QuickREAD

September 13, 2006

IT Security is a War Zone, and the Bigger You Are, The Worse the Attacks Are
The first set of results from the latest annual CIO Insight Security Survey provides an update from the war zone that is IT security. There's plenty of bad news: over half of companies over $1 billion report security breaches in the past 12 months, and 45 percent have been targeted by organized criminals. Penetration by spyware and viruses remain problems, but they're not the only ones: nearly half of all companies that have had security breaches say equipment containing company data has been lost or stolen. Many other organizations besides the Veterans Administration and Fidelity Investments have lost laptops containing sensitive personal data.
What's behind these unhappy numbers? We asked respondents to name their top three internal security concerns, and which technologies are seen as the top three security threats. Careless, risky employee behavior, lack of awareness and management resistance still have CIOs worried, while vulnerabilities in Microsoft software top the list of technical threats. In fact, 30 percent say their company has moved some systems off Windows to reduce security risk.
Source: CIO Insight, http://www.cioinsight.com/

Electronics Industry May Soon Find China's Environmental Laws are Tougher than Europe's
Just when the electronics industry thought it had cleared one of its toughest regulatory hurdles in years—the European Union's RoHS directive, which took effect in July—it will face what could be an even steeper challenge from China.
Spurred at least partly by headlines about massive environmental accidents such as the 2005 petrochemical plant explosion that released 100 tons of benzene into the Songhua River, the Chinese government has started to implement new environmental regulations that may have a big effect on the electronics industry. The most imminent law, part of which will take effect on March 1, 2007, is similar to but in many ways more stringent than the EU's RoHS.
Source: Electronic Business, http://www.edn.com/

If Your Processes Define Your Company, Just How Flexible are Those Processes?
Not a company exists whose management doesn't say, at least for public consumption, that it wants an organization flexible enough to adjust quickly to changing market conditions, lean enough to beat any competitor's price, innovative enough to keep its products and services technologically fresh, and dedicated enough to deliver maximum quality and customer service.
Using this perspective and implementing enterprise resource planning systems to view their enterprises, corporations soon recognized that they were defined by their processes, with technology serving as the underlying network linking these processes together. However, our reliance on these standardized systems has come with a cost: We're often unable to modify these processes, as the supporting systems lack the necessary flexibility to easily accommodate change. These systems often fail to deliver sufficient operational visibility, since the processes are locked away. It's like knowing when the train departed and when it's expected to arrive, but having no idea where it is in route.
Source: Industry Week, http://industryweek.com/

In Procurement Outsourcing, Companies Become Much More Strategic
Now that human resources outsourcing and finance and accounting outsourcing have taken deep hold in corporations, procurement outsourcing is next up in the business processes outsourcing batting order. Aberdeen Group was curious to see how enterprises have adopted PO today and what their plans are two years out.
"We wanted to find out the factors causing companies to outsource procurement as well as the reasons why they rejected outsourcing," says Rick Saia, research analyst in the Global Supply Management practice for Aberdeen Group. In addition, his team wanted to determine best practices in technology, processes, and systems. "We got a pretty good picture of the yeses and no's of procurement outsourcing," Saia says.
The result is The Procurement Outsourcing Benchmark Report: Moving Beyond Cost Reductions. The news is that procurement organizations are indeed moving beyond cost reductions and are becoming more strategic. "Companies today want to make sure they are getting the best product at the best price at the right time," says Saia.
Source: Outsourcing Journal, http://www.outsourcing-journal.com/

Location-Based Solutions May Have Many Benefits, But Questions About Them Abound
Like pennies from heaven, global positioning system (GPS) coordinates now fall from satellites in the sky to tiny cell phones on earth. Streams of GPS data flow invisibly from cars and trucks to police stations and enterprise dispatch centers, transforming raw numbers into maps, turn-by-turn driving directions, timesheets and even route optimization and customer invoices. Employers are also using location technologies to track mobile workforces, vehicles and other heavy-equipment assets. Both commercial and consumer appetites for location-based services (LBS) are spurring the growth of handset-based GPS at growth rates even faster than those for installed, in-vehicle units.
Is all the tracking necessary? Is it private? How useful are locator systems in improving operational efficiencies and corporate bottom lines? Which locator systems will dominate the handset and in-vehicle markets as consumers and smaller commercial outfits hop on the mobile LBS bandwagon?
Source: Mobile Enterprise, http://www.mobileenterprisemag.com/

Donate Obsolete or Unusable Inventory and Reduce Your Corporate Taxes
Don't throw away inventory when you can give it to charity and take a charitable deduction. The inventory donation deduction is generally limited to the inventory's cost basis. For corporations, the deduction is also limited to 10 percent of taxable income. An exception: When making donations to a qualified charity, C corporations may claim a larger deduction beyond the cost basis, but it must meet these requirements:
• The charity must use the donated inventory to care solely for children, or sick or needy individuals;
• The charity must keep the items (it can't sell or exchange donated inventory);
• The charity must provide you with a written statement promising to comply with these requirements.
The corporation may then deduct the cost basis plus half of the appreciated inventory value (up to 200 percent of basis), provided it doesn't exceed the 10 percent taxable-income limit (excess may be carried forward five years).
Source: Industrial Distribution, http://manufacturing.net/

Think You Can Just Jump in and Provide Logistics Support for Electronics Industry?
For logistics companies serving the electronics industry, change has come in the form of a dynamic environment that's looking far more complicated as rivals line up with creative offerings and customers demand services well outside the sector's traditional offerings.
The challenges facing logistics companies are immense: an expanding global supply chain that is moving into new geographical territories in Europe and Asia, growing demands from customers for more flexible and customized services, and end-of-life issues for various technology products that must be disposed of in an environmentally friendly way. Service providers must respond with innovative programs that establish deeper relationships with their electronics customers, according to industry sources.
"It's a time for assessment, a time for recognition that customers are expecting a lot more in the way of physical services and on-the-ground presence, information services and even managed services," said Beth Enslow, senior vice president of enterprise research with the Aberdeen Group. "Third-party logistics players need to do some soul searching and figure out what their portfolio is going to be, because other companies out there are looking to provide logistics services to the electronics industry."
Source: Intelligent Enterprise, http://www.intelligententerprise.com/

Toyota Feels 'One-Piece Flow' Works Better for Its Production Model than Mass Production
One of the key ways Toyota transformed the world of automotive manufacturing is by introducing the concept of one-piece flow—a production technique competitors are still struggling to adopt.
In Henry Ford's world of mass production, processes are designed to produce components or parts in large quantities. In other words, bolts, gears, transmissions or seats are made in large quantities and pushed to the next stage of production, where they sit in inventory until needed. Mass production has significant benefits, as Ford proved. It can greatly lower the cost of producing individual parts or pieces, and workers become extremely proficient in a certain trade or skill.
But it also has its drawbacks. The first is the need to store and constantly shift inventory. The second is waste. If consumer demand suddenly shifts and there is no longer a demand for a certain vehicle or option, there may be thousands of units in the supply chain that are no longer needed. Also, if a part or component has a defect, that defect may not be discovered until some later point in production or after delivery, at which time thousands of units may have been produced.
Source: Baseline, http://www.baselinemag.com/

Demand for On-Demand Software May See Yearly Growth of 20 Percent or More
Renting software over the Web, a concept known in the computer industry as on-demand software or Software as a Service (SaaS), solves a lot of big problems companies have had with business software.
For starters, the applications are hosted and maintained by the software vendor—not an internal IT staff—and then delivered over the Web like a service. The software is less expensive and easier to get up and running.
What's more, customers typically buy a monthly subscription rather than pay a huge up-front license fee that can easily run into millions of dollars for big corporations and require board approval. Even better: If the software isn't to customers' liking, they just stop paying.
In the old world, software was expensive and took years to install. The chances of just ripping it out were about as likely as Windows going open source.
This year, on-demand software vendors are expected to rake in just under $2bn, up from $1.5bn last year, according to AMR Research. That's still less than 10 percent of the overall software market, but it's growing more than 20 percent a year, compared with single digit growth in traditional software. Though there's widespread disagreement on how pervasive this change will be, on-demand is a powerful enough trend that the incumbents have been scrambling to come up with a strategy.
Source: CRM Buyer, http://crmbuyer.com/

Manufacturer Stamps Out Phantom Inventory by Cleaning Up Dirty Data
Stampin' Up Inc. is a direct sales company in Riverton, Utah, that manufactures and distributes rubber stamp supplies. In the summer of 2004, at the end of its highest sales season, Stampin' Up's manufacturing resource planning system stopped sending the company orders to make more stamps because it was showing that the items were already in stock. But it was inventory that didn't exist. The culprit: dirty data.
"It took a few days to figure it out," says Steve Gockley, manager of Web infrastructure, Web sites, and business intelligence and analytics. "Once it was found, we had to cut work orders and do some emergency manufacturing."
Lucky for Stampin' Up, the backlogged products weren't available from competitors. Otherwise, customers might have gone elsewhere. But employee morale suffered. "It takes a while to build confidence back up," says Gockley.
Dirty data is data that is incorrect, missing or misplaced. And it's everywhere. In a 2006 poll of 1,160 knowledge workers by Harris Interactive Inc., 75 percent of the respondents reported having made critical business decisions based on faulty data. "In any company of any size, dirty data is a factor," says Gockley.
Source: Computerworld, http://computerworld.com/

While You Must Collaborate, You Also Must Have an IP Security Policy
Of all the information a company needs to secure, none is more important than the intellectual property (IP)—the written knowledge, information, and know-how a company possesses—used to drive the product innovation engine. So of course you need to protect your IP, right? Not necessarily. In the case of outsourcing, you need to be open with your product ideas—to an extent—so that suppliers can help provide you the intellectual and technological capital you need to build your products.
Henry Chesbrough theorizes in his book Open Innovation that being open with IP to engender more innovation can be a competitive advantage. However, you still need a strong security policy in place to manage who has access to what information, whether it is a contract or a CAD file. For example, just as you wouldn't want employees accessing your HR files, you may want to limit a Chinese supplier's access to certain product CAD files.
Source: AMR Research, http://amrresearch.com/

Questions Continue for RFID and Its Supporters
Proponents of radio frequency identification technology have a lot riding on the success of a new generation of systems now being deployed. Although their initial findings look promising in terms of accuracy, cost and compatibility, questions remain among some users about RFID's maturity and business value.
Many first-generation RFID systems suffered from disappointing read rates and a lack of universal standards. So it's not surprising that adoption of so-called RFID Generation 2 technology has been relatively swift. Mandates to suppliers from heavyweight users such as Wal-Mart Stores and the U.S. Department of Defense have also spurred the quick shift to Gen 2.
According to users who have gone live with Gen 2 tags, the improvement in read-rate accuracy that they provide over first-generation RFID technology is significant. However, they noted that Gen 2 is still new and that there are limits to its current capabilities, as well as questions about how to apply the technology to business problems.
Source: CRM Daily, http://www.crm-daily.com/

The Bigger Immigration Problem for the U.S.? Visa Barriers Keep Specialized Talent Out
The country's real immigration challenge is talent insourcing. While the debate over illegal immigration careens off the tracks, a far more critical discussion over reform is barely creeping forward. The emotional subject of what to do with the nation's estimated 12 million undocumented workers has clouded judgment about a fundamental problem that will impact U.S. competitiveness for years to come: How do we develop and attract the best minds to stimulate innovation and create more business opportunity? Immigration of skilled scientists has long played a crucial role in giving the U.S. a technological edge. (Imagine where we would be if Albert Einstein, Leo Szilard, Enrico Fermi and Edward Teller had trouble getting a visa to work in the U.S.?)
But this edge is in danger of being dulled by inadequate visa policies that limit the ability of employers to hire people with skills and specialized talent not otherwise available.
Source: Chief Executive, http://chiefexecutive.net/

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