Posts Tagged ‘plan-net plc’

Shared services: a problem shared is a problem halved

May 1, 2012

A problem shared is a problem halved’ – This idiom generally refers to a person feeling better simply by sharing their woes with another, and most of us would agree that this phase is more often than not, very true.  From an IT perspective, this common saying is profoundly relevant when applied to Shared Services, and in more ways than one.

To make my point, I would draw on three words from this old saying:

  • Problem
  • Shared
  • Halved

IT support typically addresses the day-to-day, on-going management of ‘problems’.  In fact, a more popular (best-practice aligned) word these days might be ‘incident’ or ‘fault’.  Whatever they’re called, IT problems are an inconvenience to all businesses, are a distraction from the business’ core competency and interrupt the effected users from their work.  Furthermore, such problems do not contribute to the successes of the business, and worst still, are a costly overhead.

In this context, ‘shared’ has a double meaning.  By engaging with another to share your troubles, the weight of that trouble is somewhat lifted.  This, in itself, is welcome relief.  But ‘shared’ can also form part of the solution if an IT Shared Serviced is properly considered as an alternative to managing problems, incidents or faults, in-house.

Halved’, not be taken literally, is a reference to the measure of gain achieved by sharing the problem.  Use of a shared service can (and should) lead to a measurable improvement in service and reductions is cost.

As a result of the recent economic downturn and period of unprecedented financial uncertainty, providers of shared IT services have had to become very, very good at what they do.  Without stepping up to the mark, and indeed, extending the mark, IT service providers would simply slip by the wayside (and many of them have).  It is, therefore, a good thing for businesses that IT service providers have been forced to compete so aggressively with one another because it has led to new levels of service excellence and reductions in cost.

So, by referencing (for one last time) the proverb – ‘A problem shared is a problem halved’, businesses do have a chance of sharing the burden of IT support with others who are better placed to manage it whilst at the same time improving on service and reducing cost, but only if they are willing to consider the possibility of outsourcing their IT support needs.

Jon Reeve, Principal Consultant

Visit Plan-Net‘s website and learn more about what we do and how we can help your business: http://www.plan-net.co.uk

Advertisements

Disaster recovery and the mobile office

April 27, 2012

As we are all aware, today’s working culture has moved on from the traditional old 9 to 5 office work to a new concept where people are working flexible hours from flexible locations. As a consequence, both employers and employees expect more – in particular, the ability to work seamlessly from any device and from any location.

Technology advancements in telephony, collaboration tools, virtualisation, security and application and desktop delivery have enabled the ‘mobile office’ concept to be embraced faster than a speeding freight train. Adoption is also driven by the many benefits achievable through this solution – for instance, basing some staff at home can be used to reduce building and office related costs.

Relocating employees to work from their own desks using their own utilities can not only provide many financial benefits, but also allow avoiding issues such as transportation strikes and weather disasters, or the much-anticipated chaos during the Olympics and Paralympics.

But more strategically, when it comes to disaster recovery and business continuity planning, more and more companies are choosing to utilise the mobile or home office concept as a significant and vital recovery tactic. Dedicated workplace recovery services can be costly, and placing technology services at a designated workplace recovery suite will have an additional financial impact.

Similarly, if a company has multiple offices and the continuity plan states that a number of staff must relocate, for example, from the London office to the Birmingham office, then that number desks must be either kept available, which is costly, or the existing staff displaced, with a loss of function or productivity. Then, there is also the matter of a number of PCs to configure as well as the setting up of telephones and other equipment.

Basing or rotating technical support or business support functions at home can be a huge advantage when faced with a business continuity scenario. Home-based workers are less likely to be affected by denial of access issues such as high profile terrorist targets or threats, major city power failures, office fires or flooding. The first members of staff ready and waiting for services to be brought online to be able to work during an invocation are the home-based employees.

It is not all easy and straightforward, though: all devices used by mobile and home workers – mainly laptops, smartphones and tablets – have to be managed properly and securely by the company.

Policies, technology and management tools must be in place to block users from saving or transferring harmful data onto devices, and also to maintain client confidentiality and adhere to Data Protection regulations as well as contractual obligations to customers, whilst still allowing staff to seamlessly access applications and data stored within the corporate network.

The tools already exist to support businesses to remotely manage, secure or wipe devices, remotely activate device services, and to create and manage their own security policies – whether those policies are corporate ‘end-user acceptable use’ policies, or technology enforcing policies such as disallowing ‘Copy & Paste’ between devices or disabling printing or screen capture.

Fortunately, thanks to new technologies and industry best practices, the tools to achieve business continuity and to make a full recovery after a serious incident are all quite easily available. If the company’s disaster recovery and business continuity plan covers the mobile office service as well as any physical offices, the chances of a successful recovery and return to ‘business as usual’ are vastly improved. Moreover, there may be an advantage to be won over competitors going through the same issues, as well as reputational and credibility gains.

The key to any mobile office solution is resiliency and planning. It is vital that considerable thought, planning and design for the mobile office service is placed at the forefront of any disaster recovery environment and business continuity plan, to provide resiliency and contingency for the mobile and home-based workers in the event of technology failure, office inaccessibility or other unplanned incidents, as these employees may be the key to providing rapid continuation of business services in the most productive, seamless and cost-effective manner.

Jennifer Norman, Technical Consultant

This article was written for Contingency Today:

http://www.contingencytoday.com/online_article/Disaster-recovery-and-the-mobile-office/3464

7 things you should know about Managed IT Services

April 26, 2012

With more and more companies looking at outsourcing solutions for all or part of their IT, it is important to highlight the main features of a Managed Service, especially as an alternative to full outsourcing or off-shoring. Here are 7 things organisations should know about Managed IT Services:

1) It’s not all or nothing
A common misconception is that you have to outsource your entire IT function in order to obtain the cost-efficiencies you are seeking. This leads to the ‘fear factor’ of loss of control/influence of back office Services, and therefore a reluctance to explore the breadth of options available.

The approach more and more firms are adopting is one of precaution whereby they test the theory by outsourcing specific functions to suppliers. It is becoming more commonplace for organisations to outsource their 1st & 2nd line support, an area which is typically not bespoke and more easily replicable by a supplier.

However, the key to success of any outsource venture is the selection of vendors. A plethora of suppliers exist within the market, but it is critical that the supplier of choice is one which is aligned to the specific requirements of the business and does not dictate the provision of Service through a ‘one size fits all’ approach.

You could choose a service provider for out-of-hours support, so that you don’t have to rely on an internal rota system where staff are paid 1.5 or 2 times their hourly rate to provide support from their beds.

Or you could even just get a few extra resources to cover for holidays and/or to provide additional capacity during peak times which compliments and supports your existing solution.

2) It can give you more control over your IT
Whilst an in-house service seems like the best way to be in control of your IT, it is common for difficulties to arise in terms of reaching your target service levels and delivering the high levels of customer service demanded by business users. These limitations are often related to the existing skills, resources and budget that are available internally; there are also elements of staff management that can affect the final results, such as sickness, holiday cover, staff turnover and so on.

Opting for a ‘partial’ outsource means the only thing you need to do is set the appropriate SLAs and then it’s up to the supplier to meet them – using whatever tools and techniques are available, be it up-skilling staff, Continuous Service Improvement (which should be a fundamental delivery item of any managed service) or implementing new processes. In this way, you have more control over the most important thing – the service levels your organisation needs.

You should be looking for someone who wants to build a long term partnership with you and whom you believe will be seen as an extension of your existing IT function, and not ‘that 3rd party lot that sit in the corner!’

3) It’s safer than other types of outsourcing
The additional attraction of ‘partial’ outsourcing is that you retain ownership and control of your systems/data and how they are stored and managed. This is something which has become even more critical given the requirements of data protection and client confidentiality, something which ISO27001 is seeking to address.

This means, for instance, that there will be less issues concerning security of your data than if you used an offshore service desk, where the infrastructure upon which your data is stored and processed is owned by another company based in a country thousands of miles away and where there might be different regulations and laws concerning information security. It is also safer than a fully outsourced solution where all operations are run at another site and using another company’s infrastructure.

4) You will not lose your staff
Some companies which have an internal support function are worried about losing their trusted IT people who have been working for them for years to another company, and not being able to get them back if they decided to do a U-turn after a failed outsourcing contract.

Your employees rights are protected under TUPE, the Transfer of Undertakings (Protection of Employment) Regulations, which ensure the terms & conditions at transfer are protected.

This means they are not lost forever – if things don’t turn out well and you want to bring the service back in-house, you can TUPE them back quite easily or onto another supplier.

5) It opens you to new opportunities
The strong benefits to outsourcing are not only the increased levels of Service but the increases in efficiencies and therefore the reduction in cost, something which is clearly a driver for all organisations in the current climate.

With an in-house Service this is often impossible to deliver i.e.

Reduced costs = Reduced Efficiencies = Reduced Service

Outsourcing opens up the possibilities to the adoption of new models which are affordable thanks to the various options available. For instance, a shared out-of-hours service that supports a number of organisations which are similar with regards to type, sector and requirements, with which to share the costs and ability to access high skills; or a dedicated peak-times service in addition to your own in-house desk to help during periods of increased demand, such as a particular event or a busy season.

6) The costs can be shared
If your organisation needs highly efficient support with specific expertise, but does not have the budget for this, a shared service can be an ideal solution. It provides access to the high skills that might be otherwise unaffordable for your organisation but at a much lower price, as the costs are shared between different organisations. Best results are obtained if the participant organisations are of similar type and with similar needs, and if the number of clients sharing is kept to a minimum.

7) It can create a strategic advantage
An efficient, reliable and fast IT Support where all you have to do is set SLAs and expect them to be met can be an asset for certain types of organisations, such as those in the financial sector, especially banks. With so many financial services relying on fast and efficient technology and 24/7/365 uninterrupted accessibility, the less downtime and inefficiencies you have, the more probability you have to gain ground in the market and beat your competitors that have a weaker IT service.

Image

Pete Canavan, Head of Support Services

This article is on Sourcing focus:

http://www.sourcingfocus.com/site/opinionsitem/5372/

Bring IT support back to the 1st line

March 27, 2012

In a time where cuts to organisations’ IT budget are often becoming a necessity, taking a good hard look at role redistribution and service desk management could definitely help organisations diminish support expenditure, and perhaps divert the IT budget towards new projects. Organisations can even potentially achieve more benefits by better managing incidents, gaining increased speed of resolution and improved service levels while they save money, creating even more cost-efficiencies. A way to achieve this is by bringing more support work back to the 1st line.

It is common knowledge that analysts working at 1st line level have a lower cost due to their lower skills, while 2nd and 3rd line resolvers – desk-side, network and server support staff – are more expensive, as their skills are higher and more specific. Incident resolution rates also vary: it is faster to resolve an incident at 1st line due to the simple nature of incidents that are taken care of at that level, while 2nd line analysts take longer to resolve issues as these tend to be more complex, or require physically moving to reach the user’s device.

Over time, 2nd and 3rd line resolver teams have been including support activities in their daily routines which, when analysed, often include frequently occurring and process driven tasks. These tasks probably sit where they do because at system or product implementation, all related support activities were adopted by the deploying team without any later thought as to whether some of the tasks can be moved elsewhere.

At the same time, 1st line teams have become more technical and able, with greater access to system tools and the permissions to use them. This has had a positive impact on first time resolution and we have seen the log-and-flog approach begin to decline.

Considering both of these evolutions, opportunities exist to release system specialist time, reduce the cost of service provision and increase first time fix at the Service Desk. By effectively using ticket closure category information from the service management tool, analysis can be undertaken of what 2nd and 3rd line resolver teams are actually resolving.  A likely outcome is that tasks will be identified which are process driven, and therefore can actually be performed by a more junior (or low cost) resource. As long as the process can be documented and the permissions to do it are provided, it’s more than likely that the 1st line Service Desk team can pick up the work.

As an output from some analysis, this may look like – x% of 2nd line resolutions are procedural and can move to 1st line, as a result, 1st line can increase their first line fix from y% to z%, and thereby improving the service to the user-base.

The cost savings of such an exercise could be considerable.  By moving tasks into the first line, the tasks are being moved into lower cost people. This may mean that the 1st line team grows and the other resolver groups reduce, the outcome of which will lead to a demonstrable cost saving.  Furthermore, with tasks having been removed away from the 2nd and 3rd line teams, opportunities will present themselves as a result of the increase in available time within these groups, e.g. resolver teams can improve their performance as they will have more time to work on the more complex problems, and team resource can be released more readily into project work and thereby decreasing the need for expensive contractors.

Such change, however, can’t quite happen overnight.  The analysis needs to be good, and the recommendations of tasks to be moved to 1st line need to be realistic.  Then, through the controls of a well-run project, tasks are tested as being viable duties that the 1st line team can assume, and when signed off, can permanently remain at first line.

The measures of a successful exercise will be ultimately visible in the reporting. The first line fix percentage will increase, the ticket resolution volumes at the resolver groups should reduce, and costs should reduce – perhaps by reducing staffing, project or contractor costs.

The perception of the overall quality of the IT service should also improve: frequent support activities will be completed faster, which improves customer satisfaction; and core systems will receive greater attention from their specialist support staff, leading to improved availability and functionality.

Jon Reeve, Principal Consultant

This article has been published on Director of Finance Online:

http://www.dofonline.co.uk/content/view/6131/118/

Just how much of a saving is the reduction of heads from an IT support team?

March 20, 2012

ImageIn a bid to meet the demands of an FD who needs to see cost savings across the organisation, often it’s a portion of an IT team that have to go.  On the face of it, it’s an easy choice.  Those within an IT team will often perform the same functions as one another, therefore, if one or more leave the team, it can still perform all its required tasks, albeit a bit slower than before.

But what might not have been considered in such decision making is the organisation’s profile of staff’s expected IT skills and the speed-of-service demands.  If the two are considered together, an optimal ratio of IT staff to company staff can be derived which can be used as a benchmark against any planned reductions in heads.

Definitions:

Staff’s expected IT skills – Some business environments may have a low expectation on its staff in terms of their IT skills.  A law firm is a good example as it’s more beneficial to the organisation if their legal teams are fee earning (by practicing law), instead of being able to clear their own printer jams.  Other organisations, perhaps a software house, will have employees who are more than capable of dealing with common IT issues.  In these examples, the law firm is clearly going to need a greater ratio of IT support people to staff members than the software house.

Speed-of-service demand – An investment bank, or indeed any organisation that is wholly reliant on IT to trade, will tolerate only the most minor of IT interruptions, whereas some business types might be able to suffer IT delays for hours, or even days, without any particular impact on their business.  Those with the need for greater speed of service, or even immediate need for service, will require a greater ratio of IT support people to staff members compared with those that don’t.

If these two aspects of a business’ IT culture are considered together, one can begin to determine the optimal number of IT support people to staff members.

For organisations with a low expectation of staff’s IT skills, but who need rapid IT support, a ratio of 1 support person to every 50 members of staff, might be appropriate.  The other extreme, high staff IT skills coupled with lower speeds of support, may lead to a ratio of 1 support person to every 200 members of staff.

Then, if there is a need to cut heads, a more informed choice may be made, i.e. just how many heads may be lost without: a) requiring the established IT culture to change, or b) having a detrimental impact of the organisation’s ability to trade?

Of course, this thought process and logic need not only apply to difficult times, when reducing costs is a priority.  It can apply to times of business success and be used as a means of determining the best IT support fit for the business.

Image

Jon Reeve, Principal Consultant

There are still opportunities to do more for less

February 3, 2012

A lot of talk right now revolves around IT projects in 2012 – which mainly means, deciding which projects to scrap due to lack of funds and how to invest the small budget available wisely, as well as use existing resources more efficiently. The problem is that with a restricted budget, it is difficult to truly understand what is essential and what is not and therefore where to invest the limited resources. But there are still many opportunities to achieve IT efficiencies at a small or no cost.

First of all, an effective way to improve productivity would be to follow the classic suggestion of making the best of what you have, but with particular focus on the human side, the people who run your IT. Invest time and effort in your staff to make them feel appreciated, motivate them to work better with incentives and listen to their issues as well as their suggestions on how to improve the IT department. People are a fundamental part of your business and investing in them will definitely have a tangible return on investment. It is easy for staff to get discouraged in tough times, and that is why improving morale and making people feel appreciated is so vital to improve business – a no-cost investment for a great ROI.

Likewise, there is still space to find other no or low-cost efficiencies by applying simple Service Management best practice principles. From processes to help speed up operations and software to deal with large amount of data effectively, to changing IT staff’s working patterns and hours, small changes can bring great results, all to the business’ advantage. Adopting metrics can also be a great way to improve the service and monitor efficiency. A small budget may be invested in consultancy – an experienced consultant can help by assessing the state of the Service Desk and suggesting ways to improve processes and put to better use the current resources that you have.

Another good move for a small budget can be gaining certifications. With limited resources and the inability to spend on large projects, it might be a good time to obtain an ITIL or ISO 27001 certification: the immediate investment is small but the results can become of great importance in the next few years. In fact, when the market will be strong and growing again, the company will already have that crucial certification that allows them to take part in bids and tenders, for instance, and therefore grow their business; these certifications are in fact becoming more and more crucial for companies issuing a bid or tender, and greatly influence the decision-making process. At the same time, they can guarantee more efficiency and security, which means that even in tough times, resources are exploited and managed in the best way possible, operations are carried out effectively and security incidents – with all their costly consequences – are reduced to the minimum.

The most important thing to keep in mind, in any case, is that any move has to focus on supporting the revenue-generating areas and functions. Money spent supporting non-essential parts of the organisation’s productivity might not have be a wise investment in the current financial situation. Any efforts must be directed at helping the business and its core functions, while the other aspects of the organisation will have to put on hold until the market is strong again.

Jon Reeve, Principal Consultant

Find this piece on ITSM Portal:

http://www.itsmportal.com/columns/there-are-still-opportunities-do-more-less

Focus on 2012: 5 key areas in Enterprise IT

December 19, 2011

According to the industry analysts, experts and professionals, some of the changes and novelties introduced in the last few years are set to become actual trends in 2012. Influenced by the ever-challenging economic climate, disillusioned yet careful outlook on industry best practices and need to obtain measurable efficiency from any IT project, these are the five key areas that will acquire growing importance next year:

1)      Larger use of non-desktop-based applications

This is due to of a growing need for mobility and flexibility. Users need to be able to work while travelling, from any desk or office (for instance, in the case of large/international companies) and from home, as home-working is growing due to the financial benefits involved. It is also a good choice to guarantee business continuity in the case of unforeseen circumstances such as natural disaster or strikes which leave the workers stranded or unable to reach the office. As well as cloud applications, virtualised desktops are becoming a must-have for many organisations. Companies with older desktops which need updating anyway will find this switch more financially convenient, as well as those which have a large number of mobile users which need to access applications from their smartphone or laptop while out of their main office. It can also give those organisations considering or embracing home-working more control over the desktops, as they will be centralised and managed by the company and not at user level.

2)      Larger use of outsourced management services

The ‘doing more with less’ concept that started to take grip at the beginning of the past recession has translated into practical measures. These include handing part or the whole of the Service Desk to an external service provider which, for a fixed cost, will know how to make the best of what the company has, and provide skilled personnel, up-to-date technology and performance metrics. Managed services, IT outsourcing and cloud services will become even more prominent in 2012 and the following years due to their convenience from a practical and financial point of view. With the right service provider, the outcome is improved efficiency, less losses deriving from IT-related incidents and more manageable IT expenditure.

3)      Management plans for ‘big data’

There is much talk around the current topic of ‘big data’, which describes the concept of the large amount of varied data organisations have to deal with nowadays. There are some practical issues that arise from this – mainly how to store it, share it and use it, all without breaching the Data Protection Act. However, at the moment it is still very difficult to understand how to take the next step: using this data strategically and to create business advantage. This is something companies will have to look at in the years to come; as for the next year, they might just concentrate on dealing with data safely and efficiently, possibly storing it on a private virtual server or using public cloud services.

4)      A more balanced approach to security

This new approach sees the over-adoption of security measures dropped after the realisation that it might affect productivity as it may cause delay in carrying out business operations; it could also diminish opportunities that are found in sharing data within the sector to allow organisations to improve and grow; lastly, it can be counter-productive, with employees bypassing the measures in place in order to make operations quicker. Although being compliant with on-going regulations is becoming vital, there will be more scoping and tailoring than large technology adoption. Organisations will be analysed to understand which areas are in need of security measures and to what extent. This way, heavy security measures will be applied only to high risk areas rather than throughout the whole organisations, with less critical areas able to work more freely. In this approach, risks are balanced against efficiency and opportunity and the end result is a tailored solution rather than a collection of off-the-shelf products.

5)      Less budget control

Due to the challenging economic climate, other departments, in particular the financial department and therefore the DOF, will have more control over IT investments. CIOs and IT Managers will have to be able to evaluate if their IT project is necessary or just a nice-to-have, and how it can bring business advantage.  All proposed IT investment will have to be justified financially; therefore, it is important to analyse each project and find a reasonable ROI before presenting it to the finance decision-makers. This implies that IT professionals have to learn ‘business talk’ and manage to translate difficult technical descriptions in business terms.

All in all, developments within IT will not come to a halt next year – investment and changes will continue but with a more careful outlook and a stronger focus on efficiency, safety and Return on Investment rather than on following trends or adopting the latest technology for the sake of it. Because of this, the difficult economic climate could also be seen as a good thing: organisations make wiser and far-sighted choices that will create a solid base for any future decision that will be made when times are less tough and spending capacity rises, increasing the efficiency potential of IT for business purposes.

Tony Rice, Service Delivery Manager

From in-house to consultancy: moving to the ‘dark side’

November 23, 2011

There are many exciting directions a career path can take when one works in the IT field. This is not exclusive to skill development or career advancements within the same company or field. Many IT people with in-house experience at some point choose to ‘move to the dark side’ and embrace the world of consulting. It can be a positive change for a Service Desk-bound professional to finally be able to get to the clients directly without all the layers of sales people, and be able to make good use of the inside knowledge they acquired by advising companies in different fields and with different environments on what is best for them.

Moving to consultancy is a choice that more and more IT professionals are making, while other professions are slowly becoming less popular. According to the research paper ‘Technology Insights 2011’ published by e-skills UK, there were as many as 149,000 ‘IT Strategy and Planning’ professionals in the UK in 2010. This category consists of professionals who provide advice on the effective utilisation of information technology in order to solve business problems or to enhance the effectiveness of business functions, and in particular computer and software consultants. This sector has an average growth of 2.22% per annum and is expected to grow by another 29,800 people by 2019, with 178,900 professionals working as IT consultants in the UK. Whereas the IT Strategy and Planning field has enjoyed a growth of 15% since 2001, jobs like computer engineers and database assistants on the other hand have decreased, the latter category by a striking -34%. It is evident that the more technical roles are suffering from the increased use of automation software, remote support and best practice processes that allow less skilled and therefore cheaper staff to take the place of qualified engineers without losing efficiency. So it is no surprise that more strategic roles are winning ground and many techies are making the choice to use their skills in the role of advisers.

While moving to a consultancy role can be a very positive choice for an IT professional from a career point of view, it might however also face the person with new challenges – in particular, the negative prejudice they could encounter when approaching clients. Consultants are often seen as salespeople who want to trick companies into buying their services, perhaps long projects that they don’t really need, and overcharge them when they could do the same work themselves, for less. This gives way to many issues. It is difficult for consultants to get hold of business heads or get them to listen to their proposals, and when they do manage to have a meeting, they need to be very well-prepared and find the right balance between cost and quality, where they do not undersell or oversell their services. Finally, they have greater responsibility with regards to the outcome than they had in their in-house role, so it is important that their plan is feasible and effective and that they check and monitor constantly to be sure that everything is going as expected, making any necessary correction along the way.

It is not all bad, of course. At the top of the ‘positives’ list, there is the fact that consultants get to see many different environments, rather than just a few in their career lifespan. This allows them to build a greater, wider knowledge and experience base and improve their professional skills. But it also helps to avoid the feeling of stagnancy, keeping their level of enthusiasm high as they can enjoy working on a variety of projects.

A former in-house professional may also have some advantages over consultants who do not have that kind of background: having experienced ‘the other side’ helps them understand what clients want and, especially, don’t want from a consultancy, so that they can deliver a better service and even identify new work opportunities. They know and understand how things work inside organisations – the communication issues between business and IT, the difficulty in justifying IT projects to the CFO or the blaming game when a project doesn’t go as predicted.

Balancing all the positive and negative sides of this move, one thing is certain: these kinds of professionals have an edge over those without an in-house background, and can therefore be a valued acquisition for a consultancy firm as well as a resourceful advisor for any company in need of IT improvements. And if taken advantage of appropriately, work success and personal satisfaction are natural consequences.

 

 

Jennifer Norman, Technical Consultant

Brace for the feared double dip: IT planning can maximise mergers and acquisitions

October 28, 2011

As the business world lies in fear of a double-dip recession, companies are advised to ‘think smart’ and try to find a way to profit from further economic downturn and not to simply aim to survive it. Or, if they are struggling, to have a ‘rescue plan’ in place that will spare them from drowning in debt or sinking altogether. As a consequence, mergers and acquisitions flourish remarkably in times of financial difficulties, and can be a way to gain during a tough spell – either by buying or joining with another business and expanding or by selling up before collapsing completely.

Mergers and acquisitions, however, are not just the ‘combining of commercial companies into one’ (to quote the mini Oxford dictionary). Business leaders are missing a significant trick if the joining of two businesses is not maximised, i.e. that the market share of the new entity is greater than the sum of the two companies when operating on their own.

It is, however, an ever repeating trend that mergers and acquisitions do not address operational, cultural and technology considerations as part of the consolidation. These often remain ‘off the radar’ long after the legal part of the merger or acquisition is complete.

So, rather than just ‘think smart’, a better message is perhaps for companies to ‘think smarter during tight times and to make the most of these mergers and acquisitions right from the start, by ensuring that the fabric of the new bigger company is appropriately adapted so that it functions in a manner that maximises the now greater trading capabilities.

Those within the IT services industry will have experienced customer organisations that bear the signs of a merger or acquisition and, worst still, continue to tolerate them. The tell-tale signs are classic and include: performance issues; geographically separate and siloed support teams; a large list of supported applications; technical complexities; a high support staff headcount; a disproportionate number of managers; and complex organisational structures. None of these ‘features’ of an organisation can positively contribute to its on-going ability to compete and win in its market place. And if the cost of these inefficiencies could be demonstrated, senior management might just fall off their chairs.

The good news is that mergers and acquisitions can be conducted with a better overall outcome at low cost – through the use of some external aid. These are the kind of projects where the use of a consultancy can really make a difference. Employed during and soon after the merger to improve what is at heart of an improved approach to mergers and acquisitions, ‘people, process and technology’, the cost of a consultant will be a drop in the ocean compared with the overall cost of trying to fix all the possible IT-related faults and issues in the years following the merger or acquisition. The value of the work is likely to be recovered quickly by enabling the business to operate better and by making people’s working practices more efficient. Efficiencies will emerge during the analysis stage of consultancy by identifying opportunities for synergy which will have a positive impact on the on-going investment made by the business in people and systems. The outcome: doing more and doing it better, with less.

So far, all this sounds obvious and nothing more than common sense – so why is it that the ‘people, process and technology’ side of mergers and acquisitions isn’t dealt with early on? Speed, assumption and procrastination are usually the causes.

‘Speed’, because a merger or acquisition deal is usually time sensitive, and focus must be on closing the deal by a given date. ‘Assumption’ because aspects like company culture, people, processes and technology are assumed to be similar and therefore likely to gel. ‘Procrastination’ because activities required to streamline the new business are often planned post-deal, but with human nature being what it is, the plans take an age to implement or never happen at all.

So, if like the United States Army you want to ‘be all you can be’, it is important that people, processes and technology are properly considered and addressed as part of a possible merger or acquisition. You should ensure the IT planning and transformation work starts during the merger/acquisition process so that its importance is clear and understood, then follow it through post-deal before your people return to their normal mode of operation and their old working ways. And, if you are using a service provider for any or all of these steps, be sure to choose one that has a record for properly identifying synergies and efficiencies and who have successfully implemented these. As the recession will not be worsened by losses caused by a faulty or inefficient IT service, the outcome of a well-planned IT merge will surely make the difference.

 

Jon Reeve, Principal Consultant

The tricky business of justifying IT expenditure

October 20, 2011

How to prioritise IT projects and budget spend?

As a result of the recent financial crisis, the constant fear of a double dip recession or, at the very least, an uncertain and unstable economic climate where long-term commitments are not convenient any more has led organisations to become more careful with where they spend their money and what they want for it. This means that it is now even more difficult for the IT department to convince Financial Directors to invest in their projects or assign a bigger budget to them – the finances always seem to be needed elsewhere as a priority. And even when the business does concede a budget to IT projects, it normally covers the bottom line – hardware or software that is urgently in need of replacement – while Service Management is kept at the bottom of the priority list.

But if this can initially make sense from a practical point of view, it may have a negative outcome if not backed by the appropriate Best Practice processes and instead of saving the company money, might result in added unforeseen costs which could have been avoided with a smarter budget allocation. Take a move from Windows XP or Vista to Windows 7 for example, operation which many organisations have been undertaking this year. Although it is still a Windows Operating System, there are many differences in the new version for which some of the applications used by the company, especially in-house software designed for that specific organisation, might not work at all. If the appropriate Change Management process is adopted and the issue is dealt with in a timely manner, which includes adapting or changing the application before all the desktops across the organisation are updated, continuity can be guaranteed. But if this is not the case, users will find themselves unable to work and clients unable to use the company’s services – with financial and reputational loss as a result.

A Financial Director can understand the importance of having processes in place, as they have their own procedures to follow in their work. But to understand the value of processes within IT, and therefore of putting money towards improving the way the IT department carries out its functions, their view has to shift to a new concept of IT as a ‘service to the business’ – where every other department in the company is their client and will benefit from improvements to the service they provide.

In any case, figures published by Gartner suggest investment in IT is increasing more than expected: IT expenditure is predicted to grow by 7.1% this year, which is higher than the 5.6% previously believed. Just two years ago, the growth was -4.8: organisations are either taking risks again, desperately in need of replacing old systems and devices, or investing in new technology believing it will save them money in the future. Computer hardware is at the top of the list for expenditure with a growth of 11.7%, although it has decreased from the previous year where it reached 12.1% growth. Software expenditure has instead increased from a growth of 8.4% in 2010 to 9.5% in 2011. Finally, IT Services has more than doubled its growth rate: if in 2010 it grew by 3.1%, in 2011 this is up to 6.6%

These figures speak for themselves: not only Financial Directors are spending on IT again, they are changing their priorities: software, including Service Management applications, is becoming more important than shiny new hardware; more importantly, the use of services such as consultancy has increased. Buying ‘knowledge’ and ‘expertise’ in just the right doses needed for their projects and seeking guidance to carry them out in the best possible way is the new winning strategy for many organisations.

Businesses have perhaps become smarter in the way they invest their budget, finding new ways of reaching cost-efficiency: mature Best Practice processes, guidance from external experts and treating IT as a service to the organisation being at the top of the list. In this way, they get a good ROI – they can enjoy an improved IT service and, as a result, a better chance to increase their business success.

Jennifer Norman, Technical Consultant

This article appears on Director of Finance Online: http://www.dofonline.co.uk/content/view/5739/115/