Archive for April, 2010

Never stops surprising me how right we were 10 years ago assuming that as the world shifts to an economy of services, demand for SLA management will grow.

Technisource have started using our SaaS SLM solution the other day. Their Support Services division will manage their performance and SLAs to their customer base, making sure they adhere to their commitments in a cost-effective way.

Technisource joins a long list of commercial service providers, MSP’s and Cloud providers using our solutions to manage SLA’s, including IBM, Cisco, BT, CSC, PWC, SIS, Scisys, O2, Steria, FITS, Telus, Level3, and many others.

It is funny to think about the evolution this market of technology service providers has gone through in the last 10 years.

When we started out, Application Service Providers (ASP’s) were the next big thing. Then came the era of the mega data center providers – Exodus, Digex, UUNet just to name a few. Next came the era of outsourcing. Everyone was outsourcing, off shoring, near shoring. In the years post the 2001 economic crisis, Wipro, Tata, Infosys, IBM Global Services, Accenture and many others all made a good buck. Then came the days of the MSP, the managed service providers and today it is all about cloud providers!

These are all steps in the evolution of enterprises consuming IT and Business Process Services as a utility, like gas, electricity, or water. We are not there yet but we are darn close.

For us this is all good news. The more services and alternatives available, the greater the need for cost and service level management, and that is what we do for a living! Life’s good!

I was driving my oldest daughter, who is five years old, to her kindergarten the other day. She asked me her regular questions about how a telephone works, how does electricity run through wires and so on. And then it happened. She popped the question, “Dad, who created the sky?” Ouch. Just what I needed now.

I took a deep breath and said, “You know, this is a very tough question and I am not really sure about the answer, but in general people are divided into two groups, those who believe God had created the sky and everything else, and those who believe there was a big blast which had created it all.”

“So what do YOU think?” she insisted. I paused and said that I will let her answer, and she said “Oh, silly dad, no question that a big bang created it all since God lives in the sky so he cant have created it.”

Stupid me. I should have thought about that on my own. I wanted to tell her that true capitalists change their belief based on how well the quarter is going and on how close they are to its end, but decided to spare her the details.

One week to go…

They say a good leader is tested in his absence. Well, I will test that some day. In the meantime, I get filled with joy and know we are doing well when good things happen without me even knowing about them.

The joy of when you get your company from 0 to a place where deals you’ve never heard of just close and features you have never thought of are added to the product is unbelievable.

I was reviewing demand generation campaigns today and watched a presentation prepared by Cummins on their use of our solution for billing and chargeback and the benefits they have achieved.

Cummins has been my customer for more than 5 years now. I have visited them many times. We have presented jointly in different events. But I have never come across such a simple, straight-to-the-point, fact-based story of our joint success. No glamorized design or sophisticated marketing copy, just pure value as it comes straight from the Midwest.

Watch the presentation here:

In the Frankfurt airport, on my way back home. I love visiting customers in Germany, many of them real old hard core industrial companies, the kind that actually produce stuff people use. I arrived at one of the customers, a large manufacturer, signed in and started making my way to meet the CIO.

I was walking through many manufacturing buildings, all well-organized. Next to each building’s entrance were old-fashioned black bicycles with a license number and a small basket, property of the company used by all employees to get around this large manufacturing plant. The sidewalks were full of employees in blue overalls riding bicycles from one place to another. An information sign shared the fact that there are 6,500 employees on site, 75% blue collar, 20% white collar, and 5% trainees. I kid you not – I did not invent this. In some places blue collar employees are a big source of pride and rightly so!

The meeting with the CIO and his team was fascinating. These guys have been doing for 14 years now, in Excel spreadsheet and Access database, what our products do. These folks have an IT Business Service catalog in place since 1994. No one was even thinking about that then. They are doing everything: Service Catalog, IT usage based cost allocation, IT actual vs. budget tracking, IT Unit cost analysis, IT billing and chargeback and much more. Obviously they were thrilled to see there is an off-the-shelf product for all of this that will make their life much simpler.

This brings me to an important and frequently overlooked business strategy aspect: culture! When deciding how to go to market, where to start selling, where to expand to, often companies analyze the size of relevant available markets, price point, leverage, accessibility and so on. A missed but very important parameter is the cultural fit of your product or services to a specific market. Not all cultures are equal. A product that will sell great in the US will not sell well in Germany, by definition. Culture heavily influences your addressable market! Don’t forget that – you can avoid lots of wasted time and money.

Some homework on this topic for all of you:
1. Why is Starbucks an amazing success in the US but a miserable failure in France?
2. In what country are text messages the most popular and in which the least, and why?

I’m on my way to Frankfurt for some prospect meetings. There’s nothing I love more than that, except for my wife and daughters, obviously.

I got a gift from my travel agent – a guide of museums in cities across the world. Well, I was never big on art, but in the last few years I started getting into it so I will go visit the STADELSCHES KUNSTINSTITUT UND STADTISCHE GALERIE after the meetings in Frankfurt.

I often hear from customers, when talking about IT Cost budgeting and planning or IT demand management, that it is more art than science. Since I don’t think I will find any IT budgets displayed in STADELSCHES KUNSTINSTITUT UND STADTISCHE GALERIE, it is probably a good idea to share with you how IT Budgeting and Planning or IT Demand Management can become a science. It is very simple, if you know:

1. What IT services or “capabilities” you provide.
2. What are the detailed cost models of the services you provide.
3. Key historical metrics: Volume of a specific IT capability per revenue, per HC, per customer, per transactions etc. all by organization, by region, and so on.
4. Historical unit cost per IT capability and how it trends based on value.
5. Business Units, business objectives for the coming year, growth in HC, revenues, transactions etc.

Take all of this, mix it up, throw it on a canvas and you have a great budget…oops ART.
Just joking.

With all of the above you can truly accurately prepare a good, detailed IT budget.

I have seen it happen at many companies, Nationwide, Koch Industries, Volkswagen, Cummins engines, UBS, P&G and many others. Sounds like a lot of work? Well, some create amazing spreadsheets and some use a system – it’s your choice.

My guys did it again. They never fail to amaze me.

Some time ago, we appointed a team to be dedicated to building out-of-the-box cost optimization solutions. Today, I reviewed the use of the solution by one of our customers. The benefit they got was unbelievable! I won’t mention the name of the company – I am sure you will understand why – but this is a multi-billion dollar, well-run US Retail Company.

Our Server Cost Optimization solution automatically discovers potential cost savings that an IT organization can achieve with server consolidation, virtualization, reduced server levels, migrating to less expensive platforms, and other strategies. For each strategy, the solution shows total potential monthly savings and provides explicit install, move, add, and change (IMAC) recommendations linked to specific servers.

This company had 8,000 servers and a total monthly spend on servers of $8M. After 8 hours of uploading the data, our solutions identified that average utilization is 25%. They also identified potential monthly savings of $1.1M from consolidation, $700K from virtualization, $200K by reducing service levels and $150K by moving UNIX to Linux, all of which add up to over $10M of savings on an annual basis.

Our Server Cost Optimization solution is not just about high-level average savings. It actually gives specific recommendations as to what servers to consolidate, which to virtualizes, reduce service level, change platforms. I don’t know about you, but this excites me. Real value to real customers!

Every New Year’s eve my father meets his friends and neighbors in our village on the way to the holiday prayers, and always greets them with warm wishes for good health and business prosperity, except for the village doctor – he always gets “I wish you good health and hope you go out of business,” well that’s life when your profession is addressing other people’s challenges and needs.

I got an excited call from Yakov Kogan, one of Digital Fuel’s founders, this evening. He was calling to tell me about great meetings he had with one of our customers, a large North American cosmetics company. After all these years he is still so passionate when he sees how our solutions help companies. I had to run into a meeting so he texted me how they described the IT Financial Management challenge which drove them to buy our solution. It was better than any marketing copy we could have come up with:

“IT service Total Cost of Ownership (TCO) is unknown
Can’t show a business case for an IT service
IT service Unit Cost is unknown
Can’t measure efficiency of an IT service
BU’s are not accountable for IT consumption
BU’s consume much more IT than they need
Actual vs. Budget done quarterly
Money loss continues for at least three months
BU’s see IT costs as too expensive and not predictable
BU’s struggle to forecast profit. Leads to tension between IT and BU’s
Not enough data supporting Tax Regulation
Hard to pass an audit
Manual MS Excel Based
Time consuming, error prone, no audit log, no trending, no data security, no collaboration.”

God bless fathers, doctors and passionate founders!