Speaking at the Microsoft CEO summit earlier this year Bill Gates, made the following pronouncement, “I want to talk about things that won't just happen in the next 12 months or 24 months. In fact, I think a lot of people overestimate the changes in the short run and then when they see that they've overestimated those changes, they underestimate what’s going to happen over a five to 10-year period.” For Gates, we have just embarked on what he believes will be the ‘Digital Decade.’
IT=50% of US CAPEX!
Introducing his boss, Gates’ long time sidekick, Steve Ballmer came out with a staggering claim - that Information Technology investment is over 50% of US capital spending! I guess that the oil and gas business is fairly atypical, with its massive construction projects and risky drilling projects. On the other hand, our capex here at The Data Room is probably nearer 100% IT - so maybe this is not so far fetched after all.
Microsoft’s Portfolio
Gates offered some insightful remarks on how Microsoft goes about its business. In some ways being a high-tech innovator is not very far removed from oil and gas investment. Despite Microsoft’s demonstrable overall success, inside “there are many projects where we’ve spent $100 million and it was a complete failure, and fortunately, .. other projects where we spent $100 million or less and did very well. Having that kind of portfolio is interesting”
Uncertainty
How does Microsoft manage such an interesting portfolio? Marcowicz portfolio optimization? Efficient frontier analysis? Real Options? Or perhaps some of those cute financial goal-seeking functions embedded into Microsoft’s own Excel. Seemingly not! Gates practices seat-of-the pants economic analysis involving modeling supply and demand curves. If take-up for Microsoft’s interactive TV is above a certain level, then this will justify the $500 million up front investment. Gates ‘sells’ his projects on the fantastic returns which will be generated if take-up significantly exceeds expectations. In fact he reminds me of the ‘romance’ of the early 1980’s oil and gas promoters - ‘Never mind the risk - just look at the upside!’
Share Point
But Gate’s main thesis is that it is still early days for the web, and for convergence of IT, telephony, entertainment, appliances and just about anything that is not flesh and blood. In corporate IT, Gates believes that Microsoft’s new Share Point portal software will empower knowledge workers - “Share Point means that IT doesn’t get involved in individual web sites.” This is a nice idea, but one wonders where Gates has been over the last couple of years. I thought that Lotus Notes (and even Front Page) had already put web site creation in the hands of the workers.
XML
But Gate’s big plug was for XML. The assembled CEO’s were treated to an XML-based e-business demo, and even got to see some ‘raw XML.’ I find Microsoft’s attachment to XML intriguing, particularly in the context of Gates’ 12 months - 10 year rule. Is XML currently in the 12 month period of disillusionment, and about to blossom over the next ten years? Or are we just experiencing, in XML, the coming of age of ASCII and self describing data formats?
Cumbersome
In the context of multi-client web browsing on mobile devices from phones through palmtops etc., XML is a necessary simplification. But in Microsoft’s core business of Office Automation, XML is a cumbersome beast compared with the configuration possibilities offered by embedded Visual Basic for Applications (VBA). Only problem is that VBA has never made it into the UNIX world. The
.NET no doubt represents jam tomorrow (in err, 5 to 10 years maybe?). But what of the here and now? How to we tie our UNIX workhorse apps into the knowledge workers tools of the desktop?
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E-business really seems to be taking off in the upstream this month. We have six articles covering new ventures which leverage distributed IT in a way that would have been impossible only a couple of years ago. Another significant development is the arrival in force of Linux as an operating system for compute-intensive tasks such as seismic imaging and reservoir modeling. Personally, although I like the idea of open source, I have not so far considered it as of huge importance to upstream IT. We still live in a world of Solaris and Windows. If you are building an entirely new, batch-processing oriented system then Linux seems to be a natural choice, but the jury is still out on the advantages that Linux might bring the application developer.
ESRI
The announcement from ESRI (see this month’s lead) is probably the most significant development in upstream IT since data modeling began. OK, this ‘public’ will be tied to ESRI’s proprietary software, but that will not upset the many oil and gas cos. which are already committed to this technology. Reflecting on that, I wonder if a data model that was tied in to Microsoft’s Office might not be a useful adjunct to the data manager’s armory. But wait a minute, ESRI’s Geodatabase embeds Microsoft’s VBA. That could open up an exciting new route from UNIX apps, through the GIS and into Office Automation.
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