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McNealy Tells IT Pros To Challenge Conventional Wisdom

CIOs face serious challenges of security, regulatory compliance and outsourcing that will continue to grow without a shift to the right kind of IT infrastructures, according to Scott McNealy, chairman and CEO of Sun Microsystems Inc.

As a result, CIOs are spending huge amounts of time and money dealing with these problems that they could otherwise spend in planning the future of their enterprise, McNealy told some 500 CIOs from a range of industries during his luncheon address at the Gartner Symposium/ITxpo event. For example, in 2004, just three viruses -- MyDoom, SoBig and Klez -- inflicted an estimated $75 billion in damage. That's $20 billion more than all viruses cost in 2003, according to ICSA Labs. And the problem won't fix itself: Corporate investment in IT security was up 16 percent last year, yet companies spent 23 percent more fixing infected machines.

"The conventional wisdom in the tech space has never been more conventional than it is today," he said. "The people in this room have the potential to change that."

McNealy noted that new technologies, from broadband to Java-based/Web site services, make it possible to evolve from today's vulnerable computing model to a model where the network delivers services when and where they are needed.

"It's clear that businesses like Salesforce.com, Exult and Rightnow are showing every business on earth a path to a lower cost, higher security and far simpler solution," McNealy said. "It's all about mapping your workloads to industry standards like J2EE web services, rather than investing in one-off, and often un-supportable, customized solutions, or perpetuating the completely impractical mainframe."

Regulatory compliance is another area of great expense and great angst for CIOs, especially the cost and complexity of the Sarbanes-Oxley law. Companies are now spending an estimated $1 million per billion dollars of revenue on compliance with the law, with spending almost always exceeding expectations, according to a Sept. 20 story in Business Week. Much of the reason is the fragile nature of the computing systems that CEOs and CFOs rely upon to maintain the integrity of their businesses, McNealy said.

A network services approach to IT could drastically reduce the impact of Sarbanes-Oxley compliance by both automating much of the compliance process -- and by reducing the security risks inherent in existing IT infrastructures. For example, about 30 percent of the average company's ex-employees retain access privileges to critical business systems, because of the cost and complexity of removing that access, McNealy noted.

"Steve McGowan, our CFO, has to spend millions of dollars on compliance, even though our company is and always has been transparent to investors," McNealy said. "It could cost millions more if we didn't use the network computing IT infrastructure that we sell."

For example, McNealy said that CIOs need to consider:

In short, CIOs need to "challenge the anthropology" of corporate IT as it exists and "push the envelope" of change, according to McNealy. "It's the CIOs who can change the anthropology and be both creative and effective."