News and analysis to 31st October 2007
MS Facebook
Microsoft joined the hip and happening brigade with its
purchase of 1.6% of social networking service Facebook for $240m. This gives FB
an estimated value of $15bn (if you subscribe to the pricing model that if a
sprinter can run 100m in 10 seconds, they can run 10,000 metres in 1,000
seconds). It also gives Microsoft exclusive rights to the associated pay per
click advertising business. I am relieved this has happened. My concern was
that founder Mark Zuckerberg was going to hold out for a better deal, which
would have been a high-risk strategy. I am sure that Facebook, currently
enjoying cult status amongst young adults might, like a fashionable restaurant,
easily slide from in-place status to oblivion. But if Microsoft decides to
integrate it into its collaborative tool kit then it could morph into a
corporate business tool. A sign of your corporate status, unlike the current
model, would be determined by how few friends you had.
CIO - Career is Over?
UK CIOs are not happy bunnies. According to the publication
Computer Business Review, 45% of CIOs would change career if they could so, and
maintain their remuneration. Couple that with a recent CIO survey by IT
recruitment consultancy Harvey Nash, which showed there was a 15% drop
year-on-year in the number of CIOs that felt that the role of CIO was
strategically significant. One might infer that perhaps IT is becoming less
important to the business. Unlikely. More likely is that many CIOs are
ill-equipped to sell their capability to the boardroom. Today we need
inspirational evangelists that have the political skills to energise
techno-phobic and techno-indifferent senior executives. A track record of good
IT delivery is not enough.
Go Westish young man
Looking for a pay rise? According to Mercer, Switzerland
tops the league of best paid IT managers. In fact six of the top ten locations
were based in Europe, with the US trailing in seventh place. Swiss IT managers
earned on average $151,000 a year, whilst their UK and Irish counterparts
pulled in $126,000 and $116,000 respectively. In the US the average IT manager
salary was $115,000. At the bottom end of the league table managers in Vietnam
earned only $16,500. Bulgaria and the Philippines were also revealed as poor
payers. Indian managers were the fourth lowest earners with an annual salary of
$27,000. So it is unlikely that Switzerland will abandon its banking and cuckoo
clocks pedigree in favour of outsourced off shoring.
So Solid Sap
SAP broadly met analysts' estimates for the third quarter
2007 and managed to maintain year-on-year growth in the potentially weak North
American market. Net profit was up 10 percent. Its bid for business
intelligence tools vendor Business Objects for $6.8bn has jittered the other
business intelligence vendors. Possibly the BI market was just an evolutionary
blip (Oracle recently acquired Hyperion) and what we are seeing is a natural
correction? Perhaps the other BI vendors recognise that this is the Darwinian
way to go and are simply using this opportunity to set out their stall?
Oracle Pac-man
Most pythons after eating a number of large sheep would curl
up and wait for the digestion to run its course. But Oracle is no ordinary
python. It has its eye on BEA Systems, a software firm, whose languishing share
price has made it look like an attractive proposition. The database giant has
offered $6.6bn and clearly prefers indigestion to losing out to rivals, and
potential suitors, Sap and Microsoft. BEA shareholders feel this seriously
under values the stock. This would be true if BEA could actually entice
Oracle’s rivals to the party.
