Channel Marker

Sep 7 2011   5:26PM GMT

VAR taps cloud for IT cost monitoring service



Posted by: badarrow
Tags:
App360
IT budgeting
IT channel products and services
IT channel products and technologies
Mick Gallagher
NetSuite

Mick Gallagher has resold Oracle and NetSuite software and services for quite some time. Now, he’s fully into the cloud with App360.

This service, built atop NetSuite infrastructure, plus an up-front service call, will help companies get a handle on what they’re really spending for all of their information technology and better allocate resources accordingly.

“There really was no forensic way to gauge IT spending,” Gallagher said.

“I talked to one CFO who said his IT spend was $10 million a year. I asked how that broke down and he said he had no idea, he gets one line item for $10 million.”  At lower levels of any company, different departments tend to keep their own separate accounting on Excel–for headcount costs,  etc. but the C-level execs don’t get that level of granularity.

What App360 does is go into a prospective customer site and create a chart of accounts for IT. “We can take it down to electrical costs, facilities costs, hardware costs and we have a rapid implementation tool that imports all that data in CSE format into a special Excel spreadsheet that maps all the info into the correct fields.”

That process might take two weeks, but when it’s done, there’s a blueprint that can show capital expense vs. operating expense  (capex vs. opex), spending by department or by service.

The service went live a few months ago an App360 claims four big customers.

In one instance,  the company’s analysts went in, and evaluated the company’s $3 million per year IT budget

Gallagher talks to a lot of C-level execs and when the economy went south (it seems like forever ago, doesn’t it?) he kept hearing how they were continually told to cut X % of their IT spending. “The number was arbitrary,” he said, and they cut the dollars but really did not know what they were cutting.

What IT pros really needed, in his view, was a way to accurately meter exactly where their current IT spend was and more importantly, how it was allocated.

The initial consultation phase, is a service engagement where, App360 people come in and do the roadwork, talk to the various departments, examine the spreadsheets, and pump all that info into their own application.

The fee for one company with a $3 million budget, came to a one-time cost of $17,000 for the groundwork and then just under $12,000 for the software service for the year.

“So every year, this guy will spend $11.8 thousand and for that he gets to see his spend by department, by service. There’s an ROI module that he can use to see if a project request is best done via a public, private or hybrid cloud model. We plug in all the costs form his various vendors’ RFPs and then, if there’s a price uplift we can see whether if by spending this, we can increase revenue by that amount etc.  You can do ROI models for year one, two or three.”

Once the true IT spending  is captured, the company can really look at what it’s spending and what it’s getting in return, Gallagher said. “You can look at manpower utilization. “What if you have Johnny doing DBA work full time but after a month you can look at his hours vs. the DBA work that’s been done and you think, maybe Johnny’s spending too much time surfing the Web.  Maybe you then redeploy Johnny to do other things to make him more productive,” Gallagher said.

The service can also alert the company as to when its software licenses are coming due, to prevent it from losing maintenance and support, for example.

As hardware and software margins continue to erode, smart VARs need to find ways to build their services business. If they can launch cloud-based services in their area of expertise can really expand their reach. GreenPages Technology Solutions is doing this with its new cloud-based systems management wares, for example.

APP360 looked to build and host its services in house but the cost was prohibitive, Gallagher said. The company looked at using Hyperion or Cognos business intelligence systems that it would host itself but they estimated that hardware/software outlay would come in at $6 million.  Instead, they turned to NetSuite — which made its name in ERP as a service but like Salesforce.com is also pitching itself now as a platform for other SaaS products.

“NetSuite was much more user friendly as a technology and from the standpoint of infrastructure costs, we didn’t have to absorb all those upfront costs,” Gallagher said.

Let us know what you think about this post; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com,

Check out more IT channel news on SearchITChannel.com and follow us on Twitter.

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