Compared with those ultralux Asian and Middle Eastern airlines, it’s easy to disparage the service levels of the average trip aboard an American (AAL), Delta(DAL), or United (UAL) plane. Overhead TVs in the aisle, circa 1980? Yep, the U.S. airline giants still have ‘em. Free meals on a six-hour, cross-country flight or a 10-hour haul to Hawaii? Those aren’t in the budget.
Yet when it comes to airline profits, no one does it like the U.S. carriers. After several Asian carriers reported results in recent days—includingCathay Pacific Airways’ (293:HK)half-year profit of $45 million announced on Wednesday—the financial difference between the U.S. airlines and the foreign carriers that travelers love to fly is striking. Nowadays, Delta clears a $45 million profit in less than a week during the summer.
With a mind on Cathay’s results, which marked an enormous increase over the same period last year,Bloomberg Businessweektallied the results at other highly regarded airlines. Granted, the operating conditions for U.S., Asian, and Middle Eastern airlines differ, but the dramatic disparity in financial results illustrate to some extent differing philosophies. (And, as Delta executives routinely argue, the large Middle Eastern carriers are state-subsidized and don’t compete fairly on costs, an accusation those airlines deny.) All figures below have been converted to U.S. dollars:
• Singapore Airlines (SIA:SP), which often vies for the top spot in rankings of best airlines, earned $39 million in its most recent quarter ended on June 30.
• Japan’s All Nippon Airways (9202:JP), another of the five-star airlines in the Skytrax ratings, earned a little less than $3 million for the quarter.
• Asiana Airlines (020560:KS), the South Korean airline known for its premium service, isn’t profitable at the moment.
• Emirates, one of the world’s largest international carriers, earned $898 million in the year ended March 31.
In comparison, Delta fell only $9 million short in one quarter ended in June of Emirates’ $898 million haul for its full fiscal year. American Airlines earned $864 million in the second quarter, while United Continental’s profit finished near $800 million for the same period.
The striking disparity also helps show that while travelers love to fly on Singapore and Emirates, their inner investor is likely to bet on American and Delta—and then, of course, complain about the dreary flight.
Summary: Whoever heard of a pure IT project that cost a billion dollars to build (so far)? A GAO investigation goes deep into just how bad the process of building HealthCare.gov was. By Larry Seltzer for Between the Lines | s
Perhaps no news about HealthCare.gov, the Federal healthcare exchange website and supporting systems, is shocking anymore. We all know that it was an utter disaster at launch on October 1, 2013 and was completely unusable for some time thereafter. But eventually they got it to the point of being usable, so no harm no foul, right?
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Not only was the project a technical disaster — development was originally supposed to be complete October 1, 2013, but the schedule is now for the end of 2014 — but it has cost far, far beyond what was budgeted and far further than what could be called reasonable for such a system.
The report says (page 9) that, through March 2014, the total cost of the project was $946 million. $840 million of this was spent by the CMS (Centers for Medicare and Medicaid Services), with the rest by the IRS and Department of Veterans Affairs. But the development costs continue to rise and are likely already over $1 billion.
Clearly CMS was put in a bad spot having to build a major first-of-its-kind system in a compressed time frame. One implication of this was that the bidding process had to proceed without completed specifications. CMS made many risky decisions in order to meet their goals, such as the use of "cost-plus-fixed-fee" contracts in the bid process and an Agile software development model, which was new to CMS. As the report notes (footnote 23), in 2009 the Office of Management and Budget released a Memorandum (M-09-25) calling for a reduction in the use of such high-risk contracts.
A theme pervades the report: These decisions might have been reasonable, but the risks they created increased the requirements for oversight. The report finds that the agency failed utterly in its oversight responsibilities. Over and over, procedures called for the creation of quality assurance surveillance and other oversight mechanisms, but CMS did not do so. The result was huge cost overruns, the main potential downside of cost-plus-fixed-fee contracts.
The report doesn't go on to the next logical question, whether more senior HHS and Administration officials were exercising any oversight of the process, but the answer would appear to be that they were not, and there certainly is no evidence that they were. The surprise of everyone to the site's miserable initial performance indicates that senior HHS managers and the White House were unaware.
CMS's work consisted of two main projects: the FFM (Federally Facilitated Marketplace) and the data hub. The FFM accepts and processes data entered through HealthCare.gov and was intended to provide 1) eligibility and enrollment, plan management and financial management. The data hub "...routes and verifies information among the FFM and external data sources, including other federal and state sources of information and issuers. For example, the data hub confirms an applicant's Social Security number with the Social Security Administration and connects to the Department of Homeland Security to assess the applicant's citizenship or immigration status." See page six of the GAO report for more expansive definitions of these projects.
The oversight failings made it possible for failures in development to go unaddressed. Why did development fail? One reason, if not the top reason, was CMS's changing of requirements throughout the process. The following quote summarizes many of the systemic failures in oversight and management and their implications:
From September 2011 to February 2014, estimated costs for developing the FFM increased from an initial obligation of $56 million to more than $209 million; similarly, data hub costs increased from an obligation of $30 million to almost $85 million. New and changing requirements drove cost increases during the first year of development, while the complexity of the system and rework resulting from changing CMS decisions added to FFM costs in the second year. In addition, required design and readiness governance reviews were either delayed or held without complete information and CMS did not receive required approvals. Furthermore, inconsistent contractor oversight within the program office and unclear roles and responsibilities led CMS program staff to inappropriately authorize contractors to expend funds.
Figure 4 from page 20 of the study. Unsurprisingly, the panic payments accelerated as the October 1 deadline approached. Yes, the popup text says "definitize".
Of course, throwing people and money at an IT project tends to make things worse, not better. And it's almost always a better idea to delay the rollout of a project than to launch with significant problems. But a launch delay was politically impossible, no matter how badly the project was going. The law said it would launch on October 1, so it had to launch on October 1.
But even though the launch date was fixed, the problems in the project necessitated schedule changes. As Figure 5 from the study, included below, shows, the Requirements, Analysis and Design stage of the project went from the originally scheduled three months to a year, which they did mostly by cutting out features of the system which were not essential to the launch, such as the Financial Management system that sent payments to the insurers. Indeed, this part of the system is still not complete and, according to the report, "... is currently scheduled to be implemented in increments from June through December 2014."
Cutting features cut the Development and Test stage from nine months to six, and the Operational Readiness Review from seven months to one. Yes, one. They reserved enough testing time to realize just how bad things were, and then they launched anyway. No IT project can succeed this way.
Given how pathetic the government management of the project was, I'm inclined to be somewhat sympathetic to the contractors, who were in an impossible position. That would be naive, as government contractors are often in the business of putting themselves in impossible positions, figuring that cost overruns will more than make up the difference. It's hard to work up any sympathy for CGI Federal, the main contractor for the FFM, and their hundreds of millions of dollars.
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Even so, the GAO report says that CMS "identified significant FFM contractor performance issues as the October 1 deadline approached" (i.e., problems that were the contractor's fault), but decided to let them slide. It wasn't until December, when the you-know-what had already hit the fan, that CMS began withholding payment to CGI Federal. In January CMS announced that Accenture Federal Services would replace CGI Federal on that contract.
In retrospect, it would have been politically impossible to dismiss or discipline CGI Federal severely in June 2013 when, says the report, CMS grew increasingly concerned with their performance. CMS even sent a letter in August listing the problems and suggesting that they would take corrective action, but the letter was quickly withdrawn at the order of CMS Chief Operating Officer Michelle Snyder (who fell on her sword shortly after the rollout).
The report made clear that CMS was well aware of what poor shape the site was in at launch, and yet the news of it did not leak out. If only the government were as good at keeping national security secrets. It's clear that nothing was going to stop the October 1 rollout.
The Accenture contract to take over the FFM development project was a one-year, sole source contract for $91 million for one year, and even that contract has exploded. As of June 5, CMS had obligated more than $175 million to the Accenture FFM contract.
The conclusion the GAO draws is that the organizational and process decisions made by CMS are still flawed and the problems remain. Ominously, they conclude "[u]nless CMS takes action to improve acquisition oversight, adhere to a structured governance process, and enhance other aspects of contract management, significant risks remain that upcoming open enrollment periods could encounter challenges going forward." Will the next open enrollment be as disastrous as the first? We'll know by October.
Things may be better this year, as the administration brought in someone from the outside world late in 2013 to try and make some lemonade out of HealthCare.gov. Mikey Dickerson, an operational engineer hired away from Google, didn't like what he saw when he got to Columbia, Md., headquarters for HealthCare.gov: "The government had none of the modern tools to track, second by second, visitors to the website. And it had no way to figure out why the site was crashing." The addition of tools to address these concerns certainly accounts for some of the runup in costs in 2014.
But even if the system were complete and working well, it still cost a billion dollars. I asked a few people familiar with the development of large, complicated internet systems and they all said a billion dollars is a ridiculous amount, even including the fact that hardware purchases were involved. Nobody would go on the record.
I expect government to do a bad job in general, and I'm not surprised that it's bad at building IT systems. What disappoints me is the lack of appreciation of just how bad a job the administration, an administration once reputed to be "tech savvy," did on their most prominent project. A couple of CMS officials were allowed to resign and the contractor was replaced (after taking in hundreds of millions of dollars), but I'd say nobody has really paid a price for the HealthCare.gov debacle — other than the taxpayers who paid for it.
As interesting as big data can be within Silicon Valley's elite companies, it's having a bigger impact on Middle America.
Most Hadoop jobs can be found in Silicon Valley, where "The best minds of [a] generation are thinking about how to make people click ads," to quote Cloudera co-founder and chief scientist Jeff Hammerbacher. As he also said, "That sucks."
While Hadoop jobs revolve around Silicon Valley, Hadoop innovation -- and big data innovation, generally -- is anything but a Silicon Valley phenomenon. In fact, if you want to see entire industries changed through data, go to Middle America. That's where I've been this week, and it's eye-opening.
High-tech isn't the biggest beneficiary of big data
Not all industries are created equal when it comes to being able to put data to use. Some, like the construction industry, are constrained by the amount of data they can capture and even more hamstrung by their ability to get value from it, as McKinsey has written.
Others, like the finance industry, both generate a lot of data and can put it to use:
This has led to broad adoption of big data technologies, and not simply in the Valley, as a 2012 Gartner survey captures:
In 2012, Gartner found that 58% of organizations had purchased or were planning to invest in big data systems, a number that had jumped to 64% by 2013. In other words, the odds are pretty good that brands you know are already fiddling with big data, including some that might surprise you.
Revolutionizing agriculture... one seed at a time
Though the agricultural world has embraced big data in fits and starts, looking with sometime suspicion on what giants like Monsanto might do with their crop data, data-driven agriculture is catching on.
Take John Deere, for example, which has launched initiatives likeMyJohnDeere.com to give farmers deep insight into their equipment and farms.
Because John Deere equipment comes laden with data-emitting sensors, farmers can see how they farmed a given plot of land last year (e.g., density of seeds per acre, down to the individual row) and set their equipment to optimize seeding in the current year based on historical yield, soil conditions, and more.
No wonder that David Everitt, president of John Deere's Agriculture and Turf Division, has said:
"[Digital] is the next wave of productivity for the future. Since 1918, we have delivered productivity to agriculture by building equipment that was bigger, better and faster. Now we're moving to a new level."
While it might seem like the lowest of low-tech industries, agriculture is turning out to be one of the more interesting and innovative places for big data.
Insurance gets an upgrade
McKinsey notes insurance as a likely place for big data to thrive, because insurers crunch big numbers to try to minimize risk. However, sometimes where it's thriving is not at all intuitive.
Consider MetLife, for example.
Usually, "big data" is assumed to mean "petabytes of data," but that's not typically the problem that most enterprises need to solve. Rather, variety of data is a far more substantial big data problem.
MetLife spent 10 years trying to stitch together more than 70 different data silos -- holed up in relational databases, mainframes, and elsewhere -- to create a unified view of all customer data. MetLife wanted a customer service representative to be able to solve customer issues in real time, rather than scavenging frantically between the 70+ systems trying to figure out who the customer was, what they'd bought, and what they needed.
So, MetLife built a Wall, a system that brings together all of its disparate data into one Facebook-like interface.
Initially using NoSQL database technology, and later adding in Hadoop for long-term analysis, MetLife was able to go from nothing to proof of concept in two weeks and then into full production within three months. This has generated "tremendous excitement" within MetLife, as it helps the 151-year old startup revolutionize its customer experience even as the Fortune 500 enterprise operates like a startup.
Big data beyond Silicon Valley
These are but two examples of companies I saw on my Middle America field trip. There are plenty of others, covering industries like mining, healthcare, manufacturing and more.
The older the industry, the more profound the change big data can make.
Ford, for example, uses data to optimize fuel efficiency of its cars. Ford also uses data to make its manufacturing far more efficient. Given the adverse impact cars have on the environment, Ford's big data initiatives could have a massive positive impact on the planet.
For developers, this may mean that the most revolutionary places to use Hadoop and other big data technologies may not be in the comfortable confines of Silicon Valley, but rather somewhere out in the Heartland.
As Internet of Things technologies catch on, home automation solutions are gaining popularity. Here are several apps that let you automate everything from thermostats to security systems. By Patrick Gray in Five Apps, August 4, 2014
Despite being on the technology radar for decades, home automation remains fairly fragmented, with multiple communication standards and an array of small vendors rather than a few dominant players. However, interest in home automation has recently been rekindled as major players are getting into the game and Internet of Things-style technologies take hold.
1: Nest (free app that requires purchase of Nest hardware)
The "media darling" of home automation is the Nest, a controllable thermostat and associated app. Nest took the rather mundane home thermostat, applied some exceptional industrial design, and made automating the device fairly easy. While certainly not the first automated thermostat, the Nest device is Wi-Fi enabled and doesn't require any additional hardware. It also claims to "learn" your habits based on how you adjust the temperature. It can turn down the heating and cooling while you're away and send you pretty emails detailing your energy usage (Figure A).
Figure A
Nest's biggest strength: its easy setup. But the end-to-end service is also its biggest weakness, as Nest doesn't talk to other home automation components without custom code or unsupported software. This is, unfortunately, a recurring theme in home automation.
2: Haiku ($49.99; requires a compatible alarm panel)
Haiku supports only automation controllers from an automation company called HAI and requires a fair amount of technical know-how to get your controller "talking" to the internet. The small benefit is that the automation controller can often communicate with various lighting and security subsystems, allowing it to serve as "translator" for the rest of your automation system. Once the technical gyrations are done, Haiku provides a fairly modern interface that gives you complete control of your home and lets you view security sensors, cameras, and lights (Figure B). Much to the chagrin of my wife, I'm amused to no end that I can turn our lights on and off from an airplane or another continent. More pragmatically, I can turn off the alarm and open the garage door to let a repairman in the house if no one is home.
Figure B
3: Plex (free software; Plex Pass service offers additional functionality)
A major area targeted for home automation has been audio and video entertainment. If you're willing to forgo the convenience (and associated restrictions) of something like AppleTV, Plex (Figure C) offers a fairly compelling solution to viewing audio and video content on a variety of devices. The system consists of the Plex server application, which runs on Windows, Mac, and Linux, as well as client applications that run on everything, including desktops, televisions, Roku devices, smartphones, and tablets. Provide Plex with links to where you've stored media files, and it creates a beautiful user interface with downloaded information about the title, watched and unwatched indicators, and even an ability to sync content to an iOS or Android device.
Figure C
Plex takes most of the hard work out of playing your media collection on almost any device, but do be aware that converting your existing media, especially studio-released movies on DVDs and Blu-ray discs, is time-consuming, frustrating, and potentially illegal depending on where you reside and the current state of copyright law, even if you've purchased those discs.
4: Sonos (free app; requires purchase of Sonos hardware)
Another standard component of most home automation systems is multi-room audio, whereby you can play and control music in multiple locations in your home or apartment. The problem with these systems is that they're generally difficult to retrofit, since they require speakers and wiring installed in each room. Sonos(Figure D) works around this problem by providing boombox-like hardware that can be placed in any room and controlled via a smartphone.
Figure D
Sonos connects to various music services like Pandora and Spotify and can connect to your home network and retrieve music from your iTunes library or a shared drive. This easy setup and smartphone integration comes at a relatively high price, however, and the Sonos hardware is far from bargain basement pricing.
5: Z-Wave
Z-Wave is emerging as the dominant wireless standard for home automation. (The main competitor, ZigBee, is a bit more expensive and generally more widely used in commercial applications.) Devices ranging from light switches to door locks to garage door openers can communicate over Z-Wave (Figure E).
Figure E
Image: CNET
The obvious benefit to using a wireless protocol like Z-Wave is that you can retrofit automation components to an existing home without removing drywall and running wires. The main drawbacks to Z-Wave are similar to every wireless standard: limited range, slower transmission speeds, higher cost, and less reliability than wired. While that's a daunting list, as someone who's attempted to run new wires behind existing drywall, I can attest that avoiding that task is often worth the drawbacks.
Z-Wave is not specifically an "app," but a variety of devices can communicate via the Z-Wave protocol, and smartphone applications that can control them. Most automation controllers, ranging from traditional alarm and automation panels to stand-alone automation controllers like the Mi Casa Verde, can "talk" Z-Wave and be controlled by a smartphone application. Similarly, you can purchase a USB stick that will communicate with a Z-Wave network and use an application like InControl, or even an open source automation controller like openHAB.
Are you automating?
Have you used any of these technologies in your home? What other automation solutions are you using or considering? Share your thoughts with fellow TechRepublic members.
Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion
Sprint's failed merger with T-Mobile doesn't mean it's doomed. It just means owner Masayoshi Son needs to get creative.
So now we know: Dan Hesse was never destined to live out the Sprint/T-Mobile merger. The best-paid CEO in the wireless industry— $49 million last year! —announced what was clearly aplanned departure today, upon the collapse of Sprint's quixotic bid to buy T-Mobile.
Hesse was handed a mess in 2007 by his predecessor, Gary Forsee, and was asked to clean it up. Mostly, he did. Forsee's tenure was marked by two huge decisions which turned out to be disastrous: the merger with Nextel and the selection of Intel's WiMax as Sprint's 4G network technology.
Hesse spent years repairing Sprint's brand image as Nextel crumbled around him, returning Sprint from the bowels of consumer opinion to competitive levels of customer esteem, as measured by the University of Michigan's American Customer Satisfaction Index.
But his team didn't show the network-building ninja skills of MetroPCS's Ed Chao or T-Mobile's Neville Ray, both of whom managed to cobble together 4G on the cheap. Instead, the company flailed its way through failing to build a national WiMax network and ended up years behind. Sprint's Network Vision reinvention project is bold, but hasn't exactly been quick. Hesse just didn't seem up to the job of fixing Sprint's network woes with any alacrity.
Where Now, Sprint?
Sprint's owner, Softbank's Masayoshi Son, went to his own bench for a new Sprint CEO, picking Marcelo Claure from Brightstar, another Softbank subsidiary. But let's make no mistake: Son, not Claure, is the real boss here.
Sprint has amazing spectrum assets in its ex-Clearwire 2500Mhz "Spark" spectrum. And before you say that Sprint doesn't have the money to build that out properly, I'm right now watching what Rogers is doing in Canada—a smaller carrier, in a larger physical country. Rogers' 2600Mhz network in Canada's major cities made a real difference in our Fastest Mobile Networks results last year.
Meanwhile, the misnamed Brightstar is like the dark energy of the U.S. wireless industry: it operates quietly in the background. It's part of an array of very low-key but powerful wireless companies in the Miami area, most notably giant virtual carrier Tracfone.
Brightstar buys phones for third-party stores and manages returns and insurance relationships. I'm a little worried by the fact that Claure has no experience managing a network, and network management is the No. 1 thing that Sprint needs right now. But he does have experience doing things on the cheap.
Without a merger between Sprint and T-Mobile, Son will have to take a new approach. He's been talking up home broadband recently. Buying a cable provider like CenturyLink (which includes elements that were once part of Sprint anyway) and creating blazing triple-play packages the way France's Iliad has done would be one idea.
Wireless consultant Tim Farrar points out another option on Twitter: making a deal with Dish to use Sprint's Clearwire spectrum along with Dish's own spectrum for another home broadband play. We need more competition in home broadband, and if Son really has the "thousand-year plan" he has often touted, bringing true competition to home broadband would put him in a better position with regulators for later deals.
Or how about white spaces? Just as it enabled ItsOn's radical new wireless billing system and then reaped the benefits in its new Virgin Custom plans, Sprint could become a lab for new white-space wireless technologies and be the first to profit from them.
What's clear is that Son is going to have to bring aggression, wit, and creativity to reviving Sprint. With T-Mobile still in the game, he'll have some intense competition. This doesn't mean Sprint is doomed—it just means Sprint needs to think out of the box. Is Son up to the challenge? I hope so.
PCMag.com's lead mobile analyst, Sascha Segan, has reviewed hundreds of smartphones, tablets and other gadgets in more than 9 years with PCMag. He's the head of our Fastest Mobile Networks project, one of the hosts of the daily PCMag Live Web show and speaks frequently in mass media on cell-phone-related issues. His commentary has appeared on ABC, the BBC, the CBC, CNBC, CNN, Fox News, and in newspapers from San Antonio, Texas to Edmonton, Alberta.
Summary: After a deadly aluminum dust explosion in East China, authorities called for emergency safety inspections that could affect Foxconn production. By Liu Jiayi for View from China |
A massive dust explosion at a metal polishing factory in China's Jiangsu province, which claimed 75 lives and injured hundreds, has triggered a nationwide production halt and safety inspection, which may affect Foxconn's output, reports have suggested.
According to inside sources, the national work safety authority has sent dust experts to carry out investigations and ordered all polishing workshops — including Foxconn's facility — across China, to stop production and begin self-inspection on production safety.
As a result, the source expects the production of the iPhone 6, Xiaomi 4, and MX4 to be affected.
The body of Apple's upcoming smartphone, and its Chinese counterparts and rivals, are made of an aluminum alloy, which must then be polished. The process, however, often causes flammable metal dust to flow in the air. In the Kunshan tragedy on Saturday, high-density aluminum dust began to accumulate in a badly-ventilated workshop and ignited.
The incident is considered to be the biggest industry accident this year, according to China Labour Bulletin, a Hong Kong-based non-governmental labour organization.
