The jury is still out on the future of the U.S. economy. Some predict that we are on the edge of the normal business cycle and should start to see a significant decline in profits, precipitating a recession in the near future. Others believe that the cooling of the global economy will lead to a decline in the U.S. economy. On the other hand, some believe that the U.S. will continue to be the brightest spot in the global economy, attracting investors from around the world to our assets. Whichever economic scenario occurs, the old adage remains true: the only thing that is certain is change. Many in our industry are prioritizing the need to hedge their IT services against adverse market conditions which, incidentally, also creates a cost effective, agile and responsive IT environment.
Pay Down Technical Debt
As with finances, carrying debt into an economic downturn can be burdensome, if not catastrophic. End of life infrastructure, poorly maintained platforms, outdated solutions, and under-trained resources will all make it harder to deliver services when budgets are trimmed and make it more difficult to respond to renewed demand once a turnaround takes place. After the last recession, many found their abilities to deliver business intelligence, mobility, and other business needs slowed considerably by the debt they carried into the recession, hampering their businesses’ ability to be competitive in a renewed and more competitive environment.
Controlling Costs
Needless to say, cost containment is critical to surviving economic change, but short-sighted cost containment can be detrimental to an organization’s long-term health. Sustainable, intelligent cost containment includes avoiding large capital expenditures which can result in fixed costs that can’t be scaled.When on-premise solutions are oversized, the only way to reduce costs is to shortcut monitoring, maintenance, and support, which in the long term will result in poor performance and even outages.
In terms of providing services to a highly distributed organization and distributing the cost, the cloud and managed service model makes sense for commercial real estate companies to adopt. Clint Osteen, Director, IT at Granite Properties, explained, “It makes life a whole lot easier for us when we talk about allocating costs back to the properties. It’s much easier when you can get a specific PC-count allocated to that property, and we get billed for what is going on in that location.”
Larry Schachter, CIO at Cammeby’s International, agrees: “It simplifies the budgeting process. You can predict and track spending based upon usage, rather than a fixed cost that you will have to live with for a period of time.”
Build for Scalability and Agility
Deploying systems which can scale with the business and be adapted to changing demand allows the business to maneuver through shifting IT demand without short cutting their service delivery. Osteen noted, “Real estate is cyclical. What we found is: before we have a chance to make a big change, we’re already coming back and suddenly we have to scale back up. Even though we have this flexibility to scale down, we notice with things constantly changing, costs aren’t necessarily rising, but we’re never bringing things down. We’re just changing that service.”
Cloud services such as Office 365 and Azure can provide these kinds of scalable platforms with no capital investment.
Schachter commented, “When we move to an Office 365 or an outsourced model, we generally buy our licensing through our managed service provider. They can flex as we flex so I’m not sitting there with licenses going unused for years, and for us, it’s the only way we can effectively do business.”
Keep the Vision
When faced with budget cuts and stretched resources, it’s easy to get into survival mode. Leaders may abdicate their throne and simply become managers, focusing on keeping the lights on. When interest in innovation is renewed, this survival mentality will no longer be appreciated, and the business leaders may feel underserved by their own technology team when they learn of cutting edge innovations through their competitors or vendors. It’s vital to be both prudent and visionary, focusing on operational efficiency while keeping the business informed and envisioned about what is being done in the marketplace.
Schachter related, “People with significant on-premise solutions get stuck. Moving to a cloud or managed service makes it easier to get unstuck. You go through the migration, and it gets you there quicker than going through an in-house hardware or technology upgrade on-premise. At that point, you’re set. You’re not sitting there with legacy issues. You’re living in a best-of-breed world with Office 365, Amazon Web Services, Microsoft Azure, etc…and you’re really living like the big boys.”
A Strategy
Cloud and managed services are the means that many are using to hedge against the risks faced by IT teams during challenging economic times.
By moving email, telephony, and document storage to the cloud, these commodity services are monitored and maintained by the provider’s subject matter experts, eliminating technical debt. Furthermore, the subscription-based cost structure helps to contain cost while also providing the scalability to ramp up or down based on the demand of your organization. Finally, being cloud-based rather than constrained by your premises makes them inherently mobile, a feature that is a requirement for most solutions in today’s environment.
Leveraging managed services for monitoring, maintenance, and support further allows IT teams to focus on value added, business facing activities. A hybrid model includes: embedded support staff for high touch needs, event monitoring, automation and shared resources for administrative functions, shared subject matter experts for higher level support and problem management, and endpoint management tools. This allows managed service providers to cost effectively support an operation. Your in-house team is then free to focus on business analysis, solution development and deployment, business process improvement and high touch training, all of which add significantly more value to your business.
By moving commodity services to the cloud and leveraging managed services partnerships, organizations can effectively move away from the interrupt-centric aspects of IT support. The IT team can focus on better understanding the business and its drivers, and innovate in a way that can more positively affect the bottom line; not only by reducing costs, but by increasing the agility and competitiveness of the business. The CIO will no longer be the ‘controller’ of IT, but through innovation, (s)he will empower the business.
[Reposted from Realcomm Advisory]
