What is the impact of the Cloud on the existing IT environment?

As organisations look to embrace the cost-efficiency opportunities deriving from new technologies and services, there is a lot of talk about the benefits, risks and possible ROI of the blanket concept of ‘Cloud computing’. However, it is still unclear how using Cloud services will affect the existing network infrastructure and what impact it can have on IT support roles and the way end users deal with incidents.

The effect on an organisation’s infrastructure depends on the Cloud model adopted, which may vary based on company size. For example, small organisations which are less worried about owning IT and have simpler, more generic IT needs might want to buy a large part of their infrastructure as a shared service, purchasing on-demand software from different vendors.

Buying into the Software as a Service model has the benefit of simplicity and cheapness, as it cuts out much of the responsibility and costs involved, which is a great advantage for SMEs. This solution also allows 24/7 service availability, something that small firms might not be able to afford otherwise. The lack of flexibility of this service, due to the impossibility to customise software, is less of a problem for these types of organisations. But there are still risks related to performance, and vendor lock-in.

Using this model, a small company’s retained IT infrastructure can be relatively simple, and therefore there might be little need for specialist technical skills within the IT department. A new skill set is required, however: IT personnel will need to be able to manage all the different relationships with the various vendors, checking that the service purchased is performing as agreed and that they are getting the quality they are paying for. The IT Service Desk will therefore require a smaller number of engineers, less technical but more commercially savvy. More specialist skills will shift towards the provider and 1^st line analysts will have to escalate more calls to the various vendors.

Larger organisations, on the other hand, may well be keen on retaining more control over their infrastructure and purchasing IT resources on-demand. With this model, the organisation still manages much of its infrastructure but at a virtual level – the vendor might provide them with hardware resources on-demand, for instance. The main advantage of this model is that it allows the existing infrastructure to be incredibly flexible and scalable, able to adapt to changing business needs. For example, building a data centre is lengthy and expensive, therefore not convenient for expansion. But by using a “virtual datacentre” provider, capacity can be increased in the space of an online card transaction, with great financial benefits – in the Cloud model only the necessary resources are paid for without investment in hardware or its maintenance.

With this second model, the change in the roles within the IT department will mainly regard an increased need, as in the other model, for vendor management skills. Monitoring KPIs, SLAs and billing will be a day-to-day task although there will still be the need for engineers to deal with the real and virtual infrastructure.

Both models generally have very little impact on the end user if the IT Service Desk has been running efficiently, as this does not disappear as a first point of contact. However, in certain cases the change might be more visible, for instance if desk-side support is eliminated – a cultural change that may need some adapting to.

All in all, change is not to be feared – with the necessary awareness, embracing Cloud services can improve IT efficiency significantly, and align it to the business. By leaving some IT support and management issues to expert providers an organisation can gain major strategic advantage, saving money and time that they can ultimately use in their search for business success.

 

Adrian Polley, Technical Services Director

This article appears on the National Outsourcing Association’s (NOA) online publication Sourcing Focus: http://www.sourcingfocus.com/index.php/site/featuresitem/3318/

The peculiarities of Metro Bank’s IT outsourcing model

Recently-launched Metro Bank has made headlines these last few months for more than one reason: it is the first high-street bank to launch in over 100 years; it follows a retail store model, offering longer opening hours and no weekly closing day; and virtually all of their IT is outsourced to a Managed Services provider.

The news of a bank outsourcing its IT does not come as a complete surprise, as many banks outsource certain functions such as software development, IT Support etc. There are elements of novelty in this choice, though – for instance the fact everything but security and the local networks and terminal devices is being outsourced, which puts a lot of technology in the hands of the provider. It is also unusual that they have chosen a new provider, niu Solutions, which is a merger of four different IT and telecom providers and has little track record as a unified company. And finally, what is most interesting about Metro Bank’s set-up is that they are using a new ‘pay-as-you-grow’ Managed Service model that is highly-virtualised, flexible and scalable – something only a start-up is likely to have considered.

Some publications reported that the bank is using cloud computing, but they are probably mistaking the somewhat flimsy term with plain virtualisation. This is not a shared service – the bank has paid upfront for the hardware and has employed the provider to manage their systems, which run remotely from two data centres in the UK.   While it’s likely that the provider will be looking to add customers to the model, there’s little doubt that Metro will insist upon a high degree of separation of “their” equipment in the provider’s datacentre to help minimise security risks.

With any financial firm, but particularly a retail bank, information security is an overriding concern.  As well as the detailed personal and financial records they hold for their customers, there is also concern about who has access to the various financial systems that are used for recording and executing financial transactions.

Locating kit at a provider’s premises introduces a transfer of control issue, but Metro bank will mitigate that by ensuring data at rest is encrypted, and that the right security standards are enforced at the provider’s datacentres.

Clearly it is in the provider’s interest to supply a good and secure service to retain their clients and their reputation, and the advantage of dealing with a supplier is that roles and responsibilities should be clearly defined and contracted.  This is in contrast to relying on internal staff – the assumption might be that this improves security, but it also introduces the risk that there is less formality and, consequently, fewer proper control measures.

The biggest concern in a modern bank is logical security, rather than physical. Access to accounts and key financial systems will be highly restricted and audited. Since operational security at Metro Bank is retained in-house, the risks of a provider’s rogue employee having the level of access necessary to steal data or using the system for criminal purposes is relatively low.

A concern in any outsourcing arrangement is the financial stability of your chosen partner.  Such concerns would be particularly acute for Metro Bank as there would be serious repercussions if, for example, a company failure meant it couldn’t get access to its systems.  Clearly Metro will have done its homework on its chosen provider and insisted on various safeguards and insurances.

The new ‘pay-as-you-grow’ model appears to be convenient especially because of its scalability potentials – after an upfront payment for hardware, the bank pays a cost per user and increases its spend as the client and user base grows. With any new venture, it can be difficult to predict what the level of growth will be, and by adopting this model Metro will only pay for the growth as it’s achieved – rather than needing to make significant upfront investments to ensure growth isn’t hindered. Also, by leaving IT to the experts the bank is able to concentrate on customers and operations without having to worry about IT availability and support, sure of getting a high quality service thanks to SLAs.

This model is certainly interesting, but needs to show it can work in order to gain more trust among both banks and bank customers, and therefore be embraced by a larger number of companies. Retail banking is a better candidate for the model than, say, Investment Banking where the breadth of systems typically used and high-speed real-time requirements for data delivery might deter the organisation from being so bold. Nevertheless, this innovation can create many benefits from a business point of view: if this model manages to work over time, it could create many more opportunities for service providers to enlarge their range of work, and for banks to embrace cost-efficiencies that will enhance their competitive value and, ultimately, their potential for success.

Adrian Polley, CEO

Organisations live in the past when it comes to IT

Press release

A Plan-Net survey reveals that 76% of organisations still run on Windows XP 10 years after its release, and 44% are not planning to change. Also, 87% use Exchange 2003 or previous versions, which do not support virtualisation or 64-bit systems. An upgrade would allow organisations to achieve cost-efficiencies, Plan-Net advises.

Reasons behind the lack of modernisation are reduced budgets due to the recession; wariness towards later versions deemed defective; other projects being given priority; and failure to recognise sufficient reasons for change. However, using an obsolete system can prevent organisations from cost savings and efficiencies made possible by new technologies such as virtualisation, continuous replication and unified communication tools.

Adrian Polley, Technical Services Director at Plan-Net comments: “The unstable economy and reduced finances have made organisations wary of investments deemed inessential. But the challenging climate has also brought people to focus on cost-efficiencies and ‘doing more with less’.”

“Investing in good management of the IT Service Desk can reduce losses caused by inefficiencies and free up resources that can be invested in technical projects such as upgrading to Exchange 2010 and Windows 7. This can allow access to technologies and achieve benefits in a way which is not possible with earlier systems, and which in turn, will help the Service Desk run more smoothly and create other cost savings, thus engaging in a cycle of reciprocal benefits.”

The survey was carried out on 100 IT decision makers working in City-based businesses of over 250 users. For both Windows XP and Exchange 2003, standard support expired last year. Plan-Net experts say upgrades to Windows 7 and Exchange 2010 are advisable.

Keith Smith, Senior Consultant says: “Windows 7 has had positive feedback from early adopters and expert analysts such as Gartner. It is more secure, faster and makes it easier to share resources. As for Exchange 2010, it simplifies high availability, making continuity and resilience much easier, and, also, virtualisation with all the benefits that entails.”

For more information:

Samantha Selvini

Press Assistant, Plan-Net plc

Tel: 020 7632 7990

Email: samantha.selvini@plan-net.co.uk

Microsoft should fear not – is Apple even in the same league?

There has been a lot of hoopla in the press in the last couple of weeks regarding Apple overtaking Microsoft’s place in the sun. Various commentators have declared that Apple is now the biggest technology company in the world, implying that whilst it is going from strength to strength, Microsoft has become yesterday’s news.

The term “biggest”, however, is rather ambiguous – what metrics are used to measure it? Most commentators seem to base their claims solely on figures such as their relative Market Capitalisations (or worth). From this point of view, Apple is leader as its Market Cap recently hit $245b whereas Microsoft’s has dropped to $220b. But this is all based on share price, which obviously includes investor expectations rather than simply being a snapshot of the current revenues being produced.

If you look at the financials, the picture is a bit different. In the last quarter, Microsoft’s and Apple’s revenues were similar at around $14b, but Microsoft made net profits after tax of $4bn compared to Apple’s $3bn. Three months before that, Microsoft made $6.6b in profit compared to Apple’s $3.3b.

There is an even more important question to be raised: can we really place the two ‘giants’ in the same category under the general term ‘technology’? Although there is the possibility that this might change with the recently launched iPad, most of Apple’s revenue does not derive from computers – the large majority of their earnings come from mobile telephony and media players, and all the related software and applications. Data published in April this year show that in the last quarter, Apple have earned about $3.7bn from sales of desktops and laptops, and over $9bn from sales of iPod and iPhone alone.

In the same period, Microsoft earned $7.7bn from Windows products, Servers and Tools, and only $1.66 bn from entertainment devices such as the Xbox. Microsoft is also thought to own 90% of the computer operating system market.

From this data we could say that, at least for now, Microsoft is still by far the biggest computer technology company – Apple still has some way to go before overtaking its place in the world of computing.

What’s getting people excited is Apple’s apparent ability to keep producing new and aesthetically pleasant gadgets that people want to buy. Whilst the iPhone 4 looks great, the jury is still out on whether the iPad will maintain the impetus surrounding its launch, and the adoption of both for business use is still dubious. We could in fact say that even if Apple’s Tablet manages to increase their earnings from computer products, the two giants can still coexist in the market as they have two different customers – Apple’s bias is towards the consumer market, whereas Microsoft dominates the business market.

Adrian Polley, CEO

Find this article online on Computing: http://www.computing.co.uk/computing/comment/2265488/microsoft-should-fear-apple

Will Tablets rule the future?

Apple CEO Steve Jobs recently announced the start of a new, post-PC era, declaring that Tablets such as the iPod might be replacing PCs just like ‘old trucks were replaced by modern cars’. Microsoft’s Steve Ballmer reacted by saying that PCs are undergoing many transformations and tablets are just one of the experimental forms we will see, adding that the PC market has still a lot to grow.

As an experiment Keith Smith, Senior Consultant and Adrian Polley, Technical Services Director take the sides of Jobs and Ballmer and discuss the two different viewpoints.

Are Tablets the future? 

It’s a strong possibility.

Keith Smith, Senior Consultant

Nowadays there is an increasing need for light and easily transportable devices, which are at the same time aesthetically pleasing. From this point of view, Tablets tick all the boxes: they offer flexibility and mobility in use as they are not restricted to a keyboard, and because of their shape they can be used in places or positions not conducive to a notebook such as in bed, standing or with one hand. Apart from this, what differentiates Tablets is that they give users the possibility to write directly into the device using their own handwriting, which is something normal laptops do not allow. Users can then share their “ink”, the data which is input and displayed as handwriting, with other tablet and non-tablet users and integrate it with other business applications, for instance Word. There is also the option of using the traditional mouse-keyboard combination, although the elements have to be purchased separately.

After the warm welcome the iPad received, it may prove difficult to go back to portable PCs as we know them. This is especially because the Tablet offers the “touch environment” which makes navigation easier than notebook equivalents of keyboard, mouse and touchpad in certain situations, and offers faster input for creating diagrams or playing games.

The fact that users can use a stylus to input information, which builds on peoples’ traditional use of a pen, makes it even more accessible as for a lot of people it is easier to use than a keyboard.

The functions that characterise Tablets make it ideal for personal use first, which may then leak into the business world when issues such as security will be properly addressed. Although a lot of work still needs to be done, especially to gain credibility in a business environment, Tablets can be seen as the first step to a technology that is minimal, versatile and why not, democratic.

 __________________________________________________

I don’t think so!

Adrian Polley, Technical Services Director

There is a lot of fervour around this ‘innovative’ piece of technology, but contrary to what many seem to believe, Tablets are not so shockingly original, nor can really be considered the anti-PC – there have in fact been PC-based Tablets since 2001. These are generally standard Laptops with a rotating screen that can be used to write on, so that they have the general functionality of a laptop with the convenience of a pen-based device. This device was lauded as the natural successor to the laptop, but even though marketing enthusiasm has increased with both the Windows Vista and then the Windows 7 launches, take up has been relatively small compared to overall laptop sales. The dual functionality made these types of Tablets considerably more expensive than comparable laptops, which could be a reason for their limited success. There is commercial appeal in the iPad because of its ease of portability and accessible price, but these are both possible because it lacks traditional PC or Mac components. This might make it lighter and sexier, but does it meet normal functionality needs?

There is a major issue with Tablets that concerns user input.  In spite of 20 years’ worth of development of voice and handwriting-based input, the vast majority of user input to a computer is still done via the keyboard, which is considered to be fast and accurate. The lack of an equally efficient means of input into a Tablet device relegates it to those tasks which are primarily consumer based, such as viewing and interacting with content that is provided without having to input a lot of information.  This may suit consumer applications, but only a certain class of business applications. Until the input problem is resolved, Tablets will always be an item in the business world that is niche and not mainstream.  As has already been proven with PC-based Tablets, users are generally unwilling to pay the premium required to get the Tablet functions on top of a standard laptop, let alone to lose some of its main functions completely.

Apple’s Tablet may have sold to millions of technology fans, but widespread day-to-day and business adoption is probably not going to become a reality anytime soon.

Disclaimer: this is a role-play exercise and may not represent the writers’ real views on the subject.

Getting back to work – but with a service provider

IT professionals can learn from the tough times.

As the UK officially leaves the recession, although, it must be said, staggering instead of marching triumphantly, the IT job market seems to be coming back to life, but with a substantially changed face. IT professionals looking to get back to work after they were made redundant or to make that career move they postponed while things were tough, should take this opportunity to learn from the past twelve months and make a more informed choice when choosing their new employer.

As IT Support and Managed Services acquire larger space in the UK business services market, the timing is right to take IT professionals through the characteristics, as well as the advantages, of working for an IT services provider. It is also important to raise awareness of the skills and role shift that is occurring, which can have a strong influence on one’s decision.

Working for an IT Services company

When working for a service provider you are able to acquire experience in different sectors, depending on the spread of clients, of course. Working on different client sites means gaining the sort of experience normally associated with a number of jobs while keeping the security of continuous unbroken employment. For those IT professionals looking to specialise in a certain sector, there are service providers with extremely niche specialisms that are able to cater for this. Thanks to this, technicians get to practise and develop a great variety of skills, keeping up-to-date with the latest technologies and practices as the provider will want to keep them appropriately skilled.

When Service Level Agreements are involved, the performance of each individual is monitored and assessed. Thanks to this, engineers learn to keep their standards high and therefore become acquainted to being at their most efficient.

Most of the professional advantages can also be seen on a more ‘personal’ level. Being in a variety of environments can help keep one’s enthusiasm fresh, and staff can get to experience different organisations, verticals, technologies and ways of working. This is crucial to deciding which best fit their personality and ambitions. Unlike what happens in non-IT organisations, where it is not unlikely that CIOs, IT Directors and managers do not come from an IT background, engineers find themselves dealing with IT professionals who fully understand their personal and professional skills, which are appropriately valued. Finally, there is also a personal investment in the company which is sustained through a continuous employment.

The changing IT job market

Many analysts have announced a growth in demand of permanent IT staff, in fact research conducted by e-Skills UK shows that the IT industry will continue to grow at a rate of 1.3% per annum, more than four times the average growth rate for all sectors (0.3%). However, the IT workforce is experiencing a restructuring and skills shift, partly because some work is being outsourced, partly due to a standardisation of IT assets and procedures, and also because of the IT environment switching to a software-intensive platform. Jobs related to management, strategy, planning and software development are on the increase, whereas there is less need for more hardware-related or admin jobs such as line repairer and database assistant. According to the survey ‘Technology Counts: IT & Telecoms Insights 2010’, by 2018, the number of IT managers is expected to represent 27% of the IT workforce, strategy and planning professionals 13%, and software professionals will cover 32%. Computer engineers, on the contrary, have an average growth of -0.2% per annum, meaning that in 2018 they are expected to represent only a 3% of IT professionals.

Agile skills

New technologies and job roles bring along a shift in skills. Organisations are now looking for agile skills in their Service Desk engineers: support personnel have to be able to successfully implement new processes based on standard Best Practice, and be familiar with the latest tools that can speed up operations. Adoption of ITIL (Information Technology Infrastructure Library) practices is becoming essential, as is a knowledge of virtualisation. Thanks to an accurate selection of software to help with first-line resolution, and the use of outsourced devices such as servers and data centres whose management is the provider’s responsibility, basic and complex incidents are being taken care of, and on-site engineers are left with anything in the middle. The role of first-line engineers is then extended to some of the tasks originally belonging to second-line technicians, and because of these changes first-line engineers will need to have a broader technological knowledge.

As for higher-level IT professionals, the current upskilling requirements identified by eSkills UK concern the management of business process change, data management and security, leadership and business. The increased need for business skills is due to the fact that the IT department is acquiring a more strategic position within an organisation. Now that the more technical part of IT is moving towards a commoditisation and starting to be easier to deal with, managers and directors need to be able to focus on ROI and cost-effectiveness, and to have the ability to handle increasingly global supplier relationships. As organisations adopt a holistic view, IT is seen as part of the business and not as a service, and IT and business people work together for business transformation – the latter gaining awareness of the power of technology, and the former acquiring broader and deeper business skills, in order to create business value.

The right place to be

Working for a service provider, then, has never been so attractive. A more strategic use of IT means many organisations will search for appropriately-skilled staff externally, leaving selection and management to an expert service provider in order to focus on more strategic parts of the business, and surely IT professionals will want to be in the right place when this happens.

Adrian Polley, CEO

This article appeared in the May/June edition of ITNOW

So, Microsoft outsources IT support – What’s all the fuss about?

When a press release was issued a couple of weeks ago announcing that Microsoft’s IT help desk, desk-side services, and infrastructure and application support were to be managed on-premise by Infosys for its branches across the globe, it caused a lot of controversy in the media.

Outsourcing frequently provokes strong opinions, and whilst it is often accepted that outsourcing catering or cleaning is a sensible move, outsourcing IT is often seen in a different light. There can be a supposition that the company in question has somehow lost control of what it is doing and is embarking on outsourcing as a “last resort” to help clean up the mess.

These beliefs appear to be driving much of the Microsoft criticism. People have been criticising Microsoft products for years that they are difficult to manage, so if the company that produces them can’t even manage them, what chance for the rest of us?

However, this thinking stands on shaky ground. First of all, the company has always endorsed outsourcing so it is not surprising that they are now embracing what they described as a consolidation strategy, choosing only one provider to deliver all services.

Secondly, there seems to be a lot of prejudice about organisations in the IT field, where it is thought that software producers, hardware vendors and services providers are all the same, which is obviously far from true.

It should go without saying that as Microsoft is a software company, it is not implied that it can also be an expert in infrastructure support and management. Just like organisations in many other fields, the giant turned to a managed support provider to help with improving its system while achieving its main aim, cost-cutting. It is recognised that delegating the management of support services to experts can enhance IT efficiency and overall improve the whole business operations, minimising disruptions, inefficiencies and time and money loss.

The controversy, if there was one, would be that they have chosen an Indian provider to deliver the service rather than one based in the US, given all the fuss about off-shoring stealing work from the country. But the company was probably faced with little choice: the provider has to deal with 450 locations across more than 100 countries, including issues such as managing different languages, cultures and laws. Only an offshore global giant could probably do the job for Microsoft whilst still keeping the offer affordable.

The focal point of the discussion, anyway, should not be the provider, but the service. It is remarkable that an important company such as Microsoft recognises the value of managed services, choosing this option over full outsourcing. As they and a growing number of organisations of all sizes might have understood, this solution proves ideal when the need to delegate management of IT functions is accompanied by the desire to retain a certain level of power and control over operations, to retain intellectual property, and ultimately for enhanced security.

Staying up to date with the latest techniques, solutions and best practice is something that internal IT departments can struggle to achieve, but is generally easier for a service provider working across multiple clients. This strategic move shows us Microsoft doing what it frequently does – not accepting the status quo but frequently looking for “the better way”. Whether it has made the right decision is obviously to be proven, but it is the organisations that never change that are most prone to obsolescence.

 

 

Adrian Polley, CEO

Find an edited version in the Comment section of CRN: http://www.channelweb.co.uk/crn/comment/2262088/microsoft-outsources-support

What to look for when bringing offshore work back home

If we look at the number of organisations outsourcing their software development, IT service desk or WAN support to India and other cheap-labour countries, offshoring nowadays seems not only convenient and straight-forward, but as easy as abc. But what the media doesn’t seem to cover is an issue that is not at all uncommon: it hit Barclays, Quark, Dell and a large number of other companies – what happens if all is not well and you have to take the offshored back in-house?

The phenomenon has already been dubbed ‘backshoring’ in the US, where 30% of Fortune 500 companies have experienced it, according to Oxford Analytica. As for the UK, a survey conducted by the National Computing Centre found that 14% of the respondents who have used offshored facilities for their IT have switched work back to the UK, and another 24% are considering the move. This means that nearly 40% of organisations haven’t found offshoring satisfying.

However, the problem is that once you decide to reverse the decision, the process is not trouble-free. Of those who have taken services back in-house, 30% say they have found it ‘difficult’ and nearly half, 49%, ‘moderately difficult’. When we talk about IT, in fact, we are dealing with the pulsating heart and veins of a modern business, where everything seems to rely on technology. So the costs of reversing an offshore operation do not only cover the facilities and assets – it extends to data security, staff skills, system disruptions and inefficiencies, low user or client satisfaction, client loss, and maybe much more. What happens to the CIO who proposed or supported the offshore move?

Let’s look at some examples. Barclays’ recent ‘divorce’ from Accenture appears to be peaceful and grievance-free, just the best answer to their present needs. When the application development and management of their banking systems were assigned to Accenture in 2004, around 900 employees were transferred to the provider. But only 230 are expected to be taken back. What happens to the various development, support and maintenance staff and their skills every time they are shifted to the other side? Some are taken on by the new employer under TUPE arrangements – the Transfer of Undertakings (Protection of Employment) Regulations preserve employees’ terms and conditions with the previous company – although the majority will be lost, either voluntarily or forcefully made redundant. Unfortunately, when you lose people you lose their acquired skills as well, and to that there is no remedy.

An organisation which decided to openly talk about their failure is Everdream, which provides customers with remote desktop management services, and that in 2003 decided to outsource their Californian help desk to Costa Rica to aid scalability as their business was growing. Fifteen people were sent to the provider to train the call centre employees ‘the Everdream way’. It turned out to be an ever-nightmare when trainers found themselves dealing with a completely different business culture where the idea of customer service was “move ‘em through”, clashing with the hands-on approach of the firm. The strong foreign accent also failed to impress the customers, who started to complain almost immediately. The ‘shallow talent pool’ led Everdream to pull out, as happened to Dell the previous year: customers unhappy with their Indian technical support launched in 2002 made the company decide to re-route calls back to the U.S. In Everdream’s case, the pull-out was spread across six months, making the transition softer and minimising the damage, and many employees had their jobs back. However, it did take some extra financial effort to take the work back in-house and the long-term damage, the relationship with customers, is difficult to measure.

Bad customer service and poor product quality is what brought many Quark clients to switch from their software to Adobe’s InDesign during the Indian experience, never to return – 60% of their customer base, it is claimed. When work was brought back home, the C-executive who decided and led the offshore move was fired without hesitation.

Finally, a mixture of reasons have brought many offshored Oracle projects to fail for a number of US companies, it was reported a few years ago. Communication problems, poorly skilled and trained developers and enormous cost over-runs were topped with the previously unconsidered difference in the Indian law system. Oracle jobs were re-shipped back to the US, but the unrecoverable financial loss left many organisations strained.

These examples confirm the findings of research in the area: the most popular reason for failure is the lack of preparation and execution not on the provider’s but on the client’s side. An organisation needs to be prepared and know what they want from the provider and if offshoring is the right move, to avoid disappointment. Poor joint planning is also often at the root: if the client does not clearly outline and clarify roles and responsibilities, expectations, performance metrics and flexibility prior to signing contracts, there is not much to be expected. Service Level Agreements have to be clear for both sides and have realistic metrics and targets. Experts also suggest defining an exit strategy for contract end or for under-performance, as in fact poor vendor performance is another important reason for failure. Problems related to communication between the in-house and offshore team and to their different culture are often the cause of poor execution, as highlighted with the case of Everdream.

It is important to note, nonetheless, that not all outsourcing projects end up in failure. There are plenty of instances where they do deliver real benefits, both in terms of cost-reduction and improvements in service. However, the success stories tend to involve the use of a partner closer to home, able to understand the client’s environment while allowing easier monitoring of their performance.

So in the case of offshoring gone wrong, what should a CIO take into account when considering the costs of its failure?

The most obvious, and often largest, cost comes about when taking down the offshored department and re-installing it elsewhere should things go wrong, either in-house or with an IT partner nearer to home. Then there are the costs related to lost skills: organisations are unlikely to be able to re-employ previously fired staff so it will be a case of starting again from scratch. New staff will have to be found and trained, and it will take time before service levels are sufficient to deal with business demand – meaning costs could quickly run to seriously damaging amounts.

Technical issues like data security are also not to be overlooked. Different countries have different laws, and might not be so respectful of the privacy of your data. It can be lost, stolen and leaked by redundant employees abroad, legal protection from whom might be weaker than in the UK.

Finally, one last consideration for any CIO is the cost to them as an individual. Should a project as controversial as offshoring fail the responsibility is likely to rest squarely on the shoulders of the person in control. This means ensuring offshoring is really the right path for your organisation is key, as is making sure you are able to clearly demonstrate that it was the partner, not the process, that was at fault should things go wrong – both of which being easier said than done.

 Adrian Polley, CEO

 This article has been published on CIO UK: http://www.cio.co.uk/article/3217488/what-to-look-for-when-bringing-offshore-work-back-home/?intcmp=HPF3

5 thoughts on the IT Service Desk that need re-thinking

Slowly recovering from the crisis and with a more careful eye to the unsteadiness of the market, many organisations across all sectors are considering ways to make their IT Service Desk more cost-efficient, but some ideas decision-makers might have could be partially or totally wrong.
So if you are thinking any of the following, you might want to think again:

“Our Service Desk is costing us too much. Outsourcing it to [insert favourite low-cost country abroad] can solve the problem.”

Although outsourcing has it advantages, doing it off-shore is a huge investment and has a lot of hidden costs, including losses due to inefficiencies and disruptions during the transition or caused by bad performance – bad service can damage the business. Moreover, reversing the move can be a costly, lengthy and treacherous procedure. Before they consider drastic moves, organisations should try to identify the reasons their IT expenditure is so high. Likely causes could be inefficient management, poor skills or obsolete tools and processes. Best practice implementation, using automated ITIL-compliant software and updating IT skills are a first step towards efficiency; however, a more cost-effective outsourcing solution could be handing management of the Service Desk to a service provider that can take care of service improvement on site.

“If leading companies around the world are off-shoring, it must be convenient.”

Only Global organisations seem to gain great benefits from off-shoring their IT department, often being the sole solution to reduce their otherwise enormous spending. Just because many important organisations are doing it, it doesn’t mean it is suitable for all. For example, there are important cultural differences which may not be an issue for those organisations with offices and clients spread worldwide that are already dealing with a mixture of cultures, but can definitely cause problems for a relatively European company with a certain type of business mind. Another issue is costs: many organisations find that after the conspicuous initial investment, cost saving might not exceed 10% and what is more, the new facility sometimes creates extra costs that were unforeseen, actually increasing expenditure.

“Our system has always worked; I don’t see why we should change it.”

Technology is changing regardless of one’s eagerness, and it is important to keep up with the changing demands of the market in order to remain competitive. A certain system might have worked five years ago, but new technologies and procedures can make older ones obsolete and comparatively inefficient. Take server virtualisation for example: business continuity can reach astonishing levels thanks to live migration, guaranteeing a better service with the extra benefit of energy saving through consolidation. Adoption of ITIL Best Practice processes also helps increase efficiency not only in the Service Desk, but in the business as a whole. Thanks to its implementation, organisations can save time and money and enhance the smoothness and quality of all IT-reliant operations, which helps the entire business.

“We need more 2nd and 3rd line engineers.”

When problems need more second and third-line resolution, it probably means first line is not efficient enough. Thanks to specific automated software to help with simple incidents and to the adoption of software as a service managed by an external provider, the simplest and most complex issues are being taken care of, meaning some of the work of a first-line engineer and the whole work of third-line engineers are no longer an issue for the organisation’s IT staff. However, the remaining incidents still need a more efficient resolution at first-line level: the more incidents are resolved here, the less need there is to increase the number of more expensive second-line staff. To improve first-line fix, engineers need to be trained to follow Best Practice processes that can make incident resolution fast and effective, as well as help the organisation deal with change and prevent risks connected to data security.

“I’d rather we managed our IT ourselves – control is key.”

An organisation might be proficient in its field, but may find it difficult to manage its IT Service Desk as effectively. When cost-efficiency is important, it is best to leave one’s ego at the door and have experts do the job. The IT arena is constantly changing and continuous training and updating is necessary in order to keep up with the market standards, and an organisation often cannot afford to invest in constant innovation of their IT. If outsourcing, on and off-shore, gives organisations the impression of losing control, then managed services is a better solution: the existing team and tools, or new and improved ones, can be managed by a service provider directly on the office premises, if needed. Thanks to this, organisations can focus on the more important parts of their business, leaving IT to the techies while still keeping an eye on it.

 

Adrian Polley, CEO

Find this article online at Fresh Business Thinking: http://www.freshbusinessthinking.com/business_advice.php?CID=&AID=5004&Title=5+Thoughts+On+The+IT+Service+Desk+That+Need+Re-Thinking

Microsoft System Center Service Manager 2010: a credible challenger in the Service Management software market?

After 3 years in beta, Microsoft is expected to launch System Center Service Manager (SCSM) sometime this year. Long-time Microsoft watchers will know that the company often “drip feeds” new markets with product information before products are ready as a way of generating interest.  This has the added benefit, from Microsoft’s perspective, of creating uncertainty and potentially delaying buying decisions for competing products.  But a 3-year beta is unusual even for Microsoft, and is largely explained by the company deciding that the product needed a ground-up rewrite after feedback from early tests to improve performance and integration.

Although an official release date has not been published, organisations are already starting to reflect upon the consequences of Microsoft entering a sector which is currently served by relatively small-sized, niche software companies.  Whilst BMC Remedy and HP Service Manager compete for very large installations, there isn’t really a stand-out market leader in the general Service Management software market, but rather a small group of vendors offering specific, focused products.

Microsoft expects, and frankly needs to compete across the breadth of any market it enters. And here, Microsoft’s standard approach is at odds with what most buyers have come to expect.  Microsoft’s competitors in the Service Management software market most commonly use a sales model where they sell directly to the customer and provide related services such as installation, configuration assistance, customisation and training as well as the software. Microsoft has never used this model.  Instead, it invests heavily in product marketing but sells through its partner network – which in the UK amounts to tens of thousands of IT service companies and resellers of all shapes and sizes, which in turn get their product from a distributor.

In choosing new Service Management software, companies frequently go through a tender process to ensure that they choose the most suitable product at the best price.  But here, Microsoft is at an immediate disadvantage.  A customer who wants to include Microsoft’s product in its tender will have to find a suitable partner to deal with, and may find there are multiple Microsoft partners who want to compete for the sale. And whereas niche vendors can genuinely offer an end-to-end solution including after-sale support which plugs directly into the software vendor, anyone considering Microsoft’s offering will be wary of the fact that they will potentially have multiple layers of support to deal with if they want answers or fixes to problems.

Of course, Microsoft can afford to compete on price as they do in other markets.  But the software cost in changing Service Management products is only one part of the overall cost of transition.  And whilst Microsoft is likely to tout its close integration with other System Center products as a key selling point, it has the major disadvantage in the UK market in that the product does not align with the Information Technology Infrastructure Library (ITIL), but rather the Microsoft Operational Framework (MOF).  This in itself would be enough to see the product discounted in many tender processes. In a blog entry, a Microsoft employee points to ITIL licensing costs as the main reasons for the lack of ITIL alignment, which is rather curious for a company of Microsoft’s resources.

All things considered, can Microsoft convince potential customers that the multi-tier sales and service model is better, and will it win the market by selling cheaper? It is hard to believe the Service Management savvies will be easily convinced – Service Management software is a big investment not only cost-wise but especially because it is the heart of the support process, which it orchestrates. In such a peculiar market, where quality, reliability and ease of adoption are more important than price, Microsoft will have to work hard to win any form of trust, let alone take control of the market.

 

Adrian Polley, CEO