Shipping giant in-sources IT asset management to save millions

As more and more ERP vendors find it difficult to sell new licenses they are resorting to audits to make up the numbers. Aivars Lode Avantce

Shipping giant in-sources IT asset management to save millions

Møller-Maersk has signed a new multi-year contract with Flexera Software

By Antony Savvas | Computerworld UK | Published 14:48, 18 January 13

Shipping and logistics giant Møller-Maersk says it has now got its IT asset management (ITAM) in order and has saved "millions of dollars" in the process.

The Danish-based multinational has operations in 130 countries and employs over 100,000, with revenues of $56 billion (£35.2 billion).

Previously ITAM had been outsourced to a managed service provider, but Maersk decided to bring its ITAM programme back in-house, to gain improved visibility and control over its hardware and software assets at the corporate level, and across all of its lines of business.

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The company believed it was overpaying for some software and also at risk of vendor license audits. Maersk therefore wanted to mitigate the financial and reputational risk associated with software license non-compliance.

Maersk signed an agreement with Flexera Software for a multi-year project to implement an internal IT asset management programme, using the FlexNet Manager Suite for Enterprises system.

The company formed a group-wide asset management team and put in place a project plan to focus on five key software vendors and deliver consistent quarterly results.

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Less than a year after partnering with Flexera, Maersk said it had realised multi-million dollar savings for two key software vendors, and that 95 percent of its IT assets were now managed.

Also there is now corporate-wide, as well as business unit transparency, for those assets, said the company, with the ITAM programme becoming a "trustworthy source of critical information" across the group.

Luis Peluffo Johansen, Maersk global head of IT purchases and assets, said: “Our annual true-up with one of our key software vendors was the proof point for our revamped ITAM programme.

"The zero dollar true-up cost (extra money paid for software used), in sharp contrast to the millions of dollars paid each year previously, showed how powerful it is to have accurate asset information at your fingertips.”

Slipping iPad Demand May Be Worse Than Previously Thought

It will be interesting to see if this is manipulation of Apples stock or if sales have actually fallen. Aivars Lode Avantce

SLIPPING IPAD DEMAND MAY BE WORSE THAN PREVIOUSLY THOUGHT – Q4 IPAD SALES REPORTEDLY WEAKER THAN EXPECTED

9:20 AM

Following an earlier report stating weakening demand for Apple’s (AAPL) iPad forced a big manufacturing slowdown at Apple’s panel supplier, more bad news emerges from China. According to data released by TrendForce, a China-based market research firm plugged into the supply chain in the Far East, display panel shipments for tablets grew 25.6% to 19 million units in December. The growth could be a positive note for the tablet market as a whole, but it comes alongside more troubling news for market leader Apple: According to TrendForce, fourth-quarter iPad sales were weaker than expected.

“The tablet shipment showed dramatic growth,” TrendForce noted in its report. “As Apple’s 9.7” product saw lower-than-expected sales in Q4’12, the inconsistency emerged between panel suppliers’ output and clients’ procurement. But Apple increased procurement significantly at the end of the year on concern of maintaining the following relationship with suppliers, resulting in a noticeable 25.6% growth in the overall tablet panel shipment MoM to 19.34 million units, but Apple‘s act must drag down the 9.7” product demand even more in Q1’13.”

Apple’s iPad mini undoubtedly impacted sales of the company’s full-size tablet, but Apple’s orders for December certainly would have accounted for the inevitable cannibalization of its 9.7-inch tablet. As such, TrendForce’s note that sales were weaker than expected could weigh heavy as Apple prepares to report its holiday-quarter results next week.

The firm also stated that LCD TV panel shipments declined 10.3% sequentially to 19.82 million units in December and notebook panel shipments dropped 10.7% month-over-month.  

IBM continues to squeeze blue blood from IT stones

As we have said numerous times in the past the only enterprise scale computing environment is the mainframe. Aivars Lode Avantce

IBM continues to squeeze blue blood from IT stones

Mainframe boost more than covers Power dive

By Timothy Prickett Morgan • Get more from this author

Posted in Financial News, 23rd January 2013 00:07 GMT

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As has been the case for so many quarters that it has become normal, IBM has managed to boost its profits even as its revenues were down a smidgen in the fourth quarter ended in December.

Sales across IBM's vast portfolio of IT hard and softwares was off six-tenths of a point, to $29.3bn. But thanks to Big Blue's constant restructuring and penny pinching and a shift to higher margin systems, software, and services – particularly in growth markets – the company was able to wring $5.83bn in net income out of the company, an increase of 6.3 per cent compared to the year ago period.

In a conference call with Wall Street analysts after the markets closed on Tuesday, IBM CFO Mark Loughridge attributed the stabilization of revenues and the increase in profits to a rebound in System z mainframe sales and the steady growth in software sales both related directly to IBM system software as well as running on competitive gear or further up the stack.

IBM does not report its server revenues in dollar amounts, but Loughridge did say that System z mainframe sales spiked 56 per cent in the final quarter of 2012. He added that that the aggregate amount of processing capacity shipped, as measured in aggregate MIPS (that's millions of instructions per second, and only loosely based on actual instruction-chewing capacity relative to prior mainframes), had risen by 66 per cent in the quarter, which was the biggest bump in capacity in the history of IBM's mainframe line.

Of course, that is probably a more accurate measure of how weak demand was for the System z11 machines, which came out in the summer of 2010 and which were a bit long in the tooth by last summer when the high-end Enterprise Class variants of the System z12 machines debuted.

Specialty mainframe engines, which are what IBM calls a regular mainframe engine that is only allowed to run Linux or algorithsm that accelerate Java or DB2 rather than the full-on z/OS mainframe operating system and which has a substantially lower price (like 75 to 80 per cent lower), accounted for about half of the MIPS shipped in the December quarter.

Mainframe growth was higher in the 30 growth markets where mainframes are not common, rising 65 per cent year-on-year, versus the 50 per cent revenue growth in the established markets of North America, Western Europe, Japan, and so on. This may be more of a reflection of the relative strength of the economies, of course, and not because mainframes are winning more server beauty contests.

IBM's Power Systems line, which has only just begun its transition to eight-core Power7+ processors, took it on the chin a bit, with revenues dropping 19 per cent compared to a year ago. Loughridge said that IBM nonetheless did 350 competitive replacements of Unix boxes from Oracle and Hewlett-Packard and that these deals brought in over $335m in hardware, software, and services revenues.

The rest of the Power Systems line will come out during the first half of 2013, according to Loughridge, and volumes for the already-launched Power7+ machines will start ramping in the second quarter. Whether IBM can get revenues back on track, given the competitive pressures from x86 iron based on Intel and Advanced Micro Devices chips, neither of which are slouches, remains to be seen.

IBM's System x and BladeCenter server business was off 2 per cent in the quarter, and its tape and disk storage businesses fell by 5 per cent. Disk sales were flat, and it was tape that took the dive. Loughridge added that the high-end DS8870 array that started shipping in October was sold out in Q4. IBM's external chip sales were up 4 per cent.

Add it all up, the Systems and Technology Group had $5.76bn in sales, down seven-tenths of a per cent. But if you back out the Retail Store Systems revenues that were in the year-ago period and that are no longer on the books because Big Blue sold that biz to Toshiba last year, then IBM's server, storage, and chip unit posted a 4 per cent revenue gain. Pretax income was up 23.2 per cent to $974m. Mainframes were pulling their weight for the first time in about a year or so.

Services: lots of heat but not enough light

The Global Services behemoth, which is the cornerstone of the Louis Gerstner era of IBM two decades ago and that largely saved IBM from itself if not oblivion, continues to generate a lot of revenues but not enough profits considering how many people it takes to provide services.

Global Services had just a hair over $15bn in revenues in the December quarter, down 2.1 per cent, which was the bad news. But the services backlog was up by $1bn at constant currency (flat as reported) to $140bn. Margins were expanding as Big Blue was rejiggering some low-margin deals and chasing higher margin services, such as "smarter planet" and big data engagements.

IBM's system outsourcing business generated just over $6bn in sales (down 3 per cent), while maintenance on hardware and software brought in $1.8bn (down 2 per cent). Application and process outsourcing, brought in a little more than $1bn (down 4 points), while consulting and systems integration raked in $3.6bn (down 3 per cent).

Integrated Technology Services, which even IBM cannot explain well, accounted for the remaining $2.55bn and was up 2 percent. (El Reg is no longer interested in the fake distinction between the Global Technology Services and Global Business Services divisions of IBM Global Services.

What you need to know is that the combined units as one beast had $2.8bn in pretax income, which was up 3.5 per cent. There's that margin expansion, and Loughridge said to expect more as 2013 keeps rolling.

Software Group is the real profit engine at Big Blue – and is about half useless without its systems business, but don't tell anyone. IBM's software biz has the steady monthly rental of mainframe software as its foundation, and on that builds the popularity of WebSphere middleware and the use of DB2, Lotus, and Rational wares by many shops on their systems, whether or not they have the IBM logo on them.

Big Blue has also done $12bn in acquisitions in the past decade, and this is what has helped transform Software Group from a $2.4bn business in 2000 to a $25.4bn in 2012.

Anyway, the take at Software Group was $7.92bn in the fourth quarter, up 3.5 per cent. Operating systems, which includes IBM's own z/OS, AIX, and IBM i as well as resold Linux and Windows, accounted for $709m in the quarter, flat from the year-ago quarter.

The key branded middleware that spans multiple platforms – WebSphere middleware; DB2, Informix, and other databases; Tivoli security, storage, and systems management tools; Lotus groupware and now social media software; and Rational development tools – accounted for $5.5bn in sales in the quarter, up 5 per cent.

WebSphere grew 11 per cent, Rational was up 12 per cent, and Lotus managed 9 per cent growth. The other middleware software – mostly all that stuff running on mainframes and some AIX and IBM i stuff – added up to $1.2bn. Software Group had a pretax income of $4bn.

This is considerably more than Systems and Technology Group and Global Services added together. But again, these distinctions are mostly arbitrary. The much more interesting set of numbers to see would be sales where companies buy the whole stack of hardware, software, and services from Big Blue and how that has changed and what kind of margin there is compared to those who buy only some part of their IT system from the company.

For the full year, IBM's sales were down 2.3 per cent to $104.5bn, but net income rose 4.7 per cent to $16.6bn. IBM generated $18.2bn in free cash flow in all of 2012 and spent $18bn on acquisitions, share repurchases, and dividends.

The company had $11.1bn in cash as the year ended, had $8.8bn in debts not related to its Global Financing asset portfolio, and says that its pensions are well funded and it is on its way to generate at least $16.70 in operating earnings per share in 2013. IBM did not forecast revenues, as it has not done for years. And that is because IBM doesn't care about revenues so long as profits are growing and it is moving from low-margin to high-margin businesses. ®

More consolidation in the software industry. Aivars Lode Avantce

For Dell Deal, Silver Lake May Find a Partner in Microsoft

BY WILLIAM ALDEN

Silver Lake may have found a deep-pocketed investor to join a takeover effort for Dell. Microsoft, Dell’s longtime ally, is in talks to contribute up to several billion dollars to a potential bid, which could exceed $20 billion, a person briefed on the matter tells DealBook’s Michael J. de la Merced. Microsoft, which has not yet made a commitment, has more than $66 billion in cash on hand. The company has done business with Silver Lake in the past, including when Microsoft acquired Skype in 2011.

“A vibrant Dell is an important part of Microsoft’s plans to make Windows more relevant for the tablet era, when more and more devices come with touch screens,” Mr. de la Merced writes. Their partnership is especially important as Microsoft’s move into making hardware has strained the company’s relationships with PC makers. Shares of Dell rose 2.2 percent on Tuesday to $13.12, while shares of Microsoft fell 0.4 percent to $27.15 after CNBC reported Microsoft’s potential involvement in a deal.

MISSING AT DAVOS: TALK OF CRISIS, AND PARTIES  |  The official agenda at the World Economic Forum includes few meetings on financial risk, creating the impression that the world’s leaders have other priorities. “This is a problem,” Steven M. Davidoff writes in the Deal Professor column. “We are five years past the beginnings of the financial crisis, and there is still no real explanation for what happened, let alone a solution.” He continues: “If the financial titans gathered there are really going to fight off the small but growing number of critics who are calling for the breakup of the big banks or even more likely a stronger Volcker Rule, they should put forth an alternative or an explanation for why these blowups keep occurring.”

On Wednesday, there was some discussion about financial regulation. The hedge fund manager Paul Singer said defining proprietary trading — a major task of the Dodd-Frank law — was a “metaphysical exercise,” according to Lauren Tara LaCapra of Reuters. Axel Weber, the chairman of UBS, addressed the issue of overseeing so-called shadow banks.

This year’s World Economic Forum seems decidedly more sober than in the past. Gone are the big dinners and blowout parties, Andrew Ross Sorkin writes. Google, Accel Partners and Nike, which usually host memorable bashes, are opting out this year. “Have those companies given up on Davos for good? Is there something bigger here at play than just parties?”

PROSECUTING WALL STREET  |  Should bankers have faced criminal action for events surrounding the financial crisis? Why didn’t the government crack down more forcefully? Those questions were tackled on Tuesday night in “The Untouchables,” a special on PBS’s “Frontline.” DealBook’s Peter Eavis is taking questions on the topic in a live chat that begins at 2 p.m.

ON THE AGENDA  |  Amid reports of a possible weakening of demand for its products,Apple announces earnings after the market closes. Netflix and Amgen also report results on Wednesday evening, and United Technologies and US Airways report on Wednesday morning. The International Monetary Fund updates its world economic outlook at 10 a.m. George Soros is on CNBC at 10:10 a.m. James P. Gorman, Morgan Stanley’s chief executive, is on Bloomberg TV at 11:30 a.m. An interview withJamie Dimon of JPMorgan Chase airs on CNBC at 3:10 p.m. Jeffrey Gundlach of DoubleLine Capital is on CNBC at 5 p.m.

MORGAN STANLEY’S PAY LATER PLAN  |  Morgan Stanley has been trying to cut expenses by shedding thousands of employees over the last year. But the firm is increasingly pushing bills into the future by deferring compensation for its employees — allowing it to wait before recording that expense. DealBook’s Susanne Craig reports: “In recent years, Morgan Stanley has been deferring its cash bonuses for top earnings for up to three years. Not surprisingly, the amount of deferred compensation — cash and stock — has risen sharply at Morgan Stanley, according to regulatory filings. In 2009, the firm deferred 40 percent of its total compensation. That percentage climbed to 60 percent in 2010 and 75 percent in 2011.”

Morgan Stanley says the move amounts to good corporate governance. But “eventually that tab will come due,” said a rival Wall Street executive who asked not to be named. Morgan’s stock rose after the firm reported earnings on Friday, and it closed up 2.7 percent on Tuesday.

Samsung buys more chips than apple now. Aivars Lode Avantce.

Samsung Moves Past Apple To Be World's No. 1 Chip Customer

Samsung in 2012 surpassed Apple to become the world’s leading buyer of semiconductor products, according to new data from Gartner.

The two companies combined consumed $45.3 billion of semiconductors in 2012, Gartner says, up $7.9 billion from a year ago, and accounting for 15.2% of the total market. Samsung was 8% of the chip market last year, while Apple was 7.2% of the market. They were followed by Hewlett-Packard (4.7% of the market), Dell (2.9%) and Sony (2.7%). Rounding out the top 10 were Lenovo,Toshiba, LG, Cisco and Nokia.

The 10 largest customers combined accounted for 36% of the worldwide semiconductor market.

“Although Samsung and Apple continue to go from strength to strength, other leading electronic equipment makers fared less well, and six of the top 10 reduced their demand in 2012,” Masatsune Yamaji, principal research analyst at Gartner, said in a statement. “In addition to a weak macroeconomic situation, a dramatic change in consumer demand contributed to a reduction in semiconductor demand in 2012. The PC market still represented the largest sector for chip demand, but desktop and mobile PCs did not sell well, as consumers’ interest shifted to new mobile computing devices like smartphones and media tablets. This shift caused a substantial decrease in semiconductor demand in 2012, as the semiconductor content of a smartphone or a media tablet is far less than that of a PC.”

CBA, Telstra join Open Data Centre Alliance

More and more enterprises are seeking further cost reductions through use of the cloud. Aivars Lode Avantce

CBA, Telstra join Open Data Centre Alliance

Companies gain access to Alliance’s cloud usage models, data centre planning decisions

Commonwealth Bank CIO Michael Harte.

The Open Data Centre Alliance (ODCA) has signed up the Commonwealth Bank of Australia (CBA) and Telstra as adopter members of its cloud and data centre roadmap.

The two companies get access to ODCA’s usage models which are designed to help members with data centre purchasing and planning decisions. In addition, CBA and Telstra will have the opportunity to assess new cloud technologies.

Commonwealth Bank's CIO, Michael Harte, said that its advocacy of cloud and the potential benefits for both employees and customers were a priority.

“That’s why we are actively involved in industry organisations, such as the ODCA, which help to set standards and accelerate innovation to deliver faster more efficient rich services on demand, not just for ourselves but for broader industry interests and economic benefit,” he said in a statement.

In November 2012, Harte told participants at an Amazon Web Services (AWS) event in Sydney that the bank has shifted a dozen on-premise applications to the cloud. "The operational cost reduction is huge," he said at the time.

"We've halved storage costs, we've halved most of our app testing and development cost. We've got a wide range of technology functions as a service. We've got application development, testing, infrastructure, software and storage."

Harte added that the bank was looking for a "40 per cent improvement in pricing across all the things that we consume as a service".

Telstra director of cloud services Stuart Smith said he was looking forward to engaging with peers from a variety of industries to help the telco increase the “depth and breadth” of its cloud offerings for customers.

In December 2012, Telstra announced the next stage of its $800 million cloud services investment with new data centres set to go live in Western Australia, South Australia and the Australian Capital Territory in Q1 of 2013.

A new Victorian data centre will also be opened during 2014 in Clayton, Melbourne, complementing an existing facility in the city.

The ODCA is an independent IT consortium comprised of companies who have come together to provide guidance for long-term data centre requirements. It is led by a 12 member steering committee which includes the National Australia Bank (NAB), BMW, Capgemini, China Unicom, Deutsche Bank, JPMorgan Chase, Lockheed Martin, Marriott International, T-Systems, Terremark, Disney Technology Solutions and Services, and UBS.

Intel serves as technical advisor to the ODCA. The University of Melbourne’s Clouds Lab is a contributor member.

Follow Hamish Barwick on Twitter: @HamishBarwick

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Microsoft: Not Bad, Not Good

Huge cash reserves. Aivars lode Avantce

Microsoft: Not Bad, Not Good MSFT reported headline results that were about in line with sell side estimates, though probably better than real expectations when recent PC shipment data is fully considered. A closer look indicates a quarter that was more reflective of a struggling PC market, as channel inventory build probably helped the Windows business, and Surface shipments were likely disappointing, which should not be surprising. ·         Details. EPS of $0.76 (with $0.02 from a lower tax rate) on total revenue of $21.5B was about in line with consensus estimates of $0.75 and $21.6B, but better than our $0.68 and $21.0B, respectively. We believe that consensus sell side estimates may have been greater than true expectations since not all analysts had updated their estimates to reflect recent dismal PC unit shipments. Gross margin of 73.5% was about 260 bps better than we modeled. Operating cash flow declined 18% from a year ago to $4.8B and was below our $5.4B estimate, while deferred revenue of $19.8B was better than the consensus estimate of $18.9B and our $18.2B. ·         Windows inventory math. The Windows business continues to be coupled to the PC market, despite what appears to be a disconnect in the December quarter results. We believe the 900 bps outperformance of Windows relative to the PC market was primarily due to a build up of inventory in the PC OEM channel, as OEM partners built inventory in anticipation of the launch of Windows 8, like they typically do with any Windows launch. ·         Surface math. Although management chose not to disclose shipments of Surface units, we estimate shipments of 600,000 to 800,000 units, as detailed herein. ·         Model changes. Our MarQ GAAP revenue and EPS are now $20.5B and $0.74 vs. $20.8B and $0.72 previously; our FY2013 GAAP revenue and EPS are now $78.9B and $2.75 vs. $77.8B and $2.62 previously; and our FY2014 GAAP revenue and EPS are now $83.7B and $3.00 vs. $82.9B and $2.91 previously. ·         We continue to rate shares of MSFT Neutral with a December 2013 price target of $30 based on our DCF.