by DavidSpratt | Feb 27, 2017 | Energy, ICT
Over Christmas 2015 I spent a lot of my beach time getting sun burnt and considering the threat of global warming to my kids and to their kids.
I eventually decided that, to save the planet, I could start by measuring the energy consumption of every electrical device in the world. This would help people understand how to use these devices more efficiently, they would use less energy and “voila” world saved!
The only problem is – how the heck do I talk to every electrical device in the world? More importantly – how do I get them to talk back to me?
Welcome to the emerging world of the Internet of Things
The Internet of Things? What the heck is that?
All many of us know about this topic is via TV or the newspaper with an over hyped American guru telling us how our new fridges will know whether we are about to run out of milk and will place an order for delivery that day.
Now, to be honest, I don’t want Countdown to know that every week I drink four dozen beers, scoff sixteen packets of crisps and kill my inner sadness with endless king size bars of dairy milk chocolate.
So why am I writing an article trying to explain and justify something that sounds a little bit too much like big brother is watching? Because it matters. Because the Internet of Things is about how our businesses can sustainably compete in the future.
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by DavidSpratt | Dec 13, 2016 | ICT
After a busy year trying to make sense of the changing ICT landscape I’m winding down for Christmas by attending as many customer and supplier events as possible. The prospect of free wine and food, stimulating conversations and standard speeches by sales managers delivers a mix of pleasure and pain.
I’ve also delighted in compiling my 2016 awards list of companies and individuals that have taken on the IT challenge and made a difference, one way or another.
The IT challenge awards go to:
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by DavidSpratt | Aug 1, 2016 | ICT
We talk to dozens of small and large companies around the country to help them modernise and streamline their ICT needs. We frequently hear about an issue that’s important to managers everywhere: a supposed lack of control over the growth of these as-needed costs. In many cases, the concern isn’t a technical issue, it’s a management one. It is also one that can be modelled and controlled.
You can always spend more money on cloud services, but you shouldn’t be surprised by your monthly bill. In an ICT/cloud infrastructure model there are three basic levers that need to be managed in order to control costs and consumption. Let’s take a look at each of them.
1. Establishing proper authority to buy services
Picture a junior technical person happily sitting at their desk with ideas running freely through their inexperienced but giant brain. “Eureka!” they cry, “I can solve my technical problem by using loads of storage on a huge server”.
Reaching for the department’s username and password, our intrepid techo accesses a public cloud service provider, nails up the required infrastructure and sets to work.
Our junior techo never actually switched off the environment they created; in fact it was so useful that it became the test bed for the whole department. Nor did they even have the delegated financial authority to spend the money.
Two months later a finance person, waving an eye-wateringly large invoice, arrives in the IT manager’s office. The company was committed and the money spent before you could say “breach of process”.
2. Controlling storage and backup growth
For the past 20 years organisations have grown their storage at around 70 per cent each year on average, as shown in the diagram below.
The diagram shows you were able to negotiate a 20 per cent price reduction every year for six years while backing up 70 per cent more data annually. Monthly backup charges have grown from $200 per month to a whopping $930, despite aggressive price reductions.
3. Monitoring the proliferation of server infrastructure
Our intrepid junior techo has moved to an organisation with more “flexible” IT policies (that means no policies, in case you needed clarification). Techo’s new boss has just turned up waving an unexpectedly large invoice and demanding a reduction in the number of servers.
We can’t do that! says our techo, These servers are all essential to the running of the business.
Flummoxed, the IT manager storms off, wondering just how to handle the inevitable conversation with Ms Money, the chief financial officer. Ringing in his ears are the words: “Don’t give me problems – I want solutions”.
How to manage each cost contributor
Authority to buy services
A good thing about most cloud service providers is they offer some form of budget control solution, however, organisations need to understand the spending risk and put in place internal policies around just how and when cloud services are consumed.
Storage and backups
I have yet to find a multinational backup software provider that seeks to reduce the amount of data their users back up – hardly surprising as they charge by the Gigabyte.
To get on top of this problem, measure performance against agreed limits on storage and backups, and ensure technical people apply tools like deduplication (ie, only backing up one cat video shared on email), aging non-critical data, and long term archiving.
Measuring performance requires active monitoring by those in senior positions. I use a tool that reports in real time. and used properly incentivises the IT team to actively manage the challenge, and delivers the satisfaction of real financial results for their efforts.
Server infrastructure
Just as with backup software suppliers, server support providers are hardly incentivised to shut down servers when they charge a fee for every server they manage.
The answer for managing costs is the same as for storage and backups: agree overall targets, and drive to these.
Remember, although some servers are actually mission critical, not all are. Switching off a system just to hit an arbitrary target could be catastrophic, so key stakeholder input is as important when switching them off, as it is when switching them on. Monitoring server utilisation can quickly identify significant savings opportunities, and places the onus on the technical folk to justify why a server can’t be switched off in the low season.
Baseline what you have, analyse the projected and actual costs, and monitor the inevitable ebbs and flows of a dynamic IT cloud infrastructure. The rewards will be huge, the savings real and the risk negligible when you get this right.
If you’d like help modelling your ICT management, get in touch with me using the details below.
by DavidSpratt | Jul 12, 2016 | Case Studies, ICT
The year 2013 was tough for Zespri.
The PSA virus was decimating its growers’ high value, gold kiwifruit crops across New Zealand. As well, a major initiative was underway to help growers replace existing cultivars with a more disease- tolerant variety, Sun Gold.
The hope was that this cultivar’s vigorous fruiting qualities would also lead to strong production, that it would be outstandingly successful with consumers, and help sustain the growth of the industry.
The Zespri board and executive had witnessed the devastation of the Christchurch earthquakes and the Japanese tsunami, and recognised a risk to their offices in Mt Maunganui and backup IT services in Tauranga. Zespri operates a global supply chain, and losing its IT services could leave crops unpicked, left in storage or stuck on wharves anywhere in the world.
To compound the challenge, Zespri’s IT infrastructure was approaching end-of-life, and required a substantial capital investment to upgrade and enhance existing services.
In short, the kiwifruit marketing, grower-owned company faced the following risks:
Financial risk
A substantial capital investment is a challenge to any business. The competition for funds is fierce. In this case of an IT upgrade there would be a multi-year burden on the balance sheet as the items depreciated, whilst uncertainty swirled around the business’ long term viability.
Scale risk
If the crop yield grew as hoped, then there was a need to quickly scale up to markets new and existing. If the crop yield fell then the IT investment would be oversized compared to the need going forward, with the burden sitting on the balance sheet. Either way, replicating the current IT environment was not the answer.
Natural disaster risk
Christchurch’s earthquakes and Japan’s tsunami had changed the risk equation for Zespri’s business forever. Natural disasters were now a very real threat to continued IT service in a 24/7/365 global enterprise. Were data centres, even if distributed across the North Island, really a robust answer?
Global reach risk
Offices across the globe required access to IT services, many of which were operated out of Mt Maunganui. These services were delivered via complex, secure VPNs (Virtual Private Networks). Technically this approach worked, but it placed all the business’ eggs in one basket. With a real business need for application access via mobile phones, tablets and roaming devices, VPNs seemed a very complex way to access services. The question came from above:
I get easy access to Facebook and LinkedIn when I am travelling. Why not my business information?
Support risk
How does a New Zealand company deliver acceptable levels of support to cities across the world? What if the network connection goes down in Tokyo during the peak season? Who do you send? What service guarantees are there? Who gets priority in a major crisis?
The solution options
- Keep things as they are: unacceptable.
After the earthquakes and the tsunami, having two data centres within the same region was now seen as just too plain risky.
- Moving to new, geographically separate hosting facilities: marginal.
- Moving equipment and services into a hosted environment didn’t solve the problem of scaling up and down, or offer a financially sensible option. Commercially, Zespri would have to upgrade the IT equipment to have it hosted, or sign up for a fixed term to have a supplier own and operate it on their behalf.
- Shove it all up into the cloud: scary.
But that is exactly what they did.
Growth enabled
Now three years later Zespri is in growth mode. The gold crop is producing record numbers and is in demand across the planet.
The IT systems scale up and down as seasonal and market demands require, consuming services as needed and switching them off when not required.
Costs are no longer tied to capital investment. The IT financial model is consumption-based with close monitoring and management of expenses using a combination of financial analysis, real time online analytics provided by Total Utilities and constant reappraisal of the business’ requirements based on the insights delivered.
Access is via a stable and secure data network, delivered by a world class provider. The supply chain resides in multiple Microsoft Azure data centres globally, ensuring business continuity.
This managed, outsourced Azure environment delivers critical supply chain services globally. Coupled with Office 365, Skype for Business and SharePoint, Zespri is competing for market share on the world stage. It is able to scale with speed, delivering a robust and repeatable IT environment as new offices open and new services emerge and evolve, and all this at a lower cost per tray of kiwifruit than was previously thought possible.
No innovation comes without a new set of risks and challenges though. As with international roaming mobile data services, bill shock can be an issue.
In my next post, I will address managing and monitoring consumption-based IT services locally and in the public cloud.
David Spratt is director of ICT at Total Utilities. Email [email protected]
by DavidSpratt | Jun 30, 2016 | ICT
Complexity, cost, and increasing competitive inertia create big problems for business IT departments, as we saw in part one of this series. In today’s post, David Spratt addresses what to do about it.
So where did we leave off, last post?
- Competitive advantage through Information Technology seems a thing of the past.
- Your business is loaded with technical debt – spending money on systems that add less and less value while costs continue to soar while nimble, more agile competitors grab your market share
- The IT department is full of people focussed on boxes that go ping and red flashing lights.
- A finance team that can’t see why the latest request for more investment in more fancy boxes makes any sense – and you agree with them!
What to do about technical debt and IT?
Let’s start with another story.
I recently met with members of New Zealand Cricket’s leadership at the completion of a strategic IT Review that I had been asked to conduct.
As we ran through the findings I raised the great Black Cap performances I had been privileged to watch recently. As we shared our obvious pleasure at the progress NZ Cricket has made in the last three or four years I naughtily asked,
“Does New Zealand Cricket design, manufacture and sell cricket bats?”
“Of course not,” came the reply. “It is not our core business. We are aiming to be a world class sporting organisation not a bat manufacturer.”
“So why then would you choose to own and operate your own IT”?
My point?
No matter what business you are in you should be actively questioning why you should own or operate IT services.
Should you own your IT Systems?
Let’s start with a simple question?
“What will I spend on IT over the next three years?”
No I am not asking you for a budget. Dig deep – check the balance sheet for depreciating IT assets – (add a new capital spend if they are approaching zero value). Find the actual time and materials charges from suppliers for the last two years. Check your licencing costs. Check maintenance and service charges from your top IT suppliers.
Ask yourself “Is this spend adding strategic value to my business?”
Now go to IT and ask for something that you would like to happen. A simple thing will suffice – like accessing your key systems from any location using a mobile device and an internet connection.
If the answer is “Tut, tut, hmmm, that depends – it’s not in the budget” then you KNOW you are in a technical debt trap and that the business has a real problem with competitive advantage or the lack of it.
So what to do? What to do?
Down the rabbit hole…
I could say:
- Find a new provider
- Appoint a new IT manager
- Automate your IT delivery systems
- Move everything to the cloud
The trouble is that none of these in themselves answer the simple question:
“How do I derive value from technology – especially IT systems?”
So let’s start there.
Identifying the solution to stagnant IT returns
Identify two categories of IT:
Category A.
Those that are legacy and are “table stakes” to doing business. Think email, calendars, Microsoft Office, HR systems and finance systems.
Category B.
Those that really add value to the business. Think systems that drive productivity on the shop floor, improve sales effectiveness, unique systems that are distinctive to your business and strike fear into the heart of your competitors.
Analyse category A. Legacy and Table Stakes systems
What are they costing you to own and maintain? Are they cost effective, efficiently run and securely delivered? How would you know if they were?
It’s time to outsource all this dross to the “best cost” provider. That usually means Software as a Service simply because owning the equipment and software that supports legacy services is neither core business nor an efficient use of your limited resources.
Office 365 and Xero are great examples of world class systems available at a much lower cost than doing it yourself. (Note – I don’t sell this stuff so this opinion is based on experience not vested interest.)
Analyse Category B. Systems that add unique business value and competitive advantage.
This is the gold and needs to be mined.
Ask yourself – Are these systems easily available to those that need them? For example, via a mobile phone or from home via an internet connection and a browser. To my important clients?
Are we maximising the value we could extract from them? Is the current system world class or at least Best of Breed?
It’s time to focus on investing where the business will benefit most.
But here is the catch.
Even Category B systems may not be creating enough value to set your business apart.
In the world today Industry IT Systems that you spent years developing are increasingly being made available over the internet via Software as a Service (The New Guard).
These emerging services are genuinely world class in terms of quality, security and availability. The issue is ANYONE can use them with only a few weeks, sometime even a few days, effort. These systems are also being used to do away with entire industries that once relied on them. This is called Continuous Disruption. For examples see below:
Where does this leave you? It leaves you with the day after yesterday.
If you currently own and operate IT today from both a legacy and strategic perspective, you should be regularly re-evaluating just where the value is and where it might will lie in the future.
If, when looking at your IT systems today, you can’t find the value then it simply does not exist!
With these two questions the journey begins.
What am I currently spending my money on in terms of IT?
Where is this creating value for my business?
For a real world example see next month for a case study in IT transformation at one of New Zealand’s most prominent export companies.
Now, let’s see if we can drop our technical debt and get those IT folks back to the Christmas party this year…
Missed part one? Discover the crux of the issue here.
