Should midmarket companies consider using outside providers to manage their data protection services? For companies with smaller staffs and budgets, using a third-party provider to manage their data protection services can pay off, as long as certain issues, including security, are addressed up front.
For a story I did this week on a Houston-based nonprofit moving from tape backup to an online data backup and recovery service, I asked analysts to give me some sense of the enthusiasm out there on the degree to which companies are using outside providers to manage their data protection services.
The resistance to using outside providers for data protection services has fallen from near 70% a few years ago to 32% now, according to Gartner analyst Adam Couture.
Burton Group analyst Gene Ruth told me there are a number of “enterprise-ready” online backup and data protection service providers out there who are growing and are particularly suited for midmarket or small companies that may not have the staff or capital to handle automated data backup and storage and disaster recovery facilities. They include the IBM/Arsenal Digital solution used by the Houston nonprofit profiled in my story, as well as EVault, AmeriVault and EMC’s Mozy service.
As with any newish technology, however, there are lots of questions that don’t yet have standard answers. Let’s go through some of them. Continued »
Midmarket CIOs who think of a business process management (BPM) strategy in its basic form as a tool for putting processes around purchase orders, claims or employee onboarding and offboarding should re-consider the role it plays in business sustainability during a recession, according to one analyst.
“You look at all the businesses that didn’t survive the recession – some of them were in a bad market segment, OK, but some of them just couldn’t scale down fast enough,” said Clay Richardson, an analyst at Forrester Research Inc. “Look at GM, for example. That’s really the GM issue — they couldn’t scale down fast enough.”
Although a BPM strategy and scalability might seem like minor factors among the financial obstacles GM is facing, the expansive company has been unable to respond quickly enough to decreases in demand — GM has lost about $88 billion since 2005 — and as a result, was forced to file for bankruptcy protection.
As more and more businesses suffer the same fate (Chrysler, Circuit City, Linens ’n Things) how helpful can a BPM strategy be for companies in a rocky economic climate? Continued »
I checked in with early cloud adopter Jerry Hodge, CIO of Hamilton Beach Brands Inc., for an update on his pioneering migration from Lotus Notes to Gmail — the quintessential cloud app. The company, which started the project in January, is among the first ever to move to Gmail from Lotus, according to Hodge.
The backstory: Hamilton Beach was facing a mandatory upgrade of Lotus Notes that would have required not only the expense of the software upgrade, but also additional hardware and considerable staff effort. Hodge realized he could save about $500,000 in capital and operating costs over five years, and another $400,000 in labor if he went with the enterprise edition of Gmail.
In a year when his capital budget request was cut 60%, saving a million bucks seemed like a great idea, despite some trepidation on the part of his staff. He made the big switch the right way– gradually. He lined up a test group in the company’s Mexico City and China offices to try it first to work out the kinks, and he smartly waited until everything was working before the C-suite got it. People’s email would be maintained as @hamiltonbeach.com, which was important to the company.
So how did it go? Continued »
My first day at Forrester’s IT Forum was filled with everything today’s CIO should be aware of — the changing role of IT, the need for constant innovation and the rapidly evolving workforce. By day four, attendees are still buzzing about what they’ve seen and heard while here.
Six Sigma process implementation has been mentioned a lot, especially together with Lean IT. Other trends in discussions have included how IT is changing, the introduction of millennials into the workforce, cloud computing, offshoring and Twitter.
I can’t say I’m too surprised by these points peppering almost every conversation — except for the latter. It seems every conversation I’ve had, regardless of who it’s with, has turned to Twitter at some point. CIOs, IT directors, performance managers, operational directors, analysts — everyone is talking about Twitter. But not many are actually using it. They’re just interested in it. Continued »
Recently, while researching some information for a story on legacy systems integration, I dug around to figure out how midmarket IT execs determined and measured the benefits of legacy applications — How did they decide what was important? What needed to go? Was it worth investing time in one of the many process acronyms offered (BPM, APM, etc.) to sort everything out?
I asked one midmarket CTO just that — what he uses to justify the existence of any of his legacy systems. His response? “If you are a CTO in the SMB world, you don’t need very organized thinking to detect differences in criticality among applications. As soon as something fails, you get to measure its importance very viscerally.”
TTYL to the APMs, huh?
In sorting through the legacy systems of his 25-year-old business, he has not found practices like application portfolio management (APM) necessary. Quite frankly, he has other things to do. In a large enterprise organization with hundreds or thousands of applications that need sorting and analyzing, portfolio management may prove very useful — necessary, even. But in the midmarket? Continued »
If I were a CIO who had just gotten canned or was just worried about my job security, I would want to be counseled by someone like John A. Challenger. Challenger is CEO of Challenger, Gray & Christmas, the marquee outplacement firm. Mild in tone, armed with statistics that put one’s private misery in a broader context (No-fault job loss is a term to remember; 100,000 job cuts a month for the foreseeable future), he is a tireless giver of practical tips and advice for the jobless, the insecure and the corporate climbers. Two pieces of advice off the bat for keeping your CIO job: Be well-liked and boast.
Challenger was in his hometown of Chicago last week, addressing an audience of risk managers, business continuity and compliance officers at the Gartner Risk Management and Compliance conference there. From a show of hands, it seems this audience enjoys a fair degree of job security, with not a single person admitting to be out of work. (About 70% had a colleague who had lost a job.) After Challenger got through calmly laying out what it takes to secure your chances of keeping a job in a recession economy, I can guarantee that same group must have been feeling a tad more nervous.
1. The boast of indispensability
For starters, you don’t ever want to be considered a routine employee; nor do you want a job that is considered routine because it is only a matter of time before that function is outsourced or folded into somebody else’s job. Most people have a good sense of how important their job is to the success of their companies. The challenge is conveying that message to the executives at the top of the corporate ladder.
“Regardless of where you fall, the first person you have to convince of that indispensability is the person directly ahead of you on the organizational chart. And the way to do that is by offering viable solutions to real-time problems, or, better yet, to problems not yet on the radar,” Challenger said.
2. Fly the company flag even when there’ s bad news.
Risk managers are often bearers of bad news, and so are CIOs. Challenger said he speaks to lots of managers and executives in technology who have lost their jobs who feel scapegoated for being the bearer of bad news: Servers will crash if this is done; our database will be exposed to outside threats if we do this.
“You are often in the position of saying no, and no is not the kind of word that upper management likes to hear,” he said. “You want to be the person waving the company flag.”
Sometimes when layoffs are mandatory, it is not the low performer who gets the ax but the person who creates problems for management. Find the right way to bring up those problems, while “flying the company flag,” Challenger advises, by figuring out how to achieve the same result without the same risk.
3. Solve problems and no one will notice you’re home on the weekends.
“A lot of people mistakenly believe that all it takes to save their jobs in downturns is working long hours and being politically astute, but really what it comes down to is being valued by your boss, and your boss’s boss, in case your boss loses his or her job.” That won’t be accomplished by politically maneuvering but by providing solutions to real-time problems. “And if you can do that between the hours of 9 to 5, then no one will notice you are home on the weekend.”
4. Think of it as back to the guild days (free agency).
Yes, you have to make yourself indispensable at work, but no job is safe. (71% of CEOs recently said they expect hiring to decline; 67% said they expect sales to decline in the next six months; plus, the across-the-board salary cuts being implemented now are “unprecedented,” Challenger said.)
You must think of yourself as a free agent. While companies don’t want to hear this, in a climate like this we are returning to a guild environment where your peers are more important to your career health, to finding you a path into the next job, than your bosses. Network, network, network and help others who have lost their jobs, so when your turn comes they might help you.
Challenger’s closing disclaimer: “You can adopt all the measures and actions I have spoken about and still lose your job.”
Get more tips in “10 ways to keep your IT job in this recession.”
What happens when open source and cloud computing collide? Cost savings, flexibility and (at least one open source vendor hopes) midmarket CIOs checking it out.
Open source CRM provider SugarCRM has launched an on-demand version of its software that is included free with an on-premise license.
Subscribers can switch back and forth between the local server and the cloud version, called Open Cloud. They can make one version a hot backup for disaster recovery, or use one version for testing and the other in production if they like. “There’s no one asking you if you want on-demand or on-site; you get both,” said Martin Schneider, director of product marketing at SugarCRM Inc.
Jay Lyman, an open source analyst at The 451 Group, said the number of startups emerging pairing open source with cloud computing is a clear indication of a growing trend. “Open source is a good fit for cloud computing because of the interoperability and the portability,” he said. “We’re going to see rapid experimentation, testing and vendors using this as an opportunity to learn customer pain points and match the right apps in with the clouds.”
In many cases, small and midsized businesses will investigate cloud computing the same way they checked out open source – by experimenting with and investigating minimal fees. “[CIOs] can’t revamp their entire systems in the down economy, but they can look into trying new things while still leveraging their existing applications with open source cloud offerings,” Lyman said.
With more than 150,000 retail stores expected to close their doors this year as a result of the current economic crisis, should retailers consider look to outsourcing IT services to help cut costs and stay in business?
Outsourcing contracts in the retail market were up 40% from last year, but average and total values of deals signed in the retail industry actually dropped to their lowest levels in five years, according to a 2009 study by TPI, an outsourcing services advisory firm.
Outsourcing does have the potential to yield more than 30% savings for retail stores that outsource finance and administration, HR, procurement and/or IT. “Outsourcing the IT function can also free up capital and human resources, allowing retailers to focus on their core competencies, their customers and their bottom line,” said Micky Houston, managing director of retail practice at Alsbridge Inc., a global advisory firm specializing in outsourcing and benchmarking.
“Retailers should definitely be outsourcing in this economy,” according to Houston. “When the volume of the business is going down, the back office has to ramp down at the same pace.” This is a challenge for many retail stores that are still providing all IT services themselves.
Traditionally, retailers have been slow to use outsourcing services for many reasons, Houston said, including the belief that by doing everything internally, their back-end services remain confidential and therefore give them a competitive edge. But times have changed and those retail stores that are hiding behind their “confidential” services are actually missing out on better services that will improve the business, Houston said.
Many retail stores are finding success in outsourcing IT services such as support of the infrastructure, field locations and data centers.
Online retailer iStorez.com swears by the savings it’s seen from outsourcing services. According to Anand Jagannathan, CEO of iStorez.com, the online retailer has saved 60% in costs since outsourcing all of its product development and product engineering to Persistent, an Indian outsourcing provider.
When they first launched the site, Jagannathan knew he had the expertise and vision to succeed on the front end and sell clothing online. However, he did not have the technology expertise to succeed on the back end. That’s what led to his decision to outsource to Persistent. By outsourcing, iStorez became a technology leader and leveraged Persistent’s expertise to get to market quicker with new products and efficiently react to market changes, Jagannathan said.
Some small to midsized retail stores are also taking advantage of multiple sourcing vendors for best of breed. For instance, if you wanted to install a new point-of-sale system at 500 stores, how do you get that done quickly? By outsourcing integration and ongoing support, retailers can now take advantage of cost and additional capabilities.
Outsourcing IT is one way retail stores can cut costs and remain competitive in this economy. But is it enough?
“IT governance IS about the money,” said Michael Cohn, who currently heads up an eight-person IT governance committee at his accounting firm. “The IT governance committee should focus on the top initiatives that will bring the best ROI to the business,” said Cohn.
At last week’s Babson College Center for Information Management Studies (CIMS) executive session on IT governance, attendee Cohn voiced his opinion about the real goal of IT governance. “The business assumes within a budget year that capacity is fixed; if you need more capacity, you will likely require more money.”
Cohn, who is the director of the WolfPAC Integrated Risk Management Solution group at Boston-based Wolf & Company PC, said the governance process can be a long one and always ends up being a decision about the money. One example he offered was a request for smartphones with email. According to Cohn, it took months to get this request approved by the IT governance committee. The governance process dragged out because “they needed to know everything about the costs — for encryption requirements, compliance and anything that would affect the business bottom line,” said Cohn.
However, featured speaker Alex Cullen, who is also vice president, research director at Forrester Research, disagreed with Cohn’s comments. According to Cullen, IT governance is only partially about ROI and the money. “ROI is not the most complete way to gauge value of an investment,” said Cullen. Rather, governance is a process of processes and is really more about portfolios, he said.
According to the IT Governance Institute, “IT governance is an integral part of enterprise governance and consists of the leadership and organizational structures and processes that ensure that the organization’s IT sustains and extends the organization’s strategies and objectives.” Although money is not mentioned in this definition, you can’t deny the fact that achieving greater ROI and lowering costs are all critical decision factors when evaluating any IT decision that will affect the business.
Do you agree, then, that IT governance is about projects that will bring the most value to the business — and that in today’s economy, value is measured by money?
Cloud computing is at that early stage where there’s much discussion of taxonomy: Is it infrastructure? Is it Software as a Service? Is it a platform? All well and good, but little discussed so far is “Whatever it is, where does it fit in the lifecycle of corporate IT?”
Talking to IT folks who attended last night’s MIT Innovation Series forum on cloud computing, I got much more of a sense that some see cloud computing more as a staging area for new projects or businesses than as a permanent platform. Startup companies, which spend most of their first years as small to midmarket firms, are being touted as one of the early markets for cloud computing. Speaking to one startup technology director, his view of cloud computing was instructive. He is trying to walk between a rock and a hard place: provision too few servers and his company’s customers will have a bad experience online and never come back; provision too many servers and the company will run out of funding too soon.
His interest in cloud was as a prototype environment, therefore. He can find the right amount of capacity for a given number of users of his website without heavy capital investment. Later, he is likely to bring the operation in-house. He’s more impressed by the flexibility of cloud computing then by the cost: He says cloud capacity costs about 30% more than owning it, but that’s just comparing raw capacity costs, not including labor or real estate.
Still, it was evident at the forum that a lot of midmarket service providers in the technology space — development tools and middleware companies, contract developers and integrators and Web design firms, to name a few — are likely to convert their offerings to cloud offerings. Instead of buying a boutique tool vendor’s product, you’ll use it in the cloud as part of a whole stack. Hundreds of companies, literally, are lining up to offer such services on top of Amazon, and ultimately on top of other providers as they emerge. Their goal is to get you to stay in the cloud, using (and paying for) their portion of the stack indefinitely.