We want to address the fact that you may have a system that does an effective job at capturing information, but there may be a component that you don’t even realize you’re missing. It’s called the “why” factor.

In the enterprise space, ERP packages like SAP and Oracle take over the function of recording the sales order, supporting processes needed for delivery, invoicing and accounting. However, they may be missing components that clue companies into the “why”, relating to missing commitments or lack of performance that shows up in a KPI (key performance indicator).

RSA Corp  has addressed this void for clients by developing software analysis tools and applications that tie into ERP systems. In one case, it involved a job shop manufacturing facility that used RSA’s app to utilize the information coming out of the ERP to grade the prior day’s job performance. In another case, it was to develop an analysis tool to determine why commitments were being missed and shipments weren’t meeting their schedule. you can find more information on this case by reading the blog “Mary Had a Custom App, Custom App, Custom App!“. Regardless of what app or ERP you’re using to support your core business operations, if you’re not measuring it, you could be missing out on a major “what” – MONEY!

Is this how you track your inventory? THERE IS A BETTER WAY! Give Fido a break and spend a little time investigating the benefits you’d receive from improving your inventory accuracy.

If you need to track inventory, whether stored in multiple locations or as it moves through your manufacturing process, immediate knowledge of the location of each unique piece reduces your costs. Not knowing where your inventory is detracts measurably from your bottom line by contributing to increased labor expenses because of inefficiencies in locating items and/or the need to overstock items to account for this or for manufacturing delays.

The good news is, your problem has most probably been seen before…and therefore there’s a known solution. The challenge is in bringing that solution to you in a manner that works with your existing ERP or operational systems. For that, the most expedient approach may be to engage a partner who can not only “see” your problem and its solution but also knows how to tie that solution into your existing applications.

For a really unique approach to one customer’s problem, read this RSA Case Study to see how customized inventory tracking allows inventory to be visible at all points in time.

If you’ve survived the last five years with the recession and business stagnation, chances are you’ve already implemented, completed, or attempted several improvements to your business processes and have come to realize that continuous improvement is crucial to surviving in the current business environment.

You might now be at the point of knowing what you’d like your new process to look like but be struggling with how to implement it. Improvements based solely on changes to manual processes are much easier to implement than those that require changes to automated systems. Yet in many cases, the big wins come from automating repetitive clerical tasks or augmenting knowledge worker tasks with automated support processes.

In many instances, “extending” the capabilities of your ERP or other operational system establishes the base of significantly reducing the clerical labor and providing the leverage you’d like to gain. The question is how to deal with the technology of your ERP.

What you might not have considered is combining outside eyes with in-house expertise to develop the tools you need to move to the next level. In teaming key members of your staff, who understand your current work flow and your business rules, with a partner, who has the analysis and development expertise to augment the capabilities of your existing system, you can often have the best of both worlds; the reliable backbone services provided by your ERP as well as custom capabilities for those few instances where your processes are not fully supported by your existing system.

Many of these extensions are lightweight, but have impactful results and allow you to recoup your cost within weeks. Here are a few differences we’ve made for our clients by extending their systems: ERP/Application Extension Successes.

All businesses use a core set of technologies to support their business operations.  Larger businesses generally support several functional areas ranging from operational functions to accounting. Businesses rely on these technologies to increase their efficiency and improve their ability to scale and grow the business.  Many smaller and mid-size businesses rely on a core application, such as Quickbooks or Peachtree, to initially support their accounting, billing, and invoicing functions. However, the areas of the business which give rise to the need to create an invoice are often handled manually using spreadsheets and word documents.

So, what are the options when businesses reach the threshold and recognize that what is being used today won’t support the processes required for the business volume they hope to be achieving in the near future?  There isn’t a single clear cut answer for every organization, but there are several common considerations that should be examined in order to determine what is right for your company.

1. One very good option is to purchase off-the-shelf software built for your type of business.  When buying off the shelf, you should plan on implementing new processes that fit the software you are purchasing in order to obtain the maximum benefit.  Be aware that one size does not often fit all, so in more cases than not, you will need some level of customization to fill any gaps in the functionality you need to support your business operations.  It is important to go through a software selection process before making major investments in technology for your business. We recommend using a vendor who does not resell any off-the-shelf software. Instead, use a vendor who is familiar with the industry in which your business is engaged, who has an understanding of businesses processes and who is familiar with multiple types of software used to service your industry.  This allows your business to gain an unbiased opinion of multiple packages, the functionality within those packages, and how well they may suit your business.  It also allows for a gap analysis of each software and what customizations and integrations may be needed in order for it to be most effective for your company.
2. Another possible course is to augment your current software to provide better support for key processes.  Changing processes in any business is hard, so if you are pleased with your core software and there are few or no limitations to its supporting your future growth, it makes sense to investigate having software extensions designed and integrated with your core software to support your other key processes.  These areas can include mobile technology, integration of one or more of your current packages with a custom application designed to fill in the gaps, and web applications that further support your external employees and/or clients.
3. When it’s your processes that make your business unique and valuable to your clients, you don’t want to change your business processes to align with software. Or, if your business processes include multiple specialty industry segments, a custom application should be considered.  Custom applications capture unique processes across organizations, create a way for the company to work together to increase operational efficiencies on every level, and provide real-time visibility to clients via reporting tools.  If you are outgrowing your current system and are considering a custom application, make sure to use vendors who understand your industry, can analyze processes, and who have a track record of providing solid custom tailored software solutions.

Regardless of whether you decide to build or buy, make sure key stakeholders are involved in the entire process and engage a steering committee in your company to assist in making key decisions throughout the process.  Your level of commitment to providing information and working with vendors determines the success of your project.

It’s once again time to review your IT Disaster Recovery/Business Continuity (DR/BC) plan. Actually, since Hurricane season officially started June 1st, it is well past time. You do have a plan, don’t you? There is an adage from a wise but unknown sage that goes something like this: “If you fail to plan, you plan to fail”. Lofty words and a bold assertion, but they are based in fact.

Business continuity vendors like to toss out widely quoted statistics that 80% of businesses that experience system outages longer than 10 days, fail within 18 months. Searching the web for “business continuity statistics” yields widely varying and possibly even questionable results. Even so, it is clear that, based on data post Ike, Rita, and Katrina, a significant number of businesses failed to recover. Once we clear the hurricane season, there are always hardware failure, fires, theft, sabotage, even the possibility of a pandemic that could result in a partial or total loss of systems and data or availability to them.

Even if your business survives, what are you at risk to lose? eCommerce, phone, or even email sales losses can be easily computed by taking average daily sales and dividing it by 24. Chances are that if a significant portion of your revenue is generated this way, it won’t take many hours before the cost justification for protecting these systems becomes apparent.

Disaster Recovery refers to your ability to recover key systems from a catastrophic event. Business continuity refers to the ability for your business to continue to functions during that recovery. Two different concepts, but they intermesh at many points in your IT infrastructure.

Key Questions to Ask Yourself

As a decision maker for your company, how do you determine your risk? How do you balance recoverability with cost? How much protection is enough? What technologies are available for protecting critical systems and which ones are right for my needs and budget?

There are many “DR in a box” offerings (we have one ourselves) some of which only address rudimentary DR/BC needs (not ours, of course), but consideration should be made for the unique needs of your company. There are a dizzying array of products and services available that range from backup to tape or disk and storage offsite to complete duplication of systems, replication of data, and automatic failover capabilities to a secure location. Cloud services are featured prominently in many offerings. What is right for your business and your budget? A start to answering these questions would be to consider the following:

• What systems does my company need to operate on a day to day basis? (Phones and voicemail, email, data, applications)

• How long can my company do without access to those systems? You may be indefinitely without phones by using cell phones and forwarding your main number to an alternate phone, but access to data or email may be required within a single business day or even within a few hours. If your company relies on a web presence for ordering you may not be able to tolerate any downtime.

Once you identify what you need to operate and determine the maximum acceptable downtime for each system, you have determined the minimum standards for the products and processes needed to recover those systems.

Case in Point

I’ll use my company, RSA Corp, as an example of this process. As a services-based business, RSA Corp does not manufacture or distribute products, and as such we are not dependent on a specific physical location as much as we depend on access to data. When we underwent our DR/BC exercise initially, we identified that because our revenue was based on services billing that our AR, AP, Payroll, and timekeeping systems were essential.

RSA Corp essentially has two core services offerings; IT staffing and IT services. Staffing essentially needs access to their CRM and phones to continue to function. Services needs access to our monitoring, ticketing, client data systems, and application development environments. Everyone needs access to email. Because we use telecommunications extensively in the course of business, it was also decided that maintaining our main and helpdesk phone numbers was a priority. That’s it really – no dependencies on a physical office per se. Consequently, our plan was to configure our systems in such a way that as long as a user had access to a Microsoft OS based PC with Windows XP or newer or a Laptop, and internet connectivity, they could perform any essential functions.

Because we contract to provide services to clients on a round the clock basis, we had already collocated a significant portion of our IT infrastructure to a secure hosting facility away from proximity to the Gulf. We placed our IP phone system, data storage, email, app servers, and monitoring systems in the facility which reasonably insured access to them in the event our business office should become unavailable. Our ticketing and payroll systems are web based SaaS and hosted by the provider. Our IP phone system allows users to take their phones anywhere there is a working internet connection and reconnect to our phone controller. Access to applications and email was provided by using Microsoft Terminal Server, and email was also available via Microsoft Exchange webmail for desktop users and either webmail or Outlook Anywhere for laptop users. VPN capability was established to allow transparent access to the infrastructure for laptop users as well.

Own and Host or Lease from the Cloud

One additional consideration would be whether it is financially desirable to own the equipment to be used for DR/BC, if any. And would you benefit more from accounting for the cost as a Capital Expense or as an Operating Expense? The technology you choose may impact one or the other, or even both.

Clearly, there are many considerations in producing a Disaster Recovery or Business Continuity plan that is right for your business. Why not schedule an appointment with one of RSA’s DR/BC specialists to begin working on your plan before the next major storm or thief pays you a visit?

Stephen Sweeney, Chief Operating Officer at RSA Corp, points out the current business trend of switching to managed IT support and explains why this option is becoming increasingly popular.

Stephen Sweeney, Chief Operating Officer at RSA Corp, defines managed IT support and explains what a business should expect from an IT service provider.

Episode #21 – Stephen Sweeney, COO at RSA Corp, lists and explains the three points that a business should focus on because they, if done well and consistently over time, will make your business grow.

Episode #19 – Stephen Sweeney, COO at RSA Corp, discusses the five areas that RSA Corp focuses on when using technology as a tool to build a better business.

Episode #14 – Stephen Sweeney, COO at RSA Corp, explains how Green IT, the recent major technology trend, saves businesses money by conserving their resources and making them more efficient.

Episode #13 – Stephen Sweeney, COO at RSA Corp, breaks down the risk analysis process into five key areas of business risk and explains how to reduce these risks. Find out what the five areas are and how to avoid these unnecessary business risks.

Episode #11 – Stephen Sweeney, COO at RSA Corp, predicts which four business technology innovations will affect business this decade. Find out what they are and why they are predicted to have such a positive impact on business.

Episode #9 – Stephen Sweeney, COO at RSA Corp, differentiates broad based marketing from direct marketing and points out that most companies, including RSA Corp, would benefit the most by marketing directly to target individuals or niche.

There is no fool-proof way to find new clients. Any business development resource or salesperson will tell you that. There are, however, some approaches that work better than others. We at RSA Corp believe that referrals, which come in different forms, are the best way to find new customers for most B2B businesses.

There are three kinds of business referrals: customer referrals, personal referrals, and professional referrals. Let’s focus on customer referrals.

Customer referrals come from customers who are willing and able to make introductions to other potential buyers of your service. In order for a customer to refer you business, you must have earned the privilege.

WHAT Must You Deliver?

First and foremost, you must be delivering a quality product or service. If you are not, then most likely you know that you can’t ask for referrals and if you did, you wouldn’t receive any.

• Quality is the focus of many books and methodologies. Let it not be forgotten that quality has ramifications on business growth, and that business growth is limited by poor or substandard quality.

• You should be collecting customer satisfaction metrics and feedback on your service. You will stub your toe and catch an earful if you ask for referrals from a customer who is less than satisfied. Ideally, your customers should be raving fans. This is where you set the bar.

WHO Must You Ask?

Second, you must consider who you will ask. Will you ask the decision makers, or will you expand the referral program to end users? Will you offer something in return? Discounts towards future business? Referral fees?

• Different individuals within the customer’s organization have different motivations and can provide referrals at different levels. Not better … just different. The owner may know other owners. The procurement team may know procurement resources at other companies. End users may be able to provide leads that have to be pursued over a longer period of time.

HOW Must You Ask?

Third, you must consider how to ask for customer referrals. Like most things, you need to be specific about your request.

• Do not leave it open-ended or ambiguous. Provide examples of how customer referrals have worked in the past. Explain how the referral would benefit both the customer and the vendor. Base the request on their satisfaction, not your needs.

WHEN Must You Ask?

Fourth, consider the timeframe. While asking for referrals should be a standard practice, what is the schedule? Quarterly? Annually? At specific milestones in the relationship, such as delivery milestones or product shipment? Every business is different.

• I would caution you not ask for referrals at the same time as when you gather customer satisfaction feedback. This will make your quality assurance (QA) process seem disingenuous.

Most importantly, your approach should be soft and gracious.   Show how appreciative you would be for a referral, and that you will not be disappointed if they cannot provide a good referral.   No pressure!

• You do not want to turn a happy customer into a customer that avoids you because you pressure them for referrals.

In sum, asking for customer referral is not simple and should not be addressed haphazardly. Do not leave customer referrals up to chance and variation.

See the complexity and nuance? As such, business owners and managers should develop a well-thought-out customer referral program for their sales teams. Be sure to address product and/or service quality and customer satisfaction at the outset.

Episode #6 – Stephen Sweeney, COO at RSA Corp, discusses how referrals are the most effective way to find potential clients and build new business relationships.

Episode #5 – Stephen Sweeney, COO at RSA Corp, explains ways to obtain new leads through client referrals and networking approaches. Never underestimate the value of happy clients.

Episode #2 – Stephen Sweeney, COO at RSA Corp, discusses how small businesses can get more value out of their technology investments and how managed services can help small and mid-market companies reduce technology costs and restore peace of mind in the business.

Security in small and mid-size businesses is more than just preventing viruses and blocking spam. Protecting your assets is the key to the long-term success of your business and the foundation of a strong IT infrastructure. What are the basic building blocks of a secure infrastructure?

In 2009, cyber crime is expected to increase as criminals attempt to exploit weaknesses in systems and in the people that use them. An overwhelming volume of malware can hit organizations. Viruses may spread through e-mail, Web sites, USB sticks, social and business networking sites, etc.

If an organization does not have a solid security policy and plan in place, the safety of the desktops, servers and all network devices (and all your data on them) will be at the mercy of the end user. Relying on the end user is not advisable or worth the risk.

The Small Business Administration estimates that 90 percent of companies that fail to recover data after a major loss are out of business within two years. Also, 54% of all business will find themselves the victim of data loss or cyber crime over the next three years.

The basic building blocks for a secure IT environment

• Model the threats to your business and have a third party perform a security risk assessment
• Develop an information security policy and educate your users
• Design a secure network, implement packet filtering in the router, implement a firewall and use a DMZ network for servers requiring Internet access
• Know your network. Harden your systems by removing unnecessary applications and maintain an aggressive program of patching operating systems and applications
• Offsite data backups with restoration plan
• Keep your systems patched
• Minimize exposure

In the SMB space, where you do not have the benefit of a dedicated team or individual whose sole responsibility is to keep your environment locked down, another option is managed IT services. For small business, this is a low cost, high reward solution. Services are provided on a monthly subscription, a recurring operational expense and include things like security.

As a business you must maintain best practices when it comes to securing your data and your infrastructure, the longevity of your business could depend on it.

Insider theft is on the rise. Displaced workers are abusing their corporate data access to steal, exploit and damage information networks. In a survey of 800 worldwide CIOs, more than 40% agreed that displaced employees were the biggest threat to vital information. International companies are estimated to have lost more than $1 trillion in intellectual property last year. What steps are taking to ensure your most precious asset – your data – is protected?

“This is a wake-up call because the current economic crisis is poised to create a global meltdown in vital information. Increased pressures on firms to reduce spending and cut staffing have led to more porous defenses and increased opportunity for crime. Companies need to stop looking at security as a cost center but as a business enabler,” said Dave DeWalt, president and chief executive officer of McAfee.

Many cases of businesses theft and data loss go unreported due to embarrassment, public relations nightmares and the possibility of losing customers. This practice may soon be coming to a halt. States are beginning to regulate data breach reports. California is paving the way for regulations in data theft incidences by requiring businesses to report a breach within 24 hours. We expect other states to follow suit with reporting requirements.

In a recent study by CERT and the Army Research Office, multiple cases of insider theft were studied for patterns of behavior. These cases all included prosecution where public information was readily available. The study suggested that dissatisfaction played a major role in 39% of the cases with denied raises, benefits, applications for promotion, requests for relocation and the threat of layoff from within the organization.

Most businesses believe in protecting the perimeter of the network. Little focus has been given to the inside. Insider threats include not only misconfigurations of access controls, which allow access into applications or data that should be restricted, but also snooping employees, corporate espionage and disgruntled employee theft.

Although most companies don’t regard inside security as critical as external security, the approach to both types of threats should be the same.

1. Security Assessment – ensure your devices are configured correctly and your policies and procedure back up your security stance
2. Penetration Testing – check your systems just like and outside hacker would
3. Security Enforcement – knowing your vulnerabilities is half the battle, fixing them is the other half
4. Perimeter Monitoring – round-the-clock monitoring to ensure speedy response to an attack
5. Internal Monitoring – protect your business from attacks against trusted users

Since insider attacks are specifically targeted attacks, it’s risky business not to proactively protect your organization.

While we’ve seen recent indications of economic recovery, some are skeptical that IT spending will follow the trend. For the past year, CIOs have been strapped with tighter-than-ever IT budgets.  This week, Microsoft’s CEO offered his thoughts on why we will see growth in IT spending, but we will not see recovery. Here’s what you ought to know.

Steve Ballmer, Microsoft CEO,  stated that IT spending will not fully recover to levels seen in recent years in the short term.  Cited reasons:

• Capital less available
• Drop in server and PC purchases
• Tighter IT budgets

Well, I’m not convinced that capital is scarce.  It would seem that with increased corporate earnings from cost-savings measures, and with money on the sidelines for lending, that capital is not as scarce as some would like to believe.  Either way, spending has been scarce.

Regardless, Ballmer must have read last month’s Garter Group statement, which indicated that we won’t see 2008 IT spending levels again until 2012!

Doesn’t that sound horrible?

Not so fast.

If Garter is correct, 2010 will feel like an enormous improvement.  The 2009 forecast for IT spending is horrendous.  Hardware down 16.5% year over year.  (Side note, declines in new hardware purchases put a serious pinch on Microsoft, which bundles OS licenses with new servers and PCs.)  Enterprise IT purchasing down 6.9%.  Overall global technology spending down 5.2%.

Gartner forecasts a modest but respectable 3.3% increase in 2010 global IT spending, equal to $3.3 trillion.

While Ballmer and Gartner predict 0% change in IT budgets from 2009 to 2010, we at RSA Corp are seeing a modest increase in IT department budgets in 2010.  Plans are being made to replace headcount lost in the past twelve months and resume some projects that were put on hold.  On the other hand, we are also seeing companies work to extend the life of servers and PCs, which will continue to hurt hardware vendors and Microsoft.  However, everyone in IT knows that hardware will need to be refreshed eventually.  This bodes well for 2011.

In addition, we have reason to believe that while most enterprise organizations have implemented virtualization to some degree, many mid-market and SMBs are at the outset and plans are queued for 2010.

Personally, I’m optimistic for 2010 (especially relative to 2009) and will be even more so for 2011 … so long as the global economy continues to cooperate as it has in recent months.

But hey, I’d love to be even more confident.  Please comment on what your company is doing in the way of IT budgets in 2010.  Up, down, flat.

In the past year, most businesses have taken steps to “hunker down” and be a survivor.  Many businesses are taking the opportunity to strengthen themselves to emerge stronger when the economy fully recovers.

De-risking your business is a simple framework that can be used to analyze your business and adjust your execution plan.

Five Areas to De-risk

1. Operational Risk – Reduce fixed costs, which is also known as operational leverage.  Identify efficiencies, work flow automation and other ways to boost productivity.  Put processes in place so your business is not dependent on individuals.  Ensure that operational controls and approvals are in place for spending.

2.  Market Strategy Risk – Focus on your core business, which is presumably the most profitable and stable.  What can you do to improve service and value without increasing costs?  Be active in your business.  Sit down with your customers to understand their needs and how you can do a better job of serving them.

3. Business Interruption Risk – When times are good, you might be able to absorb losses from a business interruption due to catastrophic event,  system failure or even malicious employees.  Now is the time to make sure that your operation is tolerant.

4. Data Security & Compliance Risk – Now is not the time to experience data loss or compromised data security.  Reduce the risk of loss of critical business information and the risk of violating privacy regulations such as PCI and HIPAA by ensuring that audit, governance, backup and recovery, and security policies are in place.

5. Financial risk – What amount of debt can your business support?  Reduce debt load if possible. Refinance short term lines of credit to longer term notes.  Know the cash flow requirements of your business in both the best case and worst case scenarios.

Notice that I mention financial risk last.  That’s because you cannot understand the financial needs unless the strategic and operational plans are in place.

And remember, if you can’t transfer, reduce or eliminate your risk…then by default you accept the risk.

Some companies rely heavily on contractors to staff projects and even entire departments within IT. Others exclusively prefer full-time employees. Understanding the total cost of an employee is crucial in the decision-making process. However, the ultimate decision should be based on your company or department’s business strategy. Learn more about this at Part 1 of this series: To Hire Contract or Full Time: 8 Questions to Help You Decide.

Businesses often underestimate the total cost of a full-time employee. It’s true that hourly rates are usually higher for contractors and consultants than full-time employees, but we must consider all hard and soft costs.  Some are not so apparent.

Hard costs

Hourly rate – This one is easy. For this example, let’s use $75,000 per year as a pay rate, which equates to slightly more than $36 per hour for 2,080 hours per year.  One key difference with contractors is you only pay for productive hours.  Full-time employees are paid during non-productive hours, such as vacation, holidays and sick time.

Statutory costs – Social Security and Medicare cost employers 7.65% of a base salary plus federal and state unemployment insurance. For a $75,000 employee, this equates to more than $3 per productive hour worked.

Employee benefits – Full-family benefits such as health care costs, which rise each year, and 401k matching can equate to $8 per productive hour worked.

Training costs – The actual amount per employee depends on the type of job and varies from company to company. It is estimated that the cost per hour worked ranges from $0.50 to $2.50. Using contractors or consultants allows you to avoid paying for training courses, conferences, subscriptions and certifications.

Training time – Contractors and consultants are paid for hours worked. Companies pay only for the value created and not when a contractor is focused on non-productive tasks.  Five days of training per year equates to nearly $2,000 in lost productivity for an employee making $75,000. As such, use of a contractor abates approximately $1 per hour of training expense.

Vacation time – Like training, vacation cost is abated by using contractors. Depending on your time-off policy, you can avoid two to three weeks of cost. Two weeks of vacation equates to $4,000 per year for an employee making $75,000 or approximately $2 per productive hour. In addition, paid breaks can amount to an additional two to four hours per week.

Paid holidays – Most companies offer approximately ten days of paid holiday time, equating to $4,000 per year or $2 per hour.

Sick time – Depending on your policy, you may avoid the cost of between 5 and 10 sick and/or personal days. This equates to $2,000 to $4,000 per year or $1 to $2 dollars per productive hour worked.

Bad hire costs - Bad hires are expensive.  Studies indicate that the cost of a bad hire is two and a half to three times the employee’s salary.  This cost is avoided with contractors, who can be terminated with little headache if things don’t work out.  If one in thirty hires is a bad one, then we should increase the hourly rate by 10% per productive hour work.

Hiring costs – Hiring is an expensive process. Significant management time is invested in gathering resumes, screening resumes, making calls to candidates, testing, scheduling interviews, conducting interviews, evaluating and choosing a candidate, negotiating the offer, and repeating the process if the candidate does not accept. These costs can be reduced by using contractors. This management and human resources time can be focused in areas of greater value to the business. For the purposes of this example, I’ve included no allocation for hiring costs.

Separation costs – The unfortunate situation where you choose to terminate an employee creates costs for the company.  If the employee is laid off, severance costs are avoided. If the termination is performance-based, all of the time invested by HR and management on counseling, deliberations and termination are avoided. While incurring these costs are not certain, by using contractors you avoid this risk.  For the purposes of this example, I’ve included no allocation for separation costs.

For a $75,000 resource, hard costs equate to approximately $22 per productive hour worked or nearly $40,000 per year!

Soft Costs

Soft costs are more difficult to quantify.  The opportunity cost of time spent managing employees from a human resources perspective is the most often overlooked and underestimated employee cost. Contractors and consultants do not require a career path, training plans, performance appraisals or counseling sessions. It is estimated that up to 15% of a manager’s time is spent in these areas.

By using contractors and consultants, management time can be focused in areas of greater potential value to the business. One industry benchmark shows that day-to-day management and other soft costs equate to an additional 25% of an employee’s total cost.

Of note, decision makers correctly consider management costs as fixed…they are not avoided when using contractors instead of full-time employees.  Unfortunately that misses the point.  I’m specifically calling out the opportunity cost of management time, which can be focused in higher ROI areas.

Totaling it up

The total cost of an employee making $75,000 per year is approximately double – nearly $150,000 per year.

While using a contractor is definitely not appropriate for every situation, it’s not as expensive as it sometimes seems.  As such, our recommendation is to base your decision to use full-time or contract resources on business strategy, not hourly pay rates.

When deciding whether to use a technology contractor or hire a full-time IT employee, businesses must consider a wide range of factors. The choice must be rooted in the company or department’s business strategy, followed by consideration of cost.

Ask Yourself These 8 Questions…

• Is the function strategic to the business or tactical in nature?

If the function is tactical – tasks are repetitive and support operational business processes or support functions – then the function could be a candidate for using contract resources.  Another idea, if the function could be outsourced entirely, then a contractor may be an alternative.  Using contractors is a form of outsourcing … contracting out the skills while maintaining management responsibility.

• Is it important to retain the functional knowledge long-term, or is the position process-oriented?

Let’s focus on knowledge, using application developers as an example.  In an enterprise IT environment, using contractors for application development might make sense. Once the project is completed, you need application maintenance skills, not development.

For an independent software vendor (ISV),  development never ceases and retaining knowledge of product architecture, road map and underlying code is critical.  For ISV’s, using full-time employees to retain knowledge and intellectual property is pretty important.

• Are the skills scarce, difficult to attract and difficult to maintain? Or, are they commodity skills that are widely available?

It’s common for businesses to use contract employees for commodity skills, especially when those skills can be obtained for the same or less as permanent employees.  For scarce skills, your business strategy may dictate that you need to keep these skills in-house, else they be taken by your competitors.

Another consideration, people with rare skills typically are aware of this and consequently may not be attracted to contract work.  The exception to this generalization are “hired-gun” skills for projects.  See the bullet, below.

• Is it a position that merits the management and human resources attention and investment of a career path within the organization?

This is quite common.  Many organizations don’t provide a career path for every function.  Worried about losing talent?  Don’t.  Just because a person starts as a contractor, doesn’t mean no opportunity exists to convert the person to full-time.

Consider yourself fortunate when you find an extremely talented contractor who you’d like to bring on board.  You were able to ascertain the individual’s talent and culture fit with low risk and even lower hiring costs.  Contract-to-Hire approaches allow companies to try-before-they-buy. Partnering with staffing provider can prevent expensive bad hires and mitigate risks associated with misclassifying contractors as permanent employees.

• Are the skills required short-term, such as for a project that has a defined beginning and end, or long-term?
– Are the required short-term skills the same as the long-term skills?
– Will person who would be attracted to the short-term assignment (application development) be content with the long-term requirements (application maintenance)?

It is not uncommon that the skills for short-term objectives are different than those for the long-term.  Consider contract employees for the former and permanent employees for the latter.  Or, a different model is to use your full-time resources to implement the short-term project while backfilling their maintenance duties with contractors.  This is more challenging to execute because your existing team may not have the skills necessary, which increases the risk of project failure and cost overruns.  However, if you can pull it off you will end up with the best of both worlds.

• Is using contractors culturally compatible with the business or department?

This is important.  Business leaders and managers should take a moment to reflect on this.  Shifting to a contractor-based staffing model for certain functions should be carefully considered.  How will you maintain your company or department’s culture?  How will you ensure that you do not create a second-class employment category?  How will you communicate these business decisions to your employees?

No issue is insurmountable.  However, we recommend a thoughtful approach that prevents issues.

Again, the decision on whether and where to use contractors should be primarily based on the business strategy for your business or department.  Answer these questions first, then move to the analysis of whether the benefits outweigh any difference in cost, which may not be what you think.

Later this week I’ll answer that question here on PartnerIT.com.

Thanks for reading!

Technology executives are key business strategy players in today’s mid-market companies. In recent years, we’ve raised the bar for the qualifications for the ideal CIO. But, are our expectations realistic? Are we looking for a superman or superwoman?

I had to chuckle while reading Chris Curran’s analysis, “CIO Background Check: IT Experience Mandatory?” He makes excellent points and concludes that IT experience is a prerequisite for a CIO to be successful. He goes further to say that a dual background, one with both IT and business operational experience, is the best combination. I agree completely that this is ideal.

In addition to successful IT management experience, Curran lists broader skills and experiences that should be considered in search of the ideal CIO:

• Leadership abilities
• Hands-on technology background
• Experience in leading large change programs
• Experience in running successful IT infrastructure operations
• Management experience in a non-IT function
• Innovative thinking that can solve relevant industry and business issues
• The ability to understand how projects and operations impact corporate financials.

These comprise the ideal characteristics of a successful CIO candidate in today’s dynamic business environment. But what a tall order!?

I am struck that companies are looking for a CIO superman (or superwoman), who is difficult to find and even more difficult to keep.

Deloitte recently published the results of its global executive survey on IT talent, titled “Mind the Talent Gap.” (Author note: I recommend this study to any business where technology is critical to the execution of its business strategy) Survey results validate that technology leadership will be in short supply, if it isn’t already, in coming years.

Deloitte’s prescription for closing the talent gap is both challenging and expensive, but definitely high ROI for large companies. At RSA Corp, we are mindful of the mid-market and believe variations on the Deloitte recommendations will be required for mid-market companies to obtain the full value of technology leadership in an increasingly competitive labor market for those high-demand, low-supply skills and experiences.

Last week CIO.com reported that “IT Jobs May Get Left Behind in Recovery.” To sum it up, author Patrick Thibodeau deduced that companies will be less likely to hire permanent employees and more likely to hire contractors or use outsourcing providers to meet increased demand for IT workers and functions.

The evidence? Increased revenue and earnings from outsourcing providers such as Cognizant and ACS.  Further support arrived in Forrester Research’s report citing that outsourcing is the only IT spending category that will finish “in the black” in 2009.  The good news is Forrester’s prediction of an strong recovery next year with overall 7.7% growth, and led by IT consulting services expected to increase by 11.4%. [Author's note: This is according to CIO.com.  I was unable validate this.  If you find other citations, please comment below with the link.]

Also quoted is Peter Bendor-Samuel, CEO of Everest Group, an outsourcing research group, who believes that IT service providers will benefit from companies that are hesitant to hire or rehire and are otherwise inclined to rely on outsourcing companies.  The implication is that more dollars will end up offshore.

Our take? Here at RSA Corp, we’ve experienced every recession since 1980, and history shows that contract labor and outsourcing will rebound first.  The predicted contract labor cycle is consistent with economic cycles in the past.  Comparing recession to recession, only the amplitude and period have varied.

Other factors indicating IT services and outsourcing firm growth…

• Advances in technology and connectivity make outsourced IT services, such as outsourced level 1 support, more affordable and effective now than in the past.
• Outsourced IT support has become more widely accepted and available, with established service levels and delivery models.  There is far less risk in moving forward with an managed IT support service.

Does that mean that jobs will shift offshore, diluting the recovery?

Of that, I’m less certain.  Strong arguments exist that offshore outsourcing providers will greatly benefit.  However, many highly competitive, domestic managed IT support providers will benefit as well.

Does that mean that U.S. IT workers will suffer?

Not necessarily.  We’re seeing reduced labor supply of domestic IT workers.  The current recession makes this less apparent, as today there is abundant supply of unemployed IT workers.  We expect this excess supply to be absorbed quickly as the United States emerges from recession.  Consequently, domestic IT managed service vendors will use economies of scale and new technologies to deliver shared services across many clients.

Domestic companies and organizations will be more productive overall, generating more with less … which is a very good thing.

The decision whether or not (or when) to upgrade is complex and dependent on many factors. Upgrading operating systems can create a competitive advantage, increase productivity and reduce administrative overhead. Alternatively, upgrading can cause compatibility issues with core applications, reduce productivity and significantly impact budgets and the bottom line. Due to mixed reviews of Vista, many businesses have chosen to delay upgrading to the controversial operating system and are waiting for Microsoft to either fix it or produce something better. The immediate positive reviews of the recently released Windows 7 beta are encouraging, but should you bet your business on it?

Windows 7 is looming on the horizon. It’s hard to believe, but Windows XP first arrived in 2001. XP is a good OS and a significant improvement over Windows 2000 in many business-relevant ways. This was especially evident with the release of service pack 2 and its improved networking and security capabilities.

Businesses have been riding the XP train for eight years, despite Vista being available for some time now. Hesitation exists because upgrading can be a headache, and there’s the often-stated mindset that you should never opt for the first release of a Microsoft OS. Whatever the reason, many businesses wait until Microsoft has “worked the bugs out.” I‘ve often heard the belief that the best way to adopt new OS releases from Microsoft is to let someone else do its beta testing.

Like it or not, the XP train is reaching the end of the track. Support officially ended for XP in April 2009, with extended support until 2014. That means no more updates and no more free support from Microsoft duration. It also means you cannot buy a new PC installed with XP, and the legal ability to downgrade from Vista to XP will no longer be an option. So one way or another, decision makers are going to face a choice of operating systems that will not include XP.

It is not all bad news though.

I’ve been using Windows 7 both in beta and release candidate for several months on both my home PC and my corporate laptop. I use my laptop as both a desktop replacement at the office and as a mobile workstation for multiple client-site use.

How 7 Works and Plays in the Enterprise and in Multi-Client and Remote Use

1. Simpler and faster networking – Network browsing is fast and efficient, unlike Vista where long lags can occur when clicking on a network drive. Wireless configuration and reconnecting to existing networks is more streamlined and easier to achieve.

2. User account control – In Vista, UAC was unmanageable, whereas 7 is unobtrusive. I eventually ended up turning it off in Vista, which did nothing for security.

3. Faster boot times – In all but a few cases where a user was using a stripped-down version of XP on a fast computer, 7 still boots faster. Unlike XP, which seems to get slower over time, my laptop still boots as fast as it did the day I installed 7. I’ve experienced this on platforms ranging from an older Pentium M 1.6 and a more current Centrino Dual Core.

4. Faster and easier install – I’ve smoothly installed 7 on eight different devices. No muss, no fuss, no drama. My greatest fear of driver availability on my production laptop has been laid to rest. When Microsoft released Vista, it introduced new driver architecture primarily for the graphics and sound subsystems. The difficulty of finding drivers early in an OS release is legendary. With 7, I’ve only encountered a handful of devices, mostly older printers, for which I have failed or had to search to find drivers. Where 7 drivers were not available, typically Vista drivers worked. Only one device has failed to work properly – an older Tektronix Phaser printer. Windows 7 included drivers are extensive. What’s more impressive about the availability of drivers is that I installed the 64-bit version instead of the more common 32-bit.

5. Blue Screens – Lots of blues with Vista, not one in 7. Your results may vary, but consider I currently have three different VPN clients and a host of diagnostic applications on my machine that do interesting things to the IP stack of my laptop.

Points in Favor of Windows 7 for the Enterprise

• Ability to remove Internet Explorer 8 and use other browsers exclusively
• Improved network browsing and searching speed and capabilities
• Improved troubleshooting and remote support capabilities
• Improved file browser over both XP and especially over Vista

Included apps (Paint, Notepad, Calculator) are greatly improved in both function and look and feel. Windows 7 is vastly better than Vista and has proven itself robust and usable for both home and business. If you have the opportunity thru purchasing new equipment or reloading an existing machine, pick up a copy of 7 when it hits the market (October 22, 2009) and give it a try.

If you’ve had a chance to work with Windows 7 beta..what are your thoughts?

The type of security threats on our networks is escalating. While tools exist to detect security leaks, they have no chance against skilled professionals with a reason to take something from your network. Knowing where you stand in terms of network security is no longer an option, but a necessity. The numbers associated with network security will shock you.

Studies show more security threats come from outside an organization, but an increasing concern relating to several types of internal threats persists. CSO Magazine’s E-Crime Watch Survey found that overconfidence is pervasive amongst security professionals and organizations in thinking they have things handled. This kind of thinking is concerning given the recent rise in targeted, financially motivated attacks.

• May 2009 – Heartland Payment Systems reported a security breach that cost the company about $12.6 million, including legal costs and fines from MasterCard and Visa, which directly contributed to a $2.5 million loss for the affected quarter
• December 23, 2008 – RBS Worldpay, a subsidiary of Citizens Financial Group Inc., said a breach of its payment systems may have affected more than 1.5 million people
• March 2008 – Hannaford Brothers Co. disclosed that a breach of its payment systems, also aided by malicious software, compromised at least 4.2 million credit and debit card accounts

Social Engineering and Password Crackers

The E-Crime Watch Survey revealed that the use of social engineering techniques jumped to the number one method of committing e-crimes. This includes manipulation of a person or persons who can permit or facilitate access to a system or data.

Another change revealed that organizations with insiders using sophisticated technologies like password crackers or sniffers jumped from 17 percent to 31 percent. The evidence shows that while 57 percent of participants said they are increasingly concerned about the potential effects, a large number have trimmed IT spending by 5 percent and corporate security by 15 percent.

How You Can Protect Your Business

With the average cost of a security breach estimated at $6.6 million (ranging from $613,000 to $32 million), it pays to have a baseline of the environment, utilize IT security policies and stay up-to-date on trends. Focus on areas that pose the highest threat to your environment.

A recent article by CompTIA (Computing Technology Industry Association) says, “To address evolving threats, support mechanisms such as disaster recovery plans, dedicated security teams, security trainings and formal policies for responding to incidents have been adopted by many firms. These are supplemented by preventive technologies, such as firewalls and antivirus software used in combination. A growing number of U.S. firms are using other technologies, including intrusion detection systems, physical access control and multi-factor authentication.”

CompTIA’s survey of 1,000 IT professionals revealed their top security threats.  Which of these threats are relevant to your organization? What initiatives are you planning to address network security?

Midmarket companies should consider a remote monitoring service for their networks and servers, especially in a down economy.  Viewed holistically, remote monitoring not only serves as an insurance policy for business operations but also creates real business value.  Unfortunately, the incremental spend often causes businesses to overlook the tangible returns on investment, or doing it yourself seems like the cheaper option.

Here are the seven most frequently overlooked areas of business value versus doing it yourself or not at all:

1. No additional software and hardware expense…plus avoid hidden costs – A managed remote monitoring service requires no additional software and hardware but delivers the same value.  Often lost in the buy vs. outsource equation are the hidden costs of server and software selection, training, configuration, maintenance, physical and storage space, and power.  These soft costs add up and do not disappear over time. You may not need additional hardware now, but you will now need hardware sooner! If budgets are tight, the upfront cash or financing required might make the investment impossible altogether.

2. Prevent costly downtime – Your business productivity matters now more than ever.  You cannot afford to be disconnected from customers and suppliers, to have your billing process interrupted, or to be flying blind about your business operation.  Many remote monitoring service providers provide not only alerting of critical errors, but also valuable reports, analysis and recommendations that can help your business reduce downtime by preventing problems before they happen.

3.  Less on-call time – Implementing an internal monitoring solution does not guarantee service levels.  Service levels require technical staff to be on-call after hours, on weekends, and during holidays.  Today, many companies are asking more from their staffs and requiring more work hours and greater flexibility.  Using a remote monitoring provider means your employees can sleep easy unless the problem is truly critical.  This improves both employee morale and retention.

4. Avoid configuration errors – Many businesses miss critical alerts when the in-house monitoring package is misconfigured, meaning that alert thresholds are set too low or disabled.  Often, this is overcompensation for an initial configuration that was too sensitive and generated too many alerts.  Managed service providers have experience configuring monitoring and alerting thresholds and escalation rules that make sense for each business.

5. Reduce risk associated with doing it in-house – By using a third party service provider, you insulate yourself from risks specific to your business. Those risks include hardware failure on the monitoring server, service interruption by your Internet or power providers, and poor employee performance or worse.  Using a service provider can give you peace of mind, which otherwise would only come by having a large staff and redundant providers – luxuries few can afford right now.

6. Holiday, vacation, illness coverage – Avoid paying overtime or taxing your already lean staff with on-call coverage during holidays, vacations or when staff is out sick.  Ensure continuity when you experience staff transitions, such as resignation, terminations and/or layoffs.  Network monitoring service providers provide coverage 24/7/365.

7. Proactive business planning -  Wouldn’t you like to know about future technology needs, such as when to purchase new hardware, memory, disk space or  virtualization software such as VMWare?  Third-party server and network monitoring providers can supply you with information and analysis to better prioritize and plan your cash flows.

Remote monitoring services are both affordable and prudent.  During this challenging business cycle, every hour of productivity is critical. Midmarket businesses should consider remote server and network monitoring as a service they can’t afford to be without.

“Tomorrow’s CIO” is the subject of an opinion piece on sandhill.com. The author, Ashwin Rangan of MarketShare Partners, contrasts the characteristics of Tomorrow’s CIO and Yesterday’s CIO. He identifies three key areas of difference:

1. Goal orientation toward business values and objectives (read, measurable return on investment) instead of a check-the-box approach that leads to a company implementing one of each key software solution.
2. Business background, which means a deep understanding of the business operation, drivers and strategic direction instead of the tech savvy CIO with a technology mindset.
3. Open-mindedness toward innovative solutions instead of conservatives that channel technology investments only into the most sound, and often most expensive, enterprise software solutions.

I agree with Rangan, especially in the context of new technology approaches such as cloud computing, Software As a Service (SAAS), open source and Web application hybrids (aka mash-ups). Each of these four innovations (The Big Four) provide opportunities to your business. However, without the leadership of a technology innovator, your business is unlikely to embark down these paths, much less embrace them as ways to drive business value – reducing costs, expanding market share, entering new markets and building lasting relationships with customers.

Each of these innovations is or will be disruptive to your business, much like the Internet itself. However unlike the Internet, which was relative easy to understand and to envision its role in the future of your business, The Big Four are more arcane conceptually, more complicated technically and more difficult to envision. Consequently, businesses with the new brand of technology leadership are pursuing these approaches, whereas those that don’t are not.

Implications for Small and Midmarket Businesses (SMBs)

For many years, I’ve maintained that SMBs were disadvantaged in the area of using technology to support business strategy. Leveraging technology for the business is neither inexpensive nor without risk. In addition, the business strategies of SMBs are more focused and conservative by nature. This does not lend itself to diving head first into The Big Four.

Regardless, business leaders should view cloud computing, SAAS, open source, and mash-ups as the certain future and not the “latest buzzwords”. Much like the Internet, businesses will face increasing pressure from competitors using these technologies against them.

This leaves three choices and only two are good ones:

1. Invest in a business technology leader (regardless of what you call them: CIO, CTO, IT Director) with the characteristics above who can work as a part of your management team to influence business strategy and create real business value with technology.

2. Identify a business technology services partner that can help your management team navigate the technology alternatives with your business goals in mind.

3. Do nothing and pay more later in the form of market share and profitability.

In light of current economic challenges, I hope that your business has the ability to pursue one of the first two.

Some companies might attempt to cut employee costs by using long-term independent contractors without considering the potential ramifications related to the misclassification of an employee. Misclassification has serious implications and penalties from the IRS and will ultimately cost your bottom line. Consider payrolling your contractors through a third-party payroll service to eliminate these risks and ensure compliance.

The IRS can reclassify professionals claimed as, or claiming to be, independent contractors as W-2 employees. This reclassification can result in the imposition of fines, penalties and back taxes for which the employer is generally liable, and could cost a company large amounts of money.

Former contract employees are usually the ones who trigger an IRS review. When it is time for a contractor to pay taxes and they can’t pay, it sends up a red flag. Other triggers include a contractor filing for unemployment when unemployment insurance was not paid.

More than a few firms have come under the scrutiny of the IRS in recent times following this risky practice. The most notable was Microsoft in 1997, which got hit for back benefits as well.

A more recent case involves Blackwater USA in 2006. This private security firm engaged workers in Iraq as independent contractors rather than employees. Its policies have created a situation for which Blackwater might ultimately pay millions of dollars in employment taxes, as well as penalties from the IRS.

Texas does not have a payroll tax. Companies should expect that local government will be more aggressive as the pressure for revenues increases in the current market. Companies might try to avoid paying unemployment insurance taxes and workers’ compensation premiums by illegally classifying employees as independent contractors. In 2008, New York found $19 million in unreported wages and $3 million in underpayments to workers.

Here is a high level overview of the misclassification risk and information from the IRS on employee vs. contractor.

There is no magic formula…the IRS would make a judgment based on what your business does and three factors that indicate “degree of control and independence.”

• Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
• Financial: Are the business aspects of the worker’s job controlled by the payer? (how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
• Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Payroll services are an easy and affordable way to mitigate these risks and reduce administrative costs. The payroll company takes on the tax and legal liabilities while funding and administering payroll.

Companies continually seek new ways to go green with efficiencies, recycling and building improvements. How can IT help make business more eco-friendly? For companies with applications running on multiple servers, virtualization is a great way to maximize computing resources, reduce power consumption and eliminate server room expansion.

Virtualizing your server environment allows you to consolidate multiple server instances onto one piece of hardware, allowing for better utilization of computing resources and reduced energy for cooling and power.

In a business climate where IT is forced to do more with less, virtualization reduces maintenance and administration of hardware while increasing flexibility in continuity and disaster recovery. A virtualized server environment allows IT to work on issues without interrupting key operations. With more and more telecommuters and employees working on weekends, IT has less time to fix issues without affecting productivity.

After consolidating resources, donate or resell hardware to learning and training facilities in your area.

On Tuesday Apple held the iPhone 3.0 event. The event announced the roadmap for the 3.0 firmware for the iPhone, iPod touch and whatever comes next (maybe a netbook or tablet?) With more than 100 new features, this release is definitely the biggest yet. That’s right; it’s bigger than the 2.0 release, which announced Exchange ActiveSync.

Even with the release of more than 100 new features, the focus of the event was really for the developers. Apple finally launched the push notification service, which coders have been clamoring for since they hinted at it a year ago. Apparently, there were some scaling issues, but the service is ready to go.

Apple decided the push service was the path to pursue because the phone doesn’t allow apps to run in the background. The idea behind that thought is…background apps affect battery life and phone performance. Push notifications allow you to close a chat program mid-conversation but still receive updates. Then, it allows you to reply when ready even though the app is not running.

I was lucky enough to get my hands on a beta copy of the iPhone 3.0 firmware update the day it was released. Early adoption rules! After doing some breathing exercises and removing the grin on my face that went from one ear to the other, I got a chance to play with the new firmware Apple will release in June to bring the iPhone back to the forefront of mobile technology.

It’s strange to run an Apple beta release. It feels sort of the way an out of body experience might feel. It’s very alien to run Apple hardware that has glaring issues. Nonetheless, Apple was able to add hundreds of new features without compromising the useability of the device.

Highlights

Cut, Copy and Paste
Finally! You can now cut, copy and paste between applications. If you want to text someone a URL from Safari, now you can.

Spotlight
Like OS X, the entire phone is indexed so you can search across almost everything. If you enter a search term, such as “Jack,” your phone searches the iPod and returns your My Morning Jacket tunes, Jack Black’s contact info, emails, notes…anything with Jack in it.

Landscape
Finally, you can type emails on a big, touchscreen keyboard. The way the Lord intended! SMS and notes too.

MMS
Not really a big deal to me, but apparently MMS matters to someone…

It’s kind of funny that a handful of times I’ve thought to myself, “You know this phone is great, but I wish it did [insert feature here].” It seems like everything I’ve thought of, so did they.

This definitely puts the iPhone back out in front in the smartphone race. This includes the Palm Pre, especially with rumors of possible Palm Pre production issues and the patent suit pending by Apple over multi-touch. It was seen as the iPhone’s only real threat (even though it may seal Palm’s fate Palm Pre: Chronicle of a Death Foretold).

It’s only a matter of time before you’ll be able to edit Word and Excel documents, making it a real corporate contender.

For a complete feature list and more than everything you wanted to know about the 3.0 release, check the excellent coverage at Gizmodo: iPhone 3.0 OS Guide: Everything You Need to Know.

Another entry from the why didn’t we think of that before? department is Microsoft’s quiet addition of the “Fix it” button to a handful of Knowledge Base (KB) articles.

According to Microsoft, this is the first step in improving Windows Error Reporting, which is the annoying box that pops up either after an application crashes or Windows itself implodes.

The vision is…when you send the error report to Microsoft, you may get a suggestion for a one-click fix it. So far, Microsoft says that more than 75,000 customers have tried it out since December 2008, and 95 percent said it solved their problem.

I have two thoughts about Fix it.

I love the idea, in principle, but where was this when I was running Windows 98?

On the other hand, Microsoft KB articles can be difficult to understand. Often an article can describe an issue extremely similar to yours, but meant for a different operating system or software version. In desperation, inexperienced users might run the fix and end up causing more problems in the end.

Also, some KB articles involve editing the registry. If the Fix it button changes my registry and my PC becomes a paper weight, how can I fix that? Hopefully there has been some type of discussion at Microsoft regarding this subject.

Maybe that’s why it’s been a quiet deployment, sort of a live beta. Use with caution!

Now if they could just click a button and fix Vista, oh wait Windows 7 is coming….

If you haven’t seen the pictures yet, you’re missing out. Unless you work for the Department of Transportation, they’re really quite humorous. Hackers have taken it upon themselves to warn motorists of zombie attacks.

Several hacker sites listed instructions on how to change the text in common construction signs around the country. One of the first cities affected was Austin, Texas. Signs touted “Zombies ahead!” or “Zombies in Area! Run.”

This has spawned a rash of sign tampering across the United States. In Indiana, “Raptors Ahead” appeared on one sign warning motorists about the dangers of a possible encounter with the calculating pre-historic killing machine.

According to one of the hacker sites, the ADDCO machines are easily editable. The default passwords are rarely changed by crews. If they are, you can reset them to defaults with a simple key combination.

After I stopped laughing, this made me think of the importance of physical security and implementing security best practices. If you have default passwords left on any of your network gear, you could be vulnerable to zombie attacks as well.

If all you have is a padlock protecting your servers, how much would it really take for someone to break in and change your marquee?

Just when you thought Palm was out of the smartphone battle, it comes back firing with a touchscreen salvo, which appears to have its crosshairs directly on Apple’s iPhone.

It’s the Palm Pre…

The talk of CES 2009, the Pre is poised to bring Palm back towards the front of the pack. It sports a new operating system, dubbed WebOS. Like the iPhone and Android, the Pre is easy to develop for because most of the apps can be written in Java, HTML or CSS. From the demos I’ve seen, the screen redraws are extremely smooth.

In the screenshots below, you get an idea of WebOS. Check out the home screen; the phone screen; and call screen with reminders, a missed call, a text message and a song playing.

Palm offers immediate alerts without having to close a screen. The above image displays what Palm calls “cards.” You can move through applications quickly with cards. For instance, flipping from calendar to maps to photos to emails is easy as turning a card.

An interesting concept about the browser is that it displays the actual Web page and not just a screen capture like the iPhone. Mobile Safari has to reload the page when selected, whereas the Palm browser brings up the actual page already loaded.

One of the coolest new features of the Pre is an accessory. Palm is offering touchstone as an optional accessory. Touchstone is an inductive charger/cradle that allows you to charge the phone by placing it on the “puck.”

Another great feature from the why hasn’t someone done this before department is something Palm calls Synergy, which is essentially a contact aggregator. It pools your contacts from all your accounts and social networking sites like Gmail, Outlook, Facebook, Twitter, AIM, etc. and combines them into database or “stacks.” It also does its best to reduce duplicates in these stacks, keeping your contacts organized.

Palm’s Pre is set for release in mid-2009, with exclusive sales through Sprint. For all you ever wanted to know about the Pre, check out Palm’s “Pre view” press release.

Since the 80s, your operating system choices have been Windows, maybe Apple if you were daring, or Linux if you were the type who likes to tinker. We all know who the clear winner has been. Windows has dominated the OS landscape since it released Windows 95. However, Microsoft’s reign may be coming to an end. The next war for platform dominance is upon us…it’s your Web browser.

It may seem far-fetched, but if you’ve ever used Gmail or Google Docs, you’ve already sampled the idea of running applications directly in your browser and may not have even realized it.

In May, Google announced Google Gears, which is a plugin that helps websites run more full-featured, application-style pages through a browser and includes the ability to use them offline. The thinking is…with Gears you should be able to run any type of application without having to install the app on your desktop. This includes anything from a word processing app (Google Docs) to email (Gmail or MySpace messaging) to video. It’s still a work in progress, but the early results are promising.

Gears works on several platforms, but Google felt it needed a multi-threaded platform that could throttle these Java virtual machines (JVM) and separate them within the browser. The thought being, if one of these JVMs started running away or wanting to crash, Chrome (Google’s new Web browser) could shut it down before it brought down the whole browser.

Firefox, Safari and Internet Explorer users can appreciate that. Enter Chrome. Google markets the new browser as a fun, new, easy way to surf the Web, but hidden under the fluff is a sleek weapon with purpose. The perfect example of form meets function. Google produced a Web browser to accentuate Gears features and make Web applications that use Gears scream, like Google Docs and Gmail.

At first thought, I wondered why Google would try to undercut all of its work on the development of Firefox, an open source browser by Mozilla. Google is the largest financial contributor to the popular Mozilla browser. It was only after I started digging into the concepts behind Chrome that I started to understand, Google is taking direct aim at Microsoft Windows and Office.

Imagine the ability to run the exact same application – whether at home or at work, online or offline, on Windows, Mac or Linux – and have the exact same look and feel no matter which operating system you are running. For example, if you use Google Docs on your Windows PC at the office and save all your work, go home and fire Google Docs on your Mac, you have the same exact look and feel. Same menus, everything. Once again, Google excels in making the simply impossible, simply doable.

This concept puts pressure on the industry titans to make stable, lean operating systems, because that will be the basis for PC purchases going forward. Asking yourself, “Will this machine run my office suite?” will be a thing of the past. The question will be, “Which Web browser should I run?”

Google isn’t the only company working on these rich Internet applications (RIA) and plugins. Adobe and Mozilla are also working on their own offerings, which would offer the same type of experience.  Each flavor is a little different, but the ideas are mostly the same.

Most of these new tools leverage AJAX, a Web development platform, which can asynchronously retrieve server data in the background without requiring a refresh. This makes an RIA seem more like a desktop application because it refreshes data in real-time. You can read more about Adobe Air, Google Gears and Mozilla Prism, and in some cases see them in action. For a good demo on Gears, sign up for Google Docs, choose offline settings, install Gears and take a test drive. If you have Gmail account, sign up for Docs under your settings menu.

Harry S. Truman once demanded, “Give me a one-armed economist.” Evidently his economic advisers couldn’t offer straightforward answers, beginning a string of caveats with “On the other hand…” Trying to make sense of the range of Houston 2009 economic predictions brought this quote to mind.

Reported in yesterday’s Houston Chronicle, economist Barton Smith of the University of Houston’s Institute for Regional Forecasting paints a bleak picture of the Houston economy in 2009. He describes an “energy cushion,” essentially high prices of oil and gas, which has insulated Houston from the greater U.S. economy and without which the Houston economy will look and behave like the rest of the U.S. Clearly, that would not be good for Houstonians.

In the same article, the Houston Chronicle shows us an alternate view from economist Dana Johnson of Comercia Bank. He points out that Houston is less susceptible because our housing market is not as artificially inflated compared to the rest of the country. Perhaps Houston area consumers will remain more confident. (Consumer confidence… lack of confidence is a negative feedback loop when in an economic recession; excess of confidence is one cause of the problem in the first place, i.e. scarcity of thrift.)

I’m not an economist, however, I do follow economic developments. As such, I’d like to point out that the Houston economy was quite robust in March 2007, a month where oil dropped below $60 a barrel. We should take some measure of comfort in that. Regardless, we know that dramatic price decreases often result in producers reducing supply by dialing back production. Reducing oil and gas production negatively affects the labor and suppliers. Watch rig counts and production levels.

In addition, the difference between $60 and $145 is some amount of dollars expected to flow through to local companies as profits that, to some extent, were reinvested in the local economy. We lack that today.

Of greater concern, though, is the future of long-term projects and other capital investments made by energy industry participants. We have to ask ourselves, which business decisions were made that rely on high energy prices for net present value (NPV) positive results? What projects were initiated during the run-up in the price of oil through July 2008 when oil topped $145 a barrel? Which (not whether) of those projects will be put-on hold or abandoned?

It sounds like I’m talking myself into a bearish position. The Greater Houston Partnership seems to agree in their November economic report.

Let’s see some comments. Thanks for reading.

Virtualization of servers is quickly becoming a mainstream technology for large enterprises. By leveraging virtualization technologies enterprises are realizing:

 Better utilization of computing resources
 Reduced power consumption
 Enhanced options for disaster recovery
 Less need for server room expansion

Virtualization and Disaster Recovery
Virtualization for the small to medium-sized businesses (SMBs) supports the need for IT to optimize server environments, without the need for additional or extensive hardware investments. It also provides a new approach to disaster recovery and improved back-up capability.

Many SMBs realize the need for enterprise-level recovery procedures to be properly prepared for natural disasters, network outages and other disruptive events, not to mention regulatory compliance. Many SMBs lack the financial resources or personnel to implement a complex disaster recovery solution or business continuity plan.

Through virtualization, IT managers can restore virtual servers on any physical hardware device, ensuring faster recovery capabilities.

VMware for the SMB
To support and penetrate the SMB market, virtualization software leader, VMware, announced several packages designed to fit the market.

“The new VMware Infrastructure packaging delivers the features, functionality and training that enable SMBs to more rapidly experience the value of virtual infrastructure,” said Ben Matheson, director of SMB at VMware.

In my experience, virtualization is an established technology that is extremely reliable. Virtualization introduces high availability features, which allows IT administrators to move VMs from one physical server to another, with no downtime. It also provides cost-effective availability for any VM by restarting the VM on another physical server if required. This reduces the risk of downtime as a result of hardware failure.

Is your business maximizing its computing resources? What are your feelings on virtualization?

If you spend any time on your cell phone and are in the market for a new Bluetooth headset, go buy the Aliph Jawbone 2 right now. I had been burned by Motorola and Plantronics on my last two purchases. Weak signal, bad battery, etc. I did some homework on this one though. I knew a couple of people who bought the original and loved it, but were just unhappy with the size (The original was twice as big).

I bought this little guy when I evacuated for Hurricane Ike, because I knew I was going to be on the phone a lot in the following weeks. What a good investment. It’s already paid for itself.

Here’s what separates the Jawbone from the rest:

Jawbone eliminates real-world noise better than any other headset because it’s the only one that can accurately separate speech from ambient noise. It uses patented NoiseAssassin technology that incorporates a Voice Activity Sensor (VAS) and advanced DSP algorithms developed for the U.S. Department of Defense.

The VAS is able to detect very accurately when you’re talking and capture the frequencies of your speech even in the presence of noise. It works in conjunction with the NoiseAssassin algorithms and Jawbone’s two microphones to accurately model the noise environment–and then aggressively eliminate it.

And it really works. There’s a little rubber button that your cheek vibrates when you talk. When you’re not talking, it cuts off the microphone, drastically improving call quality. I quizzed several callers in noisy situations, and so far, no one has been able to tell that I’m in my car or at a pub, or wherever!

These numbers are tested:

*When you’re headset is out of range from your phone, it turns off automatically to conserve battery. Awesome feature! CNET reviewed the original Jawbone as the highest rated Bluetooth headset, with concerns about only its size and awkward ear shape. The Jawbone 2 has addressed these issues with a more lightweight design and improved ear comfort.

Check out this video demonstration from www.us.Jawbone.com…

The Aliph Jawbone 2 will run you between $94.99 and $121.95, and definitely worth it.

What other headsets are working for you? Have you experienced Jawbone and gotten the same results?

Thomas Wailgum describes 7 Ways to Get More For Your Increased SAP Maintenance Fees in his Enterprise Software Unplugged blog for CIO magazine. His blog is based on ERP analyst Ray Wang’s report for Forrester Research. In July, SAP announced that enterprise support would increase from 17 percent to a whopping 22 percent.

All in all, I believe the advice is sound, particularly in light of the current economic downturn. Companies are and implementing cost-cutting measures to prepare for and/or react to reduced revenues in core business and more expensive capital, as born out by successful cost cutting measures by Pfizer.

Based on our on experience at RSA Corp, we’re seeing the same pull-back in IT spending, even here in Houston, where we expect the economic impact to be somewhat muted by the relatively robust local economy. (Although, I am still trying to ascertain at what level oil and gas prices will create severe pain to the energy industry players here)

The 7 tips are:

1. Fight for a discount
2. Quantify the value of SAP to your business
3. Assess the ROI for system support and maintenance, per user and per transaction.
4. Document the shortcomings of your SAP application
5. Evaluate alternatives for the long-term
6. Leverage SAP user groups
7. Evaluate third-party SAP maintenance alternatives

In my view, numbers 2-7 all support number one, negotiating for a discount. This is a sound tactical approach. More broadly, however, companies should continuously reevaluate their technology portfolio for potential savings. This is one aspect of Technology Portfolio Management – the process of assessing hardware, software and service requirements relative to the agreements in place.

Technology Portfolio Management is actually a holistic approach, proactively considering the evolving and future needs of the business. Unfortunately, most companies only react to the changing business climate or new demands by vendors. This reactive approach is inadequate.

Why? First, the timing of a reactive negotiation reduces potential gains. In addition, companies in reactive mode ignore other areas of potential savings. Moreover, the reactive approach fails to address areas of business risk, where service agreements inadequately support business needs.

I predict that technology portfolio management will receive increasing focus in the coming months. Building an internal capability or using capable experts in technology portfolio management, however, is the more sustainable and better long-term approach.

I’m interested to know how companies are addressing technology portfolio management and whether it has become a new priority. What do you think?

Dwight Silverman’s blog post on Houston businesses dealing with lack of electricity for the Houston Chronicle prompted me to reflect on how RSA Corpis managing through Hurricane Ike … and how our business decisions in recent years have affected our Business Continuity Plan.

For those of us in Houston, Hurricane Ike confirmed that The Internet has been added to the list of critical business resources for contemporary businesses. Ten years ago, the list of critical resources might have been limited to:

• infrastructure (telephone communication, electricity, inter-company connectivity)
• physical workspace
• process & systems (information as well as capital assets)
• knowledge
• human capital
• financial capital

At first blush, it would seem that The Internet is “just” another kind of infrastructure. I would argue that The Internet is a critical resource that spans ALL of the others. Think about how lack of internet connectivity depreciates the value of corporate assets in the other categories.

For example, many software systems are delivered over the internet as SAAS (software as a service) … salesforce.com, NetSuite, AutoTask and others are examples of commercial SAAS. Many custom applications are browser-based and rely on the internet for connectivity to the application and database servers. Consequently, a distributed organization, aka the Virtual Enterprise, becomes a fragmented, disconnected operation that cannot function when faced with a lack of internet connectivity.

Another example … many businesses have upgraded to VOIP (voice over internet protocol) phone systems in recent years. In a single location where the VOIP phone system connects via PRI to a telecommunication provider’s hub, risk of interruption is minimal. However, business risk increases when it relies on the Internet cloud to connect multiple locations. Risk increases even more when a business uses an IP phone service for outbound calls.

In recent years, more people work from home – part time or full-time. Personally, I’m a big fan of flexible work schedules. Notwithstanding, we in Houston now better understand the risk of distributed “workspaces” … multiple points of failure. After Hurricane Ike passed through the area we asked ourselves, where do we physically put workers who are displaced from or disconnected at their homes?

Access both to corporate knowledge and financial resources are limited when Internet connectivity disappears. For many companies, such as ours, monitoring bank account balances, processing payroll, generating invoices … are all processes that rely on the Internet.

Obviously the internet is here to stay. Productivity benefits far outweigh the risks. And the Internet is a big part of the solution to the risks identified above. Regardless, to minimize business risk, a comprehensive business continuity plan must 1) identify critical business processes that rely on the internet and electrical power availability, 2) acknowledge the internet as an infrastructure that impacts the availability of many other corporate assets, and 3) define the fail over plans when the Internet is not available for an extended period of time.

I’d enjoy reading your comments on this premise … as well as your experience through Hurricane Ike as it relates to business continuity.

Deciding to establish new vendor relationships is risky, and even the most thorough vendor selection process doesn’t mitigate all risks.

One must consider…
•Execution risk – The chance a vendor does not perform
•Financial risk – The possibility that return on investment (ROI), for whatever reason, will be less than expected or required
•Professional risk – The chance the decision maker’s judgment will be questioned in the future and affect him or her negatively

How can a decision-maker alleviate these risks? How can the outcome be determined beyond ensuring good project management and status reporting? What’s next?

My premise is that a strong client-vendor relationship built on mutual trust will reduce business risk. Conversely, relationships not built on trust are inherently more risky to business leaders and their companies. Managers are responsible for minimizing business risk and maximizing business reward. Consequently, paying attention to the nature and quality of client-vendor relationships must be a priority.

Six Ideas to Reduce Risk Exposure and Embolden Mutual Trust

1. Corporate values start at the top
It’s always a good idea to build relationships with a vendor’s senior management. No matter how small your business is in relationship to the vendor, you should be able to reach a senior manager (general manager, vice president, C-level executive). Why is this important?

Corporate values start at the top. Interaction with senior management can affirm the decision to partner and instill greater confidence. If the conversation leaves you questioning the vendor’s values, abilities or priorities, you have the opportunity to reevaluate the selection decision…before doing so becomes difficult and more costly.

Confidence in the decision to select a new vendor is engendered by a comfort level with the vendor’s account relationship team and key staff involved in the project or program.

2. Trust doesn’t replace good contracts, service level agreements and communication
Before entering a relationship, make sure what will be delivered and when are well-documented and understood. Service level agreements are often under-documented, lacking detail and not understood by all parties. Particularly in a new relationship, it’s critical that expectations are well-understood through project requirements.

Equally important is monitoring progress against requirements and agreed-upon service levels. Good contracts and service level agreements form the basis for trust, which progress can be measured against.

3. “Trust, but verify”
President Reagan popularized the phrase, “Trust, but verify.” The new vendor should communicate regularly throughout the project or program. While it’s important to trust the vendor, verify what you’re being told by asking others…
•Ask end-users
•Ask the vendor’s account relationship team
•Ask the vendor’s on-site resources
•Place a call to the vendor’s management

Raise concern if you identify inconsistencies. Sometimes vendor communication among its own staff has gaps. The project benefits from being proactive in this way.

4. Trust is built over time through shared experience
Keep in mind it’s OK to ease into a trusting relationship. Like any relationship, trust is built as client and vendor work together over time. Trust is built when the parties experience challenges and work through them, collaboratively. Trust is built when the vendor meets its commitments. The best perspective is to view the project or program as a journey through which trust grows and evolves.

5. Don’t forget that trust is a two-way street
Don’t expect to build a trusting relationship with a vendor unless you are trusted also. While the vendors interests are subordinate to the client, from the client’s perspective, clients must endeavor fulfill commitments to the vendor. Small things such as timely feedback, clear communication, and collaborating on project/program challenges make a big difference toward keeping the vendor’s support and building a productive relationship.

6. Broken trust is a difficult fence to mend
Along the way, evaluate your level of trust with the vendor. Like a marriage, successful client-vendor relationships are based on mutual trust. If trust in the vendor falters, it’s difficult to rebuild. If distrust arises, consider requesting a staff change, or even account or project management changes. Changing vendors is always an option.

Broken trust is a difficult fence to mend. Often changing vendors is less costly in the long run. It offers the chance to build a new trust-based relationship without the baggage of the past hanging overhead.

Follow these steps to reduce your company’s risk and create shareholder value, two key objectives for all business managers.

What ideas do you have? Do you have some examples where these concepts apply or situations where they wouldn’t?