Innovative Visions

While maintaining our original business model for telecommunications contract and negotiation management (where our clients receive free management and consulting services from IV), Innovative Visions, LLC is considering adopting a new stance for the IT hardware and software reseller market. We are hoping to get some active feedback on this proposed model, before launching. This service is in the fashion that the customer always comes first. Here are the details of this strategy and how it can impact your business. Please let us know your thoughts and feelings about this subject and if you would like to retain IV’s services in this area, then contact us by any means convenient to you.

Problem:

The IT hardware and software market is a commodity market where increased competition creates a need for added value, hence the term Value-Added Reseller (VAR), to differentiate from the next VAR calling on the phone. The problem is that most VAR’s aren’t offering anything new or innovative and they are still paid by the manufacturers and distributors and not by the customers they serve. Although their interest may be to serve the client, ultimately they serve whoever pays them. Forms of revenue for VARs include markup on the front-end (this is the ONLY part paid for by the customer), rebates on the back-end, associated (or unassociated) marketing dollars and spiffs ranging from $5 per unit to trips to Cancun for sales reps, management, buyers, marketing and anyone else who can influence the sale. This misdirected loyalty creates an environment where the customers’ needs, although taken into account, are often foregone because the manufacturer will pay for the rep to gamble with the family at a casino all weekend, if the deal goes their way.

History:

As you know, most manufacturers of hardware and software depend on Value-Added Resellers (VARs) to distribute and sell their product. In some cases these VAR’s purchase the products directly from the manufacturers, however the majority of products go through a two-tier distribution channel before getting to your door. This is done to allow each party to concentrate on it’s core competency whether that be designing and manufacturing, distribution or sales, service and invoicing. For these various services, each party retains a fee based as a percentage of cost in the form of a markup. The distributor generally retains between 2-4% on each product they sell to the VAR. VARs, on average, make between 9-55% on products (obviously depending on the product category). Although most companies will get a fair price from their resellers, this is generally only obtained after hard negotiation, increased sales volume and constant price checking with the competition. This work can be time consuming, costly and exhausting, diverting your attention away from more critical tasks associated with your business. However, even after all of that work, you the customer may still get an inferior product for your needs solely because a competing manufacturer pushed incentives into the deal to influence the decision.

Experience:

This situation creates the potential to save time and money, while ensuring that a trusted, independent party will look after your needs first and foremost. This is where Innovative Visions can help. Jake Carey-Rand, President and Founder of Innovative Visions, LLC, has been active in the IT hardware and software reseller channel since early 2002. Trained by industry veterans who created the channel, his primary focus has always been on the customer. Although at times frustrated by the misaligned loyalties, his work has always remained consistently focused on the customer. Jake started working for a Fortune 1000 VAR selling in excess of $2 million per year and pushing as many boxes as possible out the door and moved to managing complex relationships with smaller, regional VARs with more mobility and flexibility. Throughout this process he has developed a deep understanding of the IT channel, its players and the technical and financial structure on which this channel operates. His focus is entirely on his clients and their needs.

Opportunity:

Since 2002, Mr. Carey-Rand and Innovative Visions have primarily helped clients by providing free technical and sales consultation. Historically this process starts by finding the right technological solution to a business problem, then moves to finding part numbers, pricing, proposal, managing the sale and the very important follow-up. Of course for any “value-added” service there is an inherent fee built into the associated cost, as previously discussed. This fee is the markup the VAR charges to the client. Anywhere from 9-55%, depending on the product, plus the distribution % on the back-end (and don’t forget those incentives). But in this system of doing business, the customers interests are only as important as the added money the VAR is able to obtain. The system is inherently backwards and not created to serve the clients’ interest at all.

Proposal:

IV proposes managing your purchasing process for you in order to save time, money and reduce complexity. The level of service, attention to detail and technical and industry knowledge only stand to get more client-focused by following this new model of serving customers. Wouldn’t it be nice not to have to worry about whether or not the cost of that server is fair because you know your broker is independent, knowledgeable and tough? What about not dealing with the complexity of finding part numbers, associated peripherals (such as memory, hard drives, cases, etc.) and instead concentrating on your core competency of running your department and company? Innovative Visions will work with you to ensure your purchasing decisions are correct, the technology is the right solution to solve your problems and you are getting the absolute best price possible. These services will cost you no more than you would have otherwise spent, because the fee is based on expected annual savings to your company by maintaining IV’s independence.

Please let us know your questions and comments either in the form of a comment or email.

ComputerWorld.com released a special report last July discussing the future of IT jobs and what we can expect in 2010. I recently came across the various articles produced by the results of this study and want to share some relevant insight. The researchers’ primary focus concentrated on how to keep up with the outsourcing trend and the increased need for continual training in raw IT skills. While it draws some good conclusions (and is certainly worth reading), it fails to discuss what is really at the core of this issue and where we can all help to ensure proper industry growth with shared profitability AND responsibility.

IT careers, whether now or in 2010, are about more then just raw skills and “keeping up” with the India’s and China’s of our expanding world. While I have yet to read Thomas Friedman’s new book, “The World is Flat: The Expanded Edition” it is on top of my crowded list. From an initial look, his discussion focuses more on information, knowledge and cultural understanding than it does on ensuring your people have the latest XML skills. I believe most changes in the IT job market can be tracked, corrected and taken advantage of by understanding the cultural shifts affecting us.

Whether your company is domestic, international or multinational there are certain job functions best performed by certain people. If you are worried about your job being outsourced, it is just as likely that it will be outsourced domestically as it will internationally so let’s instead concentrate on what you can do to prepare and continue on with your career. Instead of trying to keep up on your certifications, learn the latest and greatest ERP packages and spend weeks in classes to further develop your integration skills, try a different approach… who knows, it might actually work!

No matter where a company conducts its business, there are certain cultural issues prevalent in every environment. Concentrate your efforts instead on furthering your knowledge of various cultures so that you are a resource in demand to facilitate and bridge the cultural gaps when outsourcing of basic and key IT functions does happen; and it will happen sooner or later. I’m not telling you to abandon your quest for greater IT knowledge, but make it relevant and useful! In other words, instead of concentrating on IT management, systems administration or storage configuration, concentrate instead on knowledge management and how you can bring the most value to your company; therefore securing your position through at least 2010. It is becoming more and more of a balancing act between those raw skills and business understanding. Why do you think “Business Analysts” are in such demand?

More on this later…

As I’ve discussed before, IV uses Google to host its email and it works like a charm. In addition, I have been using Google’s set of “Apps” for collaborative word processing, excel and calendar functions for the past eight months or so (perhaps closer to a year).

This morning, Google announced the official release of Google Apps Premier for the corporate user and for the first time, you have to pay for it. Is it worth it? Well, you can see a great summary of features and a comparison with Microsoft’s Window’s Live at WebWorkerDaily.com.

However, there was another, less publicized announcement made by Avaya today which will pit Google against Microsoft in yet another area… Avaya plans on integrating its voice and data services with Google Apps Premier in the near future, thereby directly competing with a similar agreement between Microsoft and Nortel. This should bring some interesting things to come in the enormous (and enormously underserved) small business market. I love this stuff!!

The following was taken from an article on StartupNation.com, of which IV is a contributing member. Written by Marcia Layton Turner, it has some decent things to say which I feel are worth passing along. The full article can be read here.

1) Identify the problem

When EndSight saw its customer satisfaction, efficiency and employee satisfaction levels plummeting, management knew it was time to make a change.

But even if your company isn’t experiencing problems or bottlenecks, there may still be opportunities to improve overall efficiency and productivity.

Eric Hobbs, president of Cary, N.C.-based Technology Associates, Inc., suggests companies start by looking at “whatever they do repeatedly for customers.” Then seek out technology that can help the business do that work faster or better. “Inefficiency is expensive,” Carroll agrees.

2) Determine What You Need

Once you’ve zeroed in on processes needing improvement, the next step is finding the technology best-suited for the situation. In most cases, small business owners shouldn’t be making such choices themselves, although many still try to “cobble it together,” Hobbs says, maybe by asking for help from a colleague or neighbor.

Like Carroll, Hobbs strongly advocates hiring an information technology consultant to recommend equipment and a plan for the future.

Even EndSight, a company of IT specialists, hired a consultant for help in choosing the most appropriate equipment. Recognizing its lack of familiarity with phone systems, the firm decided to leave its integration to the experts.

One place to start looking for qualified IT vendors and consultants, Hobbs suggests, is Microsoft’s Small Business Center. He also advises sticking with name-brand hardware and software to avoid most major problems. “Ninety percent of a small business’s needs can be handled by off-the-shelf products, many of which are already seamlessly integrated,” he says – meaning, as Florin Pal of Business Communications Solutions puts it – that they’ll “play nice with other equipment.”

3) Develop a plan

After choosing your IT vendor or consultant, the next step is creating a plan for getting from where you are to where you want to be tech-wise. A timeline, equipment list and critical steps should be part of that plan, including how employees will be brought into the loop.

“One of the key things people overlook is their personnel,” says Pal, customer service manager at Business Communications Solutions of Irvine, Calif. While you may be ahead of the curve in your familiarity with different technologies, don’t assume your employees are right there with you. Some may actually be tech-averse. “Don’t jump too far ahead with the technology,” Pal says. “Take incremental steps and everyone can use the new features and benefit from them, rather than being frustrated.”

4) Install the Equipment

Likewise, “the fewer systems the better,” says David Koretz, CEO of BlueTie, of Rochester, N.Y. “Sixty percent of enterprise software sits on a shelf unused,” he says, reinforcing the importance of investing in software that will improve your company’s performance. “Don’t implement technology for technology’s sake – do it to make more money,” Carroll adds.

Training should also be a part of your roll-out plan, as well as access to consultants for post support.

5) Keep It Maintained

“People forget about the maintenance,” says Pal, but keeping software and hardware up-to-date will assure that your technology and your business run smoothly – and continue to grow together.

I’ve been working a couple of different projects recently which have kept me quite busy. Both involve data storage, but each is handled differently. The primary question at the bottom of both projects is should the client store its data on site or outsource that task? There are going to be positive and negative factors no matter what scenario you pick, so the question you have to ask is: How do we optimize the design for your business model and strategy? Is this model in line with your security policy (please tell me you have one by now)…Also, keep in mind that Congress may finally take a stand on how businesses secure customer data and of course, Symantec’s John Thompson constantly reminds us of its importance.

The old-school method of data storage is to process (with local servers) and back it up to tape on site, then store those tapes off site in a secure location (preferably not the back of your car or CEO’s timeshare, as we’ve stressed before). This is still very effective, but may not satisfy your data availability needs. If you need to find a tape and have it shipped to you, then retrieve that five year old email you needed yesterday, it may not work so well.

As another option, you can outsource your processing, storing and backing up of all of your data off site (i.e. hosted by a trusted, third party and accessible to you at all times). While losing some control, this may be very convenient, but depending on the amount of data we’re talking about, remember that often you will pay monthly, per gig.

As I mentioned, there are obvious pluses and minuses to each scenario. There is also a third option, growing in popularity, which combines these two designs and will leave you with a better solution overall. That is, house your servers on site (managed locally or remotely, doesn’t matter) and host your data internally as well. Then, by partnering with that trusted third party, have them image and store a backup of all data (also called vaulting, but could also be dynamic and real-time) so that in the event of an emergency, hardware/software failure or other “mix-up”, your data is secure and accessible at all times.

This last option has become more and more popular with the reduced cost of disk space and more efficient methods of backing up over the WAN. It enables you to control and manipulate your data locally, but have it housed offsite as well for security and availability. And as EMC’s chief, Joe Tucci, said this week: “You will see EMC playing there.” This speaks directly to the subject, considering EMC is the world’s largest hardware/software storage vendor and it is considering making storage a service.

How to really “Get Your Communications Off Life Support”

It seems that in the past couple of years, there has been a noticeable slowdown in innovative thinking within companies as it relates to IT. I realize that this is a strong statement and perhaps not everyone will agree with me. I’m OK with that, because I’m not the only one and I can see this becoming a growing concern in the near future.

Google’s General Manager and Vice President of Enterprise, Dave Girouard knows enterprise software architecture and he knows data management. Girouard heads up Google’s efforts to bring the simplicity and management of consumer software to the enterprise and is so far succeeding (at least in my eyes). His group has so far released the Google Apps “suite” of products and I’m sure there is more innovation on the way. Our team here at IV uses Google for email (at ivforbusiness.com), for shared spreadsheets, calendar and Google Talk for Instant Messaging. Because I don’t have to worry about managing an email server, Office applications and backing up and storing all of this information, I have the ability to concentrate my efforts instead on innovation for IV and more importantly for our clients.

Speaking at yesterday’s keynote address for the Massachusetts Technology Leadership Council’s annual meeting, Girouard voiced his increasing concern with the limited innovation happening within corporations’ technology departments. He stated that “75% to 80% of IT budgets (are spent) simply maintaining the systems they have already,” according to Jon Brodkin at Network World. With such a heavy concentration of time and energy spent on maintaining existing infrastructure and the status quo, what percentage of a CIO’s time, energy and budget are left to create innovative processes and procedures for his or her organization? Has a CIO’s job description become “head fixer-upper” or is there anything left relating to “Information Management?”

Girouard went on to state that IT organizations and companies should, at a strategic level, take another look at the way they manage technology and consider outsourcing its day to day management, even if your internal departments are fully capable of handling the workload. The idea here is that hardware and software break-fix work, installs and the associated ongoing management is a commodity service in itself. Why use the majority of your internal resources to manage a commodity? Why spend all of that time and money on training your staff and keeping them up to date on the latest and greatest, if you can do so more cost-effectively by outsourcing these tasks?

‘“A lot of things that people think of as core IT functions need to disappear into the ether so that the IT organization can properly focus on the value-added [activities],” he said. “Information security, as critical as it is, needs to be taken care of by organizations who live and die by it, who invest the money, time, resources and staff. Why should every company in the world have to build up their own expertise and have to maintain servers and provide security?”’ (Jon Brodkin of Network World)

Instead they could be creating new and improved processes and strategically aligning your technology to your business. So, does innovation still exist within a corporate IT department? I hope so, but let’s help give it a jumpstart by creating the right conditions for this to happen. I guarantee it will pay off. For more on Dave Girouard and Google Apps, here is a pretty good CIO Insight interview with him.