HP is a long time solid provider of computer hardware, and EDS (founded the information technology out-sourcing industry more than 45 years ago) is a longtime provider of system services. The Plan of Merger, dated as of May 13, 2008, by and among EDS, Hewlett-Packard Company and Hawk Merger Corporation, under which EDS would be acquired by Hewlett-Packard Company appears to merge two very strong technology companies into one   diversified technology giant.

Note from Editor: Apart from the obvious financial side of the merfer, the real puzzle is how they’ll fit together. HP has a history of being more flexible than the “solutions in a can” big IT vendors. EDS, on the other hand, brings the experience on managing megadeals that HP lacks but that could hinder the flexibility and responsiveness that made HP different from the “big IT boys”. Still, given EDS’s experience in large projects, I’ll consider HP more for an outsourcing deal, while in the past I may not have.

Microsoft has irked consumers and corporate customers with the most recent version of its Windows operating system, which they complain requires hefty investments in PC hardware and offers a paucity of compelling new features in return. Now there are signs that companies’ reluctance to install Vista is starting to weigh on Wall Street’s outlook for the company’s stock.

Charles Di Bona, a senior analyst at Sanford C. Bernstein and a noted bull on Microsoft, said in a June 10 report that “dampening” adoption of Vista by corporate customers will shave $395 million in revenues and 2 percent a share in earnings from the company’s financial results for the 2009 fiscal year, which begins July 1. According to a Bernstein Web survey of 372 information technology professionals fielded in May, companies expect just 26 percent of their PCs to be running Vista by the beginning of 2011, down from an estimate of nearly 68 percent of computers by respondents to a similar survey a year ago.

Shares Down for the Year

The new survey, conducted primarily in the U.S. in conjunction with Ziff Davis Media and Peerstone Research, also shows Vista’s requirement of running on PCs crammed with lots of memory and powerful processors to be a deterrent. Companies expect to install Vista on only about 10 percent of the PCs they already own, compared with estimates last year that they’d be able to do so on 27 percent of their machines.

“It seems like the IT community has turned tepid to negative” on Vista, says Di Bona in an interview. “There aren’t any features in there they find compelling — even ones that haven’t had bad PR.” For example, companies said in the survey that they were indifferent to Vista’s Windows Presentation Foundation technology for building visually compelling programs, according to Di Bona.

Windows Vista,…

Last week’s column on Gartner Inc. and the thin underbelly of IT was a hit, it seems, with very few readers rising to the defense of Gartner or the IT power structure in general. To be fair I probably should have said that Gartner isn’t totally worthless, but I think their specialists should be more specialized and they shouldn’t promote technologies or products without being darned familiar with them — a lot more familiar than they seem to be at present. But the bigger question is why IT even has to work this way at all?

I don’t think it has to.

Most of the problems of IT start and end with bad management. I speak fairly often to technical audiences and one question I like to ask is simple: If you were hit by a bus tomorrow, could your boss do your job?

The answer is almost always “no.” By “almost always” I mean 97-99 percent of the time.

It’s a question I have been asking for 15 years and the answer hasn’t changed in that time. It would appear bosses aren’t becoming more accomplished, at least not yet.

The implications of this answer are profound. It either means that IT managers aren’t being promoted from within or, if they are being promoted from the ranks, they lose their technical skills almost immediately.

If we drill down a bit further some real truths start to emerge. Whether IT managers are promoted from within or brought from outside it is clear that they usually aren’t hired for their technical prowess, but rather for their ability to get along with THEIR bosses, who are almost inevitably not technical. For every John Reed, who rose from IT to run CitiCorp (and ultimately failed), there are a thousand CEOs who want nothing to do with computers.

It might be easy to say that IT, as a staff — rather than a line — job simply isn’t seen as critical to the success of the organization, but that’s crazy. IT touches every employee and customer every day. Most of what’s accomplished in business these days is ordered, fulfilled, paid for, and analyzed through the use of IT. We can’t eliminate it because now government expects — even demands — that it be there. If something is so important, then, why do the big bosses understand it so little?

For the most part they are kept in the dark.

Since the early mainframe days there has been a priesthood of sorts in corporate computing — a level of executives who felt that their power would be enhanced by keeping technology mysterious. “It’s much too hard for you to understand, Mr. CEO, even if you started out long ago as an electrical engineer. Electrons are different now you know.”

“It’s complex and mysterious, this IT stuff, and dependent on people who don’t think like you or I do,” the CEO is told and he/she believes it because the alternative is laboriously becoming an expert in an area they don’t like or thought that they had outgrown. This leaves IT in a bit of a vacuum but it is a vacuum with some power. And in most organizations power ultimately manifests itself in head count, so IT organizations grow like crazy, becoming ever less efficient in the process.

The typical power structure of corporate (which includes government) IT tends to discourage efficiency while encouraging factionalization. Except in the rare instance where the IT director rises from the ranks of super-users, there is a prideful disconnect between the IT culture and the user culture. It’s the AV kids from school versus the “normal” kids. IT organizations often disrespect users and users often disrespect IT. This is not good for either group.

One of the real miracles of the PC revolution was that it often was led by super-users — enthusiasts who had a PC at home before they had one at work and who led their co-workers as much through example as skill. Well those days of the 1970s and ’80s are long gone and IT is today as entrenched and isolated as it was during the mainframe era of the 1960s.

In time this will end through the expedient of a generational change. Old IT and old users will go away to be replaced by new IT and new users, each coming from a new place. This is the same challenging effect I wrote about a few weeks ago for education. A generational change will completely alter our cultural approach to information technology. And it can’t happen soon enough for me.

An analogy we used to make years ago was comparing the PC industry to the early U.S. auto industry. There were hundreds of companies in both businesses at one time (in the 1920s for cars and the 1980s for computers), but each eventually consolidated into a dozen or so major brands and a few hot rods. Our problem using the auto analogy today is that we haven’t let it evolve. Where IT may have once been like the 1920s auto industry, now it is becoming more like that same industry in the 1980s.

This transition goes far beyond simple brand consolidation. When was the last time you worked on your own car? You could change your oil, probably, but you don’t, right? And you haven’t done so since the late 1970s or early 1980s. Same for IT today, where the do-it-yourself attitude of the 1970s has given way to a do-it-for-me attitude. I’m not saying this is bad. Indeed, I think it was inevitable as the market broadened from just PC enthusiasts until it today encompasses everyone.

Al Mandel, who helped market the original LaserWriter at Apple and later had several high-level positions at AOL, used to say that the step after ubiquity was invisibility, and that’s where we are headed today with IT, which has become so pervasive that everyone uses it to the point where NOT using it is no longer even an option. The problem is our management of IT hasn’t evolved as quickly as our assimilation of it. We’ll probably still be fighting over who owns IT long after the IT resources, themselves, become effectively no longer ownable, except in our corporate minds.

I’m writing this column on an iPhone, for example. It isn’t the easiest or best writing environment but, as Adam Osborne used to say, it is good enough. It offers the input, output, networking, and storage I need and almost nothing I don’t need. I’m not saying the iPhone or smartphones like it are the absolute future of personal computing, but I AM saying the desktop PC is its absolute past.

We’re in an era of transitioning business models. IT is shrinking in traditional terms and will continue to shrink as cheaper mobile devices replace more expensive desktops for some workers. Software will change from being a product to a service. And because the incumbent players in the software biz are especially uncomfortable as service organizations, we’ll inevitably see some changes in that pecking order. Microsoft will go down and Apple, for example, will probably rise. Users will be changed forever as new paradigms emerge, but for a few more years at least, corporate IT won’t notice, being too darned busy fighting its own internecine wars.

I don’t know if you have seen movies wherein hackers or some information technology thief before doing some intricate on-line attack sometimes scours for information from garbage bins. They are looking for vital information from electricity bills, phone bills, shopping bills, credit card statements, tax files, medical records, to mention a few. The purpose is to ultimately use them for hacking a person or a company’s bank account or web portal.

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I have this notion to write a series of columns from time to time under the title “Reality Check” — columns intended to explain how the world of Information Technology actually functions. Because like any other entrenched, complex, and often closeted industry, things in IT don’t really work the way many people think they do. I’m guessing the Vatican is a bit like that, too. So I’ll be looking at various IT players and their roles and trying to put them into perspective, much as I did recently with a column or two about the role of computer consultants. This week the topic is Gartner Inc., or rather all the Gartner-like operations that give advice about technology to America’s largest businesses: what do these guys actually DO?

Not much of real value I’m afraid — at least of value in my view.

While Gartner is the biggest of these outfits, I need to say that my comments apply equally to Gartner’s main competitors, Forrester Research, International Data Corp. (IDC), and the Yankee Group.

Here’s what Gartner says it does, straight from their website:

“Gartner offers the combined brainpower of 1,200 research analysts and consultants who advise executives in 75 countries every day. We publish tens of thousands of pages of original research annually and answer 200,000 client questions every year. We can help you make smarter and faster decisions. Our years of relevant experience and institutional knowledge prevent costly and avoidable errors. Be confident that with Gartner, your decisions are the right decisions.”

So Gartner and, by association, Gartner’s competitors help customers make better IT decisions. There is nothing inherently wrong with that. But why do governments and big companies NEED help making IT decisions? Don’t most companies hire IT professionals to make those decisions in the first place? Do they really need to spend more than $2 billion per year between these consulting companies just to make better IT decisions?

The truth is that there is no IT “profession.” Most of what IT managers know about IT they learn from vendors, consultants, and folks like Gartner. Because they feel isolated, and because the IT vendor/consultant/media system encourages them to worry about such things, IT managers tend to feel they must have their important decisions validated and Gartner is the most popular place to find validation. Yes they wield a lot of power, but it is often the power of discovering the obvious.

It’s all about churn. If customers aren’t buying stuff they won’t worry about buying decisions, so they are always encouraged to buy. If customers don’t change their IT infrastructure (or change it too slowly) they might become confident in their own ability to make the right choices, which would threaten the consultant relationship.

How often do these consultants tell their customers that everything is fine and no action is required? Almost never. In fact I’m tempted to say “absolutely never” simply because I haven’t heard of such an instance, but I’m playing it safe here.

After all, I’m attacking the very temple of IT.

There are themes at Gartner and its competitors — ideas that are presented on an almost seasonal basis like adding fins to change a 1956 Chrysler New Yorker into a 1957 Chrysler New Yorker. Two such themes that are popular with such consultants right now are offshoring/outsourcing and getting rid of legacy applications to gain agility, whatever that is.

I’ve written columns and columns about offshoring and outsourcing and the success of both policies is decidedly mixed, unless perhaps you are outsourcing down the street and offshoring Lake Michigan.

Outsourcing, while a very popular recommendation to improve IT, is treating the symptom and not the problem. The problem is IT applications require lots of ongoing maintenance and that costs labor, meaning REAL MONEY. Rather than make applications more reliable and reduce problems, IT managers seem to prefer shopping for cheaper labor. The problems are still there. It is cheaper to fix them with offshoring and outsourcing, true, but it often takes longer. If the end users — the people who actually make MONEY for the company (IT doesn’t, Lord knows) — are unable to work from time to time, this is okay because IT is spending less money.

Yeah, right.

Much of this comes down to the decided lack of professionalism in IT, which is after all a very new job classification. There is a huge difference, for example, between someone with an engineering degree and someone in IT who calls himself an engineer. Real engineers are often valued employees. Their opinions matter and they have real responsibilities. Good companies know engineers are important to their business and treat them accordingly. But IT workers are a commodity and are treated as such. Many IT workers are clueless about the technologies they are working with. They aspire to be project managers and are often not very good at that either.

Into this knowledge vacuum come the vendors, who want to sell stuff, and the consultants like Gartner, Forrester, IDC, and the Yankee Group, who need IT managers to feel uncertain about every decision except the decision to buy something, anything. Then look at the number of “research reports” that are commissioned by vendors. Uh-oh.

The five P’s of IT are Pride, Prejudice, Politics, Price, and Performance, with the last two being by far the least important. Consultants like Gartner are very useful for minding the pride and politics, their real function being to provide $2 billion worth of IT management CYA per year.

Now that I have alienated an entire industry, let’s turn to this week’s deal for Hewlett-Packard to buy Electronic Data Systems for more than $12 billion in cash. I’m not here to say this is the worst idea in the history of bad ideas, but I wouldn’t do it.

The goal here seems to be size for the sake of size, because it sure isn’t size for the sake of profitability. This is a business segment, remember, that IBM has been carefully and quietly leaving for more than a year now only to have HP jump in with both feet by purchasing a competitor less profitable at this stuff than IBM. The result will be a bigger business for HP that returns lower profit margins, which makes no sense to me.

I wonder what would happen to an outfit like HP Services if the company just decided to forget about acquisitions and simply invest $12+ billion in their current operation? Heck, half the people working right now in HP Services probably worked at some point in their careers for EDS (or IBM). What DNA is HP acquiring here that they don’t have already?

None.

It just looks better to Wall Street, which loves acquisitions with their associated investment banking fees but doesn’t seem to understand in the least the idea of boldly investing in an existing business.

Bill Hewlett would shake his head.

Microsoft Chairman Bill Gates and South Korean President Lee Myung-bak discussed information technology investments and the future of the Internet on Tuesday during a brief visit by the software mogul and philanthropist.

“We’re approaching the second decade of (the) digital age,” Gates told Lee at the start of their meeting at the presidential Blue House, according to a media pool report. Press access at Lee’s residence was limited.

“The Internet has been operating now for 10 years,” said Gates, who mentioned he was making his first trip to South Korea since 2001. “The second 10 years will be very different.”

The Blue House said in a statement that Microsoft, the South Korean government and South Korean companies will invest a total of US$313 million (EU202 million) in information technology for vehicles, games and education.

Earlier, Microsoft Corp. and automakers Hyundai Motor Inc. and Kia Motors Corp. announced a deal whereby the South Korean companies will use Microsoft’s in-car software, which allows people to control personal music players and telephones with voice commands.

The company has a one-year exclusivity deal on the software with Ford Motor Co. in the U.S., but that expires in November. Fiat also has been selling cars with the software.

“We’re doing some very interesting work on automobile software,” Gates said after having dinner with Lee. “That’s a really wide open area where some very exiting things will come out of.”

Lee, a conservative former construction CEO, swept into office in February with a vow to boost economic growth through deregulation and increased foreign investment.

The deals announced during Gates’ visit would boost South Korea’s economic growth by as much as 7 trillion won (US$6.9 billion; EU4.4 billion) over the next five years, the Blue House statement quoted Gates as saying.

Besides meeting Lee, Gates later delivered a speech at an event sponsored by South Korean…