U.S. Air Force Mainframer Celebrates 50 Years of Service

Congratulations to Jerry Chalker, who celebrated 50 years of service to the U.S. Air Force Reserve Command. Chalker works at Robins Air Force Base near Macon, Georgia. According to the article, Chalker has been a computer technician for 50 years. "As technology accelerated, Chalker stayed on the cutting edge, working with mainframe computers instead of punchcards."

Chalker currently writes software to encrypt classified documents and communications, and he says his 2009 work is quite similar to his 1959 work, when he was paid $1.58 per hour: "We had an input and we had an output and we have the same thing today. It’s just done faster."

"Chalker has been eligible to retire with full pension and benefits for the past 15 years. In reading a brief biography of Chalker, Chief Master Sgt. Kathy Gregory had a bit of news for the Air Force Reserve Command staff. 'Mr. Chalker has no immediate plans to retire,' she said. The office instantly broke into cheers."

by Timothy Sipples October 16, 2009 in People
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Manhattan U.S. Attorney Brings Insider Trading Charges (Updated)

The U.S. Department of Justice has issued a press release. Quoting from the press release, the U.S. Attorney and FBI "...announced charges against six individuals arising out of their alleged involvement in the largest hedge fund insider trading case in history." The defendants include Raj Rajaratnam (Managing Member, Galleon Management), Danielle Chiesi (employee, New Castle Funds), Mark Kurland (executive at New Castle), Rajiv Goel (executive at Intel), Anil Kumar (director at McKinsey & Company), and Robert Moffat (Senior Vice President and Group Executive at IBM).

Unsurprisingly there are numerous press reports on the charges, but none of the individuals' employers are commenting. According to Mr. Moffat's official IBM biography, he "...is senior vice president and group executive, IBM Systems and Technology Group. Named to this position in July 2008, Mr. Moffat is responsible for all IBM hardware offerings as well as the microelectronics division, which translates IBM research and development into semiconductor solutions for IBM systems and OEM clients. In addition, the company’s integrated supply chain operations, which include global manufacturing, procurement and customer fulfillment, report to him."

Quoting again from the Department of Justice's press release: "The charges contained in the Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty."

Update #1: An Intel spokesperson says that Mr. Goel has been put on administrative leave pending the company's own investigation into the matter. "'Intel was not aware of this case and was not contacted by authorities,' [Intel spokesperson Chuck] Mulloy said, adding that Intel executives found out about the complaint Oct. 16. 'But if contacted by authorities, Intel will cooperate.'"

According to the Wall Street Journal's Law Blog, Mr. Moffat's attorney is Kerry A. Lawrence of Briccetti, Calhoun & Lawrence. He says his client was "shocked," and that "we look forward to a favorable resolution of the case."

Update #2: The New York Times has posted copies of the criminal complaints against all the defendants.

I have made a couple changes to the original post. I changed Mr. Goel's title above. (An Intel spokesman says that he actually works in Intel's corporate treasury department, not in Intel Capital.) I also removed the non-working link to Mr. Moffat's biography.

Update #3: The criminal complaints contain numerous alleged quotes from the FBI's telephone wiretapping. For example, the criminal complaint against Danielle Chiesi, Mark Kurland, and Robert Moffat says this (on page 22):

On or about September 9, 2008, at approximately 10:30 a.m., an individual affiliated with New Castle called CHIESI on Chiesi Landline A. CHIESI said that she "had dinner with IBM." CHIESI said, "He's saying, you know, [IBM's] Z-series looks really good. He's saying that everything looks fine but... it comes down to the... final last week. But he thinks right now that they are on track. As of right now he's not even worried a little bit, I mean, we think we can beat the numbers this quarter." ....when CHIESI said that it comes down to the "final last week," she was referring to the last week of IBM's quarter — the last week of September 2008.

Update #4: Reuters and other press organizations report that IBM has placed Mr. Moffat on leave. "In view of a U.S. federal investigation into his personal activities, Mr. Moffat has been placed on temporarily leave of absence and is no longer serving as an officer of IBM," said company spokesman Edward Barbini. IBM named Rodney Adkins as acting head of the Systems and Technology Group.

by Timothy Sipples October 16, 2009 in Current Affairs
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Press Reports: U.S. Justice Dept. Opens IBM Antitrust Probe

Huh

Major press organizations, such as Reuters, the Associated Press, and the Wall Street Journal, are reporting comments from Ed Black, chairman of the Computer and Communications Industry Association. "We are aware that Justice has begun the CID investigatory process," said Black. (A CID is similar to a subpoena and would indicate that the Justice Department has begun a preliminary investigation of the CCIA's complaints.) According to the press reports, the Justice Department is specifically investigating IBM's mainframe business.

The CCIA is an industry lobbying organization funded by IBM competitors including Microsoft. According to Computerworld (citing the Financial Times), in 2004 the CCIA dropped its antitrust complaint against Microsoft in exchange for Microsoft paying $19.75 million to the organization. Half that amount went to Black personally, according to the report. CCIA member Nokia pulled out of the organization, with Nokia's spokesperson saying at the time, "The settlement content and process were inappropriate."

The U.S. Justice Department has investigated IBM previously and thoroughly for decades, starting at least as far back as the 1950s and including many years when IBM and its mainframe business had a far greater marketshare. However, in 2009, Microsoft's software revenues are triple IBM's, Hewlett-Packard (one of many direct competitors) has passed IBM as the highest revenue technology company, and even Apple's stock market value is greater than IBM's. The Justice Department dropped its previous case in the early 1980s as the personal computer era began.

So far IBM has not commented on the reports.

Update #1: According to MarketWatch, an IBM spokesman said in a statement that the company "intends to cooperate with any inquiries from the Department of Justice."

Update #2: The New York Times reports that a New York federal district judge already dismissed the antitrust complaint against IBM last week. (The plaintiff, T3 Technologies, plans to appeal. MarketWatch reports that Microsoft invested in T3.) The Times quotes more of IBM's statement: "We continue to believe there is no merit to T3’s claims. We understand the Department of Justice has asked T3 for documents from the litigation. IBM intends to cooperate with any inquiries from the Department of Justice."

It is unclear to me why the D.O.J. might be intervening in a civil antitrust case that has already been heard (and dismissed) in federal court, with an appeal pending.

Update #3: The Associated Press has an updated story containing a bit more of IBM's statement. Here's the additional sentence: "We continue to believe there is no merit to T3's claims, and that IBM is fully entitled to enforce our intellectual property rights and protect the investments that we have made in our technologies."

Update #4: Editorial reaction is starting to appear. CNBC's Dennis Kneale: "This anti-capitalist crusade is especially wrongheaded — and utterly ridiculous — in the case of IBM...."

by Timothy Sipples October 7, 2009 in Current Affairs
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The Mainframe's Future is Analytically Cloud-y

I have blogged several times about IBM's renewed (and bigger) push into analytics and business intelligence, and so has James Governor recently. IBM has completely changed its strategy, pushing aggressively to build and to promote business intelligence-related solutions on System z, especially those concerning "operational business intelligence" where the mainframe has unique advantages. Customers have been pleading with IBM for years to take another look at BI on z, and IBM is stepping forward (finally) with some new and big ideas.

I remember talking with a CTO at a major financial services company years ago about his problems meeting his end users' requirements for more and better business reporting. There was (and is) an ever-growing need for more and more timely analytical information. He pointed out that his two mainframes literally ran almost the entire core business efficiently and cost-effectively, processing all the core transactions and data for his firm and scores of others. (Only two machines! This company also served several other financial institutions, offering common services. True cloud computing before the term was invented.) But, for reporting, it was no longer viable for his development team to write "yet another custom program." They wanted to take a more streamlined, standardized, end user-driven approach that could respond much more quickly to ad hoc business requirements.

At the time he asked IBM for a solution, and they said, no problem, install additional servers — probably hundreds, to meet regulatory requirements for financial data security — start with a big ETL (Extract/Transform/Load) each night, run your analytics (on stale data, no doubt), and then push some of the (stale) results back to your operational databases on the mainframe. And the CTO, to his credit, said (closely paraphrasing) "Are you bulls**tting me? Go back to the drawing board. You're no better than Oracle." And he wasn't the only CTO saying much the same, often quite forcefully.

So IBM went back to the drawing board, and how. IBM quickly realized that there's no other feasible way to solve many major analytical and business intelligence problems without placing those functions directly in and on the operational systems. And that quite often means mainframe hosting, of course. Ergo, IBM has invested heavily to imbue the mainframe with new BI-related capabilities: Cognos, SAFR, ILOG, dashboards, event-driven middleware, Smart Analytics Cloud for System z, etc. (More to come, I'm sure.) IBM has also introduced solution packages so customers can say, "I'll have one of those, please" and IBM can quickly present a complete proposal at a competitive price.

IBM is really onto something, I think. I am hearing from so many customers about their pressing, unsolved BI and analytical problems — and how if they can solve these problems they would gain tremendous competitive advantage. I'm also hearing from people who manage IT infrastructure who are frustrated with the current too-high cost deployment patterns for these solutions. A lot of them are seeing massive and growing server farms that run busy for only a couple hours per night, per week, or even per quarter. That sort of deployment is unsustainable from a cost point of view, so managers are certainly looking at virtualization and cloud computing. But one problem is security: the information these systems handle is often extremely sensitive, and only the mainframe (with its unique technologies and security certifications) is capable enough to virtualize many of these sensitive data workloads. I am also hearing increasing problems with the ETL step: it's getting more and more difficult to physically move data through the ETL stage(s) as operational data grows. Why not improve the efficiency of ETL by bringing data warehouses physically closest to operational databases? System z does that best. Better yet, how about avoiding ETL completely, at least for certain tasks?

I am seeing high and growing demand for System z-based BI solutions. Many customers already "get it." The global economic environment is causing many others to reconsider their architectural approaches, to incorporate the mainframe more strategically (and more directly) into their BI/analytic service delivery. I think IBM is quite smart to invest in this area, and I'm pleased to see IBM's new thinking and its results.

by Timothy Sipples October 6, 2009 in Innovation
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