California Staffs Up to Retire Legacy Financial Systems

It is fully proven by the SEE group’s analysis of 650 companies that if you replace functional points you get no further benefits. You can see it coming a mile away that this project will have so many cost overruns and will not be delivered on time. Aivars Lode Avantce

May 29, 2012 By Noelle Knell

SACRAMENTO, Calif. — An ERP overhaul for one of the world's largest economies is a monumental undertaking, by anyone's definition. California currently uses roughly 2,500 legacy financial management systems in its 124 departments. But that's about to change.

State officials told attendees at the annual GTC West Conference Tuesday, May 29, in Sacramento that they're confident that they will meet an aggressive implementation schedule for a new, unified financial management system. Full implementation is expected at the end of five years.

Fi$Cal, called "the Next Generation Financial Information System for California", aims to streamline disparate accounting, budgeting and procurement systems that now operate throughout state organizations. Officials believe Fi$cal will be a more unified system that’s able to provide a simplified view into state financial operations. The new system will introduce financial interoperability between departments, enable more sophisticated analysis and make it easier to share financial data with the public.

Phasing Out Disparate Programs

State officials charged with implementing this systemwide change describe a status quo that's ripe for improvement. For example, the state Legislature often requests specific financial information aggregated across the state. The Department of Finance then surveys individual state departments so it can gather needed data from the appropriate sources. Finance compiles all the information, in multiple formats and programs, and prepares it as one uniform report for legislative review.

Such a process, with its inherent inefficiencies, can span days or even weeks. One integrated system — managing all financial data statewide — could produce the same data in a single report in a matter of hours.

Project Executive Barbara Taylor explained that a new financial system also will provide many procurement opportunities to the state. Under the current infrastructure, which is highly manual and lacking uniform standards, officials have no way to track purchasing at a statewide level.

"Instead of buying single units, let's buy a pallet and share it," Taylor said. "We can then negotiate for a much better price."

Legislators are paying close attention to cost savings opportunities the new system will provide. Savings are anticipated from shelving legacy systems the new infrastructure renders obsolete, and others deemed unnecessary by evaluations Fi$Cal is engaged in with the approximately 13,000 end-users of the new system.

Revised Cost Estimates

A transformation of this magnitude usually brings a price tag to match. Initial estimates offered by Fi$Cal were $1.6 billion, a tough sell in the state's current fiscal environment. Leaders credit several criteria for bringing the price down by more than half to where it stands today: $617 million.

Advances in ERP technology over the past few years make it simpler to integrate the kinds of customizations California officials seek for their financial systems.

A unique two-stage procurement process played a major role as well. Over a period of nine months, selected bidders were onsite at state offices, participating in a detailed exchange with Fi$Cal officials, learning specific information about the state's needs. This process removed many of the contingencies normally accounted for in RFP responses, allowing for a more detailed, accurate estimate of actual project costs. Officials say this kind of knowledge-sharing is unprecedented, but critical to Fi$Cal, which they call the state's largest IT project.

The California state Legislature's mandatory 90-day review period of the proposed contract award to system integrator Accenture ends May 30. Contract signatures are expected shortly thereafter. Accenture brings experience with several large scale statewide ERP implementations, including recent projects in Kansas and Ohio.

For California, the first of five implementation phases is targeted for completion in April 2013. Likened to a pilot program, the initial phase will roll out in 10 departments, which represent roughly 10 percent of Fi$Cal's end-users. Subsequent phases will take advantage of best practices gleaned through this initial deployment.

The system has had its share of issues. An analysis from the Legislative Analyst's Office backed the financial system modernization despite its high cost. Since the project was conceived several years ago, concerns also have been raised about whether the state's many departments could be effectively brought into an enterprise system. A report from the state auditor earlier this year also disclosed that several of Fi$Cal’s top managers had left to pursue other jobs.

Now Hiring

In anticipation of legislative approval and budget appropriations for their first phase, Fi$Cal is staffing up, seeking qualified candidates to fill many positions, including technologists, project analysts, finance professionals, and change management specialists.

Fi$Cal Project Director Tamara Armstrong told Government Technology that the modernization comes at an opportune time, given the economic woes that continue to challenge state leaders. "We're just excited to see the state turn the corner in really bringing the financial management infrastructure to the stability and transparency that the state needs at this time."

Economic Scene. Tech Suits Endanger Innovation

We could not agree more. Aivars Lode Avantce

By EDUARDO PORTER

Published: May 29, 2012 

TufAmerica, which manages the rights to the catalog of the go-go band Trouble Funk, sued the Beastie Boys this month, saying they had illegally used samples from Trouble Funk’s classics “Drop the Bomb” and “Say What” in several tracks on their 1980s albums “Licensed to Ill” and “Paul’s Boutique.”

To fans of 1980s hip-hop, the suit was a bitter reminder of how copyright law changed the music they loved.

Back then, a new generation of artists rapped over elaborate musical mosaics made of brief samples from other songs. “Paul’s Boutique” included hundreds of samples from artists ranging from the Beatles to Afrika Bambaataa. A series of court decisions in the 1990s, though, made this kind of musical collage all but impossible, forcing artists to get permission for every snippet they used — a logistical and financial nightmare. Lawsuits flew against several rappers, and a form of cultural expression virtually disappeared.

Hip-hop may have little to do with high tech. But its experience carries a stark warning for the future of technology. High-tech behemoths in a range of businesses like mobile computing and search and social networking have been suing one another to protect their intellectual property from what they see as the blatant copying and cloning by their rivals. Regardless of the legitimacy of their claims, the aggressive litigation could have a devastating effect on society as a whole, short-circuiting innovation.

The battle raging over smartphone technology is the latest case in point. Since 2010, Apple and Microsoft have led a frenzy of patent and copyright litigation against the makers of smartphones running Google’s Android operating system, hoping courts around the world will force their rivals to pay license fees, remove features from their devices or even leave the market altogether.

Apple and Microsoft have spent billions to acquire the patent portfolios of old technology companies to bolster their case. Though Google has mainly played defense, its $12.5 billion purchase of Motorola Mobility and its thousands of patents have helped Android device makers go on the offensive.

The confrontation could have a reasonable outcome — a détente in which the companies licensed each other’s technology on reasonable terms and coexisted in peaceful rivalry. But the smartphone wars could easily escalate, reducing competition in mobile computing and, like hip-hop mash-ups, knocking technologies out of the market for good. This would defeat the very purpose of intellectual property law.

Patents on inventions, like copyrights on songs, are not granted to be fair to their creators. Their purpose is to encourage innovation, a broad social good, by granting creators a limited monopoly to profit from their creations. While companies like Apple may believe they are insufficiently compensated for their inventions, the evidence often suggests otherwise. The belief that stronger intellectual property protection inevitably leads to more innovation appears to be broadly wrong.

Innovation is often tripped up by intellectual property rights. One study found that the number of new rose varieties registered by American nurseries fell after the passage of the Plant Patent Act of 1930, which allowed for the patenting of new rose hybrids. Another study concluded that copyrighting new gene sequences sharply reduced scientists’ subsequent experimentation with the decoded genes, even if they were later placed in the public domain. Surveys have found that the risk of patent litigation deters firms from pursuing innovations.

It’s not that we don’t need to protect intellectual property at all. But the protections must take into account that innovation is often a cumulative process, with each step piggybacking on the ideas before it. Like “Paul’s Boutique,” the software that drives smartphones is composed of a vast array of ideas from multiple sources. Everybody infringes to some extent on everybody else. Overly strong intellectual property laws that stop creators from using earlier innovations could slow creation over all and become a barrier for new technologies to reach the market.

One of Apple’s patents, for instance, appears to grant it ownership over any application based on a user’s location. Think of the Google map feature that pinpoints where you are. Or imagine an app showing nearby hospitals or the best deals in nearby pizzerias. If Apple enforced the patent aggressively, it could foreclose a vast array of innovation.

To compound the problem, critics argue, the Patent and Trademark Office regularly issues patents on inventions that are obvious or not new. Sometimes the patents are written too broadly. Apple, for instance, has patents on the concept of moving objects around on a mobile device’s screen using multiple touches. Not the specific instructions; the concept. Broad patents can even capture applications that the patent holder never envisioned.

Facebook did not succeed because it was the first social networking technology. It succeeded because of how it unfolded the social networking model among student communities. Still, two months before Facebook’s initial public offering, Yahoo sued it for patent infringement, arguing that “Facebook’s entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo’s patented social networking technology.”

Broad patents can hinder innovation by allowing dominant businesses to stop future inventions that would disrupt their business model. “Who has patents?” asked the Stanford economist Tim Bresnahan, an expert on technology policy. “It’s the guys who have been around for a while, not the guys who have done a lot of innovation lately.”

Overly broad patents have given birth to an entire new industry of “patent trolls,” whose only business is to buy patents and sue for royalties. TufAmerica, for instance, has made a business out of buying the rights to old songs and suing artists who sample them without permission.

Intellectual property rights could be improved to better serve their purpose of encouraging innovation. Carl Shapiro, an expert on information technology on President Obama’s Council of Economic Advisers, has suggested patent reforms, including making it easier to challenge patents after they are issued, culling the roster of overly broad or ambiguous claims, and allowing those accused of infringement to claim independent invention as a defense.

Perhaps software should not be patentable at all. In rulings since the 1970s, the Supreme Court has determined that abstract concepts like mathematical formulas cannot be patented. It has struck down two software patents and ruled against patents on diagnostic techniques because they were based on laws of nature. And it has asked an appeals court to reconsider a decision on patents over advertising online.

Yet for all the concern over excess, intellectual property protections seem only to grow stronger. In 1998, for instance, Congress extended copyright protection to 70 years after the death of the author, from 50. Notably, the legislation applied to works of art that had already been created and hence needed no further incentive to come into being.

Software patents will never be banned, of course. Indeed, software patents exploded after an appeals court in 1998 upheld a patent on a method to pool the assets of mutual funds using a mathematical algorithm, establishing the patentability of a business method and the software to run it.

And the America Invents Act of last year, a measure expected to curb some of the excesses of patent law, came up short, allowing only a small window of time for companies to challenge new patents and forcing companies that challenged a patent to waive the right to do so again in court.

Intellectual property, meanwhile, keeps growing. The United States patent office awarded 248,000 patents last year, 35 percent more than a decade ago. Some will spur innovation. But others are more likely to stop it in its tracks.

Why Facebook is killing Silicon Valley

We continue to be focused on legacy software business's and understand the value they add even though there is Social Media distraction. Aivars Lode Avantce

The Facebook IPO has reinforced the new calculus for investors

Lessons learned from entrepreneur by Steve Blank

May 23, 2012 | Comments

We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win…

John F. Kennedy, September 1962

Innovation

I teach entrepreneurship for ~50 student teams a year from engineering schools atStanford, Berkeley, and Columbia. For the National Science Foundation Innovation Corps this year I’ll also teach ~150 teams led by professors who want to commercialize their inventions. Our extended teaching team includes venture capitalists with decades of experience.

The irony is that as good as some of these nascent startups are in material science, sensors, robotics, medical devices, life sciences, etc., more and more frequently VCs whose firms would have looked at these deals or invested in these sectors, are now only interested in whether it runs on a smart phone or tablet.

And who can blame them.

Facebook and Social Media

Facebook has adroitly capitalized on market forces on a scale never seen in the history of commerce. For the first time, startups can today think about a Total Available Market in the billions of users (smart phones, tablets, PC’s, etc.) and aim for hundreds of millions of customers. Second, social needs previously done face-to-face, (friends, entertainment, communication, dating, gambling, etc.) are now moving to a computing device.  And those customers may be using their devices/apps continuously. This intersection of a customer base of billions of people with applications that are used/needed 24/7 never existed before.The potential revenue and profits from these users (or advertisers who want to reach them) and the speed of scale of the winning companies can be breathtaking.

The Facebook IPO has reinforced the new calculus for investors. In the past, if you were a great VC, you could make $100 million on an investment in 5-7 years. Today, social media startups can return 100’s of millions or even billions in less than 3 years.Software is truly eating the world.

If investors have a choice of investing in a blockbuster cancer drug that will pay them nothing for fifteen years or a social media application that can go big in a few years, which do you think they’re going to pick? If you’re a VC firm, you’re phasing out your life science division.

As investors funding clean tech watch the Chinese dump cheap solar cells in the U.S. and put U.S. startups out of business, do you think they’re going to continue to fund solar?  And as Clean Tech VC’s have painfully learned, trying to scale Clean Tech past demonstration plants to industrial scale takes capital and time past the resources of venture capital.  A new car company? It takes at least a decade and needs at least a billion dollars. Compared to IOS/Android apps, all that other stuff is hard and the returns take forever.

Instead, the investor money is moving to social media. Because of the size of the market and the nature of the applications, the returns are quick – and huge.

New VC’s, focused on both the early and late stage of social media have transformed the VC landscape. (I’m an investor in many of these venture firms.) But what’s great for making tons of money may not be the same as what’s great for innovation or for our country.

Entrepreneurial clusters like Silicon Valley (or NY, Boston, Austin, Beijing, etc.) are not just smart people and smart universities working on interesting things. If that were true we’d all still be in our parents garage or lab.  Centers of innovation require investors funding smart people working on interesting things - and they invest in those they believe will make their funds the most money. And for Silicon Valley the investor flight to social media marks the beginning of the end of the era of venture capital-backed big ideas in science and technology.

Don’t Worry We Always Bounce Back

The common wisdom is that Silicon Valley has always gone through waves of innovation and each time it bounces back by reinventing itself.

[Each of these waves of having a clean beginning and end is a simplification. But it makes the point that each wave was a new investment thesis with a new class of investors as well as startups.]

The reality is that it took venture capital almost a decade to recover from the dot-com bubble. And when it did Super Angels and new late stage investors whose focus was social media had remade the landscape, and the investing thesis of the winners had changed. This time the pot of gold of social media may permanently change that story.

What Next

It’s sobering to realize that the disruptive startups in the last few years not in social media - Tesla Motors, SpaceX, Google driverless cars, Google Glasses - were the efforts of two individuals, Elon Musk, and Sebastian Thrun (with the backing of Google.)  (The smartphone and tablet computer, the other two revolutionary products were created by one visionary in one extraordinary company.)

We can hope that as the Social Media wave runs its course a new wave of innovation will follow. We can hope that some VC’s remain contrarian investors and avoid the herd. And that some of the newly monied social media entrepreneurs invest in their dreams. But if not, the long-term consequences for our national interests will be less than optimum.

For decades the unwritten manifesto for Silicon Valley VC’s has been; We choose to invest in ideas, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.

Here’s hoping that one day they will do it again.

Facebook IPO great for insiders — but what about investors?

Even an IPO won't get you your yield and it comes with risk, unless you are an insider. Aivars Lode Avantce

Smart money cashing out in a big way; welcome to the modern-day IPO

By Jeff Benjamin

May 21, 2012 1:26 pm ET

Facebook

If you were patient enough to wait until the second day of trading for the most-hyped public stock offering ever, you might feel good about getting Facebook Inc. (FB) at more than 11% below Friday's IPO price.

Even so, you're still stuck with a stock that the smart money already is selling.

“The IPO has become little more than a way for insiders to cash out,” said George Feiger, chief executive of Contango Capital Advisors Inc., a trust company and advisory firm that manages $3.3 billion in assets.

Mr. Feiger isn't down on Facebook for any reason related to the fundamental value of the social-networking company. He is down on it because it represents the epitome of what's wrong with the present-day IPO.

“Twenty years ago, a company went public to raise capital for growth, but today, it's just the opposite,” he said. “You have huge pools of private money that fund private businesses.”

With that in mind, Mr. Feiger said the best way to tap into the growth of a new business venture is through private-equity and venture-capital funds.

“I have no idea what the valuation on Facebook should be, but I know it is the most-hyped IPO in history and insiders are selling out massive amounts of stock,” he said. “Plus, most IPOs are selling below the issue price after 12 months.”

SAP Faces Uphill Battle On Database, Mobile, Cloud

A trio of SAP articles. Kind of funny that the analysts and reporters miss what continues to drive business (LOB and niche app bolt-ons). People like to focus on technology initiatives, not business ones. Aivars Lode Avantce

SAPPHIRE conference spotlights a young, three-pronged strategy that remains a work in progress.

Doug Henschen | May 15, 2012 09:47 AM

SAP celebrates its 40th anniversary this year, a milestone that's a reminder of just how long it took the company to become an undisputed leader in the ERP and larger enterprise applications category. It also puts in perspective the company's comparatively young, three-pronged strategy to push into the database, mobile-computing, and cloud-computing markets.

After the first day of SAP's annual SAPPHIRE event in Orlando on Monday, there were signs that the database push, anchored by the Hana in-memory database , is still long on vision and short on real-world customer proof points.

The mobile push is more mature, with evidence of more customers, plus fresh news Monday on how SAP is filling in gaps in the portfolio. The cloud strategy is in transition, with co-CEO Jim Hageman Snabe and executive board member Lars Dalgaard--founder and CEO of the recently acquired SuccessFactors unit--set to deliver a keynote address on the topic here Tuesday.

It's hard to think of SAP's in-memory, mobile, and cloud strategies as new, given that this is the third year in a row they've been highlighted at SAPPHIRE. In Monday night's opening keynote, SAP co-CEO Bill McDermott almost seemed to reprise actor Gabriel Byrne's opening speech on business themes from last year's SAPPHIRE. McDermott explored a pastiche of "paradigm shift" topics including the consumerization of IT, connected-everywhere mobility, the power of social networking, and the imperative to "think from the customer's perspective into the company rather than from the company's perspective out to the consumer." The soaring, dramatic 10-minute discourse circled back to the need for innovation and SAP's enabling technology and leadership.

This was followed by a one-on-one interview led by TV personality Mika Brzezinski, co-host of MSNBC's "Morning Joe," who threw McDermott a series of softball questions about business and technology trends. McDermott served up a few solid examples of customer innovation, highlighting Bechtel, which used SuccessFactors talent management apps to cut senior management and focus around growth areas during the recession. As a result, the engineering firm not only survived, it grew, McDermott said. And Harley Davidson used SAP ERP software to help consolidate and optimize operations. But it wasn't just about cutting cost; Harley moved to personalized manufacturing in the process, thereby driving up customer satisfaction, loyalty, and growth.

A panel discussion with executives from three prominent SAP customers stayed focused on the 30,000-foot themes, but it could have used more examples and details. In the case of Hana, there wasn't much detail to offer. Luxury retailer Burberry has been running its global retail operations on SAP ERP for six years, but CEO Angela Ahrendts (a frequent guest at Salesforce.com events) said the company is still testing Hana and a related clienteling app. The Hana-powered iPad apps being developed will enable sales associates to have personalized interactions with customers with knowledge of where they shopped, what they liked, and what they bought, Ahrendts said, but they have yet to be proven.

The two other execs on the panel, Ray Griffith, CEO of Ace Hardware, and Scott DiValerio, president of Redbox and CFO of its parent, Coinstar, spoke about potential uses of Hana, but impressive details on real, measurable achievements to date were tied to their recent ERP deployments. Griffith of Ace said visibility into supplier performance would enable the firm to cut nearly $80 million out of its $420 million inventory base, improving turns and freeing up cash to invest in innovation. DiValerio said Coinstar's SAP apps will make it easy to roll out three to five new businesses patterned after its fast-growing Redbox video-rental vending-machine business.

More Hana customers are to be featured during Wednesday's keynote presentation by CTO Vishal Sikka and Chairman Hasso Plattner, but deployed-customer examples weren't plentiful here on the event's opening day.

My colleague Eric Lundquist and I talked with Sanjiv Purba, the CIO of Home Trust Company, a Canadian mortgage lender that started testing Hana in January using SAP Business Warehouse data. Hana loaded faster, compressed data better, and returned queries and reports four to five times faster than the company's BW instance running on Oracle, says Purba.

Purba says he believes Hana will outperform Oracle Exalytics and other in-memory alternatives because SAP includes data extractors with Hana that quickly move data from SAP apps into the database, eliminating otherwise time-consuming batch data-movement and transformation steps. Home Trust is keeping its eye on SAP's plan to run transactional apps and analytic workloads simultaneously on a single database -- a capability SAP is expected to start beta testing by the end of this year. It's a move that will put SAP into direct competition with Oracle, IBM, and Microsoft in the database market and that some equity analysts have criticized as straying from SAP's apps focus.

Faster querying is not exactly a business breakthrough, but Purba says converged infrastructure will deliver big savings. "Being a financial institution we're going to be very conservative and prove it in a non-mission-critical area first, but it would save us a lot of money on data-extraction and infrastructure," Purba said. A combined transactional and analytic deployment would eliminate four enterprise-class servers, plus layers of software, storage devices, and associated administrative labor at Home Trust, he said. "That could mean millions of dollars--enough that you would see it in the financial statements," Purba added.

Plenty of SAP mobility customers were available for interviews on Monday, including printer maker Lexmark, watch and accessory firm Fossil, and Indian manufacturer and distributor Asian Paints. SAP also announced new apps for travel-expense management, mobile e-learning, and health-and-safety reporting. And SAP announced a partnership with Amazon whereby the SAP Afaria mobile device management platform will be offered on the Amazon Web Services (AWS) Marketplace.

By delivering Afaria on AWS, SAP hopes it can make it easier and cheaper for companies to deploy mobile device management, which more companies realize they need to handle the growing bring-your-own-device (BYOD) trend. Companies will be able to provision instances of Afaria 7.0 directly from the AWS Marketplace within minutes, according to SAP. Afaria offers device security access controls, remote wipe (so data can be deleted from lost or stolen devices), and application management capabilities (so specific applications can be provisioned or banned for use by specific users). SAP is also filling out its portfolio with the still-pending acquisition of Syclo, a firm with experience delivering business-to-consumer mobile applications.

Summing up a mobile portfolio that includes Afaria for device management, Sybase and Syclo assets for developing custom enterprise and consumer mobile apps, SAP's own portfolio of ready-made mobile apps, and the Sybase 365 messaging platform, executive Sanjay Poonen, SAP's Global Solutions president, declared that the vendor has arrived as a leader in the mobile space, dismissing even fairly well established startups as below the radar. "If you think of the other vendors out there -- MobileIron, Airwatch, Antenna, Kony, Syniverse, and mFoundry -- most CIO's haven't heard of any of them, so we think we are two to three years ahead of our biggest competitors," Poonen told InformationWeek.

SAP does have a stronger position in mobile than it has in the database market, where Oracle, IBM, and Microsoft present formidable competition and SAP is just getting started. As for cloud applications, Snabe and Dalgaard will stake out SAP/SuccessFactors' position as no. 2 in the cloud software market here Tuesday, and we should hear their strategy for overtaking Salesforce.com. On all three fronts, there's much ground to cover ahead.

Pinnacle's Kitces: Virtual firms could leave traditional planners in the dust

Disruptive solutions popping out of the word work everywhere. Aivars Lode Avantce

  

Technology is going to alter how advisers deal with clients dramatically; upstarts could steal away next generation of clients

By Dan Jamieson

Prepare to dump written financial plans and quarterly meetings, and get ready for a more dynamic world of virtual financial planning, industry commentator Michael Kitces said Monday at the Financial Planning Association retreat in Scottsdale, Ariz.

Mr. Kitces, director of research at Pinnacle Advisory Group Inc. and a widely followed blogger, envisions a world of cloud-based planning documents, instant data updates, and advisers' and clients' communicating more frequently than ever — without ever meeting face to face.

The key question for advice-givers is what value they will be able to add in a tech-loaded world where information and answers are easy to find, he said. Improvements in search technology, sharing and social media will make it easier for consumers to get answers to specific financial questions.

That's why planners "will go from being the expert to being the navigator" for clients, he said. "Increasingly, it will be a question of how to apply our knowledge to change [clients'] behavior" and implement a plan, rather than simply providing answers.

Planners should think about eliminating quarterly meetings and written financial plans, said Mr. Kitces, whose firm manages about $850 million. Improvements in software and the ability to create personal trust online will lessen the need for these traditional tools, he said.

Someday, video conferencing will allow planners to meet holograms of their clients and “pick up on all the non-verbal clues,” he added. And younger investors prefer updates over the phone anyway.

While planners figure out the new technologies, the biggest competitors for planning clients — especially for Generation Y prospects — will be technology companies that are figuring out the planning process, Mr. Kitces said.

He predicted the “rise of the virtual platform firms” like Veritat Advisors, Personal Capital Corp., LearnVest and Betterment LLC, he said. These firms have attracted significant start-up capital and are making inroads into the Gen Y market, possibly leaving traditional planners in the dust, Mr. Kitces said.

Successful planners must be discoverable on the web, have a niche they can use to attract virtual clients from anywhere and provide results strong enough to drive referrals through social media, Mr. Kitces said.

IBM secures deal to supply mainframe in China

Big iron to provide for 300 million citizens. Aivars Lode

By James Niccolai

An IT services company in China has picked an IBM mainframe to provide online services for up to 300 million citizens, including many in rural areas who will access the services through kiosks in community centres and other public places, IBM have announced.

The mainframe acts as an integration point for services delivered by several departments and organisations throughout Fujian province in southeast China, including health care, Social Security, banking and education services.

Local service provider Yi Lian Zhong Information Technology picked the mainframe partly because it can handle the high volume of transactions the system is expected to generate, according to IBM.

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"Scale is considerably different in China. A small bank is 100 million customers," said Bill Reeder, IBM worldwide zEnterprise Cloud and Linux sales leader.

The system provides citizens with access to the various services through a single Web portal. They swipe their identity card at the kiosks and can pay bills, look for jobs, submit housing applications and collect farming and fuel subsidies.

YLZ picked a z10 Business Class mainframe, one of the smaller models aimed at mid-sized companies. It's the size of a large refrigerator and can do the work of 232 x86 servers, IBM said when it launched the system a few years ago.

The mainframe is supplementing Sparc-based systems that were running out of capacity, Reeder said. The Sparc systems continue to run the portal site, using Oracle's database and WebLogic middleware.

Software connectors link the mainframe to each local department providing the services. YLZ will extend the system from Fujian to seven other provinces, covering about 300 million people, according to IBM.

IBM was keen to publicise the deal, which shows how developing countries are adopting mainframes to support large-scale online services. It has also announced mainframe deals in India and Namibia.

IBM said more than a third of the new customers for its z196 mainframe, which started shipping last year, are in growth markets, or countries outside of Japan, western Europe and North America.