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5/18/2006
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Chinks In Outsourcing's Armor

In This Issue:
1. Editor's Note: Chinks In Outsourcing's Armor
2. Today's Top Story
    - AMD Adds Dual-Core To Mobile PC Platform
3. Breaking News
    - Apple Fixes Firmware, Leaves Users Confused
    - Windows Live Mail Almost Supports Firefox
    - Blue Security Gives Up, Spammer Wins
    - Outsourced IBM Workers To Get Unemployment Benefits
    - Tighter BlackBerry, Lotus Domino Integration On Tap
    - Phone Companies Fight Back Against Spying Accusations
    - Brief: Google Updates Online Video Service
    - Brief: Microsoft Patches Core Duo Battery Bug
    - Video Social Networking Enables Movie-Mashup Contest
    - Which Windows Live Search Is It?
    - Diebold Cancels Outsourcing Contract, Brings Home IT, ERP
    - Lenovo Unveils New ThinkPads
4. Grab Bag: Internet Everywhere--Is That A Good Thing?
5. In Depth: Open Source
6. Voice Of Authority: Mobile Devices
7. White Papers: Risk Control
8. Get More Out Of InformationWeek
9. Manage Your Newsletter Subscription

Quote of the day:
"For a list of all the ways technology has failed to improve the quality of life, please press three." -- Alice Kahn


1. Editor's Note: Chinks In Outsourcing's Armor

When Diebold said Wednesday that it will take over--or more precisely, take back--an Oracle ERP implementation and some additional IT-related functions, resulting in a financial charge and an end to its contract with Deloitte Consulting, it didn't explicitly point fingers or assign blame.

It's not a stretch, however, to read between the lines and conclude that outsourcing failed in this case. Or at least, outsourcing failed to meet the company's expectations. Diebold said in a statement: "This decision is designed to provide the company with more control and flexibility over its IT operations as well as the ability to accelerate its remaining ERP deployment."

Of course, outsourcing proponents often contend that hiring out IT gives companies the flexibility to focus on "core functions" (a position that presumes IT isn't a core function) and greater speed in deploying systems and achieving business goals. But Diebold is saying, in effect, outsourcing wasn't fast enough and didn't deliver the expected flexibility.

"Regaining direct control of our IT operations and ERP implementation will allow us to expedite the process of realizing the long-term benefits of an enterprise-wide information system," Diebold CEO Thomas Swidarski said in the company's statement. "This strategic decision is critical to achieving the operational improvement targets we have set as well as positioning us to be more flexible and responsive in meeting the needs of our customers."

So in addition to being rigid and slow, outsourcing also proved costly and an impediment to serving customers well. I've argued previously in this space that we will see more companies express dissatisfaction with outsourcing as they turn over more functions to third parties.

What can we learn from Diebold? Efficient, effective IT is as much a part of a company's financial success as quality products, good customer service, and strong financial controls. That's not to say that outsourcing doesn't or can't work, or that there's no place for outsourcing. But the view that IT is a function that any third party can come in and take over, on a plug-and-play basis, is naive and dangerous. It can also be costly: Diebold will incur a 7-cent-per-share quarterly charge to terminate its contract with Deloitte.

What's your view? Is this one in what will be a long line of failed outsourcing efforts? Or is this an isolated case where reality couldn't meet expectations? Please weigh in at my blog entry.

Tom Smith
tsmith@cmp.com
www.informationweek.com


2. Today's Top Story: Dual Core

AMD Adds Dual-Core To Mobile PC Platform
While Intel has been wildly successful with its Centrino processor, AMD's market share has been growing steadily.


3. Breaking News

Apple Fixes Firmware, Leaves Users Confused
Although Apple said that the update was to System Management Control firmware, it was up to MacBook Pro users to figure out that SMC is the specialized controller that manages thermal and power conditions, and is in charge of running the portable computer's fans.

Windows Live Mail Almost Supports Firefox
Poor spellers won't have a backstop in Firefox, since spell check is only available with Microsoft Internet Explorer. Other missing features are more minor.

Blue Security Gives Up, Spammer Wins
The anti-spam venture embroiled in a denial-of-service attack that brought down millions of blogs two weeks ago has closed shop. One observer wonders why Blue Security wasn't better prepared.

Outsourced IBM Workers To Get Unemployment Benefits
The Department of Labor has ruled former IBM staffers can seek benefits under the Trade Adjustment Act. In the past, IT workers have been shut out from claiming TAA benefits.

Tighter BlackBerry, Lotus Domino Integration On Tap
RIM and IBM are working together to simplify the entire process of connecting the BlackBerry and the Lotus Domino messaging server.

Phone Companies Fight Back Against Spying Accusations
A judge has ruled that internal AT&T documents can be used in a case accusing AT&T of helping the National Security Agency spy on Americans, but the documents will remain sealed.

Brief: Google Updates Online Video Service
Google has eliminated the need to use separate software to upload films to Google Video, replacing it with a Web-based uploader that can accomplish the task in two clicks.

Brief: Microsoft Patches Core Duo Battery Bug
Microsoft has posted a Windows XP patch to fix a power drain problem for notebooks running Intel's Core Duo processor.

Video Social Networking Enables Movie-Mashup Contest
Contestants can go online to remix the movie's video and still clips into a trailer to promote the film.

Which Windows Live Search Is It?
Microsoft has named both a desktop application and its Web search service, you guessed it, Windows Live Search.

Diebold Cancels Outsourcing Contract, Brings Home IT, ERP
In a case of life imitating survey results, Diebold's decision will cost the company about $7 million.

Lenovo Unveils New ThinkPads
The Z61 series offers integrated or discrete graphics, an integrated camera and stereo microphone for videoconferencing, Wi-Fi, and integrated wireless WAN.

All Our Latest News

Watch The News Show

In the current episode of The News Show:

John Soat with "Hard News, Over Easy"

Stephanie Stahl with "Immigration Issues"

Sacha Lecca with "Sake To Me"


----- The latest research, polls, and tools -----
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4. Grab Bag: Internet Everywhere--Is That A Good Thing?

British Cities To Fit Internet Antennae On Streets (Ireland On-Line)
Residents in 12 British cities will soon be able to surf the Internet in the street without plugging into a phone cable under a series of deals with councils, BT says.

Central Park To Become A Web Site (New York Post)
Get out your Frisbee and your laptop--Central Park is going wireless. Parks Department officials say they expect to have the park ready for wireless Internet access by the end of July. Every other city park will get the technology by the end of summer.


5. In Depth: Open Source

Oracle Contributes Ajax Technology To Open Source Community
The database company said developers would be able to assemble the reusable components on a page and connect them to an application data source.

Sun's Pledge To Make Java Open Source Leaves Key Questions Unanswered
Sun hasn't said who will manage the code or when it will become open source.

IBM Bets Big On Open Source In Next Release Of Lotus Notes
Notes will support the XML-based OpenDocument Format and the Eclipse open source framework.

Motorola To Release Mobile Java Framework Into Public Domain
While most mobile phones support mobile Java applications, the frameworks for developing and testing applications vary among developers and device vendors, so Motorola is offering its version up in a bid to create a de facto standard.


6. Voice Of Authority: Mobile Devices

Treo 700p: It Can't Wash Your Car (Yet), But It Comes Close
Hey, all of you traveling businesspeople out there! Put down your BlackBerrys and give the new Treo 700p smart phone a try. It may not come standard with "push" E-mail, but it combines the best of both worlds--professional and personal--into one neat package.

BlackBerry Vs. Laptop: It's No Contest
If you could use only one device for an entire day, which would it be: your BlackBerry, cell phone, iPod, or laptop?


7. White Papers: Risk Control

The Strategic Shift To Risk Control: Reducing The Time, Cost, And Risk Of Business Application
Now more than ever, enterprise survival depends on the flawless performance of ERP/CRM software. This white paper explains why IT leaders are turning to Mercury BTO Enterprise to control risk and predict with confidence that their ERP/CRM applications will meet the highest business requirements.


8. Get More Out Of InformationWeek

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