To sum up the year, InformationWeek's editors present their list of the most overrated and underrated technologies, ideas, people, and trends.
When 2004 goes down in the books, it might mark the year companies spent deciding where to invest next. An oversupply of worldwide IT talent led many executives to move programming and other tasks offshore, but underselling their own staffs' ability could make the cost savings short lived. More companies adopted open-source software, but the trend could be undermined by lawsuits that threaten those who use it. Among tech companies, the Google guys were overexposed, but most people underestimated Larry Ellison's ability to snare PeopleSoft.
Overrated Adversary: OFFSHORE OUTSOURCING
Underrated Adversary: SHORTSIGHTED EXECUTIVES
As hot-button IT issues go, offshore outsourcing probably gets top honors for 2004. While companies hoped to embrace the advantages of shipping IT work to low-cost countries such as India and China, the public reacted with legitimate questions about the relationship between U.S. layoffs and the use of foreign workers, and politicos parlayed the angst into election-year rhetoric.
But the smoke generated by the offshoring debate obscured the big picture, which has to do with an increasingly global economy and the changing nature of technology work. And short-sighted executives, bent on offshore outsourcing for bottom-line reasons only, may risk trading innovation and competitive advantage for short-term gains. Wal-Mart Stores Inc., the world's biggest retailer--and arguably the most tech-savvy company in any industry--does all software development in-house. "We'd be nuts to outsource," says CIO Linda Dillman (see "Wal-Mart's Way," Sept. 27, 2004). Outsourcing in general, including offshoring, is a valuable business-technology strategy. But it needs to be employed for the right reasons. --John Soat (firstname.lastname@example.org)
Overrated Money Saver: OPEN-SOURCE SOFTWARE
Underrated Money Saver: COMMERCIAL SOFTWARE
Many open-source software products can be downloaded free over the Net, while some commercial software licenses ring up in the millions of dollars. Both are true, but also an oversimplification of software's real cost.
Compare Red Hat Inc.'s midtier standard price for Linux with tech support ($799) to a roughly comparable Windows Server 2003 license from Microsoft ($999), and you begin to see how the numbers really crunch. And those are just list prices. Among the revelations to surface in the Justice Department's failed attempt to block Oracle's proposed takeover of PeopleSoft Inc. was eye-opening evidence of deep discounting. Penny-pinching CIOs can play Red Hat against Microsoft, Microsoft against Oracle, and Oracle against SAP.
In addition, there are costs associated with open-source software that aren't always obvious. Yankee Group analyst Laura DiDio reports that in-demand Linux system admins can command salaries 20% to 30% higher than Windows staffers. In addition, third-party tools and intellectual-property insurance can jack up the overall cost of open-source environments even more. So, here's how to do the math. Add up all the costs to run an open-source stack. Subtract thousands of dollars in concessions from proprietary-software vendors anxious to negotiate. The difference might be less than you think. --John Foley (email@example.com)
Overrated New Media: FLY-BY-NIGHT BLOGS
Underrated New Media: CREDIBLE JOURNALISM
According to this year's election hype, freewheeling bloggers rewrote the rules of journalism. If that were true, it would be a shame: Fairness and accuracy aren't really concepts in need of revision. While getting people to agree about what constitutes fair coverage may be impossible in an era when "fair and balanced" is a marketing slogan, accuracy can be better measured--and, here, too many blogs fall short.
Most are echo chambers--only as accurate as the publications they cite. They start with stories posted by news organizations--the kind that do original reporting and confirm details with sources--then add opinion. Without that journalistic seed corn, most blogs would be barren. There are, of course, outstanding exceptions, and some of these involve current or former journalists. But the rise of a handful of insightful, well-written, original online publications doesn't reduce the value of fairness and accuracy. Rather, it reinforces their importance.
"Journalism always has been a vast field with a wide range of quality and standards," says Stephen Burgard, director of Northeastern University's journalism school, in an E-mail. "Generally speaking, more information is better. But since the new wave of opinion writing online hasn't been accompanied with a corresponding expansion of the 24-hour day, the burden falls more heavily than ever before on the reader to find good, trustworthy sources who think twice before firing." --Thomas Claburn (firstname.lastname@example.org)
Overrated E-Commerce Execs: THE GOOGLE GUYS
Underrated E-Commerce Exec: MEG WHITMAN
There are Sergey Brin and Larry Page, lounging around those giant multicolored yoga balls in their whimsical corporate headquarters, the Googleplex. Here are Page and Brin in matching black suits, looking like a weirdly geeky version of the early Beatles. The Stanford guys made good, becoming insta-billionaires on the strength of Google Inc.'s high-flying initial public offering. Google isn't just sitting on its search-engine laurels. But that $170 stock still might be inflated. Google could be next in line to get Netscaped by Microsoft.
Meanwhile, eBay Inc.--that other Bay Area E-commerce company--reported the same third-quarter revenue ($805.9 million) as Google, and nearly as much net income ($182.3 million versus $195 million). CEO Meg Whitman has presided over eBay since 1998 and was a manager at old-line companies Hasbro Inc. and FTD Inc. when Google's presidents were still writing code in the dorms. While slow and steady doesn't always win the race, which Seattle-area company would you rather compete with: Amazon or Microsoft? Now who's feeling lucky? --Aaron Ricadela (email@example.com)
Overrated E-Mail Cure: SPAM FILTERS
Underrated E-Mail Cure: FREE E-MAIL ON THE WEB
Remember when your romance with E-mail was new as a field of daisies? It was hard to think of anything else, wasn't it? What will it say today? What will I learn from it? I can't go to lunch; I might miss an E-mail.
But E-mail changed. It became a stranger, an impudent acquaintance demanding your attention and giving you gifts you neither asked for nor wanted. For practical purposes, we can't divorce ourselves from E-mail, but we can filter its contents. We blacklist or white list our correspondents, giving us something new to do with our time: drawing up lists of friends and foes. We segregate questionable messages in a folder we're forced to shovel often. We clog our in-boxes with warnings about suspect notes in the folder. Among the 800 spammy messages lurks a missive from your boss--and you'd better not miss it!
So you do anything to avoid E-mail. Wash windows. Wash your neighbor's windows. Except now people are signing up for free E-mail from Google, Microsoft, Yahoo, and others. Now E-mail is no longer surly. The old, bad habits haven't caught up with you on the new service. The fields again teem with daisies ... so far. --Jim Nash (firstname.lastname@example.org)
Overrated Lawsuits: SCO GROUP VS. THE WORLD
Underrated Lawsuit: U.S. VS. ORACLE
OK, give us one good reason why a company would want to run Unix on Intel machines instead of Windows or Linux. SCO Group apparently couldn't think of any, either, so it's trying to make money the old-fashioned way: in court. The vendor has filed high-stakes lawsuits against AutoZone, DaimlerChrysler, IBM, and Novell--the buyers and sellers of server-side Linux. SCO claims they've either violated its Unix intellectual-property rights or interfered with its ability to do business. (A Michigan judge tossed out most of the DaimlerChrysler suit in September.)
SCO's litigious ways had little tangible effect on IT buying this year. On the other hand, its suits have pointed out some genuine risks companies take when they run open-source software.
Even if SCO loses all of its lawsuits, it has people thinking about a key issue: intellectual property in the digital age.
The courtroom has been friendlier to Oracle CEO Larry Ellison, who capped his year-and-a-half-long pursuit of PeopleSoft this month by snaring the company for $10.3 billion. A September ruling by a federal district judge against the Justice Department--which sought to block the deal by arguing it would hurt industry competition--paved the way for Oracle's success. Now Oracle is the largest U.S. business-apps vendor, second only to SAP. And Justice is 0 for 2 this decade against the country's largest software vendors. --Larry Greenemeier (email@example.com) with Aaron Ricadela
Overrated Tech Toys: CELL PHONES
Underrated Tech Toy: iPOD
We know, it's hard to call underrated a product that 4 million people are expected to buy this quarter alone. But Apple Computer's omnipresent iPod--who didn't catch U2 rocking out with one in that TV commercial?--makes a far better tech toy than our even more ubiquitous friend, the cell phone.
It's a matter of plugging to stay unplugged. We're tired of being tethered to work (and friends) no matter where we go: on the bus, in a restaurant, in the restroom. And that's not to mention the annoyance factor when someone's boss, boyfriend, or best buddy rings up for a detailed chat aboard mass transit, and we're forced to share the enclosed space.
Here's a suggestion: Set the cell phone on silent, and slip on a pair of those dreamy white earbuds. Instead of being held captive to the conversational whims of your social and business circle, and making a captive audience of everyone around you, you'll soon be within your own head, with your own music, far away from that looming deadline and nagging boyfriend. Twenty-Gbyte iPod? $300. Stopping the chatter? Priceless. --Aaron Ricadela (firstname.lastname@example.org)
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.
Join InformationWeek’s Lorna Garey and Mike Healey, president of Yeoman Technology Group, an engineering and research firm focused on maximizing technology investments, to discuss the right way to go digital.