Opportunities for Advancement in an Economic Downturn

Can the current economic environment actually create an opportunity? Even though the present financial crisis will adversely affect capital investment, the uncertainties are also creating new demand for the application of certain business technology offerings.

"In particular, ICT solutions that shift costs from a capital to variable component, focus on productivity increases and cost reduction, and support organizational restructuring and acquisitions are likely to see growing demand," says Andrew Milroy, ICT director at Frost & Sullivan.

Four Areas of New Demand
This belief that there will be a strategic increase in IT demand is the result of the consulting company's latest global market study.

While their assessment acknowledges some ICT setbacks, it identifies four key areas that are likely to experience heightened demand -- sustainable IT; outsourcing, managed and hosted services; information management tools; and those services that support mergers and acquisitions.

Sustainability initiatives range from server or storage virtualization and low-energy consumption hardware, through to the use of online collaboration tools, thin client technologies and power consumption modeling. Most of these activities have the dual aim of reducing costs, as well as lowering carbon emissions.

An Increase for Online Collaboration
The anticipated reduction in business travel will create a corresponding increase in demand for conferencing tools. These applications will allow more employees to work remotely, further cutting travel costs and emissions. Secure remote access solutions will therefore experience demand.

The need for cost controls and a desire to minimize risks will place greater focus on variable costs, leading to an increase in demand for software-as-a-service (SaaS) and hosted service models.

Frost & Sullivan's research suggests that the hosted model will be adapted to suit a wider range of services -- including storage and unified communications. New opportunities are expected in many areas of managed services -- such as managed handsets, managed network services and leasing services.

Change Creates Abundant Opportunity
In a summary of their findings, Milroy adds, "We believe that there are opportunities for solutions and services that can help organizations to cut costs, change cost structures, or increase productivity."

The lean times ahead of us will foster the environment where all "business as usual" thinking is challenged -- and, rightfully so. Forward-looking leaders will not falter; they will grasp that potential for new sources of advancement and take the appropriate action.

Perhaps all IT and business decision makers must now ask themselves the ultimate question -- is my organization preparing for a purposeful advance, or an unpredictable decline?

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Managed Service Providers: Serving Small Businesses Worldwide

Thousands of small businesses in the United States have already embraced managed services. Now, thousands of additional businesses across the globe are climbing aboard the managed services bandwagon.

Consider the following data points:

• Asia Pacific organizations will spend more than $10.25 billion on hosted and managed services by 2010, up from $6.47 billion in 2007, according to Frost & Sullivan.
• Australia's managed security market will grow roughly 20 percent annually through 2013, the same research firm predicts.
• Small and mid-size enterprises will drive nearly half of Europe's managed services revenues -- jointly spending nearly 11 billion euros in 2008, estimates Forrester Research.
• Small business managed services spending will reach $5.4 billion in 2008, according to Techaisle. The data covers the US, United Kingdom, Australia, China, Brazil and India. In the US alone, small business managed services spending will hit $1.5 billion this year, Techaisle predicts.

Quest for Managed Service Guidance
When you string those data points together a clear pattern emerges: Small businesses worldwide have overcome their fears of the IT unknown, and they're turning to trusted advisers for managed services guidance.

So, what services are small businesses outsourcing most frequently to MSPs? The answers include:

• Remote administration (94%)
  
• Help desk services (90%)
• Managed security (82%)
• Managed storage (65%)
• VoIP and telephony (57.1%)
• and unified communications (32.1%)

The data, culled from MSPmentor.net's global survey of managed service providers, reinforces a clear fact: Small businesses across the globe are realizing they need to focus on their business strategies, while outsourcing core IT responsibilities to external professionals.

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IT Financial Management - Now is the Time

I've heard many excuses, during my years as an ITIL consultant, as to why a client did not want to start IT Financial Management -- the business is not ready, we don't have the tools, we don't know where to start, etc.

However, in these troubling economic times, it is imperative that IT adopts IT Financial Management in order to respond to the increasing pressure to reduce costs.

IT can reduce costs through service-based cost transparency and charge-backs. This method does not mean IT is a profit-center; it just means that IT is educating the business on the cost to provide the services.

With this knowledge, the business can adjust their consumption to better manage their budget and ensure spending is aligned with the value of the service they are receiving. Contrast this with a nebulous IT overhead charge which does not incent the business to use scarce IT resources wisely.

A Roadmap to IT Financial Management
The secret to successfully starting IT Financial Management is to develop a roadmap with increasing levels of maturity.

For example, in Phase 1, pick four to five key services for consumption based costing, e.g. number of servers, storage consumed, network bandwidth consumed, etc., then allocate the remaining costs (i.e. Service Desk, data center operations, etc) as a surcharge against this base price. In Phase 2 and subsequent phases, continue to expand the number of services covered by consumption-based charge-backs.

Another dimension of maturity is the approach to charge-backs. In Phase 1, you may want to just publish costs (i.e. cost transparency with no dollars changing hands). In Phase 2, you may want to provide invoices that show consumption and a hypothetical charge-back amount but stop short of consummating the transaction.

Finally, in Phase 3, implement the actual charge-backs. This gradual approach will allow the business to adapt and prepare for a new way of interacting with IT.

By establishing and communicating a roadmap, you can start IT Financial Management today and be better positioned to manage the IT budget.

About the author: Reg Lo is the VP of Technology Solutions at Third Sky Inc. He has over 14 years of IT consulting experience in ITSM/ITIL consulting, research compliance and healthcare, and custom solutions. He is a frequent speaker at itSMF and HDI events and a contributor to "The Forum", the offical newsletter of itSMF USA.

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Small Businesses: The Greatest IT Innovators of All?

When you're a start-up company or a small business, you enjoy a key freedom: You don't have any legacy equipment and you can make sure your IT dollars drive innovation.

But over time -- as your staff, network and application infrastructure grows -- you'll wind up spending more and more IT budget on maintenance rather than innovation.

According to various estimates, mature businesses spend anywhere from 80 percent to 90 percent of their IT dollars maintaining systems they already have in place. That's pathetic. And it's also impractical. Small businesses must either innovate or die.

So, how can a small business remain focused on innovative IT solutions? I've found the answer in my own company. Generally speaking, we outsource just about every piece of IT possible. Here's how we do it:

1. Get Predictable: We seek managed service providers, web hosting companies, developers and other partners who can handle day-to-day maintenance issues at a reasonable, predictable monthly cost.

More than 90 percent of PC and network issues can now be solved remotely, according to ConnectWise CEO Arnie Bellini, whose company specializes in professional services automation (PSA) software. With that fact in mind, small businesses can depend on managed service providers for the vast majority of their support needs. Plus, MSPs typically have technicians they can dispatch to fix any on-site issues that aren't resolved remotely.

2. Build Assets, Not Technology Temples: Empowering your employees with the latest technologies can be fantastic. But that doesn't mean you necessarily need to "own" the technology.

Through leasing programs and managed service programs, you can ensure your technology tools remain ahead of most rivals. And you won't need to open your wallet for big hardware upgrade cycles every few years.

3. Explore Hardware as a Service: Yes, even your network hardware (switches, routers, servers, desktops) can move to a managed service model. Fact is, small businesses can't afford to "buy" many of the latest hardware and broadband solutions. But they still need the capabilities of those services.

A prime example: Small businesses can't build out $300,000 TelePresence centers. And they often can't afford to fly to all corners of the world meeting customers and business prospects. Still, those same small businesses can use shared TelePresence locations (available in more and more hotels) to network with peers across the global.

4. Oh, And Innovate: Now that you've shifted all the "maintence" issues to a service provider, you can focus on driving new innovative applications across your organization.

My small (but growing) business, for instance, leveraged a mix of contract developers and MSPs to launch a series of major media Web sites. We "own" the completed Web sites, but all of the site underpinnings (the content management system, database, server, broadband, etc.) are outsourced to managed service providers and data center partners.

The result: We did not purchase a single piece of software or hardware to launch immensely popular, profitable Web sites. And yet those sites run on state-of-the-art software and hardware.

With the help of our managed service providers, we'll keep innovating.

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Top Ten Business Technology Trends

Gartner analysts recently identified the top ten key technologies -- and related trends -- that they believe will be strategic for mainstream organizations. The analysts presented their findings during Gartner's Symposium and ITxpo.

Gartner defines a strategic technology as having the potential for significant impact on the enterprise -- within the next three years. Factors for significant impact include a high potential for disruption to IT or the business, the need for a major financial investment, or the risk of being late to adopt.

The technologies were chosen because they could affect an organization's long-term plans, programs and initiatives. They are deemed strategic because they’ve matured to broad market use, or because they enable strategic advantage from early adoption.

Gartner's top 10 strategic technologies for 2009 include:
Virtualization; Cloud Computing; Servers (beyond blades); Web-Oriented Architectures; Enterprise Mash-ups; Specialized Systems; Social Software and Social Networking; Unified Communications; Business Intelligence and Green IT.

As you consider each of these technologies in turn, and the associated applications within your own business environment, it would be wise to reconsider the notion that embracing a new technology always must equate to a financial investment in infrastructure.

In this context, is the purchase of an on-demand managed service an investment, or is it more accurate to characterize it as an expense? Let's consider the Gartner description of Cloud Computing, as an example.

"Cloud computing is a style of computing that characterizes a model in which providers deliver a variety of IT-enabled capabilities to consumers. The key characteristics of cloud computing are 1) delivery of capabilities 'as a service,' 2) delivery of services in a highly scalable and elastic fashion, 3) using Internet technologies and techniques to develop and deliver the services, and 4) designing for delivery to external customers.

Although cost is a potential benefit for small companies, the biggest benefits are the built-in elasticity and scalability, which not only reduce barriers to entry, but also enable these companies to grow quickly. As certain IT functions are industrializing and becoming less customized, there are more possibilities for larger organizations to benefit from cloud computing."

According to Carl Claunch, vice president and distinguished analyst at Gartner, "Companies should evaluate these technologies and adjust based on their industry need, unique business needs, technology adoption model and other factors."

Lowering the Barriers to Progress
Perhaps one of those other factors would be an candid assessment of what advantages are being gained by competitors who have already chosen to take action. Meaning, can you make a determination of the direct and indirect cost of your potential inaction?

Moreover, by utilizing a selective out-tasking model, it's now possible to minimize the financial impact on new technology pilots and full deployments, while at the same time creating the environment to maximize the strategic impact.

The perceived barriers that may inhibit you from taking action have essentially been lowered.

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