IDEAS Insights

Keeping Afloat or Keeping Abreast – The SMB Dilemma

Recently I attended a briefing held by Dell Australia that focused on services and small to medium businesses and the impact of the economic downturn. Dell in Australia defines a small to medium business (SMB) being from 3 to 500 employees. Dell sent out a survey asking them about the challenges they face as a result of the current economic conditions. The survey consisted of responses from about 200 organizations with 80% of those being companies with less than 100 employees.

The respondents said that the most significant challenges to their businesses were seen as maintaining the quality of customer service, retaining and growing customers, keeping revenues stable and cash flow. The things that are less important include financing business expansion and keeping up with current trends. It is this last point that I found of most interest.

The Dell survey revealed that the overwhelming majority (90%) of people responsible for IT operations and purchasing decisions are company employees. The survey didn’t say whether these were dedicated or part-time resources, but it is probably fair to assume that many are people doing this part-time. The IT marketplace is full of technologies and acronyms and can be very daunting to someone who has only a part-time interest in the subject, whilst they concentrate on running a business. It would seem that the sheer complexity of the issues and topics is an inhibitor to innovation for smaller companies.

But you don’t need to be a subject matter expert to make savings!

There have been great strides made in server performance and the reduction in power consumption, combined with the compaction of the processing footprint with the introduction of multi-core processors allows you to put more grunt into smaller packages. So, the simple act of replacing a server just a few years old, one that is just about to run out of warranty for example, can have a big impact on your costs. It’s the same logic that we all use with mobile (cell) phones. So why treat servers any different? In fact, imagine if your phone bill would go down when you got a new phone too. With servers that is what can happen, only your running cost reductions are not airtime minutes, but power consumption. Food for thought.

IDEAS offers the Server CAR tool to help users better quantify savings they can make when looking to swap out old servers for new. The Server CAR was also recently awarded the AIIA’s iAWARDS 2009 New South Wales State Winner in the Sustainability and Green IT category.

 

Gary Burgess
Senior Vice President, Research & Operations

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Software Licensing Can Be a Virtual Minefield

Yesterday, as part of IDEAS ongoing research into the key industry players, I attended the annual Unisys Asia Pacific Analyst day held in Sydney Australia. Unisys in the Asia Pacific region is into the third year of a three year plan to turnaround the operation, based on consolidating activities, getting some focus and beginning to grow profitability. The reports cards were all good and the message is that the company is on track to achieve its goals.

Unisys Asia Pacific (not including Japan) now accounts for around 14% of the revenue for Unisys Corporation overall. And it was reported that services revenues are approaching 95% of the overall revenue take in the region, which is a key indicator that the company has transformed from a product, to a predominantly services, based organization.

Analyst events often include guests, such as customer case studies and Unisys had a session with the CIO of Investec in Australia, Ric Modesto. Investec is a specialist banking group, headquartered in South Africa and also operating in the UK and Australia. Investec has been using Unisys in all three countries for some years with its consolidation activities.

Such sessions have the expected pro hosting vendor messaging, but I like them because they can also reveal interesting and sometimes unexpected perspectives in the often unscripted question and answer part of the presentation.  When asked about his experiences with virtualization and issues around software licensing, Mr. Modesto noted that in his opinion the licensing agreements in general don’t successfully address usage of the operating system and subsequent applications in the virtualized delivery on demand space and can be a minefield where one needs to be very careful.

He went on to say that even though you can legitimately deliver an application on demand, the issue of the identity of an end user can sometimes get caught up in the detail of the license agreement. For example the difference between five concurrent and five end users, is a subtlety that can make a big difference.

When asked if that had limited Investec’s virtualization rollout Mr. Modesto commented that it didn’t because the company had taken the approach of licensing everyone to avoid this issue.

What is your view? Is the lack of suitable licensing arrangements, especially in the application on demand space, an impediment for you when considering virtualization in your organization?

We Know ‘ET Phone Home’. But What About ‘PC Phone Home’?

Dell recently announced upgrades to its ProSupport services focused around mobility offerings. My initial reaction was one of services for PCs, which are not critical to the enterprise's operation and hence outside of my area of interest.

But according to Dell more enterprises are equipping their employees with laptops. And with this trend, portions of the corporations' data are going mobile too. This presents some interesting challenges if laptops get lost or stolen. This world of heightened corporate governance and security puts a new perspective on these services and places them well and truly in the enterprise camp and so was worth further consideration.

One set of services that caught my eye were those to help track and recover laptops, and even remotely delete data, if a quick recovery is not an option and sensitive data is involved. GPS equipped Dell laptops with this service activated will work in a similar way to recovery services for cars, such as OnStar. The unit keeps track of its position via a GPS and can use the cellular network to call home and report its position. A signal can also be sent to the laptop to delete data, if required. Even non GPS capable laptops can call home. Whenever the lost or stolen laptop connects to the internet it can report in. Although without the GPS, it relies on data such as IP address, to be used in conjunction with good old policing, to track the unit down.

The technology is nothing new. It exists for cars and even cell phones, where for the latter, stolen units can be detected and disabled from the network. Therefore, the extension into computing is logical.

Dell generally does its homework and only tends to pursue opportunities it knows it has a good chance of doing volume business with.  And in the interests of balance, Dell is not the only company to offer such a service. These two factors indicate that this is a growing area of need in the industry.

Dell's New Global Service Offerings

Dell has retired its old "Enterprise Services" portfolio (Silver, Gold & Platinum Plus) as well as some others such as Business Helpdesk, Gold Technical Support, and Dell On Call and replaced them with a single new ProSupport offering. The announcement revolves around Dell's commercial support. Consumer support is not affected.

The announcement signals a broadening of Dell's enterprise-level support scope, a standardization of Dell's commercial services globally, and a lowering of the bar to access higher-end proactive services.

• Unlike the old Enterprise Support offerings that were focused on mid- to high-end servers and storage, ProSupport has been broadened to the desktop and even mobile products, for commercial users. This consolidation simplifies the relationships between Dell and its customers both at the contractual and support levels, where previous multiple contact points can now be rationalized.
• Dell is also using ProSupport to standardize its offerings worldwide. Prior to this announcement, users may have seen significant per-country variations in Dell's service portfolio.
• The re-packaging has allowed Dell to "lower-the-bar" to access some proactive services, previously the domain of Dell's high-end Platinum Plus offering, which was aimed at larger enterprises with around 100+ servers. With the relaxation of this minimum size "rule,"  smaller organisations can now get access to these higher-level services.

In many ways, key aspects of the services delivered (hardware maintenance, collaborative support, proactive services) haven't changed, and it is more about how Dell has changed its packaging and hence, its go- to-market strategy – including its now global consistency, which is different. This means that Dell doesn't have a major logistical task to reengineer itself in order to roll out these new products. As a result the worldwide rollout is expected to happen simultaneously with the US in EMEA and Asia Pacific. The similarity of features also means less disruption in terms of migrating clients from old to new service contracts.

Dell has announced two types of support, ProSupport for End Users and ProSupport for IT. The former is aimed at clients with little in-house expertise, while the latter is for the IT professional with a certain degree of expertise.

A brief overview of features and options for ProSupport are as follows:

ProSupport – Common Features

• Collaborative Support for Hardware and Software
• 24x7 Expert Center Phone and Online Support
• Escalation Management
• Next Business Day onsite support

ProSupport for End Users

• Virus and Spyware help
• Application Assistance (How To) on a focused group of products
• Getting Started Advice
• Remote Assistance – Dell technicians connecting directly to system to enhance the troubleshooting process.

ProSupport for IT

• FastTrack Dispatch via IT Professional Technical Training and Certification – allows qualified users to order their own replacement parts directly, bypassing Dell's telephone queues and hardware diagnosis procedures where the user is confident he/she knows what the problem is and what part is needed to fix it.

Options (applicable to either ProSupport for End User or ProSupport for IT)

• Mission Critical Option – faster onsite response and critical situation processes
• Enterprise Wide Contract – Dedicated Service Delivery Manager (SDM) , proactive planning and reporting
• Proactive Maintenance Option – Health check services
• Remote Advisory Options – remote assistance consultation including installation, configuration, and best practice recommendations
• Computrace Theft Recovery Service – Helps track and recover stolen notebooks and remotely deletes sensitive data
• CompleteCare Accidental Damage Service – Repairs or replaces accidentally damaged systems
• Keep Your Hard Drive – Enables users to control their sensitive data by retaining their hard drives

Products Included

ProSupport for End Users and IT is supported on Dell products aimed at the commercial marketplace and includes select: Dell PowerEdge, PowerVault, PowerConnect, Dell | EMC Enterprise Storage systems that are in a standard configuration, as well as OptiPlex, Precision, Latitude, Vostro computer systems and select Dell printers that are in a standard configuration.

What's Your Services Problem?

My conversations with industry executives in the services business show certain common threads of thought as to what they feel are the major meta-issues in the industry. They wonder and worry about how to address these issues, which I am sharing here with you, while increasing both their revenues and profit margins (no shock here with this requirement). Names are deleted to protect the innocent and naive.

1. To many, business process outsourcing is hitting a dead end, or at least much slower growth, due to the high (unpublicized in the main) failure rate of such arrangements and the fact that the customers are getting wise to this.The processes are not fully understood in the beginning, the people assigned to work on them are not sufficiently experienced, and the people provided are not good enough as domain experts. The end result is either increased costs, and/or dissatisfied clients.
2. Too many deals have been won by the outsourcer on the basis of a low bid rather than the right bid. They have ended up loosing money and trying to get out of the contract. There are some notable examples in this regard. Often, the customer tries to get out of the contract as things go very badly. It is profits that count, not just revenue. How to bid properly is still an open question and the firms that solve this problem will prevail in the end.
3. There is great debate within those firms who also provide hardware and software products along with their professional services as to what the right product mix should be. Too much in one direction turns potential customers off as they believe you have become more of a niche player in the de-emphasized space. There is also a great tradeoff in how executive time is spent and one or another sector suffers.
4. Growth is, in fact, stagnant, or barely increasing, notwithstanding the sounds of praise from certain circles. The major business issue for those firms with a heavy investment in services is how to raise this number (especially for the pure play service providers).
5. Customers are more and more discontent with those professional services firms that send in tens of thousands of pounds of young folks who bill out at a high rate per diem but who provide little value-add due to their lack of experience. Gurus in vertical sectors are hard to come by.
6. Offshore outsourcing is getting more and more of a bad name. Even though it is politically incorrect, certain firms are insisting that their work be outsourced only to certain locations. Trying to find out about this is liking trying to get a bank to talk about when its database security has been breached.
7. There are too many services-only firms competing for the same dollars. There needs to be a shake out in the industry.
8. Notwithstanding their claims of vendor neutrality, too many services firms are (privately) accused of favoring one hardware/software vendor over others due to conflicts of interest or hidden sweetheart deals.

While the above collection of worries, anecdotes and facts is based on personal conversations and was not gathered based on a scientific sample or analysis, the repetition of the comments among the folks who shared their time with me makes me believe there is a lot of truth to be found here.

The solution is another matter. There is a lot going on in the industry right now to address the above. These goings-on include relabeling and reorganizing, services consolidation, worldwide adjustments to service offerings so a uniform picture is presented to the potential customer, pricing reconciliation, the packaging of even custom services as much as possible (to the extent of SKU numbers), closer packaging of services and tangible products (e.g., hardware), new managers, and a search for new processes and best practices to deliver services. Whether these attempts to improve will result in fundamental change remains to be seen. Can services really be productized?

Share your views with me and maybe see your name (if you wish) in genuine blog print.