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The Bloor Perspective: Mobile ringtones, power blackouts and corporate governance
This week Robin Bloor's team analyses how mobile ringtones outsell CDs, whether computer failure caused the recent power failures and the impact of new corporate governance legislation on IT strategies...

By Bloor Research

Published: Monday 01 December 2003

Mobile phones, once the business tool of only yuppies, are now the most carried item of technology as a lifestyle accessory. They also provide a portable personal purchasing point, with a rapidly growing market for downloadable content of all formats. Even relatively low quality ring tones now outsell CD singles. So is the CD dead?

UK mobile operator O2 thinks so.

Rather than selling low quality ring tones, O2 are selling full CD quality music over the air, to download into a specially designed digital music player. Although the player, manufactured by Siemens, will initially cost just under £100, the music will cost between £1.00 and £1.50 per track.

Despite the high quality audio, users can start listening to tracks inside around 20 seconds. Almost as important, that will sometimes be earlier than the tracks are made available through other channels. The whole music track selection will be updated weekly, and will grow with additions from the back catalogue to more than 100,000 titles.

It's designed to be easy to use, with tracks streaming down in close to real time following the initial 20 seconds in the compressed format known as aacPlus provided by Coding Technologies GmbH. This is now standardised to be MPEG-4 High Efficiency AAC, and delivers CD quality audio over a 48kbps link, and the tracks then occupy about 1Mbyte each when stored.

Customers can listen to a 30 second preview free of charge, but some of the service conditions are a little disconcerting, especially as O2 say:

"We do not guarantee the quality or availability of the Service. The Service is provided without any warranties or guarantees (including any warranties implied by law) unless expressly stated otherwise".

So a failed download might not be quite as simple to prove as a faulty CD, especially as this player relies on an infra red link to the mobile phone for data transfer. However, O2 are the first to offer this type of service, so it's early days, and perhaps they are right to be cautious.

Needless to say, this is aimed at the younger, readily spending audience with the music genres to match.

*Electricity computer failure*

A report issued by a panel of US Government and Power Industry officials has placed the blame for the largest power outage in North American history primarily on computer and human failures. FirstEnergy of Ohio and the Midwest Independent Transmission System Operator, the regional agency with responsibility for overseeing FirstEnergy are roundly criticised.

As the crisis unfolded, a computer program that should have set alarms off in FirstEnergy's control room failed. Consequently the computer system itself failed and then the back-up/disaster recovery system failed. Consequently, operators in the control room had no clear idea of what was happening. According to the report, FirstEnergy's computer maintenance staff failed to tell the control room of the failure for over an hour. FirstEnergy disputes, this saying that the control room staff actually informed the computer staff of the failure. Meanwhile Midwest ISO was having trouble with its "state estimator", a computer program that reports on whether the electricity grid is in trouble. According to the report, a technician turned the program off, tried to fix it, forgot to turn it back on and then went to lunch.

There is no mention in the report of whether any of these failures were caused or contributed to by the MSBlast worm/virus which was active at the time that the blackout occurred. However it is unlikely that it would be mentioned. Computer systems within the North American energy grid are supposed to be secure and a failure of security is, after all, just another failure of a system. There has been some suggestion on the web that MSBlast was a contributory factor or even the prime cause of the blackout. The report does say that conditions on the grid were not abnormal when the cascade of failure began.

In any event it is clear that computer system failure was the heart of the problem and given the estimated billions of dollars costs to businesses from the blackout, it seems certain that IT audit and compliance will now be strongly enforced. Quite rightly so.

*IT governance*

Corporate governance has become a major issue, spurred by high-profile accounting scandals, which have led to passing of legislation in the US such as Sarbanes-Oxley. In Europe, the Basel II capital adequacy framework accord will force companies, especially those operating in the financial services sector, to revise their corporate governance to improve their risk management practices.

SHL, a company offering psychometric testing for recruitment purposes, recently surveyed 200 HR executives across the US, Europe and Asia-Pacific. Speaking of the reasons for doing the survey, SHL's CEO points to the way that human error and accountability have changed the business landscape recently. Company reputations are at stake and businesses can no longer afford to rely on an 'old boy network'.

Overall, the findings of the survey indicate that aptitude testing is gaining favour with HR professionals across a range of positions. Respondents were asked whether objective assessment tests are important in hiring people for a range of positions, ranging from IT and HR directors to CEOs, and from bar managers to prime ministers or presidents. The survey can be accessed here.

Some of the data findings in the survey need to be treated with caution - respondents were asked whether psychometric testing should be mandatory for executive positions in companies, such as CEO, marketing director and finance director, but only asks whether such tests should play a key part in the hiring of such positions as prime ministers/presidents, sports managers, estate agents and bar managers. This subtle difference makes it appear that respondents place greater importance on the use of objective testing as part of the recruitment process for hotel managers, car salesmen and HR directors than for CEOs. Similarly, higher importance appears to be placed on the use of such tests for bar managers, estate agents and sports managers than for company finance directors.

However, some of the qualitative answers given to questions in the survey shed more light as to why the HR role sees psychometric testing as important. Asked to explain the reasons why respondents believe objective testing should be mandatory for executive recruitment, just short of two-fifths of respondents answered that finding the right person for the job - or people fit - was the most important use of psychometric testing. A further one-fifth responded that such testing was the best way of reducing bias and subjectivity in executive selection. And just over one-fifth of respondents indicated that objective testing should be mandatory because, since the executive to be hired is responsible for the business, it is necessary to ensure the integrity of the person before they are employed.

Taken together, these results point to the overwhelming importance of personality in business. HR directors are not just relying on the quality of their business processes, but realise that businesses are driven by the quality of their leadership. Perhaps that is why people think psychometric testing is nearly as important for a bar manager as a CEO.