Commentaries and insightful analyses on the world of finance, technology and IT.

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November 30, 2008

Mark-to-Market Rules - Worsening the Credit Crisis?

With Citi being forced to seek the help of the U.S. government once again, it is apparent that banks will continue to feel the effects of a deteriorating housing market for some time to come.  While the viability of Citi’s Universal Banking model is being debated, it is becoming increasingly clear that, regardless of Bank-type, mortgage-backed securities are drowning our financial institutions in a sea of red ink. 

Many question whether this deluge of losses is actually necessary.  Bankers are pressuring regulators and lawmakers to make adjustments to FAS 157, the mark-to-market accounting rule in the US.  Put in place in response to the Enron crisis (Enron overvalued its assets to the point of bankruptcy) mark-to-market accounting requires corporations to value asset at their "fair value"; the price the asset would command on the open market. 

Read more on the Think Flat site...

November 28, 2008

Using Your Mobile To Get Mobile

The holiday season is upon us; a time for shopping, family, and eating…and more eating.  Turkey, Ham, stuffing, gravy, chocolate—not exactly a diet of Olympians.  The hustle and bustle of the holiday season also tends to put a crimp on free time.  Between shopping, traveling and spending time with family there is often little time to hit the gym, the courts, or the trails.

Enter Ubifit.  Researchers at the University of Washington and Intel have developed a cell phone application which automatically tracks your workouts.  After clipping Intel’s Mobile Sensing Platform (equipped with an accelerometer) to your waist, your every movement is tracked and recorded.  The software then graphically displays your progress throughout the week.  As you workout, an empty lawn is gradually replaced by flowers—each workout representing a different color of flower.  If you reach your workout goal for the week you are rewarded with a butterfly.

The idea behind the application is simple:  motivate users to workout more.  Early studies show that it works.  Users equipped with Ubifit were more likely to stick with their set workout goals than users without the device.  Visualizing positive feedback motivates people to work harder.

Though Ubifit is not yet available to the public (it is still one to two years away), the concept of using graphical feedback on mobile phones to motivate users is fascinating.  The potential applications are nearly limitless. 

For example, an application connected to your credit/debit accounts to track spending.  As you save throughout the month, a bar inches closer to your goal.  If you spend, the bar goes down.  Though a user may not always save the desired amount, awareness is created.

Another example:  your office wants to save X amount of paper this month.  Each employee in the office is equipped with a program connected to print management software.  As days go by, progress is tracked, and positive or negative feedback is transmitted to employee phones.

As mobile phones become more ubiquitous, and technology continues to advance, I think we will be amazed at how thoroughly mobile applications affect our life.  

November 19, 2008

Sourcing in troubled times

Right in the middle of the meltdown is the Financial Services and the drama in last few months is slowly started to settle down. We don't have companies going bust over the weekend anymore.

I have been thinking about what's going on in the strategic sourcing world recently and what our reaction should be?

First of all, there is a panic in the market. I could not pick up any other word to describe what is happening out there. Unfortunately, lots of people are not able to see it as either they are isolated or they choose to live in another world.

And, people are acting as they would in any panic environment- decisions are taken by gut-feel rather than assessing the market scenario. Every IT sourcing person that I have met in last few months is looking at only one thing and that's cost. Yep, we can keep talking about the other nice stuff like strategic partnership etc. but right now cost is king. 

At the same time some organization are willing to break the mould and enter unchartered territory. Either way, both will require significant innovation in the way services are delivered to client. And' that's a welcome change for everyone. Innovate and help your client. "When people fear, be greedy"- easier said than done.

November 18, 2008

Green Real Estate for Your Data Center

I recently wrote a blog entry about Google’s patent for an offshore data center.  My post was well received in the office and much discourse was produced upon its reading.  In fact, many of my co-workers were keen to the forward looking idea and the concept catalyzed everyone’s imagination.  In the course of our break room conversations, we discussed various scenarios, environments, and locations ideal for building a green data center.  However, of the many great ideas developed during our pseudo deep dive, none were scalable, few were practical, and most lacked the ability to be implemented in the foreseeable future.    

A few days later, while reading an article about Iceland’s economic woes with the recent break room conversation on my mind, I realized a green data center did not require a patent pending design or a wave powered vessel.  Rather, a data center could be green if placed in a location dependent upon green, renewable energy.  And, how did this revelation occur?  Iceland.

You see, Iceland, like Google’s offshore data center, is almost wholly reliant on renewable energy. It’s estimated that over 82% of Iceland’s electricity is created by renewable sources.  Additionally, since 2006, the island nation has produced over 9.7 Billion Kilowatt hours of electricity per year from renewable sources.

Due to Iceland’s unique geological environment where the 200 volcanoes and 600 hot springs create a perfect environment to harness the geothermal power of the earth, renewable energy is in abundance.  Add in plentiful waterfalls and glacial rivers able to produce hydroelectric power and Iceland is well on its way in becoming a 100% carbon free country with the ability to support green data centers. Further adding to its appeal is Iceland’s proximity to the United States and Europe creating a viable destination for data centers as both geographies could be served by the location.

While cost, connectivity, and business climate are certainly drivers for data center sites, searching for data center locations where green and renewable electricity is readily available is an imperative for organization’s dedicated to cutting carbon emissions.  Just so, locations with an abundance of renewable energy, like Iceland, need to take the lead and push organizations to move or build their data centers at green locations.  Together, an amicable relationship between industry and government can be formed for the benefit of our planet.      

To learn more about Iceland’s abundant sources of renewable energy, check out this story  from ABC News.

November 11, 2008

Should I FOSS??

Free and open source software (FOSS) is software which grants the right of users to review, change, and enhance its functionality through the availability of its source code. As discussed in my earlier blog on this topic, Build vs. Buy vs. Download, FOSS has gained both momentum and acceptance as the potential benefits have been increasingly recognized by both individuals and corporate players in past few years. In the current markets, FOSS can provide unique strategic advantage to the organizations.

The following key are some drivers which make FOSS alternative, very attractive and too good to pass up:
·          Lower cost of acquisition
·          Access to libraries of common code of the applications
·          Freedom from specific vendor lock-ins
·          Ability to contribute to and control the pace of releases
·          Community driven support
·          Reduced cost of additional deployments

Come think about the it, the selection and evaluation process for the FOSS vs closed software would be based on similar set of parameters. Without sounding too simplistic, we will need to first check the fitment of the software to the functional needs. The maturity of the software to provide acceptable risk/reward based the adoption profile of the organization (early adopter, mainstream or a late adopter) could be a an important criteria. The deployment scenarios (mission critical or non-mission critical) for the application can be critical to see if the software fits the needs. So, while the evaluation parameters may not be  much different; there may be need to evaluate other risks which may not be part of a closed source software evaluation. Organizations must understand and evaluate the risks involved in open source software acquisition and manage them carefully. There could be various strategic risks associate with the maturity level of the software, support and systems integrations issues, licensing, copy right infringement and total cost of ownership and various tactical and operational issues including lack of documentation, security loop holes in the code which needs proper verifying and checking the integrity of the code and many others. TCO of OSS adoption may vary depending on whether the software is commercial or freely distributed open source software and other implications like the costs of migration, availability of skills internally within the organization.

One key challenge seems to lack of or limited oversight of the open source usage and deployment in organization which is leading to some of the operational risks. The key to the success of the adoption is to instituting enterprise wide governance for OSS adoption. There should be clear approach to usage of licenses and mechanisms for approval and compliance process to avoid litigational risks.

We have seen that there are some really tangible key benefits and yes, there are some risks with the same.

so, now let me ask you - Do you want to FOSS???

November 05, 2008

Build Vs. Buy Vs. 'Download'

Thanks to the recent financial crisis and associated downturn, many in the financial services are scratching their heads real hard to evaluate best strategies to navigate the rough weather and come up with cost cutting strategies.  Evaluating Open source technologies is seeming to be not so bad an option anymore while wading through the downturn challenges.


Looks like Open source firms have been doing quite well in the recent quarters. Business review online confirms the details about the thinking quoting Open source platform and services firm OpenLogic ant their claims show that “OpenLogic has seen revenue from financial services sector in first half of 2008 almost triple the same period in 2007; companies proactively search for open source support – the company has seen inbound support leads go up by more than an order of magnitude in the past year; and in Q3, leads from financial services companies looking for help with open source have already tripled over the previous quarter.”

The Open Source Census, a global, collaborative project to collect and share quantitative data on the use of open source software in enterprise showcases interesting statistics in their report . Some of these details are summarized in the press release of Open Source which states that financial services show the highest use of open source per machine scanned with about financial services companies having about 117 different open source packages installed per machine.

While these data points are interesting to show companies are taking open source seriously, open source is still not being pursued as a key alternative in build vs. buy decisions for business critical applications. Many enterprises would be surprised at the breadth and depth of open source technologies that are now available, often considerably cheaper than commercial software. Today’s environment is forcing the organizations to look at ‘Download’ as third option for a build vs. buy decision.

More than the obvious reasons like financial reasons, it is a fact that the open source technologies have matured really well in various technologies from Application Development Tools, Data Integration and Data management to Hypervisors, content management, communication and collaboration to even domain specific technologies like Quickfix (Implementation of FIX), Quantlib (library for modeling, trading, and risk management ) and Marketcetera's open source Automated Trading Platform.

Gartner seems to agree with this point stating "Many open-source technologies are mature, stable and well supported," they noted in a list of their IT predictions. "They provide significant opportunities for vendors and users to lower their total cost of ownership and increase returns on investment. Ignoring this will put companies at a serious competitive disadvantage." Gartner felt that “By 2012, 80 per cent of all commercial software will include elements of open-source technology”.

"The Best things in life are Free" croons Sam cooke in his 1964 Album.

Free and Open Source is surely one of the better things we will need to refocus on...

Folks, While I am convinced that open source software have come a long way and need serious consideration, if not anything they provides us with the negotiating edge with our closed software vendors.

I would like share some more of my thoughts on this thread soon.. meanwhile..

Happy ‘Downloading’!!