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Fund CIOs May not be Ready for Web 2.0: Security Concerns Dampen Excitement Over New Technologies


LAS VEGAS-Chief information officers and other IT professionals often find themselves in a quasi-parental role as they oversee their company's technology functions: trying to balance employees' desire for freedom in their use of hardware and software and the need to control the company's data.

Two panels at The National Investment Company Service Association's Technology Summit 2007 presented the opportunities and the challenges asset management IT officials face in striking the right balance between the two goals.

Rod Smith, vice president of emerging Internet technologies at IBM Software Group, told the gathering that Web 2.0 technologies are the next wave of business development applications. Web 2.0 refers to the second-generation of Internet-based services such as social networking sites, Wiki and communication tools. These products allow people to collaborate and share information.

Elements of Web 2.0 technology-specifically Wikis, blogs, social networks and application mash-ups-should play a larger role in the technology profile of financial services corporations, said Smith, clearly an evangelist for Web 2.0. A mash-up is a web application that combines data from more than one source into a single integrated tool.

One of the key benefits of Web 2.0 technology, Smith said, is that it can allow businesses to connect more seamlessly to customers and for customers to connect to each other.

Smith said that the "remixability" of content, which involves rearranging information so it can be used in ways not planned for, is a key part of the movement and one that technologists in all sectors, including mutual funds, should embrace. However, he acknowledged that putting control of these remixablity tools in the hands of employees and customers poses challenges for traditionally control-oriented chief information officers.

But one of the advantages of mash-ups is that they are quick to construct and don't involve a huge investment of resources, Smith stressed. He then proceeded to create a mash-up of shipping and weather patterns in the Northwest in less than 10 minutes.

Smith stressed that Web.2.0 tools are especially suited to creating partnerships. Describing what eBay and Amazon pioneered in the creation of "user-communities," he said IT leaders should embrace Web 2.0 tools to give customers access to what would normally be thought of as corporate functions.

He cited Amazon founder and CEO Jeff Bezos as an executive who was able to "allow customers to customize user experiences for small audiences," which then relied on his company to implement their decisions.

Smith cited the "long-tail" theory of market development in which niche markets replace broader markets as another support for Web 2.0 initiatives.

A second panel, a "CIO Roundtable," gave fund company chief information officers a chance to react to Smith's message, while discussing the impact of Web 2.0 technologies.

Tom McLain, senior vice president and director of information technology at Old Mutual, said he believes the culture of compliance is now ingrained at must mutual fund companies and data security is one part of this orientation.

Mark Prasifka, CIO at DST Systems, echoed McLain's sentiment, saying that because of the proprietary nature of business information, tight controls are necessary. Companies must protect their perimeter, that is, the interface between the Internet and a company's internal IT resources, Prasifka said. He suggested that companies plan and use the many available tools to make sure they maintain the separation between the public sphere and the private.

"We live in both the private and the public network space, but you have to ensure that the only things that come into the company's network are tightly controlled applications," Prasifka said. If such an intermixing did occur, he continued, it would expose a company's proprietary data in ways that would be disastrous.

He predicted, though, that the concept of mash-ups will become prevalent over time for businesses uses. However, he said that the way these tools will be used in the workplace will be different from their use in public networks like the Internet and in consumer applications.

But in both public and private spaces, Prasifka acknowledged, Web 2.0 is part of an evolution of content delivery that has made browsers the first common platform for the delivery of an information-sharing interface. One strength of the technology is that it can deliver rich content from independent sources.

As the adaptation of mash-ups and other Web 2.0 tools evolve, Prasifka said he envisions people within corporations building these applications in collaboration with the company's business units.

The goal of the business application of social networking tools is to customize the user experiences for the customer and to make him or her feel like they are personally known to the enterprise.

"We can use Web 2.0 to deliver rich applications and do it in a way that allows us to more easily personalize the user's experience," Prasifka said. This allows for a tighter bond between the consumer and the company supplying products or services to them.

But in a warning for industry IT executives to keep the Web 2.0 hype in perspective, Prasifka said, "Technologists are good at predicting trends, but we're not as good at predicting outcomes."

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