How to turn a $3 million expense into less than $1000 using the cloud

I am just back from a holiday during which I had a very interesting conversation about cloud computing.

I was chatting with a man who develops software for government election tracking and I got curious about the peak loads his systems would need to handle. He revealed that his system needs to be set up, tested, and then run for just one day at peak load – this then tapers into nothing in just a few days. I asked him what the cost of building such infrastructure was, and he coolly replied that it was about $3 million of infrastructure that gets upgraded every couple of years to run faster.

The question I had to ask was, “Have you considered using a cloud server to handle the peak load traffic and reduce the need for your own infrastructure?”

The answer was a very quick yes. And did it work well? Yes again.

So what was the cost of using the cloud solution? The answer shocked me so thoroughly that I don’t even recall the exact figure! But it was less than $1000. He then apologised and corrected himself as it would actually be cheaper than that; $1000 was inclusive of the extra servers that generate the simulated traffic load.

This left me wondering why any business that does occasional processing of large amounts of data is not rapidly adopting cloud solutions. With a $3 million capital cost reduction you can afford to design a lot of fail-over systems to utilise more than one hosted server offering at under $1000 for the peak load solution.

I believe in 2012 we will see a lot of idle servers made redundant, which has to be a good thing as it reduces the cost of creation, eliminates power consumption, and removes the IT waste of destruction at the end of useful life.

We are truly entering an age of high performance, high availability, high productivity, and high efficiency in IT. What are you doing to make this work for your business?

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth. We win awards for the service we offer, so if your IT environment is slowing you down, contact Combo on 1300 726 626 to organise a complimentary consultation with David.

Will security be a big issue for 2012?

My bet is that this year, we will see some massive IT security issues. Let me just summarise some of the 2011 headlines and then I’ll explain why I believe 2012 will be worse.

• ANZ bank disables online banking statements after an investigation found a serious security flaw. (Reported by Chris Zappone in The Age, December 15, 2011)
• Telstra was found to have exposed some 60,000 records to the public via an Oracle database, probably for use by one of its call centres, which inadvertently published private information that could be found via Google. The Privacy Commissioner stepped in on December 12 to force them to close it down.
• ATO has potentially paid out hundreds, if not thousands, of fraudulent income tax claims to scammers who have stolen tax payer identities. Approximately $33 million in fraudulent claims have been successfully blocked but it is unknown as to how many have slipped through. (Reported by Darren Pauli of ITnews on December 12, 2011)
• DigiNotar, a Netherlands unit of Vasco Data Security, filed for bankruptcy after hackers stole security certificates to a number of domains. (Reported September 2011)
• Blackboard E-Learn software were found to have vulnerabilities that may expose thousands of student records, and other information such as exam papers, to hackers. (SC Magazine September 2011)
• Do I need to remind you of the Sony PlayStation issue of May 2011?
• And the one I find most upsetting is RSA, who are experts in two factor authentication (high level security), who admitted that they had been breached by hackers in March.

So why will it be worse in 2012?

The answer doesn’t lie with the quality of the technology; it lies with the size of the opportunity. There are now more transactions online every day and so there is more opportunity online every day. As more motivated people in third world countries and more opportunities are available to get on the internet, there are more people looking for ways to take advantage of the unsuspecting and the unprotected.

When the big players like RSA can be penetrated, it’s obvious that most of us in the SME world lack the capability to keep our data safe as we have insufficient budgets and resources to keep the hackers at bay. So in 2012, and each year onwards, we will see more benefit from our technology and at the same time, more threats and risk.

We can take steps to be less exposed than the next company, and certainly remaining vigilant and diligent will reduce risk, but we won’t be able to ensure our online safety anymore than we can be sure we will survive our drive home.

Take care out there.

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth. We win awards for the service we offer, so if your IT environment is slowing you down, contact Combo on 1300 726 626 to organise a complimentary consultation with David.

Is Volkswagen setting new IT trends for the world?

What does a car manufacturer have to do with global IT concepts? In recent times, a lot! According to a BBC Technology news article, Volkswagen has elected to turn off Blackberry servers after hours to allow their staff to separate their work and home lives.

I am always plugged in, and as an entrepreneurial business owner, I can’t help checking my email before I go to bed – and first thing when I wake up. This has had an impact on my life, but it’s a choice I’ve made.

We all expect our emails to be read by employees, clients or suppliers and don’t select when they’re sent. There are some serious implications of this trend in relation to hours worked and time management. It’s also a union minefield for larger businesses that has not yet been dealt with in Australia.

Just a couple of years ago, handheld devices were status symbols for executives who felt very important being connected to their office at all times. Today, as the price point has come down significantly and availability has increased, every reasonable person over the age of 12 seems to have a smartphone capable of connecting to email. Telstra has sold over 900,000 new devices and plans this year alone. So now everyone can be impacted by intrusive out-of-hours company messages.

The question has to be asked, “Why don’t we all limit the access to work email systems to work hours and enjoy time to ourselves in the evenings and on weekends?” If the expectation of instant connection is broken at the corporate level, our expectations of people change very quickly. After all, we should work to live not live to work, right? So Volkswagen may well be engaging in a new and very popular trend.

Is it time we all consider the impact of these invasive systems? Will Australian companies follow suit?

Please take time to leave a comment and let me know your thoughts on this emerging trend – will it take off? And should it?

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth. We win awards for the service we offer, so if your IT environment is slowing you down, contact Combo on 1300 726 626 to organise a complimentary consultation with David.

Should we use finance to buy computers and other equipment in our office?

I often meet successful business owners who do not like to use credit to buy the things they need for their business.

They are proud of the fact that they run a cashflow positive business and don’t need to use credit to fund purchases. I was like that myself as a young gun. It wasn’t until I started down the M&A path to continue my rate of growth that I realised the disadvantages of investing cash on these chattels of the business.

There are some tax incentives for leasing equipment that can outweigh the interest costs of the loan, and I strongly suggest you talk to your accountant regarding this as I am no financial advisor, and certainly I don’t know your tax status or position.

What I do know is that if you run a professional services company and you approach a bank to finance an acquisition of additional business, you will meet a wall of disinterest.

Worse, if you run a business with a low debt ratio because you collect your debts effectively, the bank will look at your debtor book and elect not to lend you very much money at all.

Yet the IT hardware companies who are keen to use cash surpluses to loan money to spend on IT equipment to drive their own sales will lend at competitive rates, freeing up cash in your business to re-invest in expansion through acquisitions or investment in sales and marketing. If you seek growth in your business there are plenty of ways to use cash better than in the stuff that sits in your office.

Even desks and chairs can be effectively financed to allow more cash for expansion… don’t forget the company car as well.

Examples of this I have observed outside my own business are:

• Real estate agents who could drive significant benefit in their business by expanding their rent roles.
• Doctors who move into larger premises or expand their practice with additional staff to see more patients.
• Consultants who could improve their investment in sales and marketing to get more work in the door. This will smooth out the workload by paying to outsource marketing, and do more with their time.

If you are currently funding all of these capital items from cash reserves then chances are you have limited your capacity for future growth and success. This reaches beyond IT systems, but it’s very much part of expanding your business from small to medium.

One thing I am sure of – the longer you keep the vulture capitalists away from your business, the more of it you get to keep when they finally swoop to help you grow even faster. So, by failing to conserve cash in a good business, the faster you play into their hands.

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth. We win awards for the service we offer, so if your IT environment is slowing you down, contact Combo on 1300 726 626 to organise a complimentary consultation with David.

What is "as a Service"?

The big trend for 2012 will be “as a Service” (aaS). Of course, this is part of the jargon for cloud computing which includes PaaS, IaaS and SaaS.

Let me explain.

If we consider our in-house servers of yesterday, we had one physical box running one physical server. In more recent times we have added a layer of virtulisation to run multiple servers on one physical box – leading to greater efficiencies and better redundancies. Now we are moving those physical servers out of our own offices and into data centers to get more secure physical locations and better access to high bandwidth data.

The next step from this co-located hardware environment is private cloud solutions where we no longer own the hardware but simply lease what we need by the virtual slice of a larger system.

There is a logical progression from IaaS to PaaS to SaaS.

IaaS is Infrastructure as a Service. In this model, we connect to a shared set of servers and make us of a virtual server platform, install our own operating system, and manage the applications installed on that frame. This has us responsible for everything except the hardware and virtualisation layer. Possibly, we are still managing the backup at this level of outsourcing.

PaaS is Platform as a Service, where you use someone else’s infrastructure and operating system, and simply add your applications and data to that platform. This removes much of the management responsibility for keeping your environment up-to-date but leaves you managing the application and software versions – possibly including the runtime environments and still taking responsibility for the backup.

SaaS is the ultimate cloud destination as far as I am concerned. Software as a Service offers us the connect-and-use facility. We are responsible only for paying our subscription and remembering our password. We then connect and use without managing our infrastructure, data, backup, run time, virtulisation or anything. Any upgrades required a managed by the vendor – we just log on and use the tool. Our account ensures we, and only we, gain access to our personal data. The system automatically backs up that data and we can forget about management of the systems.

Today there are SaaS solutions for many of the tools we stress about, and in 2012 many companies – from two employees to 200,000 – will consider changing.

Even if you didn’t comprehend the differences above, or if you aren’t sure what they all mean for you, it is well worth talking to your IT strategist about how you might save money and improve your IT systems this year by connecting to a TaaS (Technology as a Service) solution. There are now plenty of case studies for TasS available, and plenty of advisors who can help you take advantage of cloud technology.

There are also lots of hybrid solutions that make use of your technology already in place, but allow you to extend capabilities by adding TaaS parts to your existing infrastructure. Certainly in 2012 it’s time to ask what leverage we can gain from the clouds.

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth. We win awards for the service we offer, so if your IT environment is slowing you down, contact Combo on 1300 726 626 to organise a complimentary consultation with David.

Building your flight plan

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth. We win awards for the service we offer, so if your IT environment is slowing you down, contact Combo on 1300 726 626 to organise a complimentary consultation with David.

Why you should replace your IT equipment before it fails

Why would you replace your IT equipment before it fails? The answer is because it’s under $3 per day to remove the risk.

I know times are a little tough globally at the moment, and it’s a great idea to reduce spending. But we are seeing an alarming trend in small businesses that are running hardware until it fails.

It’s time to rethink why we replace IT equipment and look at where we are (or aren’t) saving funds.

In the fifth and sixth year of a PCs life, the physical device is of no real value. Certainly extending the life of equipment reduces expenditure on products, but what is it doing to maintenance costs and productivity? Now I’m not endorsing consumerist behaviour, and I detest the creation of landfill from IT waste, but despite that, I am a business person, and I know that the total cost of ownership is still important to the bottom line. This is the ultimate measure of business health over the long-term, so I look at the cost of using inefficient, unstable computers in businesses where the highest cost is labour.

If your business is in the professional services space or if your computers are used by professional staff in your office, then your cost per hour for a staff member is more over two hours than the value of a computer in its fifth year of service ($20 or less). Although a new PC with software and set may seem expensive, the cost per day over a three year span is probably well under $3 per day, and under $2 per day if you get a fourth year out of it.

How many more minutes of work per day do your staff need to accomplish to justify the $3 expense?

So now, let’s look at the potential cost, not of a slowdown but of failure. When IT equipment fails it stops us in our tracks these days. So for each occurrence of downtime we have loss of productivity, distraction of others and potentially, loss of income. If it takes a couple of days to replace our $20 device, we could lose revenue of hundreds, or in some cases, thousands of dollars. If data is lost in the failure, it could be a great effort of time and money to retrieve or reconstruct the data – more days and dollars lost. In the case of servers, this amount can grow to tens of thousands of dollars.

I will also mention that new versions of operating systems and software can offer additional benefits and features that we previously hadn’t considered necessary. And so, there can be additional bonuses from upgrading. For example, I now use Outlook via the internet from anywhere, without needing to use Outlook Web Access or a VPN – all thanks to my new Windows 7, Office 2010 laptop. This has been a big step forward as I only need to keep track of how to use one system, and I have no barrier to entry.

So is there an upside to running old PCs?

• Certainly if they are performing well, it’s hard to see that the risk justifies the expense of replacement. But are they really running that well for you?
• Buying well in the first place to ensure a third and fourth year of use reduces the cost of moving from one machine to another, however, no matter how well the migration is done there is always an impact on the person in front of the PC.
• Reducing landfill is a huge bonus.
• Energy of creation is also reduced, although offset by running costs as new machines tend to be more efficient.
• Some of us still get emotionally attached to our devices – especially if you have cool stickers on them!
• While some of you will work with volunteers, and don’t need to increase their productivity, there is no cost to workers. But is there respect for their sanity?

Really, I am struggling to see a reason for hanging on; do you have any?

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth. We win awards for the service we offer, so if your IT environment is slowing you down, contact Combo on 1300 726 626 to organise a complimentary consultation with David.