The Bloor Perspective: Why Win2000 could fail; why the skills shortage is a myth; and the rise of e-procurement

Bill Gates and Steve Ballmer have been out on the road looking for commitments to Windows 2000 from top companies. Gates was sighted in New York last Thursday - his 44th birthday. His target was Chase Manhattan Bank, where he is believed to have held discussions with top IT management.

And what was the topic? Why isn't Chase committed to upgrading to Windows 2000 next year? Back in 1995, the story has it that Microsoft gave at least 5,000 free Windows 95 licenses to the Ford Motor Company in exchange for public commitment to the system. Deals like that added momentum to the excitement that greeted the release of Windows 95 on 24 August 1995. People queued in the streets to be the first buyers of the new operating system.

Four years on, the picture is different. While Microsoft has gained much ground through the continuing high sales of PCs, belief in the all-conquering abilities of PC servers has waned. Chase Manhattan and many other large corporations have latched on to Novell's NDS to manage networks, and pulling out a proven system in favour of completely new software is hugely unattractive.

In the case of Active Directory, a number of corporate customers have actually decided to delay deployment of Windows 2000 servers because of apparent faults. And many IT managers are taking a stronger line with boards of directors that want to adopt over-ambitious schemes for Windows.

Quite apart from Novell's steadily growing strength in directory services, other contenders in the server space have grown in stature. At the low end, Linux has grown rapidly and for many purposes it can exceed the capabilities of Windows NT.

Higher up the scale, there has been a renewal of faith in proprietary Unix systems and mainframes. On the desktop, businesses are using almost exclusively Windows, although many have hesitated over the move from Windows 95/98 to NT. Yet even here, concerns over cost of ownership, constant upgrades and difficult administration have caused uneasiness.

New attempts at launching network computers and the growing threat from Linux are a worry for Redmond. Microsoft will need all the marketing momentum it can muster to make the launch of Windows 2000 the event it needs. A few investment managers have started to reduce their holdings for fear of a fall back in earnings, although the majority remain bullish. Windows 2000 will be a critical product for Microsoft - the remaining months to the launch should be eventful. (See http://www.silicon.com/a33757 for details on the pricing of Win2000).

The truth behind the skills shortage

We're short of IT people again (see http://www.silicon.com/a33724 ). That's what we expected, but haven't we been here before - over and over again? The latest cry of anguish comes from the Association of Technical Staffing Companies (ATSCo). Maybe a lot of the damage is self-inflicted, though. For example, cries for IT professionals to smooth over the impending crisis surrounding Y2K have now fallen silent. Some gloomy forecasters have suggested there would be a dip in demand at this point. But all our soundings show that there are many drivers for fresh IT expenditure - most notably CRM and ecommerce.

ATSCo, a new trade body for IT recruitment companies, commissioned a survey of 250 IT directors. It showed that over half the respondents were delaying projects because of the lack of skilled staff. Fifteen per cent claimed that projects had been cancelled because of difficulties finding suitable staff. The research suggested that employment agencies should use a standard method of judging candidates. They should also vet candidates more thoroughly and assess their ability to fit into an organisation.

But these comments seem to reflect perennial problems with the approach to IT recruitment. The insistence on standard methods and unimaginative selection criteria is one of the causes of the scarcity of IT skills. Many of today's most experienced and skilled practitioners joined the IT industry when it was young and fluid. People came into IT from a wide variety of backgrounds. Classics graduates, bank clerks, engineers, musicians and many others built successful careers, and were the creators of robust systems that are still in use today. Yet recruitment techniques force ever-narrower definitions of skill requirements and employers evade the provision of training. So we shouldn't be surprised if there is a shortage at a given price. But couldn't we do more to expand the sources of the skills we need?

E-procurement comes of age

General Motors and Ford each plan to create Internet market-places to handle their billions of purchase transactions with suppliers. The move is further confirmation that procurement is an issue that draws even the most traditional companies to the Internet.

Manufacturers have traditionally been the slowest to adopt new IT, but in the case of procurement there is activity across the entire spectrum of industries. Ford is collaborating with Oracle to build its AutoXchange (see http://www.silicon.com/a33775 ), and Oracle believes that the system will soon cater for transactions with a total value of around $200bn per year.

Ford's AutoXchange is to operate as an independent joint venture, with Oracle holding a large minority stake. A possible public offering has been mentioned. Unlike the General Motors system, AutoXchange plans to offer services to other manufacturers. Revenues are anticipated from transaction fees, commissions on auctions and through advertising.

Other Internet market places have moved towards portal status, increasing their potential for generating advertising income. Oracle has said that other similar ventures will be announced soon, involving other industries. The airlines are known to be keen to establish online purchasing, as are most businesses with large procurement needs.

These moves indicate that the total of business-to-business transactions across the Internet is likely to exceed predictions. Generally, there are many advantages to the automation of purchasing through an electronic market-place. Conformance to contract and better management of supplier relationships offer major gains. Simpler procedures cut costs. More rapid processing reduces inventory and goods in transit. The Internet is now clearly bringing economic benefits through improved transaction capabilities.

For more analysis, see http://www.it-director.com