The Savvy CIO

Smart phones are everywhere. In 2008, nearly 90% of respondents to a survey said they accessed email or company information on a smart phone purchased either by their company or themselves.

How many people in your company are now carrying emails, files, passwords and network access around with them 24×7?

Mobile connectivity increases responsiveness and productivity, but have you adequately addressed the security risks these devices bring?

The main risks you should be aware of are:

• A lost/stolen device or memory card with information stored on it
• A lost/stolen device with the ability to access the company network
• Interception of data over WiFi or 3G networks
• Interception of data over Bluetooth connections
• Departing employees with un-wiped mobile devices they personally own
• Lack of clear ownership of the phone number (if the phone itself is used for business)

What can you do to minimize these risks?

• Require passwords/PINs on all devices
• Use encryption for files and storage cards (this can require third party software)
• Restrict what software and which employees can connect to your network from a mobile device
• Use SSL encryption when setting up email accounts
• Use centralized solutions tied to your email/collaboration system that have remote-wipe capabilities
• Provide clear policies and training for your staff
• Include mobile devices with access in your end-of-employment security checklist
• Be sure you have ready access to carrier and account information

Are you aware of other risks or solutions when it comes to mobile devices?

Talking about data backups is as fun as going to the dentist.

Every time I visit the dentist, I get a lecture about flossing more. I’ve never had a costly cavity, crown or root canal, so my newfound concern for my teeth only lasts for a few weeks. I have more pressing matters than prevention.

Many leaders approach data backups this way. Like my teeth, they haven’t yet paid the price for lack of prevention. It isn’t likely to affect them and there are always more urgent issues on their plates.

Of course, backups (like flossing) are important to tend to. Businesses in Chicago still remember the 2004 fire on LaSalle that locked down a building for weeks. Most companies’ offices were fine, but they couldn’t get to their data.

Guess how the unprepared fared?

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What is the IT Myth?
The IT myth says IT is a subsection of your business, best tended by specialists. Technology decisions for your business should be made by IT professionals who understand that capabilities and limits of technology. Only a trained IT professional can decipher the tech lingo and dizzying array of options to deliver the best possible technology.

The Truth
IT is no longer a simple subset of business, but is often absolutely critical to reaching your goals. IT professionals are experts in technology, not necessarily in business. Technology decisions too often begin with “What would IT like to work with?” not “What business problem are we going to solve?” In the worst cases, we’ve seen IT use huge budgets to finally get a system they’ve been wanting for years, ignoring more recent, superior solutions that are a fraction of the cost.

Your business needs technology that serves your business strategy. Good technology decisions are made by business leaders for business reasons.

The lingo and options in IT can disempower business leaders and owners from leading their business in areas related to technology. Owners and leaders need straight talk from voices that understand business strategy and processes as well as technology—advice that starts with “What problem can we solve?” In short, every business—regardless of size—needs a good CIO.

The Savvy CIO is breaking the IT myth with simple, free advice on identifying and solving business problems using technology. We want to help you lead your business in technology by using IT to reach your goals.

After the recent post on total cost of ownership (TCO), the Savvy CIO decided to use Microsoft Exchange–a common small business solution–as a TCO example.

The “Sales Pitch” Cost of Exchange: $4,844

Server Hardware: $1,000
Small Business Server 2008, 5 Client Access Licenses (CALs): $1,089
15 Additional CALs: $1,115
20 Outlook Licenses: $1,600

TCO Estimate of Exchange (4 year lifespan): $51,870

Initial Cost: $10,110

Hardware and Licenses: $4,844
Server & Exchange Configuration (8 hrs): $1,200
Spam Filter: $700
Spam Filter Configuration (3 hrs): $450
Outlook Configuration (.5 hr per user): $1,500
Backup Configuration (3 hrs): $450

Ongoing Cost: $870 per month

Online Data Backup: $20
Server Maintenance/Downtime (4 hrs): $200
Patches/Upgrades (2 hrs): $100
Exchange Administration (5 hrs): $250
Spam Filter Administration (5 hrs): $250
Energy Cost: $50

This TCO doesn’t even account for many expenses:

• User and admin training
• Productivity lost during unplanned downtime (Exchange average is 4 hours per month)
• Additional storage
• Part replacement
• Disaster recovery & emergency backup

The Savvy CIO is not sure why Exchange is common among small businesses with such a high TCO.

A TCO of $50,000+ doesn’t mean technology isn’t worth it. Exchange may still pay for itself in time and embarrassment saved and in reduced administrative staff. But knowing the TCO allows comparisons that help make wise decisions, the first of which is the outsourcing question:

Can you subscribe to a collaboration platform for less than $12,750 a year?

In full disclosure, the Savvy CIO’s firm is a provider of Zimbra, exactly this kind of hosted collaboration platform. There are also other alternatives that offer a much lower TCO to a small business than purchasing Exchange.

In general, there are two roles of IT: reactive and proactive.

Your business needs both of these roles. Ignore one and you will have a problem, either now or later.

The Reactive Role
This is IT as fix-it person: supporting users, administering systems, hooking up new PCs and printers, and replacing parts. This role keeps your systems and users working. Reactive IT is a necessary cost center, with little return on investment.

The Proactive Role
This is IT as business strategist: planning for contingencies, improving productivity, adding capabilities, ensuring compliance and security, advising on emerging technologies, identifying business issues and potential solutions. This role helps you reach business goals and requires a high-level viewpoint on technology and business. Proactive IT is a business asset and can significantly improve your bottom line with reduced cost or increased revenue.

A recent study suggests that as businesses trim costs, IT managers at small companies are spending nearly 60% of their time on administrative tasks. When business leaders do not identify and value the proactive role, resources end up funneled into a reactive maintenance mode. If the IT managers in this study are skilled enough to be proactive, their companies are wasting a valuable resource and hampering long-term growth.

If you have an IT staff in house, what role do they fill? Are you compensating them correctly for that role? Depending on their skill level, consider outsourcing to free up internal staff or to provide proactive strategy. If you don’t have internal IT staff, be sure your outsourced service providers have the team-based expertise necessary to attend to both roles.

The basic piece of business technology is the PC: simple and inexpensive. When you purchase a $1,000 PC, you’re spending about 4% of the total cost of that machine over 5 years. In other words, maintaining, supporting and powering that PC for 5 years will cost your business nearly 25 times the initial purchase price.

Cost of a PC: $1,000
Total Cost of Ownership (TCO) over 5 years: $25,000

I know. Stunning.

TCO includes the costs you can see on your balance sheet (energy and internet, IT support, part replacement) and the costs you can’t (training for IT staff and users, downtime, user self-support, administration). You can imagine how TCO increases rapidly as the technology in question grows in cost and complexity.

Basing a technology purchase on initial cost can lead to a bad decision. A common rationalization for a big purchase is the false belief that once the high upfront layout is over, it won’t cost the company anymore: It’s free!

Free, in this case, is NOT free.

Technology decisions must consider total cost of ownership. TCO allows you to compare the various ways technology is offered: internal IT staff, outsourced IT consultants, capital purchases, software as a service subscriptions, etc.

The MaintainITProject has a list of core TCO questions to consider.

Good technology is unrivaled in its ability to improve business efficiency. The total cost of good tech is still worth it. But don’t be fooled by that attractive initial price tag and the promise of “free”. Know the TCO.

Technology changes fast. Your business can’t sustain jumping on the “new and improved” bandwagon every time. But changing too much isn’t the problem most businesses face.

For most it is changing too little, fighting down the growing certainty that a technology or business process that is paid for and familiar has become a problem. If this is you, here’s the bad news:

You have a legacy monster on your hands.

A legacy monster is usually some piece of hardware or software that was, years ago, a great source of efficiency and maybe even pride. Now faster, better, and cheaper solutions abound. But somehow the legacy monster is hanging on. Legacy monsters survive on lies like:

“It doesn’t cost us anything anymore.”
“Everyone is comfortable with this system.”
“We can’t take time for change right now.”

Don’t believe it.

Legacy monsters cost more to maintain than they did to purchase, better systems lead to better work, and today’s slow market means we all have a little extra time to improve business processes.

The truth is that the legacy monster’s initial cost is irrelevant. Hampering your business for months or years won’t “get the most” out of your investment.

Do you have legacy monster systems in need of slaying? Did you recent lay one to rest?

My friend Dave has four salespeople. Right now his company needs all hands on deck to best position themselves for the recovery. But one of them is coasting, content with the residual commission and long term relationships he has built over the years.

This salesman knows what Dave is now realizing: He “owns” his accounts and all of the information associated with that relationship. His notebooks, black book and Blackberry are assets the company can’t afford to lose.

Dave is held hostage in replacing or eliminating underperforming staff, because they control the information about the company’s customers and prospects.

Your company must own this information.  The technology that typically makes this happen is a Customer Relationship Management (CRM) Database.  A well-implemented CRM means:

⇨    Marketing, sales and customer service are in one place
⇨    Actionable sales and marketing campaigns flow in repeatable-even automated-processes
⇨    Management has clear visibility into the sales pipeline and salesperson performance
⇨    Salesperson turnover results in no lost information or relationships

With a CRM, Dave could replace underperforming sales staff and provide complete information on every lead, proposal and opportunity in a territory to a new sales person. That’s the power of owning your company’s sales information.

The Savvy CIO’s last post detailed the main advantages and challenges of moving business software into the cloud, concluding “The question is not if you should move tasks to the cloud, but what and when.”

How do you decide what and when to move to the cloud? The answer is NOT everything and now.

Jonathan Blum at CNN offers a good reminder that moving to the cloud isn’t the magic bullet for every problem your business faces. But a carefully considered what and when can gain solid rewards from using the cloud.

Choose a Target
Where is time being wasted or opportunities being lost? Communication? Customer relationships? Sales? Project management? Document storage and retrieval?

Your biggest challenge is a prime target to move to the cloud, addressing a significant problem without a large initial cost. A trusted advisor or a Google/LinkedIn search can lead you to the best cloud platforms in an area.

Know the Cost
Pay careful attention to the pricing structure of a cloud platform. Some offerings have tiered pricing that are attractive for low needs and low cost entry, but can add up quickly as you begin to take real advantage of the platform.

For example, very basic access to Salesforce.com only costs $9 per user per month. But the fully featured Salesforce.com maxes out at a costly $250 per user per month. Not all cloud platforms scale in this way, but a careful analysis of costs and returns are needed before making a move to the cloud.

Plan for the Future
Before making the move, ask questions that will be important two or five or eight years from now:

• How difficult is it to migrate out of this platform?
• Does the platform scale well?
• Will this platform integrate openly with other systems?

Have a good or bad experience moving to the cloud? Tell us about it below.

Hearing more and more about the term “cloud computing”?
Cloud computing is moving tasks traditionally done on a local PC or server to a service provider in the Internet “cloud”. A service provider gives you access to a program through your web browser, and your data is stored on the provider’s servers.

I’ll be blunt: The cloud is the future of business IT. At some point, the only thing you’ll limit by moving to the cloud is your IT costs.

The highest profile part of the cloud is webmail; Gmail, Yahoo Mail, and Hotmail have offered personal email in the cloud for years. In the last five years, business tools in the cloud have exploded, with platforms for business email, customer databases, accounting, document authoring, project management and much more.

Can you benefit from the cloud?

ADVANTAGES

⇨ Cost: Local servers and software can be big-ticket items. Most cloud platforms are on subscriptions, letting you pay only for what you use. You do not need to support, maintain or have expertise in the technology infrastructure in the cloud that supports you. Businesses who move to the cloud can often more than halve their IT budget.

⇨ Access: The cloud lets you work like you’re at the office from anywhere with Internet access. Applications often have scaled-down interfaces for use on smartphones.

⇨ Security: For many businesses, data is safer in the cloud. With data not stored locally, the inevitable PC or server hard drive failure won’t affect you.

CHALLENGES

⇨Internet reliability: If you cannot access the Internet, you cannot use your applications. Some cloud apps provide an “offline” client, but regular online access is required.

⇨ Maturity: Many cloud apps are not as mature and feature-rich as their desktop equivalents.

⇨ Trust: You are entrusting a service provider with your critical data and ability to operate. So make sure to pick one with a reputation for good service and reliability.

For many businesses, the advantages already outweigh the challenges. Working in the cloud is only going to get better.

The question is not IF you should move tasks to the cloud, but WHAT and WHEN.

Are there other big advantages or challenges to moving to the cloud?