a power plant, dispensing services as needed.
Patrick says the business case for such a utility-like approach is a strong one for
two reasons. First, the Grid offers economies of scale. Second, companies will be
spared the unpredictable performance of public networks, such as the internet,
because the Grid is designed to handle spikes in demand.

While IBM’s own global services unit is a logical candidate to operate a Grid
utility, it faces competition from niche start-ups like Cluster Solutions of France
(financial services) and Swiss-based Gridcomputer (life sciences). *

4. WIRELESS NETWORKING

RUN FREE

There is almost universal agreement that wireless networking will be a hot
technology next year. But that consensus ends abruptly when it comes to
predicting which wireless standard will dominate 2002—Bluetooth, 802.11b (or
Wi-Fi) or GPRS.

In many respects, of course, there isn’t much room for debate. Each standard
serves a different need. Bluetooth provides a wireless link between devices up to
ten metres apart, 802.11b up to 100 metres and GPRS between any two points on
an ordinary GSM mobile phone network. The latter’s superior reach, however,
must be set against the faster data-transfer dates offered by 802.11b and
Bluetooth’s low cost.

In this light, the contest is really about which standard will beat the others in
finding a home inside European organisations. Looking to the US for guidance is of
limited use. While 802.11b, and now the speedier 802.11a upgrade, quickly won
over American firms, there are good reasons why it may lose some charm this
side of the Atlantic.

For a start, Europe has its own home-grown alternative to 802.11. Called
HiperLAN-2, it offers, some wireless experts say, better support for streaming
media and interactive applications than 802.11. But European users are in a bind:
802.11-based products are in the shops, but no one knows when the 5-GHz
frequency both standards use will be allocated by national regulators. As for
Bluetooth and GPRS, there’s no doubt about their place in the radiomagnetic
spectrum. But whether they’ve won over corporate Europe remains to be seen.

In any event, another development in 2002 might turn the standards dilemma on its
head. Innovative companies such as US-based Embedded Wireless Devices are
releasing devices capable of concurrently supporting multiple standards and
seamlessly switching between them. In that case, firms can invest in wireless
networking without fear of being locked in to a standard that doesn’t get a
regulatory stamp of approval. *

5. INTERNET PAYMENT SERVICES

PAY TO PLAY

There is still no secure way to make small, one-off payments on the internet
without a credit card. That leaves some 60% of consumers reluctant to make
purchases over the internet, says Jupiter Research. This reluctance sank many
internet businesses that were forced to rely on site advertising alone for revenue.
Moreover, says Jakob Nielsen, a principal of the Nielsen Norman Group, an
internet consultancy, it forced them to lower the quality of the “free” content and
services they offered, undermining customer confidence further. However, Nielsen,
who is considered in many circles to be the web’s foremost usability expert,
predicts 2002 could be the year when the “user-pays” model finally makes its way
to the internet. He reckons countries like Denmark and Sweden will lead the pack.
“These countries are small enough so that all of the major websites and internet
service providers can get together and settle on the necessary technology to allow
users to pay for services over the net,” Nielsen says.

In theory, this should address some of the main objections to alternative payment
systems: there are too many of them and they are incompatible. In practice, there
is no guarantee a spirit of co-operation will hold, let alone extend into more
competitive markets such as the UK and France. Still, there are signs that a viable
alternative to credit cards exists with programmes like Yahoo! PayDirect, a joint
venture between the internet portal and HSBC, the UK-based bank. PayDirect
users register their credit card or bank account with HSBC. They can then transfer
money to and from their PayDirect account, which can be used to buy goods and
services from participating merchants or other individuals with a PayDirect
account. The next challenge will be to find a way of linking Yahoo!’s programmes
with rivals like PayPal and Microsoft’s Passport. *

6. EMAIL

STOPPING THE FLOOD

Email is a lousy business tool. Less secure than a postcard, it takes up valuable
time as staff sift the wheat from the chaff, only to hide the wheat in a swamp of
poorly organised in-boxes. In short, email is the curse of the modern organisation,
except for one thing: it is an integral part of the way business is done. In fact, the
failure of expensive knowledge management systems is proof that attempts to
wean employees off person-to-person tools like the telephone and now email, are
doomed.

So instead of fighting the inevitable, a number of innovative companies are putting
a new spin on the internet’s killer application. UK-based DespatchBox, for
example, offers an inexpensive plug-in to encrypt some of the 9 billion unprotected
email messages currently sent around the world each day. Another British
company, K-Vault Software, sells an email archiving software, which was originally
developed at computer maker Compaq. The software works with Microsoft
Exchange, the world’s most popular email system, to build a fully searchable
repository for email and email attachments.

If companies need any more incentive to get their email systems in order, the
increasing use of text messaging in businesses provides it. Already well
established in the mobile consumer world, text messaging will add another pile of
entries to employees’ in-boxes. To avoid letting even more “knowledge capital”
seep out of their business, companies will need to bring knowledge management
to the tools people actually use, rather than vice versa.

7. COLLABORATIVE COMMERCE

THE NEW ERP

Collaborative commerce (or c-commerce) has as many meanings as there are
analysts and vendors with an interest in defining it. An alternative way of getting to
grips with the concept, however, is to take a quick look at the history of enterprise
software.

Beginning in the early 1990s, enterprise resource planning (ERP) software took off
as a way to automate the back office of big companies. By the late 1990s, B2B
e-commerce was supposed to link that automated back office with those of
customers and suppliers to form a “virtual” marketplace. The problem was most
companies found they didn’t want to play in an anonymous marketplace after all.
They wanted to work with their old partners, but do it more efficiently by moving
transactions and other interactions online. C-commerce covers the plethora of
standards and technologies becoming available to support this need.

The building blocks are XML-based standards for linking computer systems, such
as xBRL in the financial arena. To these, c-commerce adds a layer of collaborative
tools based on voice, instant messaging, email, video, mobile devices and, of
course, the world wide web.

For this reason, a c-commerce evangelist at JD Edwards, Nick Rawls, expects
customer relationship management (CRM) to lead the c-commerce charge in
2002. Judith Dixon, a marketing manager at Syntegra, a systems integrator,
agrees, adding that the aim is “client, product and market information, contained in
CRM systems, existing in-house systems or third-party applications, can be
accessed either at a desktop in the fixed world or via PDAs while on the road.” *

8. SECURITY

UNBREAKABLE

The September 11th terrorist attacks forced companies to take another look at
their existing list of IT priority spending. And if security wasn’t already at the top of
the list, it is now. That’s led many experts to predict 2002 will see the rise of
unbreakable security. The idea is that unbreakable security is not a single
product, but a collection of related technologies that can deliver a level of security
well above what might have been acceptable before.

One of the big securities technologies is smart cards, already familiar to many
Europeans. Most retail banks offer customers simple versions of these
computers-on-a-bit-of-plastic. Following September 11th, however, expect both
companies and governments to show renewed interest in sophisticated smart
cards, which incorporate biometric details such as fingerprints and eye patterns.
“The need to identify employees, travellers and citizens rapidly, both to protect
corporate assets and to return to some level of revenue growth in the travel
industry, will be the driving cause for this movement,” says Rob Enderle, a
research fellow at Giga, a research group.

Corporate IT departments will also look to introduce unbreakable security to the
back office. Information infrastructures designed to withstand any failure or
intrusion will become de rigueur.

There are already products that help on this front. Oracle's Virtual Private
Database, for example, pushes user authentication all the way down to individual
rows in a database table. So even if hackers break into the application level above,
the underlying database will still be protected. Unbreakable security, says Norman
Green, financial director at Oracle UK, Ireland and South Africa, is about reducing
downtime which, according to Standish Group, can cost an organisation from
E2,700 to E8,500 a minute. *

9. CONVERGENCE

DELAYED TAKEOFF

Convergence—the tantalising prospect of carrying voice, data and video over a
single digital pipe—has been topping the hit-parade list of hot technologies for a
decade. Frustratingly, it has never left those charts for the mainstream. The year
ahead, however, will be different, say experts. They cite two
developments—September 11th and the launch of GPRS mobile data services in
Europe—that could transform convergence from a nice-to-have technology into a
must-have.

Granted, the economics of a unified communications network have never been in
doubt. But corporate inertia, combined with an “if it ain’t broke don’t fix it”
mentality, has killed most convergence projects, with the exception of some
greenfield sites where the cost benefits are even clearer. The recent terrorist
attacks, however, upset this equilibrium. Applications that take advantage of a
converged network, like video conferencing, have suddenly become popular. As
has the idea of decentralising corporate headquarters operations after years of
trying to centralise everything. The more greenfield sites and corporate offices
there are to link, the more attractive the idea of a converged wide area network
(WAN), for example, becomes.

The other driver in the equation is mobile data. The launch of commercial GPRS
services in Europe at the end of this year will make many business users
comfortable with the idea of a single network for voice and data. More important, it
will entice companies to put in place the foundations of a converged infrastructure
so that field workers and sales staff are provided with mobile access to enterprise
applications. Vendors like Cisco and Commworks, a 3Com company, are ready to
pounce on this new opportunity and sell networking products off that foundation.
Commworks, for example, is marketing what it calls “softswitch technology”. By
using software rather than hardware to route all types of traffic, softswitch allows a
single network infrastructure to carry any medium—voice, data, fax or video. *

10. AUTONOMIC COMPUTING

HIDDEN BEAUTY

Unlike all the other technologies covered in this overview, autonomic computing
won’t be ready for implementation in 2002. But because it neatly encapsulates
what all technologies strive for, we’ve decided to include it in our line-up of top
technologies.

Autonomic computing is basically a reaction to the growing complexity of
enterprise computing. These days, a computer network is a complex architecture
run by thousands of lines of code, which is not only hard to use, but also hard to
manage. It’s this complexity that “threatens to undermine the very benefits
information technology aims to provide”, says Paul Horn, senior vice-president of
IBM Research, which is backing the concept.

For a way out, autonomic computing has turned to one of the most complex
systems of the human body for inspiration—the nervous system. “Consider the
autonomic nervous system,” Horn says. “It tells your heart how many times to
beat and checks your blood's sugar and oxygen levels. But most significantly, it
does all this without any conscious recognition or effort.” He thinks it is time to
design and build computing systems that hide complexity from the user in the
same way.

Work is already under way to put flesh on this still fuzzy concept. Current
research projects at labs and universities include self-evolving systems that can
monitor themselves and adjust to certain changes, “cellular” chips that are capable
of recovering from failure, and heterogeneous workload management that balances
and adjusts workloads of many applications over various servers.