Decade shows Moore's Law in action

Ten years is a long time in technology, so the blowing out of candles on the birthday cake by New Zealand IT firms Oxygen and SnapperNet is worthy of note.

In 1965, Intel co-founder Gordon Moore predicted the number of transistors on an integrated circuit would double every 18 months.

Moore now says that dictum has about served its usefulness as the size of atoms becomes the fundamental barrier to the industry's growth, but the exponential nature of Moore's Law means the basic building blocks of computer hardware have increased their capacity a hundredfold over the decade.

On the software side, the improvement has been even more dramatic.

According to a report on funding for IT research and development by Barack Obama's Council of Advisers on Science and Technology, progress in numerical algorithms far outstrips advances through silicon.

It cites research by German optimisation expert Professor Martin Grotschel, showing a benchmark production-planning model would have taken 82 years to solve in 1988, using the computers and the linear programming algorithms of the day.

Fifteen years later - in 2003 - this same model could be solved in one minute, an improvement by a factor of about 43 million.

Grotschel estimated a factor of about 1000 was because of increased processor speed and a factor of 43,000 was because of improvements in algorithms.

The two 10-year-olds are on both sides of that equation.

SnapperNet distributes a wide range of hardware for data networking, such as switches, routers and internet gateways.

Managing director Richard Paul said when it started much of its business was supplying network interface cards to the thriving local personal-computer assembling industry - remember that?

"The first Ethernet switch we sold was 8 baud and cost $2500. You can buy one now for $25, and we're selling 10GB switches for $2500," Paul says.

Moore's Law in action.

SnapperNet's customers are now the re-sellers and large services firms such as Axon, Datacom and Gen-i have become the main interface to the technology market for many medium-sized and large New Zealand companies.

Over at Oxygen, it's the algorithms that underlie the extraordinary growth of its business, which is installing and maintaining systems from German company SAP, the world's largest business software company.

Oxygen grew out of a decision 14 years ago by forest products conglomerate Carter Holt Harvey to run its business on SAP.

For a company that size, the normal process is to engage a large global consulting firm.

The consultants analyse the business processes, change the software to match the business or the business to match the software, and leave - taking with them much of the company's cash, valuable business knowledge and some of its IT-savvy staff who have found the excitement of large IT projects appeals more than going back to business as usual.

Then-chief executive Chris Liddell decided instead to use internal resources, with the aim that at the end of the process Carter Holt would not only have a team that understood its business but it would also have a valuable IT business that could be sold.

That duly happened and, for the past five years, Oxygen has been owned by Australian IT group UXE, which also owns Microsoft specialist Eclipse and Red Rock which services all the flavours of Oracle.

Liddell, of course, moved on to Microsoft and General Motors, but the person he brought in to run the fledgling company, former Jade chief executive and Harvard alumni Mike Smith, is still in the job.

"It actually feels like it's been three distinct jobs," says Smith.

"First there was growth under the Liddell model, then the 18-month process of selling the company - longlisting, shortlisting, doing due diligence, communications with staff and so on - and then under UXE it has been a different regime."

Over the decade, Oxygen has maintained SAP for a solid list of blue-chip customers on both sides of the Tasman, including Air New Zealand, Fonterra, KiwiRail, TVNZ, Zespri, Blue Scope Steel, Bridgestone, Linfox, Oxfam and Rio Tinto.

The exponential rate of technology improvement means many of the capabilities which only the largest organisations could afford, such as business intelligence, are now available to a much wider range of firms.

"For the large end of town, there has been an incredible amount of R&D within SAP to simplify the product set and make it much more user friendly," Smith says.

"In the mid-market, SAP has taken a leap forward. It had no story for the mid-market six or seven years ago. It does now with A1 and B1."

A1 (or SAP All in One) is the main SAP engine wrapped into a templated form so it can be dropped quickly into smaller firms. B1 (or Business One) is a separate suite of business software for small and medium-sized firms.

Oxygen resells A1 and B1 in Australia, as well as the Business Objects business intelligence software, but in New Zealand it tends to implement the systems that SAP sells directly.

It now has 180 permanent staff and 40 contractors.