Why cloud is crucial for a sustainable business, and how to choose the best option.
The Covid-19 outbreak has reinforced two lessons for businesses – the importance of cloud-based services and the need to ensure their model is sustainable. Cloud platforms have really come into their own, providing accessibility for remote workers and customers, while providing the ultimate scalability for businesses facing an uncertain future. But in a world where both the economy and environment are facing unprecedented challenges, it is more vital than ever for business owners and CFOs to make informed business decisions.
Choosing the right cloud option can be daunting, and a truly sustainable business needs a clear understanding of the financial and business case drivers to help make the right decisions.
Review the business model
Changes are happening at a rapid pace in today’s business environment, with many companies looking at downsizing and improving their remote working capabilities. Even beyond the extremes of a pandemic, acquisitions, new ventures, upturns and downturns all provide daily challenges for senior managers.
Nothing illustrates how quickly the business environment can change as the infographic below.
The infographic shows the vast drop in consumption of electricity since Covid-19 hit New Zealand. Many businesses were unable to operate from their normal offices and stores. While most have adapted to working from home, the shutdown had a huge impact on commercial electricity consumption.
While major industry consumes a third of all our energy, the wider commercial sectors consume a further quarter of New Zealand’s electricity demand. It is this quarter that we can reasonably assume to have almost completely evaporated when the lights went off.
Although the future is opening up and consumption is starting to rebound, businesses are now focused on new ways of consuming energy or delivering services.
Many CFOs and CIOs are trying to figure out this new way of working and how it affects their own businesses. The days of the road warrior salesperson may be coming to an end. How we engage with, incentivise and add value to our clients will look very different, as some may prefer a call from the office or a virtual meeting to a corporate lunch. Customers too will be feeling the impact, with online engagement becoming the predominant form of communication, and Microsoft Teams, Zoom, and Hangouts becoming an integrated part of working culture.
In addition, Covid-19 has caused a large shift in the global economy and supply chain. Secure production and supply are increasingly of greater importance than the cheapest or most efficient options, which has led to a greater focus on in-house production, multiple suppliers or regional stockpiling.
The result of all this is we can no longer trust the stability of the surrounding environment. While we may see some return to the old ways of working, some business processes will never be the same again. Business managers therefore need to be prepared to constantly review business models and consider whether their technology needs are still being met by their current system. This will help ensure their business remains sustainable in a world that can change drastically in what seems like a second.
Plan for the rebound
Kiwifruit producer Zespri is a classic example of how to approach this kind of situation. In 2010, it was dealing with the PSA Virus, which caused entire crops of kiwifruit to fail. The popular gold kiwifruit was the most affected variety, spurring Zespri scientists to research a resistant strain.
They knew the situation could have gone either way – with the opportunity to double production if the new strain was successful or ultimately halve if the research failed. Zespri was concerned about having enough computing power to cover existing demand while preparing for both the best- and worst-case scenarios.
With support from Total Utilities to assess its existing IT costs and consumption, Zespri was given a list of options that projected the business outcomes and costs for each. It could either continue managing and maintaining its own data centre, outsource its data to another local vendor, or switch to the public cloud so it could replicate the same platforms around the world. Zespri chose the latter, moving its infrastructure and associated platforms onto the Microsoft Azure Cloud.
This decision helped Zespri cover a multitude of potential problems by removing the financial risk of investing in its own tech infrastructure, allowing rapid expansion of a global supply chain and delivering detailed cost control mechanisms. Providing Zespri with financial operations toolsets allowed it to efficiently manage costs and consumption, which was repaid as Zespri’s research gamble paid off and the business grew in scale. Measures such as “cost per tray of kiwifruit shipped” have become an important way of tracking success. Zespri has used subscription cloud services as an effective way to manage, analyse and contain its costs ever since.
Not only does that mean Zespri is able to adapt its model to any scenario, not having a data centre on site reduces both energy consumption and space. The business is therefore more sustainable in every sense of the word – something consumers around the world increasingly expect. Microsoft itself has committed to removing all carbon it has ever emitted directly or by energy consumption from the environment by 2050, reinforced by its pledge to support New Zealand’s sustainability goals through its new datacentre investment. As every organisation on the planet is challenged to review its impact on the environment, choosing greener IT options is a great way to minimise your footprint.
As the adage goes, the only certainty in life is change. While an upfront investment during downturns can be daunting, the best way for any business to safeguard its sustainability long-term is to invest in an IT system that doesn’t become obsolete, that meets modern expectations around environmental impacts and which allows workers the greatest accessibility in an era when many of us are now working remotely. And that means embracing the cloud.
Ensure resilience
A resilient network and good technical support are essential to every modern business. There is an expectation for email, purchasing or sales automation to be working around the clock. Software updates, testing or hardware failures are no longer an excuse for disrupted services, which can instantly see customers go elsewhere.
Just five years ago, businesses were put off moving their platforms and operations to the cloud because they weren’t sure about achieving the level of compliance and technical competence they needed to operate the systems. Every business we consulted felt the skills to manage cloud migration were a barrier to digitising their operations, and that only in-house experts could provide the support needed. That figure is now just 40 per cent. Trust in the cloud and cloud providers to manage their businesses and tailor their services to their needs has skyrocketed.
Likewise, secure and reliable connections are more available than ever. While some thought the demand put on the internet during this period of working from home wouldn’t hold up, the Covid-19 lockdown has proven how resilient the internet can be. It is a credit to our network providers, whether fibre, copper or mobile data-based, that these services have remained largely in place as millions of people have suddenly put tremendous demand on capacity.
This shows that network availability is no longer a constraint holding back businesses from placing their operations and services in the cloud. Those organisations using public cloud services are also better placed to combat the predatory players who sought to take advantage of the situation via scams and cyber-attacks, with regular security upgrades not available to those using an outdated server in the back office.
No longer can you place your trust in simply ‘doing it yourself’. Instead, managed cloud-based services can prove more secure and reliable. Security and connectivity is complex to establish and even more challenging to maintain, especially when scarce, skilled resources are in high demand.
Establish good financial governance
Whichever cloud service you use, make sure to choose a partner or platform that can provide real-time analysis and reporting so you can see exactly how it’s working for your business and change your plan if you need to.
Governance, cost control and resource efficiency have always been top priorities for businesses. Now more than ever, businesses are focused on getting the best value for money from their technological solutions while growing a sustainable business. One thing cloud-based platforms do very well, thanks to their sheer accessibility and ease of use, is enable workers to use a huge range of resources and implement their own changes and updates. However, if unconstrained, this can result in wastage and bill-shock.
While governance and budget setting have provided the framework for cost control and planning for decades, moving to the cloud requires a new level of collaboration between Finance and IT. Ensuring these two teams remain communicative through the cloud integration process is vital to ensuring it runs smoothly and efficiently, that the right functionality is baked in from the beginning and there are no budget surprises.
As well as close co-operation, the key to ensuring total visibility and that cloud services are providing the best value, is using a monitoring service to provide real-time data on how cloud is being consumed across the business. The best services can illustrate exactly how resources are being used – either energy or data – and enable CFOs and other decision-makers to rapidly change to new plans that are better for the environment and the bottom line. Clear and regular reporting is essential and takes a great deal of time and effort out of maintaining good governance.
Cloud is the future of many businesses and in a time of so much change and uncertainty, it is important to know your business has a model it can rely on to save costs and make governance far less onerous. To know that your business is making most of out your cloud service, make sure you have reporting in place so you can accurately reflect usage in real time, limit your expenses and energy consumption and create a business model that’s truly sustainable for many years to come.
I recently spent some time with a group of business leaders who all had concerns about the increasing demands for money and resources that were being made right across their enterprises.
Whether it was investments in new plant and machinery, wage increases, new government regulations or the price of electricity and waste services, they all felt pressure on the bottom line.
Why spend money on social media?!
One area that came up in discussion was justifying our Social Media spend. For many people that I talk to, it feels like a bottomless pit where they pour cash in, only to be told that their search engine optimisation is inadequate, their branding is fluffy and their budget is not in line with industry trends.
My Masters Thesis was on exactly this topic. Finally, an audience after all that work!
My approach had been to interview twenty-five senior executives and business owners. This group included local success story Trade Me and huge global advertising firm Saatchi & Saatchi, as well as local retail outlets, businesses and for an expert perspective Justin Flitter, one of New Zealand’s leading Social Media and Emerging Technology commentators.
What are these?!
Last week my eleven-year-old grandson was introduced to a programme on free to air television.
“What are these?” he asked when the ads came on.
Is it any wonder television and print media are on a seemingly terminal decline? When kids do not even recognise a paid TV advertisement, the future is bleak for that industry and of concern to those of us still using their services.
Where in the past many of us saw newspapers, radio and television as our first port of call for our promotional activity, high cost, lack of reach and focus make today’s digital platforms a far more effective use of limited funds.
But how is this value derived? There are five value creators businesses can focus on when evaluating the effectiveness of their internet strategy. These are Commerce, Community, Communication, Connection and Content.
Commerce
You don’t need me to tell you about e-commerce. Anyone not living in a cave will know that online customer interaction is essential.
E-Commerce is not simply about trade though. If we are not doing so already, we should be collecting customer data and leveraging the huge value that this drives.
A simple but powerful example is Amazon. Yes, they will sell you anything from a book to an electric car, but next time you visit, pay attention to their “recommendations”. Their data collection has followed your journey to the site, noted what you buy and where you stop and look. You are their ‘customer of one’.
Algorithms are far more effective at knowing your preferences than the old school face to face service we expect from our local retailer.
We are not all retailers of course. My firm, Total Utilities, is interested in procurement contract expiries and value, leveraging energy and waste consumption trends, carbon footprints and greenhouse gas emissions. Sure, we collect this data ourselves, but often this information is provided by our clients who will willingly contribute this in exchange for superior value, speed and actionable insights.
Data has real, measurable shareholder value and when combined with commercial transactions, inquiries and insights makes your business worth more every day. Once it was the customer list that had value, today it is insights into customer preference.
Community
This year I joined three significant social media communities. One group shares information on growing organic food, another is a professional Financial Operations (FinOps) group specialising in managing the complexity of OPEX-based service contracts, and the third is a group that helps me learn Italian and Norwegian.
None are related and yet all have a key characteristic: they make me feel a part of something as a consumer and as a contributor.
In the past I would have joined an Italian Society or attended meetings of Financial experts or visited organic gardens. Today, if I have a question, I simply type it online and my answer will come from all over the world, or from just down the road. Either way it is instant, usually expert, and relevant to my needs.
What is important is that by participating in, and supporting a ‘Community of Practice’ as these groups are formally known, my knowledge increases, my reputation is enhanced, and the opportunity to communicate, and extract value is created in real time.
I have formed lasting relationships with people I have not met face to face. One data specialist in Tel Aviv has extended an open invitation for me to visit. Just as powerfully, I have received calls from prospective clients, noting my membership of the Fin Ops group and wanting to meet.
Communication and Connection
Most of us recognise Zoom, Skype and Teams and the vital role they played in keeping staff and customers in constant touch during lockdown. The ability to consume face to face meetings, document share and deliver powerful presentations was revealed to us all almost overnight. We took the opportunity with both hands and doing so business changed forever.
Compare these tools to phone systems, emails, letters and faxes and the performance, cost and benefit equation is clear to us all. Consider that video calling services for many of us were delivered at zero or near zero cost to the user. Also consider the ease with which even the most non-technical user engaged with these tools and the internet’s transformational capability within business is brought to light.
Content
If it is normal for us to search the web for our every need it is also quite reasonable to expect that our clients and potential clients are doing the same thing.
Creation and dissemination of web content is proving to be the key to differentiating our products, companies and brands. Where once a website with a logo, a photo of our offices, our contact details and a quick summary of our services was enough, we are now seeing emerging players and current competitors reaching higher by delivering quality, timely insights right to the devices of those who need it.
Content no longer just relies on visitors coming to our websites. Digital content marketing is a powerful tool that directs your carefully crafted content to a specific group of people in a specific geography. For example, I produced some information recently on how cloud computing could be used as a tool to help businesses coming out of the lockdown quickly move into recovery and growth mode.
With the help of a specialist digital content marketer we were able to direct that content to over 20,000 senior managers whose specific interest was marketing and finance. This was achieved using a methodology called “boosting”.
Not only was this content directed to the right people, we were able to measure the level of interest, deal with feedback and react in near real time to requests for more information.
The Simple Things in Life are Often the Most Valuable
When billions of people across the world suddenly started video-calling friends, family and colleagues, the web handled it. When millions of students went online for their school lessons the web handled it. When we all started playing computer games and watching Netflix at once, the web remained working.
The internet is a network of machines designed to transfer information at speed, reliably and efficiently via the shortest available path. It has the capacity to serve five times as much demand as a worst-case scenario produces and is self-healing in almost any event. Secure, scalable and astonishingly cheap to use, we took it for granted until COVID-19.
May I suggest the next time you walk past that IT person crouched under a desk you stop to thank them. These people help keep your computer running and we have all witnessed how essential that is. Without IT departments, the world would have been a much darker place during lockdown.
In the meantime, consider this question. How many people do you know who have found love on the internet? If you are thirty years old or less the answer will likely be “most of my friends at one point or another”.
If you want clients to love your brand understanding the five C’s is a great place to start.
Total Utilities is proud to have been nominated as a finalist in the 12th annual Microsoft New Zealand Partner Awards. These awards reveal the capability and influence that Microsoft Partners have in empowering customers to create real change and value.
As a business we have been known for a number of years for vendor-independent business consulting which enables our customers to make informed and contestable decisions in relation to their migration to Cloud computing.
Once the customer embarks on that journey it is crucially important to have the right governance in place to control costs and realise the value promised in the original business case.
Total Utilities has developed analytics that ensure our clients gain the value from their cloud environments and provide insights to help save money.
“Being finalists for the 2019 Microsoft Partner ‘Optimising Operations Award’ is a significant milestone for Total Utilities as it means we are now also gaining recognition for our independent, innovative and inexpensive Cloud FinOps service which provides that financial governance.”
The -aaS consumption model is nothing new when it comes down to brass tacks – it’s exactly how we’ve been consuming electricity ever since Edison and Tesla were squabbling.
Over the last 130 or so years, electricity consumption has risen and with it, the cost.
This is why Total Utilities stepped in to help businesses in New Zealand ensure that their power costs were being thoughtfully managed through analysis of quantitative and qualitative data.
Now, the team at Total Utilities have brought their years of experience and the array of tools at their disposal to help enterprises transition to the cloud in the most cost-effective and outcome-focused way possible.
Total Utilities strategy and transformation director David Spratt explained that as a company that specialises in the analysis of data, migration to the cloud is a no-brainer.
“The intellectual battle over the cloud is done,” Spratt says.
“if you haven’t heard about the multitude of advantages that public cloud can bring to any organisation, then you haven’t been listening. To be competitive from our corner of the world, you need to be using world-class technology and today, that means public cloud.”
Every day, more enterprises move onto the cloud. Every day, another startup is born there, ready to displace their predecessors. And every day, you have someone else tell you that if you don’t move now, you’re done for.
Total Utilities is not interested in this kind of manic hyperbole. In fact, the team’s knowledge and expertise in the cloud was inspired not just by their love of the tech, but more importantly by their passion for saving money for their clients.
“As a completely vendor-agnostic consultancy, we aren’t trying to convince anyone to spend more or upsell to products they don’t need,” Spratt explains.
“If your company has brand new servers that are fully functional and ticking along happily, you probably aren’t interested in migrating everything right now. We understand that and want to guide both IT specialists and C-level executives to make the right decisions about what should be moved, how it should be moved, and when to move it.”
Total Utilities helps organisations bridge the communication gap between IT and the C-suite, speaking both languages, and suggesting clear, evidence-based options that are all about making life easy for the techies, and making money for the execs.
This is not some upstart company aiming to build their experience – for the last five years, they have worked with New Zealand’s major kiwifruit exporter and agricultural giant Zespri, providing financial insights and ongoing evidence of the value that migrating to Azure has brought.
“We said to Zespri, ‘Are you really in the business of owning and operating IT?’ And of course they’re not,” Spratt elaborates.
“But certain key services they have to deliver. So how do you get out of the business of owning and operating tin boxes that go ping, and into the business of providing all the services that give a business strategic advantages?”
Total Utilities performed assessments in every area to see what the cloud could offer. They looked at the obvious benefits like the ability to copy/paste their systems for deployment in any country, simplified disaster recovery and backup, and the ability to scale up or down based on crop yield.
Scalability ended up being a key driver for Zespri as this transformation occurred at the same time as the much-publicised Psa disease that threatened to wipe out their gold kiwifruit stock.
Zespri wasn’t sure if it would end up with shipping numbers dropping from 80 million to 40 million, or if a new strain of fruit would take successfully and end up yielding 140 million. Total Utilities showed them how being in the cloud would mean they were ready for any eventuality.
But then they even dug deeper, looking at the cost per square metre of housing private servers, power costs, and the depreciation of hardware over time.
Today, Zespri still sits on Azure and continues to work with Total Utilities to ensure that it is always in the best position to achieve its goals as one of New Zealand’s biggest organisations.
Now, Total Utilities wants to help your organisation be as profitable and streamlined as it can possibly be – get in touch today to find out how.
For the third year in a row BusinessPlus has allowed me the opportunity to take the mickey out of a select group of businesses and individuals in this satirical Christmas “awards” wrap-up.
That’s a big call by the editor when my track record for saying the wrong thing at exactly the wrong time precedes me. If you are offended, I am in the phone book and on social media. If you have a laugh, then send the kudos to my brave editor.
Taking the Eye off the Prize Award – Auckland Council
When a huge storm with 200kph-plus winds blew out the candles on 150,000 Auckland households last April, we all sympathised with the hardworking Vector crews and management as they scrambled to ensure the hippies out West didn’t lose their indoor light garden, marijuana crops.
Later it turned out that a big part of the problem was damage caused by Auckland Council-controlled trees crashing down under the weight of reduced maintenance programmes and inadequate planning rules.
More focus on the basics might have left us not having to cook defrosted freezer contents over gas barbecues for a week
Social Media Brand Genius Award – Clarke Gayford
Clarke, could you be any more savvy than to be photographed standing, dripping sweat, in a skin-tight wetsuit while gently tucking your infant child into your rippling biceps?
Creating a personal social media brand bigger than a Kardashian’s booty while retaining the job title of “stay-at-home dad”, you even found the time to construct a patio deck for your house while in the midst of new parenthood.
In a blow to husbands and partners across the nation, your smiling perfection has exposed our hopeless parenting inadequacies for all to see. To make matters worse for me the remains of my broken self-esteem were wiped away when my partner hissed those fateful words, “Why can’t you be more like him?”
Curdled Milk Award – Fonterra
Take billions of dollars’ worth of farmers’ hard-won milk products, package them up for international consumption, add a highly paid exec team and shiny new Auckland Viaduct offices, then deliver a loss of $140 million.
This is usually a recipe for pitchforks and flaming torches. It’s lucky Fonterra’s shareholders couldn’t afford the newly excised fuel to get their tractors to the ritual burning. Hopefully 2019 will see a return to form for what is usually the shining star of our agricultural economy.
Accident Waiting to Happen Award – Steel and Tube
Steel & Tube has been fined a record $1.885 million for breaching the Fair Trading Act by making false and misleading representations about its steel mesh products that are used in construction to provide strength and stability in the event of an earthquake.
Getting the product testing wrong had the potential to wreak havoc on our roads, but for the timely intervention of the Commerce Commission and the prompt admission of error by the company.
The irony was not lost on the writer that recent company share buyers have included the New Zealand Government through the Accident Compensation Corporation.
If Fletcher Building’s takeover attempt of Steel and Tube proves a success, expect far greater attention to be paid to test regimes and quality control than proved to be the case here.
Unsung Hero Award – Rod Drury, founder of Xero
Founder and still 13 per cent shareholder of Xero, Rod Drury, has proved that Kiwi companies can fly in the highly competitive international marketplace for accounting software.
Rod stepped down as CEO this year in further proof that emotionally secure, servant leaders can make way for innovation and change without ceasing to be brilliant entrepreneurs.
Xero has surpassed one million subscribers globally and heads a long list of New Zealand tech enterprises flexing their muscles internationally. Xero ships no physical product as it spreads its wings across the globe. Food for thought in a world looking for clean, green, sustainable solutions from countries such as New Zealand.
That’s it for 2018. Have a safe and restful break and a wonderful Christmas. See you in the New Year.
David Spratt is a director of Total Utilities. Email [email protected]
Data protection is the process of safeguarding important information from corruption, compromise or loss.
Many of us will have watched with some concern the ongoing reports of hacking, ransomware (where a hacker locks or encrypts your company data and demands a ransom before releasing it) and data theft by outside agencies.
IT Security Threats Pose New Risks for Owners and Directors
As owners and Directors of businesses in this country, we cannot ignore the real risks presented to our companies by theft or destruction of company data. Stricter laws governing Director’s responsibility make risk management and mitigation very personal.
Henri Elliot, Founder and CEO of Board Dynamics commented to me recently, “It is essential Directors take a strong position on all forms of risk. Risk should be on the Board’s agenda each month and should be appropriately categorised. For example – is a staff member taking a list of clients a company policy issue? An HR issue? An IT security issue? In truth, it is all of the above and Directors need to take a holistic approach.”
Security Risks Are Mainly Internal
The scary thing when we consider the risks around IT is that it is not the sneaky Russians or the depraved teenage geeks who represent the real threat to most businesses. In fact, it’s often quiet Jane from Finance or good old reliable Mac from Sales who represent the real and present danger.
If you think I am being a bit dramatic (and my wife would agree with you) think again. Here are a few things that should give you food for thought.
Nearly two-thirds of employees surveyed, who leave an organisation voluntarily or involuntarily, say they take sensitive data with them.
That is a real wake-up call when you consider that your staff will almost inevitably have access to sales and customer records, design secrets and new product plans.
Nine out of ten Information Technology (IT) staff surveyed indicated that if they lost their jobs whether through redundancy or by firing would take sensitive company data with them.
Techies are extra smart, often socially inept and prone to impulsive behaviour when stressed. Just because Jason the geek is a bit dishevelled in the morning doesn’t mean he is not capable of revenge served cold.
So how does Jane, Mac or Jason walk out the door with your most valuable secrets? In truth, they probably don’t. Your worst enemy is email. Over a quarter of data, thefts have been as simple as attaching a file to an email and sending it home or to a friend.
Next on the IT security threat list for most small to medium businesses is that convenient friend, the USB stick. In many cases, these data downloads start quite innocently with your trusted person downloading files, so they can work from home. It’s only when they are preparing to leave that the true value of the customer list they downloaded becomes clear.
I can dwell on ways you can lose your company data, but in truth, this only serves to make you overly fearful. Instead, let’s look at a couple of the signals that your data may be at risk.
Signals Your Data Might Be at Risk
Negative Work Events
Laying off or firing staff, whatever the reason should be a signal that your data is at risk. A huge proportion of internal IT security failures come from a desire for revenge. If you are planning to terminate a staff member it is important that you monitor that person’s behaviour. A surge in large data files being downloaded or emails to an unusual address should be a huge red flag.
Complacency
In many cases, data security failures are just a case of staff members, managers, or owners who just don’t get it. Data is valuable only if you see it that way.
The signals of complacency are often clear. You should be troubled by people violating simple IT security policies like keeping passwords protected. It is the company who will pay and the staff who end up with their jobs at risk if you ignore the knowingly irresponsible behaviour.
Next month I will run through the key things you can do to reduce the risk of insider security threats without treating your much-loved people as if they are criminals.
