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Thursday, December 17, 2015
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Apple on Thursday announced some personnel moves that suggest CEO Tim Cook's future vision for the company.

He named Jeff Williams (pictured above) chief operating officer, elevated Johny Srouji to Apple's executive team by making him a senior vice president, broadened the powers of Senior Vice President of Worldwide Marketing Phil Schiller to include supervision of Apple's App Store across all its platforms, and added Tor Myhren as the new vice president of marketing communications.

"As we come to the end of the year, we're recognizing the contributions already being made by two key executives," Cook said in a statement.

"Jeff [Williams] is hands-down the best operations executive I've ever worked with, and Johny [Srouji]'s team delivers world-class silicon designs which enable new innovations in our products year after year," he added.

Loosening Reins

Williams joined Apple in 1998 as head of worldwide procurement. In 2004 he was named vice president of operations. Since 2010, he has overseen Apple's supply chain, service and support.

Making Williams COO is a sign that Cook feels confident in loosening the reins to Apple a bit, noted Patrick Moorhead, founder and principal analyst at Moor Insights and Strategy.

"When you add a chief operating officer, it says that Tim Cook needs to spend more time on strategy and the future of the company and less time on day-to-day operations," he told the E-Commerce Times.

"It's a classic growth move you make when you feel comfortable about how operations are going," he said.

IP in Apple's Future

Srouji has been vice president for hardware technologies at Apple for eight years. He oversees custom silicon and technologies, such as batteries, application processors, storage controllers, sensors silicon, display silicon and other chipsets.

With Srouji's elevation to senior vice president, Apple may be recognizing the significance his role will be to the future of Apple.

"Hardware is a very important part of Apple's business," said Tim Bajarin, president of Creative Strategies.

"But it's not just hardware," he told the E-Commerce Times. "His role includes overseeing the silicon business, which to us is equally important to Apple's future."

Srouji's promotion was also a promotion of enabling technologies at Apple, Moorhead noted.

"Enabling technologies are going to be more important to Apple in developing more of its own intellectual property in the future," he said.

"This says we will see more homegrown enabling technologies from Apple," Moorhead added.

Outside Hire

Schiller now leads nearly all developer-related functions at Apple. His duties also include worldwide product marketing and international, education and business marketing.

He will be charged with advancing Apple's ecosystem, Cook said.

"In many ways, the whole app ecosystem is just an extension of Apple's marketing," Bajarin said. "It makes a lot of sense for Phil to oversee that."

The only outside move Apple made was the hiring of Myhren, chief creative officer of Grey New York, who is replacing retiring 18-year Apple veteran Hiroki Asai.

Under Myhren's leadership, Grey won Adweek's Global Agency of the Year award in 2013 and 2015.

Bringing in someone from the outside to run advertising is an interesting move, Moorhead observed.

"It's interesting that there wasn't anyone inside Apple who could have taken that role," he said.

More Changes Needed

Apple usually brings in outsiders when it doesn't have the in-house talent for an initiative. It brought in people from the outside when it planned to enter the retail market, and it did so again when designing the fashion aspects of the Apple Watch.

"I wouldn't expect them to bring in an outside guy to run advertising and merchandising because Apple has good people internally to do that," Moorhead noted.

Apple has problems that won't be addressed by appointing a new COO or advertising director, according to Trip Chowdhry, managing director for equity research at Global Equities Research.

"Apple's stock has underperformed by every metric. Investors have zero confidence in Apple's executive team," he told the E-Commerce Times.

"This reshuffling at the secondary level isn't going to make any difference," Chowdhry added, "unless the CEO, CFO and the head of the retail channel is replaced."

John Mello is a freelance technology writer and contributor to Chief Security Officer magazine. You can connect with him on Google+.

8:58 AM

Apple on Thursday announced some personnel moves that suggest CEO Tim Cook's future vision for the company. He named Jeff Willi...

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Congress Passes Budget Bill With Controversial Cybersecurity Provision

Congress on Friday passed an omnibus budget bill that included the Cybersecurity Information Sharing Act, or CISA.

The Senate earlier this year passed CISA, which many conservative and liberal politicians, high-tech firms, and privacy and civil liberty advocates oppose.

The latest version includes amendments that will allow corporations to freely share customers' information with the government.

"This is the worst version of CISA yet, and we are deeply disappointed by its likely passage," Mark Jaycox, legislative analyst at the Electronic Frontier Foundation said before the vote. "Such key legislation should not be sandwiched into a 2,000-plus-page federal spending bill."

Truth in Government

The legislation "should have followed the normal process -- a formal conference committee bill that's sent back to the House and Senate separately for an up-or-down vote," he told the E-Commerce Times.

Adding CISA to the omnibus budget bill "is why folks don't trust the government," said Rob Enderle, principal analyst at the Enderle Group.

"It's fundamentally antidemocratic," he told the E-Commerce Times.

Objections to the Latest Version

This version of CISA essentially lets private firms monitor their systems and access information flowing through them so long as they declare that it is being done for cybersecurity purposes.

Private organizations will be able to hand data, including private personal information, over to the federal government with legal immunity as long as they categorize it as cyberthreat information.

Further, there will be few, if any, restrictions on how the government can use the data it receives.

"Removing some of the legal restrictions on sharing cybercrime or threat data with the government is a win," Erik Knight, president of SimpleWan.

"However, it's a blow to individual privacy rights," he told the E-Commerce Times.

Data shared with the U.S. National Security Agency is useless without personally identifying information, and "almost negates the use for the NSA," Knight said. It "will just show trends, not necessarily prevent any kind of active threat."

On the other hand, "without restrictions on even protecting this data, most private data could become public, especially if the government has another data breach," he said.

Too Much Information

The U.S. Department of Homeland Security is concerned about the flood of information that will come down the pipeline with the passage of CISA.

The bill's authorization to share data with any federal agency "will increase the complexity and difficulty of a new information sharing program," DHS Deputy Secretary Alejandro Mayorkas wrote in July in response to a query from Sen. Al Franken.

Further, it "could sweep away important privacy protections, particularly the provisions in the Stored Communications Act limiting the disclosure of the content of electronic communications to the government by certain providers," he said.

The administration "should work harder to make more efficient use of the information they currently have legal access to before moving to violate our privacy to get more information they can't effectively use," Enderle said.

"The latest attack [in San Bernardino, California] was conducted by people who acted like terrorists on social media, and [federal agencies] couldn't even pick that up," he noted.

Opposition to CISA

Rep. Jim Jordan, chairman of the House Freedom Caucus, on Wednesday reportedly offered an amendment to the government funding bill that would have removed an undisclosed cybersecurity measure, among other things. It was filed to the House Rules Committee.

Fight for the Futurehas set up the ObamaDecides campaign opposing CISA. President Obama must sign the bill into law.

CISA "will not do anything to prevent cyberattacks," said campaign director Evan Greer. It "gives companies an incentive to share data because they can then pass the buck to government when there's a problem."

Google and Facebook "haven't done enough," she told the E-Commerce Times, and are "hiding behind their industry body."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

8:20 AM

Congress on Friday passed an omnibus budget bill that included the Cybersecurity Information Sharing Act, or CISA. The Senate ear...

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Federal prosecutors in New Jersey on Tuesday charged three men in a US$2 million identity theft scheme to hack corporate computer systems and blast spam messages to more than 60 million people.

Timothy Edward Livingston, 30, of Boca Raton, Fla., Tomasz Chmielarz 32, of Rutherford, N.J., and Devin James McArthur, 27, of Ellicott City, Md., were charged with conspiracy to commit fraud and related activity in connection with computers and conspiracy to commit wire fraud, according to U.S. Attorney Paul Fishman's office. Livingston and Chmielarz also were charged with fraud and related activity in connection with electronic mail.

The defendants face up to 20 years in prison and $250,000 in fines on the wire fraud charges, and up to five years in prison and $250,000 in fines on the email and computer conspiracy charges, according to prosecutors.

In addition, the indictment indicates $299,653 held in several Wells Fargo bank accounts in Livingston's name or the corporate name are subject to forfeiture, as well as a Scottrade account in Livingston's name, a 2006 Ferrari F430 Spider Convertible, which was seized in July in Ft. Lauderdale, Fla., and a 2009 Cadillac Escalade.

Michael Koribanics, attorney for Chmielarz, told the E-Commerce Times on Tuesday that his client planned to enter a not guilty plea at a hearing scheduled for later in the day before U.S. Magistrate Judge Michael Hammer in Newark federal court.

His office was investigating the allegations, Koribanics added.

McArthur was scheduled to appear Tuesday before U.S. Magistrate Judge Beth Gesner in Maryland; however, no information was immediately available about representation.

Livingston had an initial appearance earlier Tuesday before U.S. Magistrate Judge Alicia O. Valle in Ft. Lauderdale, Fla., and was being detained pending a Friday bail hearing, prosecutors said. His attorney Jeffrey Cox, of Boca Raton, Fla., was not immediately available for comment.

The Allegations

Starting in 2011, Livingston and others operated a company called "A Whole Lot of Nothing," which specialized in sending spam email on behalf of clients, prosecutors alleged.

Their clients ranged from legitimate business such as insurance firms that wanted to send out bulk emails to customers, to illegal pharmacies that sold narcotics without a prescription, according to the allegations.

Livingston typically charged anywhere from $5 to $9 for each email that resulted in a completed transaction, prosecutors said.

The corporate victims allegedly included an unnamed telecommunications firm based in New York, a technology and consulting firm in New York, a credit monitoring firm based in Texas, and a telecommunications firm based in Pennsylvania.

The ISPs started using blocking software to help cut down on the spam messages, but in January 2012, Livingston allegedly solicited Chmielarz to write computer programs designed to conceal the identity of the sender and bypass the spam filters.

The two men are accused of using proxy servers to send out spam, and enlisting botnets to help avoid spam blockers, the prosecutors said.

Livingston also registered certain websites in the name of "Mark Lloyd," an alias he used, based on the allegations.

The two men hacked into the accounts of certain individuals and then took control of some of their corporate victims to further the spam email campaign, according to the prosecution.

Livingston and Chmielarz allegedly worked together with the third defendant, McArthur, to steal confidential information of corporate victims, including databases containing the personally identifiable information of millions of Americans.

Livingston and Chmielarz in 2013 began discussing a third corporate victim, according to the charges.

Livingston allegedly told Chmielarz in an online chat that he needed to scrape the website of a third corporate victim, the prosecutors alleged, and later paid Chmielarz to write a program that stole the information of 10 million people from a database of that company.

McArthur worked as a sales representative at a fourth company from February 2014 to February 2015. By August 2014, he allegedly provided Livingston with access to a remote administration tool to steal from that company, including the names, addresses, email addresses and phone numbers of current, former and potential customers.

The fourth company had more than 50 million people in its corporate database, and Livingston and McArthur allegedly gained access to 25.4 million records, the prosecutors claimed.

Pervasive Problem

Spam messages are among the most common means of accessing personal data.

An average of 1.5 million deceptive emails are sent, particularly to business users, on a daily basis, according to GreatHorn, which has analyzed more than 20 million emails in the past two months.

"This problem isn't only pervasive -- it's also incredibly effective," said GreatHorn CEO Kevin O'Brien.

"Over 90 percent of all known data breaches start with this kind of an attack," he told the E-Commerce Times.

These types of attacks cost one company more than $47 million, O'Brien said, with the chief financial officer targeted four times.

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

3:01 AM

Federal prosecutors in New Jersey on Tuesday charged three men in a US$2 million identity theft scheme to hack corporate computer sy...

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A Brazilian judge on Thursday lifted the ban a different judge had imposed on WhatsApp hours earlier, according to reports.

It did not seem reasonable to affect millions of users to penalize Facebook, WhatsApp's owner, for failing to cooperate with judicial rulings, the judge reportedly said, suggesting that the imposition of a larger fine would have been more appropriate.

The ruling reversed the decision of a judge in Sao Paulo, Brazil, who on Wednesday had ordered the 48-hour suspension of WhatsApp services starting at midnight. The suspension was meant to penalize Facebook for ignoring two previous judicial rulings to turn over information in a criminal investigation. Facebook had refused to supply the data despite having been hit with a fine.

The temporary suspension of services spurred about 1.5 million Brazilians to sign up for WhatsApp rival Telegram Messenger, sparked outbursts in the Brazilian Congress, and inspired the sardonic "#In these 48 hours I will," according to reports.

"We're disappointed that a judge would punish more than 100 million people across Brazil, since we were unable to turn over information we didn't have," a WhatsApp spokesperson said in a statement provided to the E-Commerce Times by spokesperson Matt Steinfeld.

"I am stunned that our efforts to protect people's data would result in such an extreme decision ... . We hope the Brazilian courts quickly reverse course," wrote Facebook CEO Mark Zuckerberg.

The Brazilian government wants to clamp down on the Internet and social media, according to media reports.

Some of the country's telcos are similarly inclined, for their own reasons, but they're opposed by the Brazilian telecommunications authority and at least one other telco, as well as by ordinary Brazilians, who reportedly pay through the nose for wireless services.

Leading Up to the Ban

The controversy that resulted in the ban stemmed from the case of a drug trafficker linked to the PCC, one of Sao Paulo's most dangerous criminal gangs, who allegedly used WhatsApp in the commission of crimes.

Judge Sandra Regina Nostre Marques reportedly ordered the 48-hour shutdown of WhatsApp because of Facebook's refusal to share data on the drug trafficker.

The ban affected not only Brazilians, but also users in nearby Chile and Argentina.

Failure to Comply

Facebook could not provide the information the court demanded, because WhatsApp's uses a store-and-forward model, which means messages are deleted from its servers once they have been delivered.

Those messages can't be retrieved from the servers, which essentially function as routers.

WhatsApp chats are backed up automatically and saved daily in the users' phone memory storage. Users also can back up chats to online storage.

Political Maneuvering?

"Vivo, Brazil's leading wireless operator has always been calling for heavy-handed regulation against WhatsApp because it considers WhatsApp and other over-the-top services are getting a free ride," said Ronald Gruia, director of emerging telecoms at Frost & Sullivan.

The company's stance "lines up with the position of the government, which wants more regulation for its own political interest," Gruia told the E-Commerce Times.

"Its approval rating is about 10 percent, and it's increasingly faced with scrutiny over various scandals, and a lot of the mobilization that's been happening against it has occurred over social media, which it can't control," he said. "TV and radio it can control."

Anatel, Brazil's equivalent of the United States Federal Communications Commission, "says operators around the world are dealing with messaging apps, so Brazilian carriers must deal with it," Gruia continued.

Oi, Brazil's "third or fourth largest telco," takes the same position as Anatel, he noted.

On the other hand, the ban on WhatsApp could have been merely an attempt by the judge to gain publicity, because "the judge probably knew the ruling would be struck down," Gruia commented.

Você Não Passará!

Given the climate of terrorism and the widespread unrest in the world, other governments, including the U.S. government, are taking the same position as Brazil's, suggested Rob Enderle, principal analyst at the Enderle Group.

"It's a shortcut to evidence, and one thing that's true of pretty much everyone in any industry is that we all like shortcuts," he told the E-Commerce Times.

However, Brazil's social media might remain free for a while yet.

"There won't necessarily be a clampdown, just more heavy-handed censorship," Gruia said. "It's a non-starter, and the government has bigger fish to fry."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

1:18 AM

A Brazilian judge on Thursday lifted the ban a different judge had imposed on WhatsApp hours earlier, according to reports. It did ...

Read more »
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A Brazilian judge on Thursday lifted the ban a different judge had imposed on WhatsApp hours earlier, according to reports.

It did not seem reasonable to affect millions of users to penalize Facebook, WhatsApp's owner, for failing to cooperate with judicial rulings, the judge reportedly said, suggesting that the imposition of a larger fine would have been more appropriate.

The ruling reversed the decision of a judge in Sao Paulo, Brazil, who on Wednesday had ordered the 48-hour suspension of WhatsApp services starting at midnight. The suspension was meant to penalize Facebook for ignoring two previous judicial rulings to turn over information in a criminal investigation. Facebook had refused to supply the data despite having been hit with a fine.

The temporary suspension of services spurred about 1.5 million Brazilians to sign up for WhatsApp rival Telegram Messenger, sparked outbursts in the Brazilian Congress, and inspired the sardonic "#In these 48 hours I will," according to reports.

"We're disappointed that a judge would punish more than 100 million people across Brazil, since we were unable to turn over information we didn't have," a WhatsApp spokesperson said in a statement provided to the E-Commerce Times by spokesperson Matt Steinfeld.

"I am stunned that our efforts to protect people's data would result in such an extreme decision ... . We hope the Brazilian courts quickly reverse course," wrote Facebook CEO Mark Zuckerberg.

The Brazilian government wants to clamp down on the Internet and social media, according to media reports.

Some of the country's telcos are similarly inclined, for their own reasons, but they're opposed by the Brazilian telecommunications authority and at least one other telco, as well as by ordinary Brazilians, who reportedly pay through the nose for wireless services.

Leading Up to the Ban

The controversy that resulted in the ban stemmed from the case of a drug trafficker linked to the PCC, one of Sao Paulo's most dangerous criminal gangs, who allegedly used WhatsApp in the commission of crimes.

Judge Sandra Regina Nostre Marques reportedly ordered the 48-hour shutdown of WhatsApp because of Facebook's refusal to share data on the drug trafficker.

The ban affected not only Brazilians, but also users in nearby Chile and Argentina.

Failure to Comply

Facebook could not provide the information the court demanded, because WhatsApp's uses a store-and-forward model, which means messages are deleted from its servers once they have been delivered.

Those messages can't be retrieved from the servers, which essentially function as routers.

WhatsApp chats are backed up automatically and saved daily in the users' phone memory storage. Users also can back up chats to online storage.

Political Maneuvering?

"Vivo, Brazil's leading wireless operator has always been calling for heavy-handed regulation against WhatsApp because it considers WhatsApp and other over-the-top services are getting a free ride," said Ronald Gruia, director of emerging telecoms at Frost & Sullivan.

The company's stance "lines up with the position of the government, which wants more regulation for its own political interest," Gruia told the E-Commerce Times.

"Its approval rating is about 10 percent, and it's increasingly faced with scrutiny over various scandals, and a lot of the mobilization that's been happening against it has occurred over social media, which it can't control," he said. "TV and radio it can control."

Anatel, Brazil's equivalent of the United States Federal Communications Commission, "says operators around the world are dealing with messaging apps, so Brazilian carriers must deal with it," Gruia continued.

Oi, Brazil's "third or fourth largest telco," takes the same position as Anatel, he noted.

On the other hand, the ban on WhatsApp could have been merely an attempt by the judge to gain publicity, because "the judge probably knew the ruling would be struck down," Gruia commented.

Você Não Passará!

Given the climate of terrorism and the widespread unrest in the world, other governments, including the U.S. government, are taking the same position as Brazil's, suggested Rob Enderle, principal analyst at the Enderle Group.

"It's a shortcut to evidence, and one thing that's true of pretty much everyone in any industry is that we all like shortcuts," he told the E-Commerce Times.

However, Brazil's social media might remain free for a while yet.

"There won't necessarily be a clampdown, just more heavy-handed censorship," Gruia said. "It's a non-starter, and the government has bigger fish to fry."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

1:16 AM

A Brazilian judge on Thursday lifted the ban a different judge had imposed on WhatsApp hours earlier, according to reports. It did ...

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Wednesday, December 16, 2015
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A Brazilian judge on Thursday lifted the ban a different judge had imposed on WhatsApp hours earlier, according to reports.

It did not seem reasonable to affect millions of users to penalize Facebook, WhatsApp's owner, for failing to cooperate with judicial rulings, the judge reportedly said, suggesting that the imposition of a larger fine would have been more appropriate.

The ruling reversed the decision of a judge in Sao Paulo, Brazil, who on Wednesday had ordered the 48-hour suspension of WhatsApp services starting at midnight. The suspension was meant to penalize Facebook for ignoring two previous judicial rulings to turn over information in a criminal investigation. Facebook had refused to supply the data despite having been hit with a fine.

The temporary suspension of services spurred about 1.5 million Brazilians to sign up for WhatsApp rival Telegram Messenger, sparked outbursts in the Brazilian Congress, and inspired the sardonic "#In these 48 hours I will," according to reports.

"We're disappointed that a judge would punish more than 100 million people across Brazil, since we were unable to turn over information we didn't have," a WhatsApp spokesperson said in a statement provided to the E-Commerce Times by spokesperson Matt Steinfeld.

"I am stunned that our efforts to protect people's data would result in such an extreme decision ... . We hope the Brazilian courts quickly reverse course," wrote Facebook CEO Mark Zuckerberg.

The Brazilian government wants to clamp down on the Internet and social media, according to media reports.

Some of the country's telcos are similarly inclined, for their own reasons, but they're opposed by the Brazilian telecommunications authority and at least one other telco, as well as by ordinary Brazilians, who reportedly pay through the nose for wireless services.

Leading Up to the Ban

The controversy that resulted in the ban stemmed from the case of a drug trafficker linked to the PCC, one of Sao Paulo's most dangerous criminal gangs, who allegedly used WhatsApp in the commission of crimes.

Judge Sandra Regina Nostre Marques reportedly ordered the 48-hour shutdown of WhatsApp because of Facebook's refusal to share data on the drug trafficker.

The ban affected not only Brazilians, but also users in nearby Chile and Argentina.

Failure to Comply

Facebook could not provide the information the court demanded, because WhatsApp's uses a store-and-forward model, which means messages are deleted from its servers once they have been delivered.

Those messages can't be retrieved from the servers, which essentially function as routers.

WhatsApp chats are backed up automatically and saved daily in the users' phone memory storage. Users also can back up chats to online storage.

Political Maneuvering?

"Vivo, Brazil's leading wireless operator has always been calling for heavy-handed regulation against WhatsApp because it considers WhatsApp and other over-the-top services are getting a free ride," said Ronald Gruia, director of emerging telecoms at Frost & Sullivan.

The company's stance "lines up with the position of the government, which wants more regulation for its own political interest," Gruia told the E-Commerce Times.

"Its approval rating is about 10 percent, and it's increasingly faced with scrutiny over various scandals, and a lot of the mobilization that's been happening against it has occurred over social media, which it can't control," he said. "TV and radio it can control."

Anatel, Brazil's equivalent of the United States Federal Communications Commission, "says operators around the world are dealing with messaging apps, so Brazilian carriers must deal with it," Gruia continued.

Oi, Brazil's "third or fourth largest telco," takes the same position as Anatel, he noted.

On the other hand, the ban on WhatsApp could have been merely an attempt by the judge to gain publicity, because "the judge probably knew the ruling would be struck down," Gruia commented.

Você Não Passará!

Given the climate of terrorism and the widespread unrest in the world, other governments, including the U.S. government, are taking the same position as Brazil's, suggested Rob Enderle, principal analyst at the Enderle Group.

"It's a shortcut to evidence, and one thing that's true of pretty much everyone in any industry is that we all like shortcuts," he told the E-Commerce Times.

However, Brazil's social media might remain free for a while yet.

"There won't necessarily be a clampdown, just more heavy-handed censorship," Gruia said. "It's a non-starter, and the government has bigger fish to fry."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

11:30 AM

A Brazilian judge on Thursday lifted the ban a different judge had imposed on WhatsApp hours earlier, according to reports. It did ...

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Federal information technology purchasing often involves large amounts of money based on the small print of acquisition requirements. Arcane procurement language seemingly can have a big impact on transactions.

For IT vendors, provisions of recent legislation are prime examples of why it pays to scrutinize every line of the laws and regulations pertaining to federal acquisition programs. One example: For years federal agencies have been encouraged to utilize commercial off-the-shelf, or COTS, hardware and software versus more costly customized IT configurations.

Now, provisions of the National Defense Authorization Act for 2016, and the Federal Information Technology Acquisition Reform Act should increase both awareness and purchasing of COTS offerings. The FITARA law was enacted last year, but implementation is still in the early stages and its impact will be felt over the next several years.

"New realities in federal IT management create a shifting sales landscape for COTS manufacturers," said Chris Wiedemann, market intelligence senior analyst at immixGroup, at the company's 2016 Government Sales Summit conference last month.

Matching Private Commercial Market

The use of commercial off-the-shelf procurement certainly is not new within the federal government. Federal COTS acquisitions involve commercially available items provided to the government in essentially the same form as they are offered in the general market.

The idea is that these items are less costly and can be used just as effectively for many purposes as substitutes for expensive and unnecessary customized products built especially for government agencies. In the IT realm, federal COTS products include both hardware and software.

In the government acquisition process, the new laws encourage agencies to move toward the COTS buy option, versus the customized build choice. Finding those provisions supporting COTS, however, can be challenging. For example, the NDAA for 2016 runs to 580 pages -- but vendors would be encouraged by a small item tucked into the law addressing COTS.

The section requires the Department of Defense to issue procurement guidance that at a minimum provides that an agency head may not enter into a contract in excess of the simplified acquisition threshold for noncommercial IT products or services unless the head of the agency determines in writing that no suitable commercial items are available to meet the agency's needs.

As the NDAA 2016 bill -- and the COTS language -- was being considered earlier this year, the COTS proposal in the bill "reinforces and essentially outlines the need for the DoD to conduct more market research to identify commercially available solutions," noted Jason Glasser, director of federal programs at DOMA Technologies.

The language was "not just referring to information technology, but the department's needs as a whole," he said.

"The new NDAA has potential to start DoD on a path to better planning new projects by crafting the needs around what is commercially available," Glasser said.

Acquisition Reform Act Spurs COTS

On the civilian side of federal IT procurement, the FITARA law is replete with guidance and requirements that promote more efficient IT contracting, with an emphasis on incremental IT procurement programs versus large one-shot projects that are expensive and limit flexible approaches to acquisitions. The FITARA bill has led to successive guidance and acquisition declarations within federal agencies that boost the concept of COTS procurements.

In early November, for example, Steve Cooper, the CIO at the U.S. Department of Commerce, appeared before the House Government Oversight and Reform Committee to discuss the department's preparation of the 2020 census.

Among the steps that Commerce was taking was a "realization of the Census Bureau's information technology guiding principles to simplify, innovate and engage by looking to the cloud first and emphasizing standard-based, commercial off-the-shelf solutions over custom development," he said.

In addition to major departments such as Defense and Commerce, smaller agencies also are more aware of the COTS option.

In a capital planning and investment document issued earlier this year describing the agency's response to the provisions of FITARA, the U.S. Nuclear Regulatory Commission noted that new IT acquisitions give preference to using available, suitable federal information systems, technologies and shared services or facilities, or to acquiring open source or COTS technologies over developing or purchasing custom or redundant solutions.

"COTS is for real, and has been for some time, and the continued direction from the Office of Management and Budget means that the focus is on agencies conducting market research to determine if there is a COTS solution that can meet their needs before deciding to move forward developing a custom solution, which can oftentimes prove costly and take an extended period of time," said Tomas O'Keefe, market intelligence consultant at immixGroup.

"Hardware is a popular option for COTS, particularly hardware that can operate on an open-standards platform where an agency doesn't get locked into one vendor's total solution," he told the E-Commerce Times. "Moving forward, we expect departments to try and avoid vendor lock-in so they have flexibility."

Another potential COTS growth area will continue to be in cybersecurity, particularly tools geared toward insider threat prevention and defending against more sophisticated attacks against a department or agency's networks, O'Keefe noted.

The COTS versus customizing situation doesn't always have to be mutually exclusive. "There are often many customization options that come with COTS products, particularly for an enterprise like the government," he added.

The impact of FITARA will be significant going forward, said Robert Haas, team chair for the Professional Services Council's Federal IT Budget Outlook.

The legislation "will start to drive transformation," in federal IT procurement, he said at the PSC outlook forum in November.

As a component of transformation, "while it's hard to divine what Congress has in mind for any particular issue, there are a couple of ways to think about" the COTS issue, Haas noted.

"One is a rallying cry to eliminate individual custom software implementations where a COTS product fulfills most if not all of the requirements. Moreover, the requirement gaps are opportunities to ask whether the process could be changed to simplify the IT support required," he told the E-Commerce Times.

Agencies Express Strong Interest

"Another way to think about the COTS versus custom software implementation is as a risk reduction and replacement strategy. In this case, the focus is less about whether a specific COTS package needs to be tailored to an agency, and more about using standardized platforms that are supported with maintenance releases, bug fixes and so forth. In this scenario, there is a risk of customizing the COTS software to the point it is difficult to upgrade in the future. At that point, the total cost of ownership may favor a custom software implementation," Haas said.

In either case, interviews among federal IT professionals conducted in conjunction with the PSC outlook forum "indicated that agency leaders are looking for cost effective and efficient methods" to modernize their IT systems. "COTS approaches are likely to be a good fit for some situations, while others require a different solution," he said.

COTS strategies often work best where there is a high degree of standardization.

"Specifications are commonly understood in these types of procurements and can yield substantial savings" Haas noted. "These savings continue to accrue during the deployment and operations phases because standard configurations are easier to manage and support."

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

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Federal information technology purchasing often involves large amounts of money based on the small print of acquisition requirements...

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