The 10 Most Important Technology Areas for 2008?

January 4th, 2008

So begins the New Year…

Just when you thought you had it bad, this morning’s paper read, “Man survives 500 ft fall”. Apparently, he is in stable condition with broken everything – but he can speak and seems to be on his way to recovery. Sound familiar? Don’t you feel sometimes that’s exactly how 2007 left us? Whew – at least we can speak…

With that being said – lets speak…

Now that the year is underway - pontification takes place in all realms of nature, including IT. Let’s take a closer look at what the leading Nostradamous is touting for 2008:

The 10 Most Important Technology Areas for 2008, a Gartner Perspective..

The research house defines strategic technologies as those with the potential to significantly impact corporations in the next three years.

Green IT: This is the idea that the Green manufacturing effort shall finally hit the data centers.

Comment: This may only be remotely perceivable in the planning stages – for someone to actually believe that this will culminate in the next three years in a data center – hasn’t worked in a data center in the past three years…

Unified Communications: Gartner says that over the next three years the majority of corporations will migrate to Internet Protocol telephony.

Comment: Well, this would be a lock – if it weren’t for two small items: installation, support. Installation – normally would be a snap weren’t for those nasty DIDs and trunk connections – (telephony guys – help me here). The wonderful task of translating the company directory is also a bear. Now, don’t take it from me, just ask those corporate early adopters that braved the 3 month, or I mean 9 month fiasco. Support – unfortunately, this technology needs it. The availability of it is another thing…

Business Process Modeling: As companies continue to look for ways to improve their business processes, the key to success will be an organization’s ability to bring together enterprise architects, senior developers, process architects and process analysts. Gartner also expects business process management software suites to better complement SOA applications development.

Comment: OMG! If I have to hear this tired old diatribe of marketecture – do you realize this has been a propped up Meta language circa 1990 – its another term for cooperation between departments… Please..

Metadata Management: Over the next three years, companies working to integrate both customer data and product data will link these master data management efforts together in an overall enterprise information management (EIM) strategy. Metadata management, Gartner notes, also extends into SOA software development projects with service registries and application development repositories.

Comment: Another Smithsonian relic circa 1990 – hardly merits mention on a 2008 epiphany – the only strides here have been in the manufacturer realm – in database management…

Virtualization 2.0: Virtualization has improved server utilization, but with the addition of automation technologies—with service-level, policy-based active management—even greater improvements are possible. “Resource efficiency can improve dramatically, flexibility can become automatic based on requirements, and services can be managed holistically, ensuring high levels of resiliency,” Gartner says.

Comment: Now this is interesting – much like IT where the concepts of expand and contraction are sinusoidal – Distributed systems vs. Integrated Systems (Master Computer), Computing is following suit. First there was big iron – the mainframe, then came distributed systems, now this wonderful concept of blades and virtualization so “The Network is the Computer” sound familiar, Scott McNealy? Wow – now you can buy individual systems and put them all together to work as one big CPU! Great, that’s way up there with selling something that was normally inexpensive and marketing it so its expensive again… bottled water anyone? A mocha latte perhaps…

Mashup and Composite Apps: In three years, Web mashups will be the way companies create composite enterprise applications, Gartner predicts.

Comment: Don’t get me wrong, the idea is attractive – the reality is ugly. A mashup is a web application that combines data from more than one source into a single integrated tool; an example is the use of cartographic data from Google Maps to add location information to real-estate data from Craigslist, thereby creating a new and distinct web service that was not originally provided by either source. bottled water anyone? A mocha latte perhaps…

Web Platform and Web-Oriented Architecture: Software-as-a-Service, in which applications are available on-demand over the Web, is becoming a real option for many companies. And emerging Web platforms, Gartner says, will provide service-based access to information, applications, and business processes through Web-based “cloud computing” environments.

Comment: This has been around since 2000 – and as far as I can see, it still wears diving boots in Corporate America. There are some that will argue that there have been great strides in sales software – but its usually popular in the “cobbler’s kids” category, i.e., Our company doesn’t want to play in this area – so we will rent it, since all of you are dispensable…

Computing Fabric: Gartner says the next phrase of server computing will be technology that allows several blades to operate as a large single system. “The fabric-based server of the future will treat memory, processors, and I/O cards as components in a pool, combining and recombining them into particular arrangements to suit the owner’s needs,” the research firm says.

Comment: Whoop, there it is… bottled water anyone? A mocha latte perhaps…

Real World Web: Gartner defines the real world Web as a place “where information from the Web is applied to the particular location, activity or context in the real world.” It gives the example of a navigation unit that adjusts the information it delivers as a car or boat moves around. Gartner sees real world Web application improving many business processes and creating new revenue streams.

Comment: Gartner Defines… Need I say more…

Social Software: The Web 2.0 market will go through a lot of changes between now and 2010, Gartner says, with considerable vendor consolidation. However, the research firm does see social networking being adopted by many enterprises to augment traditional collaboration.

Comment: between now and 2010… I see, I see… Corporate America – using IM and contracting enormous amounts of viruses…OOOOOooooooo.

2007 Holiday Hottest Video Games by Age Group

December 12th, 2007

For those of you that are scratching your heads on the games to get - here is a list that may help… This is a summary of the article at the Morning Ride Site: www.1esc.com/wp

2007 Holiday Hottest Video games by age group Shopping List

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THE LITTLE DUDES – The fun of playing is one thing, but the playground prestige is another…

1. Mario & Sonic at the Olympic Games; Platform: Wii (Nintendo DS version due Q1 2008)

2. Drawn to Life; Platform: Nintendo DS

3. Pokemon Battle Revolution; Platform: Wii

4. MLB Power Pros; Platform: Wii, PlayStation 2

5. Zack & Wiki: Quest for Barbaros’ Treasure; Platform: Wii

6. EA Playground; Platform: Wii


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THE TWEENS – Here we have suggestions for the little people not quite the Teenager.

1. Super Mario Galaxy; Platform: Wii

2. The Legend of Zelda: Phantom Hourglass; Platform: Nintendo DS

3. Rayman Raving Rabbids 2; Platform: Wii, Nintendo DS

4. Thrillville: Off the Rails; Platform: Xbox 360, PC, Wii, Nintendo DS, PlayStation 2, PSP

5 Ratchet & Clank Future: Tools of Destruction; Platform: PlayStation 3

6. Sly 3: Honor Amongst Thieves; Platform: PlayStation 2

7. Dance Dance Revolution; Platform: Xbox 360, PC, PlayStation 2

8. Harry Potter and the Goblet of Fire; Platform: Xbox 360, PC, PS 2, DS, Gamecube, PSP

9. The Incredibles: Rise of the Underminer; Platform: PC, PlayStation 2

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THE TEEN SCENE – Big kid buying? Chances are they’ll want some adult-oriented games. Get them these instead—they’re all so uniformly entertaining your recipient won’t even notice that none of them have an M rating.

1. Rock Band; Platform: Xbox 360, PlayStation 2, PlayStation 3

2. Guitar Hero III: Legends of Rock; Platform: Xbox 360, PC, Wii, PS 2, PS 3

3. Wii Zapper w/ Link’s Crossbow Training; Platform: Wii

4. Chronicles of Narnia: The Lion, The Witch, & The Wardrobe; Platform: PS3, PS2, PSP, Xbox360, Wii, DS

5. Peter Jackson’s King Kong; Platform: PS3, PS2, PSP, Xbox360, Wii, DS

6. Skate; Platform: Xbox 360, PlayStation 3

7. Project Gotham Racing 4; Platform: Xbox 360

8. Naruto: Rise of Ninja; Platform: Xbox 360

9. Metroid Prime 3: Corruption; Platform: Wii

10. Uncharted: Drake’s Fortune; Platform: PlayStation 3


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THE KEY DEMOGRAPHIC 18-34 MALE – For those buying for their college roommate/boyfriend/newly-married husband, congratulations—half the industry works to fulfill your needs. That doesn’t mean you should just close your eyes and pick, because there is some garbage out there…

1. Halo 3; Platform: Xbox 360

2. Call of Duty IV: Modern Warfare; Platform: Xbox 360, PC, PlayStation 3

3. Crysis; Platform: PC

4. Assassin’s Creed; Platform: Xbox 360, PlayStation 3

5. Enemy Territory: Quake Wars; Platform: PC

6. Unreal Tournament III; Platform: PC (console version to be published in 2008)

7. Medal of Honor Heroes 2; Platform: Wii, PlayStation Portable

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THE GAMER – Regardless of age or gender, if the person you’re buying for is into games, they’re going to be tough to appease. These are the games for those who consider playing less of a pastime and more of a culture.

1. Oblivion: Elder Scrolls IV; Platform: PC, Xbox 360, Playstation 3

2. Final Fantasy XII: Revenant Wings; Platform: Nintendo DS

3. BioShock; Platform: Xbox 360, PC

4. Mass Effect; Platform: Xbox 360

5. Shin Megami Tensei: Persona 3; Platform: PlayStation 2

6. Jeanne d’Arc; Platform: PlayStation Portable

7. Castlevania: Dracula X Chronicles; Platform: PlayStation Portable

8. Eternal Sonata; Platform: Xbox 360

9. World in Conflict; Platform: PC

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THE NON-GAMER – Your recipient has never cared about games before, or thinks they’re stupid; your goal for this December 25th is nothing less than indoctrination. A Nintendo DS and these games are the tools that should help you out.

1. Brain Age 2: More Training in Minutes a Day; Platform: Nintendo DS

2. Picross DS; Platform: Nintendo DS

3. Planet Puzzle League; Platform: Nintendo DS

4. The New York Times Crosswords; Platform: Nintendo DS 

5. Cooking Mama 2: Dinner With Friends; Platform: Nintendo DS


The Merchants Guide to Credit Card Processing

December 11th, 2007

The Secrets of Credit Card Processing, or The Devil Wear’s VISA

This morning we shall be exploring the mysteries of “Retail technology”, specifically – that ELUSIVE and CONVOLUTED subject of “CREDIT CARD PROCESSING”. Every Retail business knows that today’s retail purchase landscape is predominately electronic. The days of “cash is king” is metaphoric at best – even at its most rudementory level – the credit card seems the victor at the cash register. Even children’s birthday cards are now being filled with gift cards that not only resemble the credit cards, but process the very same way.

Now as a business owner – you’ve been approached six ways to Sunday on how someone can provide you better rates, service, or value. However, that being said – what does it all mean

To answer that question - lets level the playing field and walk through the architecture of credit card processing…

In today’s offerings there are two points of entry – website or brick and mortar (Retail). Now if your presence in the market is via website:

Your Web Application
The process starts with your Web application. The Web application is responsible for collecting the customer’s contact and credit card information. Once that is done – it sends this info to an internet gateway that provides the interface to the credit card processing network. The Internet Gateway is API that your application can communicate with transforming the information you collect into a standardized format that the credit card processor can understand. In addition, These Gateway providers also provide browser based credit card processing interfaces so the merchant can manually punch in telephone orders or mail orders. Some of the more popular Gateway providers are Authorize.NET, Verisign (PayFlow Pro), LinkPoint. They all perform the same basic functionality for providing a standard interface for your application to process a credit card.

For Brick and Mortar – ie. Restaurants or Stores – there are two main ways the Merchant processes their credit cards. Either a POS (or Point of Sale Cash register software system is used or a standalone hardware terminal) In the POS scenario, the cash register either communicates directly to the network, or interfaces with a terminal that does.

Looking at an integrated POS solution at first blush is very appealing with an all in one technology, support, and maintenance renewal contract. However, these POS with integrated card processing are proprietary and are limited to specific technologies and credit card networks that they are certified on. As a result, Merchants may be captive to specific solutions, networks, and subsequent rates.

What that equates to is if better rates for processing are offered from another source – they will be subject to the limitations, affiliations, or requirements of the POS solutions – or even worse, some shadier POS organizations require Credit Card processing to go through them. This way, theyre masking their support price through their gains in exorbitant processing fees and are using it as a subsidy for their service. This should be frowned upon if proposed, for it prevents you from any market corrections on your credit card processing and could cost you thousands on your bottom line.

This is why the predominate solution for retail is the standalone terminal, for its less hastle, more portable, and interfaces to a variety of POS systems on the front end and many processing networks in the back end.

It is this flexibility that makes the independent terminal the more popular choice. It not only keeps the options open for the Merchant to take advantage of better solutions e.g. POS systems enhancements or better credit card Processing Services, but keep each technology solution from impeding the other.

Processing Network
To review, weve discussed the Web Application, the Gateway API and interface, and the brick and mortar solutions of integrated POS and independent terminals. All of which talk to this mysterious credit card processing network.

The credit card processing network handles the actual payment processing by passing transactions to the issuing bank e.g. Chase Credit Card, Wells Fargo or Bank of America. There a number of different providers that offer a credit card processing network, ie. this communication network to the issuing banks, some of the larger organizations are First Data/Concord, Chase/PaymentTec, and Nova Network.

Returning back to our process flow of a swiped credit card – the information and charged amount is captured by either a gateway or independent terminal and goes through one of the aforementioned credit card networks and ends up at the credit card’s issuing bank for authorization. At this point the transaction has either been approved or declined. If approved the transaction is only Authorized with the issuing bank, which means your information checks out and you do have the funds available for that transaction. At this point, the funds are put on hold only for the moment. Funds are not actually transferred and taken out of the user’s account until the authorized transactions are batched and settled.

What is meant by transaction batch settlement is that the Gateways or terminals throughout the coarse of a day, collect authorized transactions into batches which are processed at regular intervals that you can specify as part of the Gateway or terminal interface. When batches are settles the Gateway communicates with the back end networks to cause the funds to be put on hold, but removed from the customer’s account. At this point the money is being moved into the merchant bank account and held in escrow for a period of time – typically 48 hours, it’s not immediately transferred into your checking account.

Merchant Bank – the ‘Escrow’ Account
The Merchant bank acts as the intermediary between your bank account the processing networks that retrieve the funds. The funds retrieved are held – as mentioned, typically for 2 days and then deposited into your bank account. The merchant bank also subtracts the merchant percentage from each transaction, assigning the per transaction charges for the credit card processing.

The merchant provider also acts as an intermediary between you and the issuing banks should there be a dispute for payments. So if there’s a fraudulent transaction or a charge back you’ll hear from the Merchant bank that provides you with the details and to whom you have to send any documentation. A good merchant bank can also deflect frivolous charge back claims before they ever reach you.

AMEX, Discover, Diners, JCB – special cases
These card providers actually act as both the Issuing bank as well as the merchant provider – they deposit directly into your merchant account after holding funds for a short period. In essence these companies are the merchant provider for the transactions. However, transactions still run through your merchant bank which will charge you per transaction fees for the AMEX etc. So AMEX, Discover, Diner etc. all have their per transaction charges billed through the Merchant statement. Even if you were only to take AMEX you still need a terminal to process the card and gain access to the processing network.

Fees Structure:

When a customer uses his Visa or MasterCard to buy a product or service, you pay a fee. This fee is split by three of the players involved in handling the transaction. The largest portion of this fee, the “interchange”. Interchange fees are set collectively by the financial institutions which are stakeholders in Visa (currently an association of banks and other credit card issuers and acquirers) and MasterCard (a public company). Many of these banks issue both credit and debit cards. JP Morgan Chase is the largest issuer of both. The Interchange fee that goes to the card issuer, e.g., Bank of America, Chase, and Wells Fargo and is based on a percentage (e.g., 1.8 percent) of the purchase plus a small transaction fee (e.g., 10 cents). The smallest portion (less than 0.095 percent) goes to the card association, e.g., Visa/Mastercard and is called the “assessment.” Interchange rates are established at differing levels for a variety of reasons. For example, a premium credit card that offers rewards generally will have a higher interchange rate than do standard cards. Now, transactions made with credit cards generally have higher rates than those with signature debit cards, whose rates are in turn typically higher than PIN debit card transactions. Sales that are not conducted in person, such as by phone or on the Internet, generally are subject to higher interchange rates, than are transactions on cards presented in person.

Downgrades…

There are over 200+ cards out there each commanding a separate rate and overhead governed by nearly 63+ interchange levels complete with 402 primary qualification criteria with 402 matching downgrade scenarios. What does that mean to you? That wonderful rate and transaction fee your spouting comes up short when its time to calculate your overall monthly bill.

Avoiding downgrades

The reward card kickdown…
Which means – if someone purchases something from you with a card that has, airline miles, cash rebates, or reward points attached to it, you the merchant pay an additional .85% - 1.65% for that priveledge. By in large, this is an unavoidable dilimma; however, there are a few exceptions out there – one that comes to mind is a processor that uses this issue to distinguish themselves from other processors by treating the majority of the rewards as standard cards. Thus, avoiding the rate downgrade. These guys can be found at clearpayprocess.com…

Hand-keyed downgrades

The interchange system treats every hand-keyed transaction as a downgrade. It’s true that magstripes on cards do wear down and terminals do sometimes fail to read cards when swiped. The occasional hand-keyed transactions are to be expected.

Sometimes, for whatever reason, an employee will hand-key many or most transactions, without even trying to swipe first or giving up after one attempted swipe. Training is key here.
Staff may also fail to let a manager know that a terminal is not working properly, or a busy store owner may put off contacting the vendor about a problem terminal. If a terminal is acting up often, it probably needs to be cleaned or repaired. Get the terminal working well and you’ll have far fewer hand-keyed - downgraded—transactions.

Batch Delays

Transactions also downgrade when there is a long gap between when the transaction occurs and when the batch is released to the processor. Many retailers opt to have their terminal software configured to release the batch automatically every day, to receive funds faster and avoid downgrades. Others prefer to handle batch release manually. Some older terminals are not capable of automatic batch processing. Merchants who process batch releases manually should make sure it’s getting done at the end of each business day or as regularly as possible.

Transactions in batches that aren’t released within one or two days are downgraded, and the rate gets worse as more time passes. If a batch is not released for a week, those funds are delayed from being deposited into the merchant’s account and the interchange rates go up as time passes.
Most retailers understand batch releases, but they may overlook such factors as a change in a key employee. Make sure that the change in personnel does not impact the batch releases.

No match

Unlike Restaurants, who are allowed to adjust a pre-tip authorization up to 20% of the base amount. Salons and Spas, Cab Drivers, Massage Therapists, Services providers, Bands, etc or any entity falling under (MCC) Merchant Category Code or SIC code is categorized by Visa and MasterCard as a Retail merchant are NOT Allowed.

Therefore, a Salon or Spa who obtain a REAL authorization on a base (pre-tip) amount and adjusts it later for a tip, will Downgrade the transaction to a higher MID or NON Qualified Rate tier; depending on how the transaction qualified in the first place. Because, the original authorized amount will not be the same as the settled (batched) transaction amount.

There are only a few equipment and software company’s that have addressed this topic. What has been developed is a terminal software work around; allowing a “dummy receipt” to be printed which provides a tip line for the customer to write in their preferred tip along with providing their signature. What I mean by “dummy receipt” or fake receipt is.. a printed receipt that shows a authorization code that is Fake or Not Real, but real enough for the customer to input their tip, sign and hand back to the cashier.

After the “Dummy receipt” is in the cashier’s posession, they will swipe the card again to obtain a REAL authorization; inputting the base amount, server # and tip amount written on the dummy receipt. The new receipt will be handed over to the customer and the original “Dummy receipt” will be retained by the merchant.

This procedure keeps your transactions from Downgrading; qualifying at the lowest card rate (depending on the card type) Because, you are only going out for one authorization on the total amount; no tip adjustment necessary. The authorized amount will always be the same as the settled transaction amount.

Adjusting for tips is costing your business:

Tech solutions

In a few instances, upgrading equipment may be a wise investment because of the savings in processing charges. The discount rate for debit cards is lower than for credit cards, but the lowest rate is reserved for PIN-based debit transactions, which are considered less risky than signature-based debit transactions (in which a customer uses a debit card but signs the receipt rather than entering a PIN).

Some stores use a POS cash register with out-of-date software that results in downgrades for many transactions. Make certain your POS system is using current software, or consider switching to a POS system or terminal that does, to eliminate these downgrades.

Businesses that do many transactions away from a store—at festivals or trade shows, for example—have resigned themselves to paying high rates for transactions because until recently they couldn’t easily swipe cards at the time of the transaction. Although the customers’ cards are present during the transactions and the merchant is checking signatures, interchange rules require that they are charged for the riskier “card not present” transactions.

Investing in a mobile transaction terminal that allows on-site card swiping through a wireless device might make sense in the long run for these merchants. The devices have dropped in price over the past two years.

In addition to saving on processing, merchants report many other benefits to their businesses in terms of professional image, improved bookkeeping and saved time.

Most merchants recognize that payment processing is a cost of doing business, just like heating the building and paying staff. Like other costs, processing costs have risen over the years. But unlike other costs, the complexity of the credit card payment industry has increased tremendously over the past decade as well.

This complexity can lead merchants to feel as though they have no control over this cost. The more a merchant understands how the charges are generated, the more he or she can manage this cost.

Hopefully it has helped navigate through what is usually merky waters…

Happy Holidays

December 10th, 2007

Seasons Greetings,

As this year-end rapidly approaches, we thought a little note of appreciation from us here at ESC would be appropriate. For nearly 14 years now, yes, can you believe it, we’ve been providing technology solutions for the business community and have made many new friends in doing so. We’ve seen the business world go through many changes; however, the players remain constant and a close-knit community. For this reason, we feel compelled to say - Thank you for sharing your lives with us, for it is your friendship that allows us to remain here serving your technology needs.

With that, it is with sincere appreciation that we extend this holiday wish - We hope that you and your family have a happy holiday, and a safe, healthy and prosperous New Year!

Oh yes, don’t do anything memorable at your company holiday party…

Merry Christmas vs. Happy Holidays

December 7th, 2007

Seasons Greetings,

Recently, their has been an inordinate groundswell of indignation toward the use of the “Happy Holidays” greeting as opposed to “Merry Christmas”. This is probably a reaction of the Media’s immediate grandstanding of events that point out complaints of Christmas decorations. This year its the Christmas Tree next to the Menorah, last season, it was Christmas decorations at an airport. Now as I understand it the arguments are as follows:

1) The Merry Christmas group declares that the giant retailers out there are really vying for Christmas Shopping dollars, not anything else. As a result, they want the Christmas put back into Christmas. In fact, they go so far as to counter the complaints made by others toward symbols of Christmas, such as, Christmas Trees, Santas, etc. with their own assertion, that they are offended by “Happy Holidays”.

2) The Happy Holidays group declare that their holidays have been for years passed over (forgive the pun) such as, Chanuka (also spelled Hanukkah), December 5 - 12, 2007, or Feast of Our Lady of Guadalupe, December 12th, or Kwanzaa, December 26th thru January 1st, or even Boxing Day, December 26. In fact, there are 44+ Holidays and observances in December. As a result, they declare that in a mixed culture, retailers should be sensitive to other cultures.

Well, that being said, there are merits to both sides of the coin. However, I do believe that there may be a bigger issue here, one of the feverant creep of retailer/etailers commercializing something that really should be revered with humility and respect. Regardless, of the reason. Observances are intended for all of us to reflect on what we hold dear in our hearts. So, forgive me if I don’t jump on the debate on who gets the most attention from the retailers, personally, I would find it refreshing not to be solicited after Halloween about getting that special holiday gift, or hearing Christmas Carols (yes Christmas - not many Kwanzaa tunes out there) - let me survive Thanksgiving at least first, then drown me in a sea of unadultarated commericialism.

So whether it be Seasons Greetings, Happy Holidays, Merry Christmas, Happy Chanuka, or Happy Kwanzaa - I will attempt, among the barrage of circulars, commercials, jingles, and pop-ups - just to be Happy…

Securing Information: Two Factor Authentication

December 5th, 2007

The Security Issue

While firewalls and ID/VA solutions are important components of a comprehensive security infrastructure, this infrastructure is not complete without policies and venues for authentication and authorization, or what is industry termed as “access control”. While firewalls attempt to prohibit unauthorized perimeter access to the intranet, it is in effect, an access control point. However, as the firewall focuses on traffic characteristics, it does nothing in the authentication arena. With the advent of the Internet, companies are increasing rather than decreasing access to information assets. Subsequently, the importance of validating who is actually accessing your offerings becomes more and more critical.

In fact, the threat from the inside rivals that from external sources. For example, those who venture in the VPN technology are now faced with even a higher risk factor than those who don’t. The predominate reason is that the false sense of security accompanied with encrypting your traffic in the internet, leads one to become more comfortable with exposing valuable assets, which you would never even consider otherwise, on this public venue. Hence, with a breach of security (basically a slip of a password), what would normally be a minor issue now becomes a company event, for the assets compromised are of critical nature.

Nothing illustrates this better than the recent annual Computer Crime and Security survey conducted by the Computer Security Institute (CSI), an association for security professionals, along with the FBI, which indicates a growing trend of security breaches within organizations.

The CSI/FBI Study: A New Perspective

Security Breach is on the Rise

Companies continue to experience a significant amount of unauthorized use of computer systems. 64% of respondents reported unauthorized use of computer systems in the last 12 months. While the number has been volatile over the past four years, we believe the trend is clear.

Origins and Source of Attacks Are Shifting

Looking at the data, we find that the internal threats are declining in comparison to external. We consider this very interesting, particularly since it has often been stated that the potential for threats and computer abuse from someone inside an enterprise was greater than from someone external to the enterprise. There are two data points from the survey that demonstrate the increasing amount of threats occurring from the outside.

Internal threats remain comparable to external. In fact, only last year did the hacker rise above that of the former employee. Overall, we think these data validate our position that the threat is comparable whether employee/contractor or inside or outside your network.

Authentication: Who is Doing What From Where

Passwords

Passwords, although the most popular method, are notorious for being the weakest form of authentication (via stolen, guessed, or shared). As security consciousness increases in this nation, we would not be surprised if legislation will become the business driver for two-factor authentication.

While passwords (single-factor authentication) are and will continue to be the basis for authenticating users, we expect that over time, most companies will migrate to stronger forms of authentication, i.e., two-factor authentication, e.g., tokens, dongles, and PKI.

Two Factor Authentication

It is important to note that two-factor authentication requires two forms of authentication, which may consist of “something you have”, and “something you know”. Two Factor Authentication, in its most popular form is the Magnetic Strip Card, is your ATM Card. On a smaller scale, but growing in popularity is the small hardware devices known as Tokens.

Form Factors

Two Factor Authentication also is beginning to appear on applets on PCs, cell phones, or PDAs. A recent IDC study indicates that approximately 20% of 982 respondents had implemented tokens prior to 1999, and 7.1% and 6% for the respondents were implementing tokens in 1999 and 2000, respectively. Token formats vary. The most popular type is the synchronous passcode type, e.g.,

These tokens work by generating a six-digit value every 60 or 30 seconds. The token works in concert with a pin number (user created) to provide two-factor. The appeal here is no software to load on the desktop, centrally managed from a non-intrusive server, and easy to use.

Soft Tokens

Another form is software tokens – but as they are imbedded in the software, if the device is stolen, one can easily gain unauthorized access to the network.

Dongle

Another form factor that is emerging as a popular token is the Universal Serial Bus (USB) tokens. This is a smaller form factor that can store a certificate or algorithm in its chip that takes advantage of the USB ports of PCs. This is most popular among laptops, for some deployments include encryption of content as part of the solution – which adds significant value to a laptop user. Laptops are the number one choice for commercial espionage, i.e., if one were to breach company secrets – stealing a laptop at a convention, seminar, or even parking lot, masks it as a regular asset theft – so the breach doesn’t tip off your target. The USB token with content encryption thwarts this effort for it makes the content of the stolen laptop useless without the token.

Biometrics: Doomed from the Start

Why didn’t I mention Biometrics? Biometrics, although a great marketing angle and nice for Hollywood - has several fatal flaws. I won’t go into them in detail, but just to name a few:

1) Using body parts? What do you do when there is a breach of your thumbprint, or an eye? Fire the employee because you don’t want to rip out your 10,000-user infrastructure? Or perhaps re-issue a new thumb/eye?
2) Using eyes? Does your solution include your optometrist as part of the security policy?
3) No matter what the body parameter, it will be compared to a digital representation of that item. Hence, what is digitally stored can be digitally compromised.
4) Downstream liability, you think that having your customer’s credit card numbers compromised on the web had legal ramifications, try a breach that compromises your customer’s finger prints. For your customers, the legal arguments are endless. Identity theft is the least of their worries - if thumbprint access is adopted ubiquitously - you may have just contributed to your customer’s inability to purchase goods, apply for services, or even get a new job.

Token Authentication Methods

What is Challenge Response Authentication?

Challenge Response authentication involves simultaneous calculations on the token and the server. In traditional challenge response systems, the authentication server generates a challenge that is presented to the end user. The end user enters this challenge into their token. The token takes the challenge and encrypts it, which generates a response. At the same time, the authentication server is completing the same process. The end user then inputs the response, presents it to the server, and the server authenticates the users. For the specific steps, please refer to Table 1, A Comparison of Authentication Methods.

Challenge-Response Advantages

• Alphanumeric Codes: Challenge response utilizes numbers and letters for its calculations whereas time synchronous only uses numbers. This makes cracking a challenge response code statistically more difficult, because a hacker has to deal with hacking all possible combinations of 0-9 and A-Z.
• Synchronization: As long as each authentication server has the token seed record stored in its database, you do not need to worry too much about server synchronization problems since each server will generate a unique challenge. Note that this requires some configuration that also makes this a possible disadvantage (see below).
Challenge-Response Disadvantages
• Poor Ease of Use: Challenge response involves multiple steps for the end-user, which increases the possibility of data entry error and failed authentications.
• Synchronization Problems: Challenge response tokens introduce possible problems when multiple authentication servers are used because these servers must maintain proper synchronization to ensure that the proper challenges are generated. The workaround is to have each token seed value stored in each database. With time synchronous authentication in a multiple server environment, server synchronization is not a significant problem because time is the dependent variable, not some value generated at the server.
• Networking Protocol Support: Some networking protocols (such as XTACAS and TACACS) do not support challenge response authentication.

Vendors Using Challenge Response Authentication

• ActivCard
• PassGo Technologies Limited
• CryptoCard
• Secure Computing Safeword
• Vasco Digipass 300 & 500

What is Event Synchronous Authentication?

Event synchronous authentication improves the ease of use difficulties associated with challenge response authentication, but exposes serious security issues.

An event-synchronous token functions in challenge response mode ONLY for the first time it is used. During the token’s initial usage, the authentication server’s challenge is stored in the memory of the token and the memory of the authentication server. For all future authentications, the user does not have to wait for the challenge from the server to authenticate; instead the token automatically calculates a response based on that initial challenge. The server conducts an identical calculation so that the codes match and authentication is successful. In this manner, event synchronous makes it easier to users to authenticate since they do not have to wait for the server’s challenge to generate a response. For the specific steps, please refer to Table 1, A Comparison of Authentication Methods.

Event Synchronous Advantages

• Ease of Use: Event synchronous tokens are easier to use than challenge response because users do not have to wait for the server’s challenge to authenticate. This reduces some of the steps associated with challenge response authentication.

Event-Synchronous Disadvantages

Event-synchronous reduces the steps associated with authentication in a traditional challenge/response mode. This improves ease of use, but introduces some potentially serious security problems. These security issues make event synchronous the least secure authentication method. Here’s why.

Event-Synchronous authentication circumvents traditional challenge/response systems by making the “challenge” a known (rather than random and spontaneous) factor.

• Timeliness. Challenge response tokens, in their classical use, are as time dependent as a RSA SecurID. Because they need the random challenge from the server, they cannot pre-calculate the response (and the server can require that the response be given within some finite period of time.) The Event-synchronous token is no longer so constrained: valid Event-synchronous passcodes can be precalculated. Unlike challenge response challenges, which are random, event synchronous codes are not random, but based on a sequencing that could be hacked.

• No Physical Proof. Unlike a classical challenge/response exchange, an event synchronous countdown can not be taken as proof that the user has the physical token in-hand, since one (or many) “responses” can be successively pre-calculated (by the user or someone else) and written down or shared. For example, users can generate 5 responses by pressing the button on the token five times. Users could then write these responses down a piece of paper and they will be able to successfully authenticate Monday through Friday without even having physical possession of the token!

• No True Two-Factor Authentication. The “strong” evidence of authentication is reduced to a piece of information that can be memorized, written down, or passed along.

• Weak Audit Evidence and Accountability. Because of the second point, an event-synchronous token merely becomes a piece of salesmanship and theatre, with none of the traditional audit-assurance that a physical token offers. The integrity of the audit and/or authentication mechanism is no longer self-policing in the way a classical challenge response or time synchronous token is.

• Elicit Access. With or without the cooperation or corruption of the legitimate user of the token, illicit access to an Event-Synch token can allow anyone to get a valid access-code (i.e. a future event-synch “response,” or a series of future Event-Synch responses — all valid if used in series.) An irresponsible user, for his own purposes, can always share future Event-Synch passcodes with fellow-workers, subordinates, partners, or co-conspirators — and they can all use them to gain access, from wherever, with no requirements that they physically hold the
Event-Synch.

Vendors Using Event Synchronous Authentication

• ActivCard X9.9, Plus, and One Tokens
• PassGo Technologies Limited
• CryptoCard
• Secure Computing Safeword
• Vasco Digipass

Two Factor Authentication Market

IDC estimate that the overall token market will reach approximately $1.5 billion by 2004, that up from 150 million in ’99.

The lion’s share of this activity will be in the mid to small company market. For years, the only participants that considered, or could even afford token technology was the business behemoths; however, today with security consciousness at an all time high – we find that the mid-range company are gaining a new appreciation of this technology. What was formerly termed “an insurance policy” has now become a “utility”. Suppliers are no longer challenged with selling the significance or value of their solution, only the effectiveness.

Summary

Everyone is in agreement that a good Security Policy includes a firm position on Authentication. However, remember why you are using Authentication. It is not just an administrative obstacle to overcome, but also a vehicle to confirm that the people accessing your valued assets are in fact who they say they are.

Passwords are the favoured authentication method. The good news is that for the owner, passwords are cheap and easy. The bad news is that for the attacker, passwords are cheap and easy. As far as biometrics is concerned, forget it – never use anything static, least of all a body part, as your authentication ID. A dynamic password is more preferable. This way even the user does not know his password until he needs it. For simplicity, flexibility, replacibility, and security, Two Factor Authentication is you ticket.

The Internet’s charter is clear – assets are offered so people can access them – security will begin and end with these people. It makes sense that the security’s charter be equally clear. In any comprehensive security solution, there must be a mechanism that ensures the identities of your people are not compromised.