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Inside this issue:
No Savings: Outsourcing's Dirty Little Secret
As this article shows, sometimes the costs are higher because of missing controls when work is done so far away. Often the the work is completed long after the estimate. And even when the job is complete, offshore work is 35%-40% buggier than work done on site.
At one large corporation where I work, they are still using a payroll program that is almost ten years old. As you can guess, it is not client-server and uses a proprietary database format. Getting information from this system to the updated systems used in other departments requires a great deal of data massaging and manual intervention. Almost five years ago, they decided to rewrite the system using web-based technology. Instead of training their staff to handle it, they decided to farm the project out to another company who used many offshore consultants. To avoid cost overruns, my company requested a fixed price quotation. The consultants made few visits to the office and few phone calls. Many emails were exchanged and it was evident to the employees supporting the system that there was a huge gap in the knowledge transfer. Emails didn't seem to help because there also appeared to be a language barrier and it is not as easy to explain complex concepts via email as it is to do so in person. The program which was eventually delivered was virtually unusable. Then the in-house staff, with no training in the technology, was asked to fix it. Some resigned, some transferred to other departments. Additional offshort consultants were hired to fix the buggy program. Five years and over a million dollars later, it has still not been rolled out. The original estimates to do the work in-house would have entailed perhaps $20,000 in training costs for the staff and perhaps a year of development. In the end, they lost time, they lost money, they lost valuable employees and they have little to show for it.
As a consultant myself, I have at times been tempted to hire someone offshore to handle some of my work. If I am writing a system for a client at my hourly rate, why shouldn't I hire someone in the Phillipines to produce it at $10 an hour and pocket the difference? The answer is quality control. Remember the game of telephone you played as a kid, where you said something to someone who said it to the next person and it travelled across the room? What the tenth person heard was often completely different than what was originally said. Now consider a game of telephone where a client discusses complex business functions which you then transmit to someone in another country whose native language is not even English. What are the chances that the result will resemble what the client wants? And even if it were close, how easy would it be for you to understand the code and maintain it? When a client calls me with a question or an emergency request for a code change, I can't tell him, "Give me a few days to contact my Phillipine programmer." There is a reason why my client hired me at my hourly rate rather than hire an offshore programmer for considerably less. They want reliability and immediate resolution of problems. At the large corporation I mentioned, I have stayed late when a contract change meant that payroll calculations would have to be re-coded. I have sat in the office at 2 AM, correcting a database that got trashed by a transmission error. I have even stayed overnight when a server upgrade trashed the entire application the night before a payroll run. This kind of work must be done in house and immediately. It can not be farmed out overseas.
With judicious use, offshore consultants can save a company money. But this is not a panacea to be widely and recklessly used to balance budgets. Unfortunately, most American companies seem to work on a fiscal year plan: if you save money this year, you're a great manager and worthy of a raise, even if that savings will cost the company ten times more the next year. How many billions of American corporate dollars will flow to India and Russia before more companies learn an expensive lesson?
For one thing, the funds are verified immediately. No problems with bad checks or insufficient funds. For another, they get paid immediately, even on out-of-state checks. Folks have reported that by the time they returned home from a local shopping trip, the payment had already been deducted from their bank balance. Electronic bank payment is much cheaper for a merchant than credit card payment and is not subject to charge backs. Though mistakes and fraudulent charges can be disputed within a narrow time frame, the customer can not charge back the payment if they are unhappy with the merchandise.
But how will this affect consumers? As already mentioned, the customer loses charge back rights. Even a completely mistaken charge such as a double billing, can only be disputed within a narrow time frame. Fraud concerns are even higher. With a credit card, there is usually a limited liability, $50 or in some case none. There is a third party - the issuer - reviewing the account. In the event of fraud, it is sometimes the issuer who has to bear the cost. If unusual activity takes place, the issuer contacts the cardholder. If the information falls into the wrong hands, it is usually a fairly simple matter to call the issuer and have one card stopped and another issued. This is not the case with bank accounts.
The bank itself rarely bears the cost of an account drained fraudulently. As long as there are funds in the account, the bank is happy to allow them to be transferred. A number of people have reported how scammers managed to get into their Paypal accounts and use it to drain their bank accounts. In some cases, the scammer first tried an amount larger than available funds and failed, then continued reducing the request until he finally hit an amount for which there were sufficient funds. Some people reported that this activity continued for several days. Despite numerous attempts, neither paypal nor the bank flagged it as suspicious. If banks can't do it now, I don't expect them to become more vigilant when thousands of vendors switch to electronic checking and millions of additional transactions begin appearing. If you authorize someone to electronically access your bank account, some banks automatically allow blanket access. I have at times stopped doing business with specific vendors. I was shocked to learn that the only way I could bar them from accessing my bank account (according to Fleet Bank) was to close the account! I have transferred my accounts to a different bank which allows me to name specific vendors and remove them at will.
But a more pressing problem is the immediacy of electronic transactions. If you spot a fraudulent charge on your credit card, you generally have 60 days to dispute it. In the meantime, you don't pay it. Aside from the annoyance, life goes on. But if a scammer accesses your bank account, the charge goes through immediately. You might not learn about it until your rent check bounces. Then you have a narrow window of opportunity to dispute it. You won't get the funds back unless and until you prove your case. In the meantime, much damage may have been done.
Single-walled nanotubes are expected to debut this year in polymers as a way to strengthen plastic parts in cars or get them to conduct electricity through normally nonconducive materials. Paint that can deflect radar is also anticipated in the not-too-distant future. Computer and TV manufacturers plan to use them to drastically reduce the cost of screens in an estimated two years.
Within a decade, nanotubes could replace silicon as the transistors inside processors and memory chips. Tubes could also be used to convey light through optical fibers and, further out, to deliver medicines to specific cells inside a body or even restructure the nation's power grid.
Mass production of nanotubes, however, remains a challenge. Carbon Nanotechnologies Inc plans to increase its manufacturing capacity to the point where the company can make 1,000 pounds of nanotubes a day by 2005. Right now, it can make only about a pound or two daily. This cumbersome process makes the technology too costly for wide use. The going price on the company's Web site is $500 a gram.
Other researchers also say that silicon nanowires--solid microscopic strands of silicon--could prove to be easier for semiconductor makers to graft onto existing manufacturing processes.
A carbon nanotube is essentially a sheet of carbon atoms that curls up into a tube. The tubes' properties are significant because of two factors: their size, which allows them to function as one-dimensional objects, and the intrinsic nature of carbon. Because one-dimensional nanotubes have no height or width, electrons can travel ballistically on them--that is, barring obstacles or flaws in the material, electrons don't get scattered or lost. Such confined dimensionality means that nanotubes can conduct heat better than any other material ever discovered, including diamonds, and could even be used to transfer energy in homes or between power stations. Tubes can also be used to carry light, enhancing or replacing optical fiber. In chips, nanotubes could lead to transistors that switch off and on much faster than today's silicon variety.
While nearly everyone agrees that carbon won't likely appear in chips or fiber for several years, other products in the near term will likely take advantage of nanotubes' electrical properties. Several companies are looking at ways to use nanotubes in TVs, liquid crystal display monitors and plasma screens for 2005. In traditional TV sets, electron guns shoot electrons at the screen, which must be 18 inches away. LCDs and plasma screens don't require electron guns, but the manufacturing process required to implant the glass with circuitry costs billions.
Nanotube monitors would be thinner than LCDs and far cheaper to make. The tubes can be mixed into a paste and printed onto glass. Hyperspecialized facilities wouldn't be needed. Bonding is another key property that makes nanotubes attractive. Carbon atoms bond tightly to each other and gravitate toward the stable, hexagonal rings. Nanotubes "heal" themselves by shifting to replace atoms that get removed.
Other applications benefit from bonding as well. Single-walled nanotubes, which are incredibly resilient to physical twisting or pulling, can be kinked to a 120-degree angle and bounce back to original form undamaged. They can be long, too. Researchers have created defect-free nanotubes as long as four microns, which is 40 times the length of the average size of features on regular silicon chips. Some nanotubes with less-than-perfect ballistic features have been made as long as 120 microns. Hypothetically, this could allow engineers to replace wires in airplanes with tubes, strengthening parts while reducing weight.
The next challenge is arranging the nanotubes in products. Placing tubes in exact locations in products such as chemical sensors or flat panels isn't a problem, because they are painted in. Chips, however, will require that individual nanotubes be placed between specific contacts. Scientists hope to grow the nanotubes on a wafer. Researchers at Duke University and Stanford have shown that it is technically possible to grow and position tubes, but many hurdles still need to be cleared.
In the end, silicon compatibility could tip the balance toward silicon nanowires. Silicon nanowires are made by siphoning molecules of SiH4 (a single silicon atom surrounded by four hydrogen atoms) through a gold particle, said Andre DeHon, a professor at the California Institute of Technology. The gold strips off the hydrogen atoms and allows the naked silicon atoms to form into a wire. As futuristic as it sounds, the technique was first described by researchers at Bell Labs in 1964. Although nanowires may not exhibit the same electrical properties as nanotubes, silicon nanowires may be easier to grow on the wafer itself, DeHon added. Nonetheless, the process cannot be done overnight.
Despite the challenges, researchers and companies are optimistic about nanotubes, buoyed by positive experimental results that are occurring at a fairly rapid pace.
Lawsuit Dropped
In the meantime, there still exists one small ray of hope that common sense can still prevail. Sunncomm has dropped its lawsuit against a Princeton University graduate student who revealled that their much-vaunted protection scheme could be bypassed merely by holding down the shift key while inserting a DVD. They first claimed that revealing this information violates the Digital Millenium Copyright Act, a law making it illegal to circumvent copy protection. They have since realized that it would be extremely difficult to find 12 people stupid enough to believe that pressing the Shift key is a federal crime.
The evidence in question, which was not considered in the court case against Microsoft, indicates that articles about the concept of internet plug-ins were published over a year before Eolas filed for the patent. The PAG claims that these public documents demonstrate "prior art" in this area, and thus invalidates the Eolas patent.
If upheld, Microsoft will not owe Eolas the over $500 million court judgement. In the meantime, because justice takes its time, Microsoft is already working on methods to bypass the technology Eolas claims to own.
1) A telemarketer must identify the company he represents. It wouldn't make sense for an AT&T employee to identify himself as calling on behalf of Verizon. (On second thought, it might be a great idea. Folks would become angry at Verizon and switch to AT&T.) But spammers often identify themselves with false email IDs. So what penalty would they face for violating the list?
2) You very rarely get telemarketers calling from overseas but a lot of spam originates from outside the U.S. It would be next to impossible to go after them.
3) Creating a list of valid email IDs would simply give the spammers many more valid IDs to spam. Not a problem, say the supporters of this measure, the list would be encrypted and only legitimate companies would have limited access to the list. They would be able to submit email IDs, one at a time, and receive back a confirmation if that ID is on the list. First of all, what would define a "legitimate" company? Second of all, what company would bother going through such a convoluted process for each email ID? Third of all, if the spammers won't have access to the list, then the whole point of the exercise is useless. Even if caught, they can claim that because they didn't have access, they couldn't remove the IDs from their list. At best, the list serves no purpose. At worst, it will give the spammers millions of additional victims or provide them with a defense.
If congressmen just want to take the solution to a different problem and apply it here, why don't they just announce a "War on Spammers and the countries that harbor them?" If the President thinks it will help his re-election campaign (and it might), he'll jump on board.
First, real spammers hide behind fake or spoofed email IDs or route their spam through offshore sources. This legislation will not affect them. Second, the definition of a "previous business relationship" still leaves you open to a floodgate of what you would call spam but this legislation would not affect. Your bank, credit card and phone company all have a relationship with you. Most of these companies also have what they consider "partners," which may be mortgage companies, investment firms and the like. Under this law, there are now hundreds of companies that have "permission" to spam you.
As the article points out, the companies most likely affected by this law will be legitimate small companies that are carefully targeting their audience. They may send out a single small mailing to carefully chosen people about a specific product. But under this new law, they could be hit with a penalty for doing this. Will stopping them prevent spam? Not really. It might even drive them to hire a real offshore spammer to blast out a million emails because this will end up being cheaper than doing it the legitimate way.
Now let's take a look at newsletters such as this one. Aside from an occasional short note about a new product we carry, there are no advertisements in this letter. The email we send out once a month contains no ads at all. We have no motive for emailing it to folks who don't want it. The only way to get on our list is to purchase a product from us, requesting one of the free software programs or informational e-books we distribute or ask a technical question (which under the California law gives us a "previous relationship"). We take pains to inform our visitors that doing so will add their email to our list to receive a once-a-month notification. The email notification consists of: the notice that the newsletter is ready and the link, the table of contents, a reminder to the recipient about how they got on our list and a note stating that simply replying is all that is needed to be removed. Despite this, we still get the occasional email rant that we have spammed someone. If that person were from California, would we be getting sued? If that happens, we will simply stop producing this letter. We will also stop providing free software, free e-books and free tech support. I have already received notices from several newsletters I subscribe to, telling me that they are discontinuing because of these new laws. I wonder how many other newsletters, and there are many valuable ones offered free via email, will follow suit? This legislation is just another knee-jerk reaction from a politician who wants publicity but doesn't want to work too hard to get it. I call it "political spam."
Personally, like the author of the article, I have no problem with it. Anyone who drives a car unsafely risks not only his life and the lives of his passengers, but the lives of other drivers and pedestrians. Any information which can remove dangerous drivers from the road or determine the cause of an accident is fair game. Knowing that this information is being recorded, should cause people to drive more carefully.
Here is a site for XP/Nt/2000: Wayne's Resource Sites
There is a membership fee of $8 a year which allows you to send personal greeting cards to family members.
Thanks to Leonard, one of our readers, for sending this in.