Reality Check | Ephraim Schwartz | April 2007

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April 2007

April 30, 2007 | Comments: (0)

Emerging markets to seal fate of Dell's fall from grace

By the mid-90s, Dell's business model was unstoppable, having turned the high-tech industry and distribution on its ear with its direct-marketing model. But that model is in doubt with today's memo, which speaks of new directions for the company.

In its heyday, those who tried to ignore it, and those who tried to emulate, either fell by the wayside (Compaq) or became second-tier manufacturers (Toshiba, Hewlett-Packard) as Dell gobbled up every enterprise sale in sight.

To give credit where credit is due, it wasn't just the direct sales model, it was how they went about it that really made the difference.

Dell pioneered a new way to deal with suppliers, a model that has since been followed by the best retailers like Wal-Mart, in which the responsibility for holding inventory and restocking warehouse shelves was transferred from the manufacturer to the supplier.

In addition, its just-in-time manufacturing model for the assembly line, and the personalized service and management tools it offered to its enterprise customers, was nonpareil.

But that was then. The entire desktop PC and server market has changed since. Suddenly, the market is being reshaped by Asia, China and India in particular.

Direct marketing just can't cut it in these markets.

Can Dell change? According to the leaked memo from Michael Dell, a push into emerging markets is required but direct sales model won't work in China or India.

There's a great lesson that companies seem to need to relearn about every 5 years or so. Watch the market, don't get smug, and create a corporate sloop that can turn on a dime -- instead of a giant battleship.

I don't know if Dell will succeed. Hewlett-Packard, now the No.1 maker, and other older companies that have been long-time participants in these emerging markets may have the upper hand. But certainly there is a lesson here for companies be they SaaS providers like Salesforce, or Web 2.0 companies like Google, Yahoo, YouTube and MySpace.

Posted by Ephraim Schwartz on April 30, 2007 02:20 PM

April 27, 2007 | Comments: (0)

Experts offer proof H-1Bs used to hire cheaper labor

Human resources professional, software industry analyst cite first-hand experience and government statistics to prove H-1B visas are often used unfairly as a ploy to keep wages low

Two observations were sent to me following my blog entry, Professor Refutes Claims of IT Job Growth.

Both are worth repeating here.

The first is from a human resources professional, named JMS. JMS has seen first hand how H-1B visas are used to cheat workers, both domestic and foreign, out of a fair wage.

The second is the latest study on IT wages from John Miano. Following the JMS comment are Miano's major points an a link to the full study entitled "Low Salaries for Low Skills Wages and Skill Levels for H-1B Computer Workers, 2005".

From JMS:

"As a Human Resources representative, I see first hand how the H-1B visa and employment based green card programs actually work together to drive U.S. white collar workers from their jobs and even from their careers.

To begin with, the H-1B rules clearly state that an H-1B worker can be hired even when a qualified American wants the job, and any American worker can be terminated in favor of an H-1Ber. H-1B is also a dual intent visa, so an employer may sponsor an H-1Ber for an EB green card for legal permanent resident status.

Companies routinely game the labor certification process for green card sponsorship to defraud even well qualified citizen job applicants in favor of low wage foreigners. They use fake job ads and/or bad faith interviews of American citizens to convince the federal government that they tried to find American workers first.

These practices are common in high tech and even in some non-tech industries, but HR people are told to keep quiet about it or lose their jobs.

I would be in favor of a program that issues a small number of
self-sponsoring green cards for truly innovative foreign nationals on a competitive basis. But very few of the H-1Bers or green card applicants that I have seen in 10+ years even come close to being truly innovative.

Most are just practitioners with skills that actually quite common among the domestic workforce. The only thing special about these foreigners is that they will work for substantially less than Americans in order to have a chance to become legal permanent residents. Thus they are used by management to sweeten corporate balance sheets.

Since my work allows me to have access to salary records, I can tell you that the labor cost savings for H-1Bers and green card applicants is substantially greater than the costs of filing the applications with the government.

Citizens should demand that both the H-1B and EB green card programs be abolished in their current form."
Posted by: JMS at April 26, 2007 09:07 PM

Here are the highlights from John Miano's latest salary study.

- According to the applications filed in 2005, it appears that employers may be significantly understating what U.S. computer workers are earning in order to justify paying low wages to H-1B guestworkers in those occupations. In FY 2005, H-1B employer prevailing wage claims averaged $16,000 below the median wage for U.S. computer workers in the same location and occupation.

- 90 percent of H-1B employer prevailing wage claims for programming occupations were below the median U.S. wage for the same occupation and location, with 62 percent of the wage claims in the bottom 25th percentile of U.S. wages.

- While higher than the prevailing wage claims, the actual wages reported for H-1B workers were significantly less than those of their American counterparts. Wages for H-1B workers averaged $12,000 below the median wage for U.S. work-ers in the same occupation and location.

- The reported wages for 84 percent of H-1B workers were below the median U.S. wage; 51 percent were in the bottom 25th percentile of U.S. wages.

- Many employers make prevailing wage claims using wage sources that are not valid under the law. The Department of Labor routinely approves prevailing wage claims based on these invalid sources.

So, as I said in a previous post, Let's Call Gates' Bluff on H-1B visas.

But I'm taking my call for action a step further: I suggest you send this blog to your Congressional representative and ask for an official investigation to get at the truth once and for all.

Posted by Ephraim Schwartz on April 27, 2007 02:25 PM

April 25, 2007 | Comments: (0)

Professor refutes claims of IT job growth

The debate between industry organizations and those with their feet on the street continues over whether or not H-1B visas cause unemployment in the high tech sector.

I received a very thoughtful response to the blog I posted on Tuesday, AEA study says high tech employment and salaries coming back to 2000 level, from Norm Matloff, UC Davis professor of computer science.

Since Matloff disagrees with most of the findings of the AEA [American Electronics Assoication], I thought it would be worthwhile to share with readers some of what he had to say, especially since as I stated at the end of that blog that the AEA, founded by David Packard, has over 2000 members all of whom are high tech employers and as such they support the idea of unlimited "skilled immigration."

Let me preface Matloff's comments by adding a bit of background to what he has to say. Matloff''s arguments are predicated on the belief, which is still debated by some but not by me, that U.S. workers are being treated unfairly.

See The H-1B Swindle, a blog I wrote back in October 05.

Matloff believes that foreign nationals are being paid at lower wage rates than U.S workers and this is the reason why companies want an increase in the H-1B visa cap. It has little to do with the non-availability of skill sets among U.S. workers.

From Norm Matloff:
"The study makes the usual errors in discussing the number of jobs in relation to the H-1B issue, and especially in relation to its impact on American programmers and engineers.

The study doesn't break the number of jobs down according to the relevant categories. Note carefully that the numbers of jobs quoted were counts of positions in Software industry SECTOR, not software development jobs.

That industry sector has tons of jobs which do not involve software development, such as writers of software documentation, people who manage the releases of new versions of software, people who market or sell software, etc.

These are nontechnical jobs that H-1Bs are not hired for,and thus shouldn't be counted in a study that argues that job growth numbers imply that we need more H-1Bs.

The jobs that count are software developers and system/data administrators. These are the ones taken by computer-related H-1Bs, and these are the ones computer science graduates are trained for, rather than for, say, software marketing."

Here is one of Matloff's strongest arguments when discussing H-1B caps and employment.

"...the H-1B cap limits the number of NEW visas issued each year. Since the visa is good for six years, one can get rough idea of the number of H-1Bs in the na-tion at any given time by multiplying the cap by 6.

The cap has been at 65,000 per year since late 2003, and between 2000 and 2003 the cap was 195,000 per year. So, we are talking about something like, say, 600,000 H-1B visa holders being in the U.S. right now, with about 300,000 of them in the computer field.

So you can see that any discussion of job growth is meaningless unless one discusses how many of those jobs are going to H-1Bs, L-1s etc."

Finally, Matloff disputes the AEA claim that the unemployment rates for computer related jobs is very low. The AEA study pegged it at 1.9 percent for electrical engineers and 2.5 percent for computer scientists.

"Predictably, the AEA study cites low unemployment figures for programmers and engineers. These are meaningless, because the programmers and engineers who can't find jobs in the field are forced to go into other occupations. They then count as EMPLOYED in those other occupations.

As Gene Nelson once put it so succinctly, the former programmer who is now working as a security guard is counted in government data as an employed security guard, not an unemployed programmer. (For a more formal statement of this see Carol Veneri, Can Occupa-tional Labor Shortages Be Identified Using Available Data?, Monthly Labor Re-view, March 1999, p.15.)"

I hope these excerpts from Norm Matloff help to balance the scales in this continuing debate.

Posted by Ephraim Schwartz on April 25, 2007 01:07 PM

April 24, 2007 | Comments: (0)

AEA study says high tech employment and salaries coming back to 2000 level

The 10th Annual edition of the American Electronics Association [AEA] publication Cybestates: A Complete State-by-State Overivew of the High-Technology Industry has quite a few surprises buried within its 150 pages and thousands of statistics.

I spoke with the author of the study, Matthew Kazmierczak, vice president, research and industry analyst and we discussed some of the reports highlights.

The AEA breaks down high tech into four categories: manufacturing, communications services, software services, engineering and tech services.

The categories of most interest to us are the last two because these include those working in software publishing, computer systems design, customized programming services, electrical engineers, computer scientists such as programmers, system analysts and software engineers.

Although the industry has not fully recovered from its high point in 2000, it is slowly coming out of the downturn, says Kazmierczak.
This is the second year of job growth in the tech industry. In 05 87,000 jobs were created and in 06 there were 150,000 new jobs created.

In 2000 there were 6.6 million total jobs in high tech, in 2006 there are 5.8 million.

The average high tech salary in 2000 was $78,700, average annual compensation and adjusted for inflation. In 02 that bottomed out at $71,800 but has been growing ever since.

The average annual compensation in 05, no stats for 06 yet, is $75,500.

However compared to total salary for the private secotr high tech is 86 percent higher. The average annual compensation for all of the private sector is $40,500.

The fastest growing high tech sector is software services, engineering and tech services. Software services grew by 6 percent last year with a total of 88,500 jobs added to just this part of high tech, slightly more than half of all the high tech jobs created in 06.

The Cyberstates report also says that unemployment for electrical engineers is at 1.9 percent and for computer scientists, which includes programmers, system analysts, software engineers, it is 2.5 percent.

Kazmierczak, who is an economist by training, says that those percentages are considered full employment if you take into consideration the natural turnover rate.

Well, I guess it is full employment unless you are one of those 2.5 percenters.

Probably the most unusual stat coming out of the report is which states have the highest new job creation rate for high tech employment.

The four leaders are California with 14,000 new jobs in 06, followed by, here's the surprise, Florida with 10,900, then Texas with 10,300 and in another surprise Virginia with 7,700.

Florida's strength, says Kazmierczak, is in computer system design, software publishing and Internet services.

Virginia is seeing its job growth from computer system design which alone accounted for 4,000 of the 7,700 new jobs created.

The most startling statistic that Kazmierczak spoke of actually came from a Duke University study, Americas New Immigrant Entrepreneurs

That study says that for the ten year period between 1995 and 2005 one-fourth of all new high tech companies were created by a foreign national. Therefore, Kazmierczak concludes that if the U.S. had no cap on H-1B visas more not fewer jobs would be created.

It should be noted that the AEA, founded by David Packard, has over 2000 members all of whom are high tech employers and as such they support the idea of unlimited "skilled immigration."

Posted by Ephraim Schwartz on April 24, 2007 12:29 PM

April 23, 2007 | Comments: (0)

Beware mob media

For all its good intents, citizen journalism is a form of fascism waiting to happen

During the past couple of years, there has been a great deal of talk about citizen journalism. It started with the idea that bloggers and others could provide worthwhile information that would add to a topic under discussion or to a news event.

The Dan Rather case comes to mind. In that case, it was a blogger who said the letter Rather was using to base his story on President Bush trying to avoid active duty during the Vietnam War was a fake.

Ever since then, the theory has been proposed that ordinary citizens may have something to add to news as it is regularly covered by professional journalists. Not to mention the fact that for-profit Web sites that adopt the concept get an awful lot of free content. Why care who creates your content as long as you get your page views, right?

I am not a cynic and a skeptic because I am a journalist. I admit those attributes came first and are the reason I probably was attracted to journalism. The chance to say the emperor has no clothes is my hot button.

So with that in mind, let me offer a very cynical point of view: Citizen journalism is a form of fascism waiting to happen.

Now I know fascism requires the centralization of power, and that would appear to be the opposite of citizen journalism. But think of dark historic times such as the Salem witch trials or Hitler's rise to power.

They both started with the rantings of individuals, but somehow those individuals became "thought leaders," and around them coalesced a central organization made up of like-minded individuals.

I'm saying citizen journalism, where nonprofessionals report on and write the news, will devolve over time. Citizen journalism will become a platform for so-called thought leaders to vent their biased, possibly hateful opinions. If you go to a racist Web site, of which there are plenty, you know what to expect. But when you go to a site or read a blog that wears the mantle of citizen journalism, it is another story.

If you don't think things can get turned around in a not-so-good way, let me remind you of the one tool many dictators use to perpetuate authoritarian rule: the referendum. What could be more fair? Everyone votes, and yet it turns out to be the scariest tactic of all.

So we come to the Topix Web site. The perfect example of citizen journalism in action. Topix is a local news aggregator, started with the best of intentions by Rich Skrenta, co-founder and CEO.

Skrenta decided what was missing from news sites such as CNN and Google News was local news. Although Topix gets news feeds from hundreds of local daily papers, news radio, and television stations, Topix was striking out, according to Skrenta. They just weren't getting enough local news to keep the pages fresh, and without that they weren't getting enough local interest -- i.e., not enough local clicks.

Then a local event, two tornadoes in Caruthers, Mo., changed everything. Skrenta opened up Topix to everyone so that residents could communicate with one another. "Is my grandma's house still standing on Cherry Street?" someone might write, and sure enough, grandma's neighbor might write back, "Yes, she's okay."

Now Topix gets 50,000 posts per day nationwide, more than 10 million page views per month.

Sounds good. For the moment.

But if you've ever lived in a small community or belonged to an affinity group online, you know how things go. I belonged to an online group for Harley-Davidson Sportster riders, and even that went south. From discussing bike mechanics and good rides, it devolved into politics and where you stand on Iraq with lots of name-calling to boot. Let's face it, besides the good things about living in a small community, there are also the busybodies, the ones who think they are the community watchdogs and censors. They don't see or understand the value of impartiality or the benefit of standing on the outside and looking in. Is that who you want to get your information from?

I guarantee at some point some local citizen journalist will ask why Mr. Jones down the street doesn't put out a flag on July 4th. What's wrong with him anyway? Or why does that guy with the funny accent never say hello to me? What's he hiding?

Journalists remain a voice of reason and a moderating voice. But now we seem to value "thought leaders," so-called experts who have their own agenda. They claim to know more and are willing to steer the discussion in the direction they choose.

If we start turning to them to find out what our neighbors are hiding or why they aren't saluting the flag, we are going to be in lots of trouble.

To my ears, "citizen journalists" and "thought leaders" sound like words straight out of a George Orwell novel. Maybe I'm wrong. But as more and more people stop reading newspapers and depend on online community sites to get their information, I see the danger and it may just be too late.

Posted by Ephraim Schwartz on April 23, 2007 03:00 AM

April 19, 2007 | Comments: (0)

Workday -- ERP startup targets Oracle and SAP

A conversation with the co-founder

Workday is a two-year old software as a service [SaaS] ERP vendor with all of ten customers. Yet, co-founder and president Aneel Bhusri says they are gunning for SAP and Oracle.

It reminds me of the story of the flea floating down the river on his back in full tumescence who shouts, "raise the drawbridge."

However there is one major difference. Workday has earned some of its bragging rights. You see Bhusri was the vice-chairman of PeopleSoft and his co-founding partner, Dave Duffield who is now CEO at Workday, was the founder and chairman of PeopleSoft.

To date Workday offers only one ERP module, Human Capital Management but Bhusri says by June they will follow with the financial modules.

Why does Bhusri think he can compete with two of the largest software companies in the world?

"ERP platforms are outdated," Bhusri tells me. Having been built over 15 years ago, most ERP solutions don't represent today's view of business processes. Out sourcing, off shoring, and the extraprise have moved ERP beyond the four walls of a business and traditional ERP suites were not built for that, says Bhusri.

"They [SAP and Oracle] don't look and feel like consumer applications. They don't have the usability."

The premise of Workday from the start was to bring ERP into the
on-demand world for larger companies.

"Customers are finding it is too expensive to upgrade so they are staying on their old releases," Bhusri said.

But those products are beginning to fall behind while the vendors supporting old releases have less investment dollars to develop new products.

Asked whether Workday would offer more functionality than either SAP or Oracle, Bhusri said, "no, less."

"Those companies built more functionality that customers don't use," Bhusri said.

Finally, Bhusri warns other SaaS vendors not to embrace the new trend to outsource the management of the data center.

"This is not a great solution for SaaS vendors. It wouldn't make sense for us to build a massive data center. But, at the same time, the data center is a key part of the SaaS model and we want to manage it."

After our conversation I wondered, has SaaS technology progressed to the point that a start up can realistically challenge such entrenched powerhouses like SAP and Oracle? If you would have asked me that two years ago I would have said "no." If you asked me that last year, I would have said "maybe." Ask me that this year? "Raise the drawbridge."

Posted by Ephraim Schwartz on April 19, 2007 03:08 PM

April 17, 2007 | Comments: (0)

Best of breed vs. trusted partner

A battle royal is shaping up over two distinct IT/business strategies

Best of breed vs. trusted partner -- it's the perfect example of why the execution of a business strategy cannot be disentangled from the implementation of IT operations.

To make good on the trusted-partner model, as defined by Ray Repic, chief technical architect at Coca-Cola Enterprises (CCE), a company must establish meaningful relationships with a tight group of technology vendors and transform those associations into strategic business partnerships. In this scenario, each side must give up something: The enterprise must reveal its closely held strategic goals; the vendor must unveil its technology road maps. Obviously, the goal of the enterprise is to determine how best to use the vendor’s technology to deliver on its business objectives.

There are unspoken commitments once this exchange of closely held information is made. The enterprise promises that when a new business need arises, it will go to these partners first to see how they can fulfill the need.

"If the partner can provide for 'mandatory' or basic requirements, then the enterprise says it will look no further, assuming financials are all in alignment," Repic says.

The vendor also has to make a commitment to the enterprise, allowing it to participate -- co-develop -- in the process of bringing new functionality to the market. SAP calls this "co-innovation." Obviously, by being the first to understand how the new functionality works, the enterprise gains a competitive advantage.

This is, by the way, in contrast to what Josh Greenbaum, principal at Enterprise Applications Consulting, says is the more typical "predatory commercial relations" with a customer, in which the customer exists to make the vendor's quarterly numbers.

"I don't envision CCE moving away from its ERP decisions anytime soon," CCE’s Repic says. But in saying why his company will remain with the trusted-partner model, Repic reveals a significant reason as to why many enterprises go the best-of-breed route.

Repic says companies that choose the trusted-partner model are typically those that "do not require 'bleeding-edge' technologies to support required business operations."

But how many companies can say they don't require the latest and greatest? Would your company prefer to deploy software that has only the "mandatory" requirements until their trusted vendor catches up?

Today’s enterprises depend on the latest enabling technologies -- those not in the core ERP package so to speak -- to differentiate themselves in their markets or to support internal growth initiatives. Whereas disparate application integration used to translate into expensive propositions, we now have SOA, XML interfaces, and SaaS (software as a service), all of which help ease the pain of integration.

Rick Collison, director of solutions at Ariba, one of those best-of-breed application vendors, in this case for spend management, warns that if you need a new solution and you wait for your "trusted partner" to come through, it's like "the blind leading the blind."

Collison's point is that best-of-breed vendors, such as Ariba, have more depth. These best-of-breeders offer end-to-end solutions that optimize every aspect of spend or supply-chain management, for example, rather than just lightly touching a product category outside core ERP.

I spoke with Shai Agassi, a former SAP board member. Although Agassi no longer works for SAP, he still sees ERP as the "core" of the enterprise. Here's an excerpt from Agassi's blog:

"Without a strong core ERP you cannot scale a company and you lose scale even on successful strategy. ... [T]he more applications you have designed separately, the less you can afford any change and the more you invest in the gaps between them." Agassi writes. Agassi makes a good point, but I'll give the final word to Marc Benioff, CEO and chairman of Salesforce.com, one of those best-of-breed SaaS upstarts that offers a noncore application that has been "designed separately."

In a recent video interview, I asked Benioff whether he wanted Salesforce.com to become the new platform, or new core, around which Web 2.0 and SaaS applications would plug in to. Benioff would have none of it. He simply answered, "There is no core."

An interesting proposition, and like everything in high tech, where things change rapidly, CIOs and CEOs will have to confront this issue sooner rather than later.

Posted by Ephraim Schwartz on April 17, 2007 03:00 AM

April 16, 2007 | Comments: (0)

Buzzlogic prediction: Melinda Doolittle--not Sanjaya--will win American Idol

Statistical analysis of the blogosphere points to why Melinda Doolittle will win American Idol

The prediction is not mine but comes from the founder of Buzzlogic a startup that monitors blogosphere conversations, mainly by topic and keyword, for brand managers and marketers at large and small companies.

Buzzlogic takes keywords and with algorithms maps the intricate web of links that take place between bloggers and readers posting comment.

Buzzlogic determines who the thought leaders are by looking at the number of hits on a topic bloggers receive. The algorithms also factor in the number of posts that a blogger posts on a specific topic because this helps to build credibility of the blogger as an expert on a topic.

Using all of these approaches, and more, Todd Parsons, co-founder of Buzzlogic told me that Melinda Doolittle will win American Idol this year.

View report for all American Idol contestants

Although Sanjaya and Doolittle are almost in a dead heat for the most number of blogs written about them among the American Idol contestants, Sanjaya's posts are almost all negative while Doolittle's are all positive.

View the American Idol winner's circle

View Sanjaya's Buzzlogic results

If Buzzlogic's prediction is correct, they should try predicting the winner of the next presidential election.

If they get that one right, too, we will have a very real demonstration of how the World Wide Web can bring down, or as it used to be called "disintermediate" yet another hallowed institution, presidential pollsters, such as Gallup and Zogby.

Posted by Ephraim Schwartz on April 16, 2007 11:13 AM

April 15, 2007 | Comments: (0)

Apple says OS X 10.5 delay is iPhone's fault

Either it is unprecedented honesty or the biggest bald-faced fib I've ever seen come out of a high tech company.

Apple claims that Leopard, OS X 10.5 will be delayed on account of the iPhone.

In a statement on its Web site it says in part. "we had to borrow some key software engineering and QA resources from our Mac OS X team, and as a result we will not be able to release Leopard at our Worldwide Developers Conference in early June as planned."

If it is true I can't imagine the marketing and PR departments at Apple being very happy. What is the message Apple is sending out here?

The message says we're not as big a company as you think we are and we can't chew gum and walk at the same time. Not exactly the kind of stuff that inspires confidence.

Again, if it is true, let's look at the second message it is sending.

Apple is saying that it is more important to live up to the promise of a ship date for a new product that has an unknown market value with an unknown number of new users in favor of its comining in on time with a better OS for its multi-millions of current users.

Who is more important here?

Well, obviously, Apple figures that Mac users are a captive audience so let them wait. But the faint sounds of the cash register ringing in the distance for an entirely new market of Apple users has them willing to turn their back on the current customer base.

Finally, if it is not true, it's right up there with "my dog at my homework," "we can't find the emails," and "I don't know how we lost fifteen minutes of tape in the middle of a recorded conversation."

This industry never ceases to amaze me. It will be interesting to see whether or not by Monday afternoon some Apple official announces the all time favorite, "I misspoke."

Posted by Ephraim Schwartz on April 15, 2007 10:08 AM

April 10, 2007 | Comments: (0)

Content management 2.0 from Salesforce

Way back at the turn of the century the Irish poet William Butler Yeats said, "Things fall apart: the center cannot hold." Who knew he could have been talking about core enterprise applications.

As promised this morning, here's a follow up, post-Salesforce.com event, on what's new and interesting.

[Video: Salesforce's Marc Benioff on becoming the next platform player]

There was quite a bit of both. For more details you can see our news story, Salesforce wants to be a content manager.

What I liked about the content management system Salesforce unveiled is how they use the latest Web 2.0 technology to make content management, especially for unstructured data, easy and even fun to use.

In the old days, the reporter who drew the short straw was sent off to the content management conference. It's different now.

Salesforce, taking a page from the consumer Web, will offer the kinds of functionality that up until now was not available on a corporate level.

To do that, Salesforce bought a SaaS company called Koral whose service will now be integrated into Salesforce and become the content management service on the site.

Here's a quick list of what you can do and I'll elaborate on some: share, tag, subscribe, rate and comment, recommend, content connect.

Tag -- Some of the cool stuff you can do is create multiple tags for your content like you would on a consumer site for sharing pictures, like Flickr, so that users can search for content using different key word descriptions.

Subscribe -- The service allows you to receive alerts if a document is updated. Also if someone adds new content with the same tag topic you can receive an alert. You can even subscribe to an individual and be alerted whenever that person posts content to the system. It also suggests to the user how they might want to tag an item.

Rate and Comment -- Users will also be able to rate or judge content like you can with books on Amazon. If you have a list of content in a repository the content that gets the most hits displays in larger type so that you can see what the most read content is.

What remains a bit cloudy is this. Are all of these features accessible if you store your content in backend systems or does it only work if you put it into Salesforce's content repository?

While Marc Benioff, CEO, told the audience that you can easily link to content stored in other backend systems, it wasn't clear during his explanation if you could get the same functionality.

Also, if the system is to become a true content management system for your company, uploading all of that data to Salesforce might be expensive. Salesforce gives you the first gigabyte of storage free but after that it costs. If your company is a large enterprise we are talking about storing terabytes of data.

Which brings up the other question that remained unanswered. Does the Koral system include archival and search capabilities for unstructured data that will allow it to become the system of record for e-discovery?

Are the search and retrieval capabilities up to that level of sopohistication? I will report back on that.

The other interesting announcement was around Salesforce's intention to target the Appex development platform to ISVs.

Using the same principle that drives SaaS, which is companies don't want to have to make huge investments in infrastructure in order to deploy new services and applications, the Salesforce development platform will allow ISVs to focus on their core strength, innovation, and let Salesforce host the infrastructure. Sounds like a good idea to me.

Finally, I asked Benioff if Salesforce was content to be a plug-in to a core application like SAP or does it want to become the core around which all other applications circle?

I think he dodged the question a bit. I think so because he refused to admit that what I am convinced of is true. But he did say something interesting, "there is no core."

I don't think that is quite true yet, but there is a lot happening out there around software at a very rapid pace, and Benioff may just turn out to be right.

Posted by Ephraim Schwartz on April 10, 2007 03:39 PM

April 10, 2007 | Comments: (0)

Salesforce gets trendy with Web 2.0 solution

Salesforce.com's announcement that it will offer content management and content collaboration as one of its services raises some interesting questions.

For the full story of what the company is unveiling today read Salesforce.com wants to be a content management player.

In the usual hyperbole that is Salesforce.com's signature stance in its press releases and public pronouncements, Marc Benioff is quoted as saying, "Salesforce Content represents a decisive step toward our vision of managing all information on demand."

"Managing all information" is a pretty big deal.

The release goes on to say that "companies no longer need to buy bloated on-premise document management software to build applications that are based around documents and other content."

I wonder if the folks at Salesforce are aware that a lot of that bloat comes from new Federal regulations for e-discovery of documents? See a story I did on this a few months ago to learn more about it. Content management is not a trivial application. If you don't have the right system, it could cost your company millions of dollars in fines and lawsuits.

The release goes on to say that Content Exchange, the app dev environment that will be used to create Salesforce Content, "takes Web 2.0 concepts and ties them to the enterprise."

Josh Greenbaum, an analyst with Enterprise Applications Consulting says that just making something Web 2.0 is trendy but not too interesting.

"It's not going to bring home the bacon," says Greenbaum, questioning whether or not making content collaboration available on Salesforce will garner the company new customers.

Neither Greenbaum nor I see a lot of bona fide revenue from the Web 2.0 world to date.

Finaly, on first view, this reminds of the predicament Apple always seems to get itself into.

Wisdom on the street says Apple keeps having to come up with the next big thing, first it was iMac that saved their hide, then it was the iPod, and now the iPhone and AppleTV.

This as opposed to companies like IBM or HP that just roll along and build their customer bases by slowly and steadily adding value to their current products.

Is the Apple strategy what Salesforce thinks it needs to follow? Is content management its next big thing?

I'm off to the event, where I hope to interview Marc Benioff and to see what this is all about. I will report back later this afternoon.

Posted by Ephraim Schwartz on April 10, 2007 11:03 AM

April 10, 2007 | Comments: (0)

Search fatigue

Improving search has less to do with goosing numbers than honing the relevancy of results

A year ago March, Neil Holloway, president of Microsoft's Europe, Middle East, and Africa operations, boasted about how good Microsoft's search engine would become in six months.

"What we're saying is that in six months' time we'll be more relevant in the U.S. market place than Google. The quality of our search and the relevance of our search from a solution perspective to the consumer will be more relevant," Holloway said.

This got him into a lot of hot water, at least in the blogosphere where he was roundly lambasted for making the claim. He went on John Battelle's Searchblog to explain what he really meant to say.

"[W]e are committed to investing in R&D aimed at providing a search service, initially in the US in six months, that performs better than the current industry wide standard of one in two urls being connected to the subject of the original query. I also said that our aim is to perform as good, or better, in that respect than Google. This is a long term goal. I did not put a date to it as this is work in progress," he posted.

Yes, you did put a date to it, Mr. Holloway. See your quote directly above.

Nevertheless, a year later I decided to perform a search or two on Google, MSN Search, and Yahoo to see what kind of results I would get.

First, I searched for the "Gospel of Judas," a recent archeological discovery of a lost Gospel written about A.D. 185.

Google gave me 1,390,000 returns; Yahoo, 1,800,000; and MSN Search, less than 500,000.

That's quantity, but what about the quality -- or relevancy, as it is called -- of the search results?

This time I searched on the phrase "search fatigue" (this time, quotes included), which is only now becoming recognized as a problem, mostly by reference librarians who see it every day, in online searching. More about that later.

Here, Google returned 1,890 results; Yahoo, 431; MSN, 329.

Only Google returned multiple results on the phenomenon of search fatigue as it refers to online searches on the first page. MSN and Yahoo had only a single relevant result on the second page, nothing on the first.

As you can see, one year later Microsoft loses out to Google both on quantity and quality of results. Why the largest software company in the world can't do better is beyond my ken.

However, the truth is that all of the current consumer search engines are inadequate. Only the most dedicated researcher would wade through 431 results, let alone a million or more. The rest of us will definitely suffer from search fatigue.

Is there a cure?

I suggest that you get a copy of the March 2007 print edition of American Libraries magazine and read Jeffrey Beall's article, "Search Fatigue: Finding a Cure for the Database Blues." Beall is a catalog librarian and assistant professor at the Auraria Library, University of Colorado at Denver and Health Sciences Center. Beall offers some search-fatigue antibiotics.

Search fatigue, according to Beall, is a feeling of dissatisfaction when search results do not return the desired information.

"The root cause of search fatigue," Beall told me, “is a lack of rich metadata and a system that can exploit the metadata."

For example, metadata-enabled searching, as you find in a library when it searches through its databases for resources, "allows for precise author, title, and subject searches," Beall says. In other words, it looks only in the fields you request, rather than searching through the entire document. If you name the author, it looks only in the author field of each document, thus returning only relevant hits.

Beall says libraries also use "controlled" vocabularies, meaning that if someone searches for information on cannibalism, they will also receive resources that use the synonym "anthropophagy."

After my talk with Beall, my advice to Microsoft and Holloway is to go to the folks sitting behind the library reference desk. They can probably tell you how to create a better search engine than Google more than anyone else on the planet.

Posted by Ephraim Schwartz on April 10, 2007 03:00 AM

April 05, 2007 | Comments: (0)

Microsoft issues de facto 'no comment' on search progress

My Reality Check column for next Tuesday will be on search engines, and I look into the claim made by Microsoft in March of 2006 that it would have a search engine better than Google's.

I contacted Microsoft to request an interview with an executive to get an update on the company's progress in building that search engine.

I just received the following response via email:
"Unfortunately, we're unable to provide a spokesperson for your request at this time."

They suggested I send an email.

It is amazing to me, considering the size of Microsoft (approximately 76,000 employees) and the importance that Microsoft has placed on search over the last two years that it could not find one person to talk to me. I guess it really does need a better search engine.

Posted by Ephraim Schwartz on April 5, 2007 03:06 PM

April 04, 2007 | Comments: (0)

Have a coke, cash free

The cash-free vending machine is making a comeback.

A company called Isochron will be installing cashless vending machines in the Hartsfield-Jackson Atlanta International Airport this year.

The hype around cashless vending machines started back in the dot-com era when everything was going digital and virtual. The idea took a hike along with thousands of other dot-com schemes once the bubble burst. But now it is back and this time it may stick around.

Isochron worked with SkyeTek, an RFID technology company, to install RFID readers in the airport's Coke machines. If you have a credit card with an embedded RFID chip, the reader in the vending machine downloads all your pertinent info and dispenses the soda.

Between 15 percent and 20 percent of all credit cards now have RFID embedded, says Rob Balgley, CEO at SkyTek, and the number is climbing rapidly.

I asked Balgley, doesn't it cost the distributing company more to process a credit card payment than cash, and on a $1.00 item, does it really pay to do that?

His answer surprised me.

"The increase in revenue is substantial where smart cards can be used for incidental purchases, less than $5. Revenue goes up 30 percent to 40 percent," Balgley said.

Why? Simple. Coca-Cola now has a lot of information about you and can offer you all kinds of promotional incentives to buy more.

Imagine walking up to some anonymous Coke machine and waving your credit card in front of it only to see displayed on the LCD screen a personal message: "Hello, Joe, I see you're buying another drink? That's your tenth today. Maybe you should try our diet soda or you might put on a few pounds."

Well of course it will never say that but there might be a promotion that buys back every eighth drink.

The possibilities are endless.

Imagine a criminal on the run tracked down by following his trail of Coke purchases across the country.

Speaking of criminals, what if someone steals your card? You might literally be nickeled and dimed to death. Those small change purchases can add up.

A cashless vending machine will also absolutely allow the vendor to easily up the price. When it was a strictly cash business, vendors had to consider that having the right change was part of the purchase decision. Now, the vendor can up the price by any odd number they choose.

Finally, if my bank is embedding an RFID chip in my credit card I want to know about it. I could be walking by dozens of RFID readers all of which are picking up my credit card information.

As this InfoWorld video shows, hacking RFID, for things such as making cloned access cards, is in the wild.

Posted by Ephraim Schwartz on April 4, 2007 01:55 PM

April 03, 2007 | Comments: (0)

H-1B visa petitions hit cap limit on first day

The United States Citizenship and Immigration Services (USCIS) announced today that petitions for H-1B visas for 2008 exceeded the cap limitation on the very first day that submissions were being accepted, April 2, 2008.

See a related H-1B blog post written earlier today and the news story, Senate H-1B bill seeks to give U.S. workers a better shot at tech job openings.

The USCIS said it will use a system of random selection and will reject all filings not randomly selected.

Here's what the press release said in part: [Thanks to Greg Siskind, a partner at Siskind Susser Bland for letting me excerpt from his blog, The Visalaw Blog.]

* USCIS has determined that as of April 2, 2007, it had received enough H-1B petitions to reach the FY 2008 H-1B cap and has set the “final receipt date” as April 2, 2007.

* In keeping with its regulations, USCIS will subject H-1B petitions received on the “final receipt date” and the following day to a computer-generated random selection process.

* USCIS will reject all cap-subject H-1B petitions for FY 2008 received on or after Wednesday, April 4, 2007.

* USCIS will reject and return along with the filing fee(s) all cap-subject H-1B petitions that are not randomly selected.

"As of late Monday afternoon (April 2), USCIS had received approximately 150,000 cap-subject H-1B petitions. USCIS must perform initial data entry for all filings received on April 2 and April 3 prior to conducting the random selection process. In light of the high volume of filings, USCIS will not be able to conduct the random selection for several weeks."

I spoke with Siskind, who had some interesting comments to add to the H-1B story.

Siskind, a partner in a firm with an immigration law practice, believes that the news today clearly shows that the demand is "way out of sync with the quota." He also points out that the quota was set back in 1990 "which means Congress was debating it in the '80s," Siskind said.

Siskind also says that nobody now remembers why the number was set at 65,000, but a Congressman who was part of the process told Siskind that its intention was not to limit immigration but to encourage permanent residency.

From Siskind's point of view, the entire H-1B visa system "is a disaster."

A lot of people will agree with that much, but they will have far different reasons than Siskind for saying so.

Posted by Ephraim Schwartz on April 3, 2007 02:45 PM

April 03, 2007 | Comments: (0)

H-1B reform bill to seeker stricter enforcement of visa program

At last there seems to be a recognition on the part of some politicians that the H-1B program as it is now administered is unfair.

Unfair because it allows the largest American companies to hire foreign guest workers at lower wages than American workers.

See our sister publication, ComputerWorld's story, Senate H-1B bill seeks to give U.S. workers a better shot at tech job openings.

The U.S. has a very strong enforcement policy against what is called, "dumping," selling products in the U.S. below cost in order to capture a market. Just this week it was announced that we are imposing a 10 percent tariff on some Chinese goods for this very reason.

But up until now most politicians have looked the other way when employers bring in workers and pay them lower wages.

The bill is called the "H-1B and L-1 Visa Fraud and Abuse Prevention Act of 2007" and it is sponsored by Senators Dick Durbin [D-Ill.] and Chuck Grassley [R-Iowa].

That sleepy little union, AFL-CIO, which has been quiet for the last 20 years or so is actually endorsing the bill and put the news up on its Web site.

In a nutshell the bill requests the Labor Department to hire "200 additional employees to administer, oversee, investigate and enforce the H-1B program."

It also proposes random audits of employers that use H-1Bs and requires companies to advertise job openings for 30 days on the Department of Labor's Web site before submitting an H-1B application.

The bill is still in committee and no date has been set for its release.

Posted by Ephraim Schwartz on April 3, 2007 02:13 PM

April 03, 2007 | Comments: (0)

Freeing IT from the end point

Distinctions in client hardware will soon be irrelevant, allowing IT to focus on app delivery

No one can say exactly when it will happen or which company will be the first to do it, but at some point in the next, say, five years, when a new employee comes on board, the CTO will show up with a $1,000 voucher in hand. "Buy whatever you want," the IT exec will say. "It doesn't matter to IT whether it's a desktop or a laptop, a PC or a Mac."

What the CTO may not bother to explain to the new hire is that IT has gotten out of the client hardware support business. Now it is all about application delivery.

IT owns your workspace. You own your hardware.

If you can't imagine this happening at your company, think for a moment about the consumer space, says Zeus Kerravala, senior analyst at Yankee Group. Look at MySpace or Google. Those Web sites simply provide a mechanism for facilitating communication. Similarly, IT will transform from an organization that manages thousands of desktops to one that facilitates the flow of information.

Perhaps the most immediate driver of this trend is Microsoft Vista and Office 7. Companies are trying to avoid the disruption of installing new systems with new images planted on them, not to mention the expense of buying bigger iron to accommodate these giant apps, says Natalie Lambert, senior analyst at Forrester Research. The solution? Stream the entire desktop environment over the network. Cutting-edge now, this practice will be mainstream within a couple of years.

As business is increasingly conducted over the Web, there are other application delivery issues even more important than Office 7 that IT needs to focus on.

Think of virtualization, SaaS (software as a service), Web 2.0, and the Internet as a business collaboration tool. Application delivery bubbles to the surface as the key driver in all of these technologies, says Andi Mann, senior analyst at Enterprise Management Associates. On top of that, you can add mobile technology and the growing need to send more and more complex applications to remote users.

If I can flip the usual cliche on its ear, you might say that, for IT, as one door opens -- freeing it from having to support PCs -- another door closes -- trapping it into supporting a far more complex network that runs a lot more complex hardware and software.

Of the many vendors I spoke with about this topic, Citrix best exemplifies a company focused almost exclusively on application delivery.

The Citrix Presentation Server was one of the first to virtualize and stream Windows apps to a thin client. Back in 1990, Presentation Server was in essence a big projector. It has since morphed and can now isolate an app from Windows and stream it using only the components of the OS required to run the program. Code-named Tarpon, the current version allows a user to run incompatible applications on the same system -- those that require different DLL files, for example, or an old and a new version of Photoshop.

But IT will need much more than the latest version of Presentation Server if it wants to hand out those vouchers. It will need an end-to-end infrastructure built for delivering a wide array of applications, not to mention the ability to deliver distinct, personalized desktop environments to the end points, according to Wes Wasson, vice president of worldwide marketing at Citrix.

That said, Citrix is reading the tea leaves, and its recent acquisitions are a good indicator of the kinds of hardware and software IT will soon have to manage.

Net 6, which Citrix acquired and renamed Citrix Access Gateway, adds security in the form of SSL and VPN technology. Citrix WANScaler, which comes from Citrix's Orbital Data acquisition, accelerates application delivery to remote offices. And Citrix EdgeSight, from a company called Reflectant, provides performance monitoring at the client.

The complexity of applications, the protocols, the kinds of transactions, and the distance between the user and applications all have vastly different implications for the network and for the managers of the network.

Wasson says application delivery will be the defining IT issue of the next decade. From the looks of it, he is probably right.

Posted by Ephraim Schwartz on April 3, 2007 03:00 AM

April 02, 2007 | Comments: (0)

Microsoft OBAs are too little, too lame

The headline might be a little too rough on Microsoft, "too little, too lame" but I think the company needs to wake up to where the world is headed. While Microsoft offers yet another tactic to keep Office relevant, the world of enterprise IT is moving in another direction.

Microsoft released the third in what will be a series of Office Business Applications, Reference Application Packs [OBA RAP]at the end of last week.

I'm not completely sure of what to make of them but here's what they are and what they are defintely not.

OBAs give companies the ability to do things like take a business process from a line-of-business [LOB] application and plug it into into Word. The idea is to allow workers who are familiar with the Office interface to move a business process along, say a loan application approval process, without having to learn the entire loan application software.

Microsoft is slowly and steadily releasing these OBAs for different veritcal solutons. Each will offer best practices and templates for various line of business processes which can then be customized to suit the actual process a company may be using.

The news OBA RAP is for Loan Origination Systems.

Microsoft is trying to say that Office is relevant and that it can become a development platform that can integrate and interoperate with other vertical applications to create something new. Microsoft hopes that one plus one will equal three.

But, what it is not is an enterprise mashup.

I think Microsoft is reading the market wrong. OBAs remind me of old school EAI, enterprise application integration technology while the entire world is moving to an SOA architecture.

Mashups can do the same thing and over time I think even the most staid of enterprises will not wait for Microsoft to launch its next OBA RAP solution. After all five years from now companies may not even be using Office.

Rather the viral network will sooner or later inform the most conservative IT shop with the news about mashups and how they can easily integrate the logic from one process with the logic from another to create a useful new process. Here one plus one will equal three for sure.

Posted by Ephraim Schwartz on April 2, 2007 03:39 PM

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