Tech Standards? Or The Wild, Wild, West Of IT?

Gary Hamel writing on the Wall Street Journal blog blasts corporate IT departments for enforcing technology standards with a post titled; Why Don’t IT Departments Give Employees More Freedom? The premise is that if the best tool for the job is something that an employee provides themselves, or downloads from the Internet, so what? In Mr. Hamel’s words;

How is it that employees can be trusted to take care of important customers, safeguard expensive equipment and stay within their budgets, but can’t be trusted to use the Web at work, choose their own IT tools, or download programs onto the workplace PCs? Do IT staffers really believe that conscientious, committed employees turn into crazed, malicious hackers when you give them a bit of freedom over their IT environment?

Sounds Great In Theory -But Tell Me, Who Pays?

When it comes to business computers, the actual total cost of ownership of an IT asset can be as high as five times the purchase price, no not one time – annually! And a significant portion of that cost is supporting that IT Asset. Support is defined as direct, an example being technical services staff paying a visit to fix something, as well as indirect support. This latter support is when you spend your time helping a neighbor (or they help you) trying to figure out why that mail merge is not working properly.

Now, in my smaller business, we are pretty relaxed about people utilizing their own tools of choice as stated by Mr. Hamel. But in the past three or four months – that choice has cost me over 10 grand to do it. (more on that later)

Who Fixes What? (Or When I Just Go Home!)

Just in the past few weeks, I recall reading  about a larger organization (if I find it again I will update with a link) that has allowed its employees to provide their own computers or laptops. With the caveat that corporate support would not be able to help them if they chose the non-standard devices. In other words – you are responsible for getting it fixed if it breaks.

OK, So what happens when it does break?

In larger organizations, if a notebook or PC software or hardware dies, it will be either re-imaged with clean versions of the software, or new PC dropped into place with the corporate tools pre-loaded. Job done. In fact this type of computer support can often be done remotely.

So if I chose to forgo the corporate supplied PC, and provide my own Mac, and it dies. Lets see, I unplug it and trek off to my repair outlet of choice. They tell me it will be back to me by Wednesday.

OK. Do I sit twiddling my thumbs until Wednesday?

Maybe call my my clients and say; “Hey – can’t help ya until next week, will call you back then!”

Somehow I don’t see that going over well with your clients. So the question is;

If staff supplies their own IT assets, and they are responsible for repairing them, what productivity loss do you face when they don’t have their machine until next Wednesday?

Next: How About The Cost of Security?

Leaving hardware failure out of the picture, lets assume we allow everybody to install their software of choice on business computers. Read the following quote from an Information Week article by Avi Baumstein after  audits found peer to peer file sharing software on PC’s;

The results were shocking and scary–loads of confidential business documents and enough personal information to ruin any number of lives and create PR nightmares for quite a few companies. Among the business documents were spreadsheets, billing data, health records, RFPs, internal audits, product specs, and meeting notes

As smaller businesses, we are not immune to this either!

In this previous post, I wrote about a small business owner that was fired by three network support vendors.

And why did three IT Services companies fire this customer?

After every abusive , screaming support call, the service providers found the affected PC to be riddled with viruses and spy ware from the kids playing on business PC’s. His attitude was that he should never have problems in spite of his own irresponsibility.

My Personal Experience

At the beginning of this post I mentioned above the 10 grand dollar value.

As an organization, we are pretty liberal on what people do with their PC’s. And of a staff of about 20, three of them use that advantage more than others.

And yes. I have to rebuild or fix those three users computers every couple of months. In fact I just finished fixing one again that took a few days to repair. But lets leave out those softer productivity and labour costs for a minute. After all, maybe you don’t consider these type of things as costs. (but you should!)

How about hard dollar accounts payable costs? Does that strike a nerve?

One of these three individuals configured a three way data synchronization with our email server, his iPhone, and his Google calendar.

Immediately after he did this, I started getting errors on our e-mail server, all coming from his account!

Even after removing the e-mail server part of this synchronization, the errors rapidly escalated in severity and number.

Articles and support notes suggested completely deleting this individuals email account, taking the server off-line and running certain database repair & diagnostic tools.

To avoid bringing critical e-mail to a halt during business hours, I planned that work for late on the next Sunday.

Unfortunately – my e-mail server did not last until the next Sunday.

That Friday morning was nothing but a complete nightmare of error messages and failures that completely crashed the server. The crash completely corrupted all message stores, the file system, the works. At one point we could not even get that e-mail server to actually run the operating system.

After a few hours of work, I contacted one of my preferred vendors who specialize in this type of disaster recovery. It still took myself and two of their experts 3 days to get a complete rebuild of that server, a restore of all that data from backup tapes, and then use the database tools to clean up the corruption.

Three days and a 10 grand service bill

The SMB Takeaway

It is easy to say; let everybody use what they want.

But you better be willing to pay for the excess costs! Because somebody has to pay them.

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Photo Credit peppergrass via flickr

Book Review: IT Savvy

I recently finished IT Savvy by Peter Weill, and Jeanne W. Ross. An excellent book, but I actually had to debate writing this review.

Quite simply, this blog is dedicated to you, the hard working executives and managers in the SMB space. And this text is applicable only to the largest SMB’s, with heavy emphasis on the larger enterprise.

That caveat aside, the authors present  an excellent prescriptive text on developing  a clear, vision forincorporating IT into a businesses strategic planning processes.

The first sections of the text walk through the definition of, and providing examples of, defining your unit operating models, because the linkage between the model and IT is critical. Correctly defining your operating model (ie competing as lowest cost provider, or innovator etc) is critical, because as the authors state;

Information technology does two things well;  integration and standardization

This emphasis is placed because it is that precise definition of your operating model that is needed to align the business with the high level requirements of the IT functionality required to support that model. In other words, choosing the wrong IT strategy for a particular model will not provide the benefits you are looking for.

The next section dives into the requirement of applying the correct funding model to your IT investments. As these funding decisions will determine that you are allocating funds to the right places, and for the right reasons, and receiving the appropriate returns. (as the authors state, if your funding decisions are made on the golf course, you have some work to do)

IT funding allocations must be transparent, repeatable and consistent and activity based in their costing formulas.

The next step? Optimizing your IT investment, this is the point where you are digitizing basic business operations, this is the cost reduction stage where you emphasize standard processes or improve data flow. Again depending on your operating model. One key quote I want to pull from this section;

A much tougher piece is the implementation of enterprise process

This is that key warning that applies to business of all sizes; tools such as ERP or POS software are dead last in the people, process then technology equation.

The final sections of the book close off with the critical concept of governance. As simply as it can be put; governance is the mechanisms, roles and formalized process that clarify accountability to fulfill strategic business objectives.

The authors define the following five elements as key in the governance process;

1) IT principles
2) enterprise architecture
3) IT Infrastructure
4) Business needs and project deliverables
5) IT investment & prioritization

And finally – the text closes off with the key leadership attributes needed to drive this change as this quote states; (emphasis original)

No vendor can drive value from IT for you. You can take a partner on an IT Savvy journey with you

Disclosure: Just as anyone that has studied any of the basic sciences can understand the concept the Heisenberg Uncertainty Principle, it takes much more skill to actually use it. And as a manager in smaller SMB’s, this concept is the same for me. Certain of these concepts apply to many smaller businesses, but the actual execution of this in larger enterprises is beyond my pay grade.

Just so you know!

Published; The Hard Questions For Your Tech Team

Thanks to Jim and Ian, Canadian Business Magazines entrepreneur supplement PROFIT published another article by me on asking the pointed questions that ensure you are getting the most value out of your IT Staff or suppliers

The column is for growing business owners, ‘C’ level execs and managers, and briefly covers;

* How quickly can we fix breakdowns?

* What’s our long-term plan?

* How are we managing our tech spending?

* What will we do if a tech disaster strikes?

* How are we using technology to boost productivity?

The full column is here!

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Doing More On Less

I know the press states that things are beginning to look up, and I certainly hope that is true!

Both my much better half and I have seen major slowdowns with this economy, although we both consider ourselves lucky to be employed.That being said, all is not rosy yet, and the popular press can still be saturated with advice on doing more with less.

How About Something Different?

Instead of trying to do more with less by spreading 10 dollars around 10 different initiatives.

How about doing more on less, by spreading that 10 dollars around three or five different initiatives?

Do you have a laundry list of IT Gotta Do’s?

Prune the list, move them all to the back burner.

Vampire projects sucking resources? kill them too.

Trying to boil the ocean? Nope – kill those too.

The SMB Takeaway

Chris Zook, in his excellent book Unstoppable,  writes that sometimes you have to shrink to grow.

Re-prioritize, re-evaluate. Kill what does not fit the current reality.

And use the dollars saved to double up on an initiative that means something more.

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Real SMB IT: 5 Ways to Stop IT Cost Leaks

As managers in the SME space, here are five bad IT spending habits that are so common your firm is likely to be committing at least two of them.

• Tracking only your capital costs

• Falling for a low sticker price

• Permitting ad-hoc purchases

• Paying retail rates

• Letting printing costs run wild

The full article is here.

My thanks to Jim McElgunn and the editors at Canadian Business PROFIT magazine

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Start With Expenses, Not Revenues

For managers in the small business space, an excellent article on the importance of budgeting in your business is on the E-Myth blog

As it states, your budget is a combination of;

past trends and future predictions

I wanted to bring this up, because there is one area that many SMB’s are often losing information on these past trends and future predictions.

And that is in their IT spending

Sure, you accounted for the capital expense of that ERP system years ago.

But how about it’s annual maintenance, licencing and support costs?

Are you accounting for that expensive service that used to be used a lot – but one person is the only one using it now?

Probably Not.

The SMB Takeaway

As a business manager in the Small to medium business, make this year the year that you start that IT spend as a zero based budget. Look at each and every hour, and dollar.

You may find that you don’t know as much as you thought you did about your IT spend.

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2 Images: What is different?

Look carefully at these two images.

Can you see any difference?

Look carefully!

Want a hint?

Here it is;

One costs $28.00 from a popular Canadian tech retailer.

The second cost $5.99 from a Canadian tech distributor.

See the difference yet?

Give up?

Look at this network switch, you have several I am sure.

 

 

 

 

There are 11 cables plugged into it.

Not including taxes, that means there is either $308.00 dollars worth of cables, or $65.89 worth of cables.

You get the picture!

(Note: both  prices were from a spot price check in December 2008)

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IT Spending, It’s A Responsibility

Venture Capitalist Fred Wilson has a post titled; Always Treat Money Like It Is Your Own

As a SMB Business Technology Manager, this is a mantra that I try to live by. I would rather get scolded for not spending enough, or fast enough, than for too much.

I do not mean el-cheapo Bill & Teds made in the basement products, but I constantly ask myself what the risk is in delaying a purchase, or push back on some ‘We gotta have..’ purchase request.

If you are a tech in the SMB space, keep asking your self that question. If you had to pay for it yourself, would you still be spending that money buying it?

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Focus That IT Budget

IT Budget

In the SMB space, most of us don’t have buckets  of cash to spend on IT.

Yet too many of us do not make the disciplined prioritization and planning of an IT budget necessary to understand where we are spending money.

If you have not moved beyond ad-hoc pricing of IT spending, take the time to start a zero based budget.

Include all capital expenses and operational expenses.

OPEX

In the operational expenses, include service agreements, parts replacement, the works.

Plan your purchasing over the budget cycle, it allows you to avoid capital outlays that occur all in the same quarter.

You will find that you begin to see your IT costs in advance, and that starts peeling the kimono off of the black box of IT spending.

As a SMB owner or manager, can you say with certainty what you spent on IT last year? Do you know what you will be spending this one?

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Christmas Lights And IT Costs

Like many, I try and put the Christmas lights on the house before there is 10 inches of snow on the roof making the chore more difficult than necessary.

So, a couple of weekends ago I stretched out my two strings of lights, tested them, and found about 10 burned out bulbs.

That forced me to schedule a stop on my trip home from work one day to visit Canada’s favourite hardware store to purchase 3 packs of replacement bulbs.

The following weekend I replaced my burned out bulbs and hit the roof of the house to install my seasonal lights.

After the chore was complete, I plugged them in;

Three more bulbs died instantly. And over the next several hours, four more died.

I admit, my comments were not seasonal.

So yesterday I had to visit the hardware store again; had to fight through seasonally choked aisles to get three more packs of replacement bulbs. Hit the roof again and replaced the burned out ones.

Money Value of Time

As a business manager in the small to mid-sized business space, you are most likely familiar with the time value of money.

But don’t neglect the money value of time.

Based on my story above, what would have had less cost?

* Two new strings of lights at about six dollars apiece, and one trip to the roof

* Or six packs of replacement parts at about a buck each, but four to five hours of time made up of testing, installing, two trips for parts, and two visits to the roof?

The takeaway.

As in many cases, there comes a time where direct (labour) costs, plus indirect (downtime, loss of productivity) IT maintenance costs outweigh a replacement cost.

And these maintenance costs often start out as small nickel and dime maintenance costs that on the surface seem quite inexpensive and reasonable.

But over time …….

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