Why Did Google Buy ITA And Its Flight Comparison Software?

Peter Burris

[Co-authored by Zachary Reiss-Davis]

Google announced yesterday that it is buying ITA Software for $700 million. ITA does two main things: airline eCommerce and reservations management solutions and a cross-airline flight comparison tool called QPX, used by most of the major travel comparison Web sites including Kayak, Orbitz, and Microsoft Bing. 

Google purchased it for the QPX product in a classic example of buying technology instead of either building it in-house or licensing it.

Today, Bing, Microsoft’s search offering, offers a solution that is based on QPX to help customers search for flight information on the Bing Web site. Google has nothing comparable; instead, they direct customers to other travel specific sites (see the screenshots below). 

Google is focused on the goal of staying at least half a step ahead of Microsoft in all aspects of search technology; in order to stay ahead of Microsoft in this area, Google had three major options: 1) License the technology; 2) Build it themselves; 3) Buy ITA. 

Licensing the technology would mean that Google would end up with a solution equivalent to Microsoft’s and not as robust as specialized Web sites like Kayak. Building the technology would take several years, allowing Microsoft and other competitors to continue to differentiate themselves and pull ahead. 

This left the acquisition as the only viable path to regaining leadership in this area, while at the same time placing Microsoft in the awkward position of relying on Google-owned technology as the backend for one of their major search features. 

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Ensure Your Software Reseller Can Overcome Its Potential Conflict Of Interest

Duncan Jones

Yesterday I attended Computacenter’s Analyst Event. It’s a major independent provider of IT infrastructure services in Europe, ranging from reselling hardware and software to managing data centers and providing outsourced desktop management. My main interest was how it manages the potential conflict between properly advising the client and maximizing revenue from selling software. For instance, clients often ask me if it's dangerous to employ their value-added reseller (VAR) to advise them on license management in case the reseller tips off its vendors about a potential source of licence revenue.

An excellent customer case study at the event provided another example. A UK water company engaged Computacenter to implement a new desktop strategy involving 90% fully virtualized thin clients. Such a project creates major licensing challenges on both the desktop and server sides, because the software companies haven’t enhanced their models to properly cope with this scenario. The VAR’s dilemma is whether to design a solution that will be cheapest for the customer or one that will be most lucrative for itself.

As we said in our recent report “Refresher Course: Hiring VARs,” sourcing managers should decide whether they want their VARs to provide design and integration services like these or merely process orders at a minimum margin.

Computacenter will do either, but they clearly want to do more of the VA part and less (proportionately) of the R. So, according to their executives, they have no hesitation doing what is best for the customer even if it reduces their commission in the short term. But they didn’t think many of their competitors would take the same view.

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What BigFix Adds To IBM’s Portfolio Of Green IT Products And Services

Doug Washburn

Today, IBM announced its acquisition of BigFix, an established client and security management suite vendor. Beyond gaining BigFix’s core competencies in securing and managing client devices and servers, the acquisition adds PC power management* to IBM’s already broad portfolio of green IT products and services.

So why is PC power management important to IBM customers?

While IBM already offers its customers energy-efficient servers and their “Tivoli Monitoring for Energy Management” software for the data center, bigger opportunities for savings exist across distributed IT assets, like PCs, monitors, phones, and printers. In fact, Forrester finds that distributed IT assets consume 55% of IT’s total energy footprint versus only 45% in the data center. And the extent of these savings can add up. For example, BigFix cites a large US public school district with 80,000 PCs saving $2.1 million in annual energy costs (or $26 per PC per year) using BigFix’s Power Management software.

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Will Russia Really Change? Cisco Places Its Bet. But Seeing Is Believing.

Jennifer Belissent, Ph.D.

Russian president Dmitry Medvedev toured Silicon Valley last week, meeting with tech vendor executives and local entrepreneurs.  At Cisco, Medvedev participated in a telepresence session and used a Flip video camera for the first time. He met with representatives of public organizations and academic and business circles at Stanford University.  And, more informally, AmBAR, the American Business Association of Russian-Speaking Professionals, hosted a session in a café in Palo Alto with local students and entrepreneurs.  In each setting, the Russian president hoped to gain an understanding of what makes the Silicon Valley tick and glean some of the best practices developed in the region to take home and apply to his new Skolkovo initiative.  He has been talking about diversifying the economy for some time.  But with this initiative he has plans to develop a Russian “Silicon Valley” just outside of Moscow.  This new “inno-grad” (from “innovation” and the Russian word for city – think Leningrad) will promote Medvedev’s new modernization directions, including advancements in IT, telecommunications, and also biomedical and nuclear technologies. He aims to attract local and foreign high-tech companies with infrastructure, tax incentives, and other government support.  

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Your Future Needs A Type 4 Technology Strategy

Randy Heffner

As I discuss with clients the developing notions of Forrester's Business Capability Architecture (see blog post #1 and blog post #2), I have found it important to distinguish between different levels of scope for technology strategy. The primary distinctions have to do with (a) the degree to which a strategy (and the architecture it promulgates) aims to account for future change and (b) the breadth of business and technology scenarios addressed by the strategy.

Thus, I define a four-part technology strategy taxonomy along a two-dimensional continuum with (a) and (b) as axes (IOW, the four parts are archetypes that will occur in varying degrees of purity), to wit:

  • Type 1: project strategy for successful solution delivery. With Type 1 strategy, the goal is simply to achieve successful project delivery. It is beyond the strategy’s scope to consider anything not necessary to deliver a solution that operates according to immediate business requirements. Future changes to the business and future changes in technology are not considered by the strategy (unless explicitly documented in the requirements). The classic case for a Type 1 strategy is when an organization definitively knows that the business scenario addressed by the solution is short-lived and will not encounter significant business or technology change during the solution’s lifetime (history argues that this is a risky assumption, yet sometimes it is valid).
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Windows Intune Gives A Glimpse At Microsoft’s Licensing Future

Christopher Voce

With Microsoft's fiscal year end coming to a close today, I wanted to spend some time focusing on future licensing direction. Windows Intune is a significant offering from Microsoft that blends cloud-based management, on-premises tools  from the Microsoft Desktop Optimization Pack (MDOP), and Windows – as a subscription service. Let’s put Intune aside for a moment.

Like all software vendors, Microsoft is keen on pulling customers into an annuity relationship for their offerings – a dependable revenue stream that isn’t as vulnerable to things like economic downturns or anything that might delay a purchase. When Microsoft first introduced the Software Assurance (SA) program, it was primarily just upgrade rights –  while a license was covered under SA, you had rights to deploy any new versions that came out during that time. Over the years Microsoft has refined the program, adding different benefits to incent customers into the program – but the primary focus of value has remained upgrade rights. Unlike other vendors, Microsoft included security patches and updates as part of a license, so their “software maintenance” program has always been something a little different.

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Understanding The Evolving Ecosystem Of Innovation Service Providers

Christopher Andrews

I recently finished the draft of my report on the ecosystem of innovation services providers.  This report, to be published in July, explores the landscape of companies that are unified by a single purpose:  they are dedicated to helping their clients unleash their own innovation potential.  These are not companies who simply use "innovation" as a marketing buzzword.  Rather, they are dedicated to the discipline of innovation – and bring unique innovation expertise to clients in wide variety of corporate roles. This report builds on much of Forrester’s previous work related to Innovation Networks and Innovation Management, but expands the "ecosystem" to consider all of the companies I interact with that have a distinct innnovation focus.  In the report, I explore the offerings of:

  • Strategy consulting organizations
  • Technology service providers
  • Product management firms
  • Outsourced product development firms
  • Idea management/solution generation companies
  • Other niche service providers (including training program, design firms, and others)

 

I argue that this ecosystem of providers will be an increasingly important part of a comprehensive innovation strategy. However, it will be up to very knowledgeable and “connected” individuals within companies to help manage the diverse players, and connect suppliers to the right role, at the right point in the innovation process.  I also argue that this is an opportunity for SVM professionals who want to play a more strategic role  in their organizations.

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Database Migrations Are Finally Becoming Simpler

Noel Yuhanna

Lately I have been getting quite a few inquiries on database migrations asking me about migration approaches, best practices, and tooling. Some of the reasons why companies are looking at migrations are because of staffing issues, scalability and security concerns, and cost-saving strategies. Migrations have always been complex, time consuming, and expensive, because each DBMS has proprietary data structures, data types, and SQL extensions. Once you choose a DBMS, you get locked into its platform, often creating a challenge when looking to migrate. Some companies told me that it took them more than a year to migrate some large and complex applications, which is not surprising. Although, tools and services have helped with migrations in the past, they have not been comprehensive and automated, which would make the process simple. Like an IT manager in the retail sector recently told me, “We did not want to spend a million dollars on tools and services just to save a million dollars on our database platform; it just didn’t make sense.”

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Does Your CEO Care About Green IT? Not If You’re Stuck In The Data Center

Doug Washburn

To quote Forrester’s CEO and Founder, George Colony, during his keynote at Forrester’s IT Forum EMEA event: “CEOs only care about two things: revenue growth and profitability.” How should we interpret this? CEOs do care about green if it is able to drive revenues, reduce costs and mitigate risks — all of which are essential ingredients in delivering long-term profits and shareholder value.

Evidence is mounting around CEOs' rising interest in corporate sustainability initiatives. For example, the United Nations Global Compact-Accenture CEO Survey 2010 published in June finds that 54% of CEOs globally view sustainability as “very important” to the future success of their businesses. And the Economist Intelligence Unit backs this up by finding that companies that rated their green efforts most highly over the past three years "saw annual average profit increases of 16% and share price growth of 45%, whereas those that ranked themselves worst reported growth of 7% and 12% respectively."

So does your CEO care about green IT?

Not without some convincing. And here’s why: While your CEO might care about green, they may not necessarily care about IT. As an indicator of this, Forrester found that only 16% of the world’s largest companies mention green IT in their annual reports. And as a result, CEOs are most likely unaware of IT’s role in enabling their company's green ambitions. The good news, however, is that IT is playing an increasingly central role in planning and executing companywide green strategies which will lead to C-level visibility.

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Planes, Pains, and Multichannel Engagement

Stephen Powers

Recently on a cross-country flight, I was just waking up when the flight attendant asked me what I wanted for lunch. She was a little annoyed because I kept her waiting while I  looked  through the magazine for food choices, and gummed up the whole works. And who could blame her for being annoyed? She had a whole bunch of people to get serve. I made a hasty selection and mistakenly picked the healthy snack box (organic pumpkinflas granola and apple slices instead of pepperoni and a chocolate chip cookie).

About an hour later, I had some serious hunger pains and would have killed for one of those old-school gummy chicken casserole airline dinners.

What would have solved this? A proper online engagement architecture, naturally. I usually print my boarding passes out ahead of time. So why doesn’t an airline print out the food choices under the boarding pass, or distribute via mobile devices as people increasingly use them for check-in? The airlines could provide other information, too, like how full the flight is, and whether NBC in the Sky will show something good like “The Office” or something not-so-good like “The Marriage Ref”.

So, what’s the problem? Content management and delivery systems aren’t unified.  There are all kinds of opportunities to present rich, consistent, engaging multichannel experiences by integrating technologies such as content management, customer relationship management, document output management, email campaign management, and others. But these are still siloed, due to legacy issues as well as market dynamics (there is no unified solution on the market).

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