Cloud computing turns out to be a disruptive technology. It is the next stage of the Internet computing model, one in which business will consume more and more services, not technologies. And these services are ready to run, available outside the office walls, and paid for on the basis of usage, just like water or electricity. As the cloud and services model matures, business will be able to solve old problems more inexpensively and rapidly. And what’s more: business units will be able to address new challenges that they were never able to address before. The cloud will force business to change, and even more, force IT providers and IT departments to change.

For a lot of companies their journey to the cloud began some time ago. Other organizations may be in an exploratory phase. Regardless the present situation of your organization, this master class provides you an unique opportunity to get under the hood of cloud computing and to learn from other CIO’s and experts in their field. You’ll get deep insights in the business opportunities of the new paradigm, in the roadmaps for implementation, but also in the limitations and the legal, security and privacy constraints. Further more: every module will provide one ‘inside story’: a business case or case story.

The master class is an intensive four day program including two overnight stays. This four day program contains over 28 hours lectureship, with expert guest speakers for each module. Most modules will be a half day session. In the evening there will be a plenary dinner with a mystery guest. The result at the end of the master class will be that you have enough practical knowledge to judge the business opportunities of cloud solutions for your organization and to orchestrate to steps to be taken to move to a hybrid IT ecosystem with cloud services from various providers. All in order to get more value for the same dollar.

For whom?

An exclusive 4 day masterclass for CIO’s, senior IT managers and business leaders.

Skill set: High-level business & strategical capacities and basic IT-knowledge.

De Europese Commissie (EC) komt tegemoet aan multinationals en cloudaanbieders met een voorstel voor radicale verandering voor databescherming en privacykwesties in Europa. Bedrijven die actief zijn in meerdere landen binnen en buiten de EU kunnen in de toekomst bij één toezichthoudend loket terecht.

1 loket in 1 land

Dat wordt geen internationale pan-Europese toezichthouder, maar simpelweg de toezichthouder in de lidstaat waar het bedrijf zijn Europese hoofdvestiging heeft. De regels die deze lokale waakhond stelt, zijn dan voor het bedrijf in kwestie geldig in de gehele EU. Dat maakte eurocommissaris Viviane Reding van Justitie maandag bekend.

Op dit moment moeten deze bedrijven in alle lidstaten aan de nationale wetten apart voldoen. Die wetten zijn weliswaar gebaseerd op één Europese richtlijn uit 1995, maar de lidstaten hebben dat flink verschillend uitgewerkt. Zo zijn de regels rond databescherming en privacy in bijvoorbeeld in Duitsland veel strenger dan in Groot-Brittannië en Ierland.

Multinationals moeten nu aan 27 verschillende wetten en waakhonden in even zoveel lidstaten voldoen. De administratieve rompslomp die deze juridische lappendeken met zich meebrengt kost bedrijven circa 2,3 miljard euro aan omzet per jaar, constateert Reding.

Ierland voor hele EU

Het creëren van één loket levert bedrijven flinke besparingen op en geeft ze duidelijkheid en rechtszekerheid. Bedrijven als Google, Microsoft en Amazon hoeven dan voor al hun Europese activiteiten alleen maar te voldoen aan de Ierse databeschermingswet en te luisteren naar de Ierse privacywaakhond.

Er komt ook een nieuwe methode voor bedrijven om het transporteren, verwerken en opslaan van data buiten de EU te regelen. \'Data vliegt van Barcelona naar Bangalore. Het wordt verwerkt in Dublin, opgeslagen in Californië en opgevraagd in Milaan. [...] In deze \'brave new digital world\' hebben we een efficiënte en effectieve manier nodig om er zeker van te zijn de persoonsgegevens online goed beschermd zijn\', aldus Reding in een vervolgspeech dinsdagochtend in Parijs.

Bindende bedrijfsregels

Tot nog toe zijn daar bilaterale overeenkomsten voor, zoals de omstreden Safe Harbor principes tussen de EU en de VS. De Europese Commissie stelt nu voor dat multinationals \'bindende bedrijfsregels\' opstellen en die voorleggen aan de toezichthouder in de lidstaat van de Europese hoofdvestiging. Gaat die privacywaakhond akkoord, dan moet het concern zich wereldwijd aan deze regels houden, dus binnen én buiten de EU.

De EC wil ook meer zelfregulering. Momenteel zijn organisaties verplicht om bij elke nationale toezichthouder zoals het College Bescherming Persoonsgegevens (CBP) te melden wat voor soort data met welk doel op welke manier verwerkt wordt. Die meldingsplicht komt te vervallen, als het aan Reding ligt.

Meldingsplicht bij datalek

Wel komt er een algemene meldingsplicht bij datalekken. Bedrijven die data lekken moeten dit melden bij zowel de toezichthouders als aan de personen wiens data op straat ligt.

De voorstellen van Reding komen grotendeels overeen met de eisen uit de branche, zo blijkt uit een verklaring van de Industry Coalition for Data Protection (ICDP), onderdeel van de industriegroep DigitalEurope.

Het CBP was voor publicatie niet beschikbaar voor commentaar. Eind januari 2012 zal de Europese Commissie de concrete voorstellen openbaar maken.

Bron: WebWereld Auteur: Andreas Udo de Haas

http://youtu.be/zDXCqE4Q5II

Back in 1997 when we connected to the internet using dial-up modems Steve Jobs expressed his passion and vision.

Nobody talked these days about Cloud computing. We all were to busy to manage the shift towards client/server technology.

The young, stubborn Jobs explains his vision. What more can I say, watch and listen:

Steve Jobs on Cloud Computing

If you would like to read the full article "Steve Jobs and the Innovations that pioneered the Cloud" click on The Turnkey Internet Blog.

During my Cloud workshops and lectures sometimes discussions arise about the marketing hype around Cloud computing. The techies often state that there is nothing new. Virtualization e.g. is a technology invented in 1947 and already more than a decade proven technology. Business men stipulate that they have heard many times before beautiful IT stories and were left behind disappointed, because the reality was less bright than depicted. Financial managers stress the point that all promises about IT cost reduction oftend end in paying a higher bill for new technology.

From Innovation towards utility Services

The pay-as-you-go concept is often compared with the way we pay for our electricity. Only the amount we use will be billed. If we don\'t turn on the light, we only pay a small amount for the electric grid connection. Maybe it is a good idea to look at the steps every industry takes from innovation towards utility service, like electricity, to understand why Cloud computing is here to stay.

Every major shift in industry starts with an innovation, something rare, a brand new way of doing things. After the spark of innovation the first bespoke systems will hit the market. When it really fulfill a market need, the bespoke systems will be followed by standardized products. When the products are so widely spread and matured, it will become a commodity and it can be delivered as a utility services. Here are the stages for the electric industry:

1. Innovation: 1800 electricity produced by chemical reaction

2. Bespoke: 1831 Michael Faraday electricity from rotary motion

3. Product: 1878 Thomas Edison distributed direct current electricity

4. Services: 1895 Niagara Power station started production

CRM as a utility service: Salesforce.com

If you look at Cloud Computing you will see the same stages as the electric industry. One nice example is the development of CRM systems:

1. Innovation: 1980 early lists

2. Bespoke: mid 80\'s Database marketing systems

3. Products: mid 90\'s Siebel, Oracle

4. Services: 1999 Salesforce.com founded by Marc Benioff

Why is Cloud Computing here to stay?

Cloud computing is not about technology. As we have seen above, virtualization e.g. is already a proven technology for many years. Cloud is the logical step to deliver IT as a utility service, because the basic building blocks of the IT infrastructure are standardized and widely used. IT has become a commodity.

The users attitude is there to use IT services as a commodity. Bill Gates brought the information to your fingertips and Steve Jobs has done a terrific job in putting the world in the palm of your hands. So the acceptance of the users is there to use IT as a Service. The concept of Cloud Computing is there, the tech building blocks are there and it fulfills a real market need: functionality at your fingertips, anywhere you go, anywhere you need.

www.peterhanselman.com

www.onemorething.nl

Heres-to-the-crazy-ones

Are your Data Centers ready for Cloud Computing?

Nowadays we cannot live without the user friendly apps on our smart phones. Within a couple of days the Appstore will contain 500.000 apps, used by millions of people everyday. To bring all these beautiful services at your fingertips an overwhelming amount of data has to be crunched and transported towards your mobile devices.

Consumers count on continuous 24/7 cloud services and expect comfortable high security levels. They don\'t like disasters like the recent hacking of Sony\'s Playstation customer database. We demand high qualitative services against competitive prices. Most of us don\'t realize that you need a highly specialized supply chain that starts with \'cloud ready\' Data Centers.

Mega Centers

Last month I had the opportunity to discuss the economic aspects of the Cloud with financial experts of a leading bank in Europe and with one of the leading European Cloud providers.

The central question was: how is it possible that a Cloud provider can deliver services at a price level that is considerably lower than the internal price of the own IT department?

The Bank\'s basic assumption was that this is not possible, because of the small difference in purchasing power between the IT provider and the Bank, the fact that the IT provider should make a profit and the VAT of 19 percent on the invoices are a cost to the Bank. The total IT costs of the bank fits into the benchmark of Gartner. The centralized IT department is seen as a cost center. The business units of the bank are charged according to a PxQ model. The P is based on the Gartner model and the Q is estimated a year ahead. If the real Q is higher than the estimation the extra quantity will be charged to the business units. If the real quantity is lower a nice negotiation starts to decide if the business unit will get money back. In many cases there will be no recharge because of the necessity to cover for the central IT costs.

Let\'s have a look if the basic assumption that an external Cloud Service provider cannot compete with the internal cost level of a big international bank is true or false. If the basic assumption stands the Cloud Computing market will be substantially lower than all the experts predict.

From now on we refer to the economic aspects of Cloud Computing as \'Cloudnomics\'.

Traditional IT versus Cloud Computing

A picture often tells more than thousand words. The comparison between Traditional IT and Cloud Computing can be depicted as follows:

When we compare the costs and price-levels of the different delivery models, we all make the silent assumption that all the costs are known to the financial managers. Unfortunately this assumption is not always valid. Many big companies doesn\'t have full sight of their IT costs, because there IT infrastructure is complex and the procedures to register all IT resources fail. So first of all, you have to make sure that the internal IT costs really cover all the IT cost in your company!

Economies of scale

Let\'s have a look at the three main shifts in technology from mainframes to client/server and nowadays towards Cloud Computing:

It is quite clear that from a cost perspective the economic advantages of Cloud Computing are in favor of the mainframe and client/server technology. The more MIPS the lower the cost per MIPS.

Economies of scale in the Cloud

If we focus only on Cloud Computing we see a dramatic decrease in the total cost of ownership when the number of servers is increased considerable:

This is one of the reasons why the big players are building mega computer centers.

Difference in purchasing power

One of the assumptions at the beginning of our discussion was, that the difference in purchasing power is small. If you look at the graphics that depict the advantages of the economies of scale, you come to another conclusion. A Cloud provider with big mega centers have much more purchasing power than one big company resulting in a much lower investment for the needed computer capacity. How much in percentage depends on the circumstances of the provider and its potential customer. My assessment is that the difference in purchasing power easily compensates for the VAT, which is a cost to the bank.

If you buy ten thousand\'s of servers, the room for negotiating and creativity is big. Maybe you even don\'t pay for it upfront, but only when you use this huge capacity. In this way you can optimize your business model much better than a single company can do, even a big bank.

Total cost of ownership.

If you look at the TCO graphic, it is quite clear that the cost advantages are huge. If you have really build a Cloud infrastructure that is managed almost fully automatic, you need a lot less people than in the traditional centers. The new mega center of Apple of 50.000 sq feet, will be managed by 50 people! Besides that, there are 200 people for security and cleaning. Compare this with the number of people you need to run your IT operations. I am sure you will not believe what you see.

Conclusion.

As I stated earlier the IT infrastructures of the big companies are complex and therefore expensive. A lot of hard work and big investments are needed to transform the outdated infrastructures into a fully automated Cloud infrastructure. The advantages of TCO for the Cloud providers are big enough to make a nice profit,while offering prices to its customers that are lower than the internal cost price of IT departments.

Peter Hanselman ©HMS www.peterhanselman.com

As of today a complete set of training courses and workshops are available to prepare your organization for the road to Cloud Services.A fundamental shift is happening in the market. A shift from \'information at your fingertips\' to \'services as you like it\'.

Leading Corporations are implementing Cloud Solutions in order to become more agile in the fast moving market places.

ING as launching customer

On request of ING, a renowed international bank, ITpreneurs and myself, developed in 2010 a program to change the mindset of the IT and Business people. This program consists of the following modules:

1. A video message from Business and IT management
2. Virtualization and Cloud Computing Awareness course
3. Executive Workshop
4. Virtualization Foundation training
5. Cloud Computing Foundation training
6. Business Simulation Game
7. Virtualization-Ready-Professional Exam
8. Cloud-Ready-Professional Exam
9. A supporting book \'Get Ready for Cloud Computing\'
10. A Marketing/Awareness campaign to motivate and support the learning process

This whole portfolio is adopted by ING and developed with the support from EMC, IBM, Cisco, HP, Virtual Clarity, VMware and others...

For more information how this unique program or parts of it can help you and your organization on the road to Cloud Services just give me a call at +31 629 265 420 or sent an email tohms@peterhanselman.com

Peter Hanselman, Corporate partner of ITpreneurs.

Three years ago ING decided to radically change its data center approach. Goal was to increase efficiency and to offer more flexibility into the infrastructure in order to facilitate its data center customers with platforms that best match the service levels they have set for their applications. For assistance in this project ING turned to the VCE Coalition, a cooperation of VMware, Cisco and EMC to realize \"Virtual Computing Environments\".

The efficiency project has impressive features: sixteen data centers in the Benelux will be reduced to two. 800 of the 2500 applications should be closed down within two years. Where possible, all applications will be virtualized, initially on an internal cloud, but in term also on third parties infrastructures. The x86 platform is preferred because of the cost aspect. Unix, Sparc and Unix on Power platforms are phased out wherever possible.
 

\"We look at all aspects of technology to improve efficiency and to meet new customer needs,\" says Tony Kerrison, CTO and head of Infrastructure Services of ING. The development of cloud architectures, as a natural extrapolation of virtualized environments, could only lead to one conclusion according to Kerrison: ING did not have to build new data centers, but has to demand flexible capacity in the market.
 

The extensive data center consolidation that ING has in mind, is possible thanks to a more efficient utilization of physical machines. \"A few years ago, we tried eight virtual machines per physical machine. Now we realize thirty to fifty machines in some cases.\" The miniaturization of chipsets and memory makes a further consolidation possible, expects Kerrison. Using virtual networks and virtual storage a whole set of technologies is available that allows capacity to grow over the physical footprint. \"It helps us enormously in power and cooling savings, because the visualized area is much more efficient.\"

 

Part of the efficiency wave is the virtualization of desktops with the X86 platform as base. Mid-October ING took the virtual desktop infrastructure (VDI) in production after a trial with 500 users. Kerrison: \"A virtual desktop can never be the only option, as part of our internal customers want to work in a plane or at their clients. Then you need a laptop. But for many ING employees it\'s a perfect solution because it makes them more flexible.\" Kerrison\'s department supports the virtual desktop on many platforms. For example, ING is working on a VDI app for the iPad. \"The most important reason is that we want to be device independent. We make sure it is safe and it works.\" The advantage of VDI is that no data is stored on the device. Only the session must be secured.

 

The choice for Cisco and the UCS platform was taken based on the performance of the blade platform ING reviewed. Cisco was new in this field. To ensure that this was the right choice, Kerrison executed a thorough research into the business and technology. ING chose the UCS blade infrastructure of Cisco even before the VCE coalition between VMware, Cisco and EMC was a fact. These companies introduced together Vblock, an integrated suite of network, servers and storage. Kerrison: \"For us this was very attractive because we didn\'t need to worry that much about integrating the various components. Also we could scale the Vblock package by adding or removing units based on our needs. \"

ING already had long term relationships with VMware and EMC. Kerrison: \"However, one solution wouldn\'t mean universal happiness either for us. So we have HP and IBM blades and will also continue to use these. We will regularly look what\'s the best technology at that moment.\"

 

Kerrison stresses that the choice for virtualization software was the most important decision. If that choice has been made, the hardware that runs underneath it, is of secondary importance. \"Over time the importance of virtualization software will change as well. We are working on technology that operates independently of Hypervisor (VMware), as if it\'s an extra layer on top, and automatically decides which provider of capacity best suits a particular application or data. This may be within or outside ING. At them moment we only look for capacity within ING. We are thus increasingly districting from the underlying infrastructure.\"
 

 

At the next investment cycle, ING will review all players to see what is the best option in the market at that moment. The blade suppliers are continuously developing. For example, HP has now its \'converged infrastructure\', an integrated package of its own storage, server and network. That package did not exist when ING decided to select VCE.
 

For the virtualization of the application layer all the business units were presented with a bilateral approach. First option Kerrison introduced top-down a blueprint with an architecture of applications of the future. In addition the business units reviewed bottom-up the need and operation of the current applications critically. With these two approaches a quick overview arose of what administration should involve the coming years. In order to get there, ING needed a solution to manage the current applications as efficiently as possible. Kerrison: \"On the x86 platform, we could easily virtualize. On Unix platforms we did this, where possible, via AIX, HP-UX and Solaris Containers. This way we could still maintain the virtualization concept, independent of the chipset, whether it was either Sparc or X86 power.\" For applications where this was not possible, ING used wrapper technology. \"This way we could still make them suited for virtualization without rewriting the entire application.\"

Internal education program

The management of the new IT environment ING realized, requires skills that were insufficiently present at ING. The bank has therefore developed an internal training and certification program with leading technology providers as Google, Microsoft, HP, Cisco and many others. All employees of ING Infrastructure Services follow that program so that they develop a good understanding of virtualization and cloud computing. The training and certification was designed so that other companies can take over the program. \"We want to help the industry to set a standard certification for cloud computing in the same way ITIL for IT management is created,\" says Tony Kerrison, CTO and head of Infrastructure Services of ING. \"We are already having conversations with CIOs from other companies about this in the Benelux, but also on a global scale.\"
 

Source:

This article is written by Thijs Doorenbosch/t.doorenbosch@sdu.nl  and published in Automatiseringsgids 29 oktober 2010

The last couple of years much has been written about the pros and cons of Cloud Computing. Many products and services has been brought to the market place by leading vendors like Amazon, Google, EMC, IBM, Cisco, VMware just to name a few.
Nowadays a lot of small companies and start-ups already use Cloud Services to run their business. Interesting is that the big international companies are really moving now to upgrade their IT infrastructure to become more competitive in the fast changing marketplaces. Virtualization and Cloud Computing are in 2010 on the top of the Cio’s to do list.

Time to change

Now is the time to change. Philips already brought noncore business activities into the Cloud. Air France-KLM use Google mail for information exchange with the crews. The big banks are preparing for virtualization of their IT infrastructure in order to take advantage of Cloud Services.

All these activities will have a significant effect on the way how IT and business people will work. Therefore it is time to properly prepare Business and IT people. To make them aware of the possibilities of the Cloud, to let them understand the basic concepts of Virtualization and Cloud Computing and to train the IT staff so they are professional trained to work with the new technologies.

International training initiative on Virtualization and Cloud Computing

ING acknowledge this trend towards Virtualization and Cloud Computing. As a leading bank and as a good employer ING wants to prepare their employees for the new way of working. Therefore ING took the initiative, supported by leading vendors, to develop high quality generic courses.

Change the mindset of IT and Business people

The concept of Cloud Computing changes the way of working significantly. Therefore it is necessary to change the mind set of IT and Business people. Next time we will describe the approach we recommended to realize this unique training initiative on Virtualization and cloud computing.

More information?

In the coming weekswe will inform you about the change campaign and the content of the generic courses.

For more information you can send us an email or call +31629265420

Public Cloud for young businesses

The last number of years IT technology has made several steps forward which makes it possible to offer standard solutions to businesses and consumers against low prices and standard conditions. Besides this, by the intensive use of the Internet, the browser has been accepted as the general user interface. Mind set and technology has come together and created many services that are available on line.

The Cloud offerings are all over the place. Many solution providers are rebranding their products and are in the process of transforming itself into Cloud service providers. A lot is ‘Cloud’ nowadays. Time has come to separate the chaff from the wheat.

What makes a service a Cloud service?

Let’s bring in mind the definition of Cloud Computing by Gartner, “A style of Computing where scalable and elastic IT capabilities are provided as a service to multiple customers using Internet technologies”. This is a broad definition of a general term cloud computing. Striking are the terms ‘scalable’ and ‘Internet technologies’.

Scalability

Adept IT processing to changing business levels is nothing new. Adding new servers or extra storage is business as usual. New is the agility and speed of scaling according to the needs of the business. Scaling up and down within the same box is already business as usual. Now you can also scale out, which mean that you simply can add servers and storage, almost limitless. It is just like managing the electrical grid.

In the ‘old days’ the deployment of a new server had an elapse time of 4 to 6 weeks. You have to order a server, install and test it. Assess the needed facilities like power, cooling, floor space, etc, etc. Many labor intensive small activities were needed to get your server up and running.

In a real Cloud environment you can deploy a new server not in weeks, not in hours but within a couple of minutes. You log on to the Service portal and if you are a qualified user you just order what you need. The capacity is managed on the fly in a virtual environment.

The same goes for scaling down. Go to your Service portal and stop the server you don’t need anymore. In this way you only pay for what you use. From a financial point of view it means that you turn your Capex into Opex and that is very rewarding in times of economic crises.

An acid test for a real Cloud service is the possibility to scale up and down within a very short period of time and without paying for a minimum level of service. That means that you can scale down till zero any moment you want without paying anything to the Cloud Service provider. It is like a real life utility (water, electricity, gas), you pay what you consume.

Internet Technologies

The use of Internet technologies makes it easier to connect and add content to web applications. Web 2.0 enhances the use of social network sites like Hyves, Facebook, Twitter etc. Internet becomes more and more interactive.

Main characteristics of Cloud Services

There are many different aspects to cloud computing. In our opinion there are 6 main characteristics of Cloud services.

1. Virtualization

In order to make scalability possible, the service provider should make use of the virtualization technology. This technology makes it possible to create multiple virtual servers on one physical server. As a consequence the utilization rate of CPU resources goes up and you are able to scale up and down easily.
As we said before easily scaling up and down and out makes Cloud services stand apart from the rebranded ‘old’ services.

2. Shared Platform

To be cost effective the hardware platform should be a shared one. In this way the cost can be shared with many users resulting in lower costs than usual.

3. Pay what you use

Cloud service providers offer a ‘pay what you use’ model, often per user per time unit. Keep in mind that it should be possible to scale down till zero any time you want. So you are not paying the vendor for a minimum service level.

4. Flexibility

With Cloud computing you can easily create and delete virtual servers within a very short time, as described before.

5. Automatic scaling

Another characteristic is the possibility to scale automatically depending on the traffic levels.

6. Standard solutions and conditions

To enjoy the benefits of the economics of scale the Cloud services are highly standardized and offered against standard conditions. There is not much room for customization and negotiations.

Analyze the Cloud Services offerings against these 6 characteristics before you take a decision to go for a fancy Cloud service provider.

This article is written by Peter Hanselman and Ad van de Werf

Hundreds of years ago the concept of mentoring was in use worldwide. If you wanted to be a painter, the best way to learn from was from a painter. You didn’t go to a blacksmith or a carpenter no you just went to Rembrand to ask if you might become his apprentice. You were not sure that you would become as good as the master, but you did know that you had started the right process to become a high performer.

Why did this happen?

For all people it was obvious that you learn best from people who master the job and had literally done what you want to achieve. This classical model of learning has delivered very talented craftsmen like painters, carpenters, writers and so on.

Nowadays the concept of mentoring is heavily used in circumstances where people have to deliver under stresshigh performances, like baseball, athletics, football and the like.

Learning from people who has walked your path before is very effective and motivating. A nice example of high performers who uses this mentoring model extensively is football club Barcelona.

Are you using a mentoring model?

In all high performance sports mentoring is used extensively and has provided excellent measurable results. So why are we not using the same model for working professionals? They too work under stress andneed to be high performers in a very competitive environment. They too need to learn from high performers who has walked their path before.

Traditional mentoring has disappeared because it became very difficult to find people who had done what you would like to become. Through the use of new web technologies it is again possible to find the right mentors for the mentees wherever they are on this planet. So everybody who likes to become a high performer has the possibility to find the knowledge, wisdom and experience to help him to become great.

Dr. Izzy Justice has developed and implemented a cutting-edgemethod which makes traditional mentoring again possible in our modern society.

“Technology can now connect leaders to new (1) people (2) communities and (3) knowledge sources in unprecedented ways 24/7. These connections can significantly improve the pace and quality of decision-making. The notion of relying solely on one’s own knowledge and resources to make better decisions is outdated” said Dr. Izzy Justice.

With the use of the newest technology everybody can have a top coach available for his personal and professional life. To find the right coach fitted for your needs is not an easy task. First of all you really need to know what your needs are.

Do you know what makes the difference between a star and average performer in senior leadership positions?

According to Goleman 90% of the difference is caused by Emotional Intelligence. Emotional Intelligence consists of 5 important components: Self- Awareness, Self-Regulation, Motivation, Empathy and Social Skills.

Dr. Izzy Justice has developed a unique online assessment methodology, which give you an insight in your needs for further development in your personal and professional life. The result will be that you will take better decisions and become a high performer.

Finding the right Mentor

Based on your needs and personal characteristics EQMentor will match you through a cutting edge technology with a mentor who has walked your path before. This mentor will facilitate your learning process using a certified mentoring method. The whole mentoring process will take place online and is guaranteed anonymous.

This anonymous mentoring process is described this month in Harvard Business Review in an article called “Mentoring Millennials” http://www.eqmentor.com/public/Mentoring.aspx

For more information visit www.eqmentor.com or contact me by mail or phone.

Peter Hanselman

Press Release

EQmentor to open new office in Europe May 1st, 2010

Cornelius, NC, April 30th, 2010 – EQmentor Inc., an innovative leader in professional development, announces that it will open a new office in the Netherlands to lead its European Market.

“We are very proud of our team and the success that we have had in 2009,” said Dr. Izzy S. Justice, founder and CEO of EQmentor. “As we forge ahead, even in these difficult economic times, we must continue to focus on the needs of our clients. Consistent with our long-term strategy, EQmentor will expand its market coverage by opening four new offices in May 2010. We are very pleased to have Peter Hanselman join our organization. He will hold the title of Regional Vice President of Europe and will be responsible for sales in Europe, Turkey and Russia.”

Peter lives in the Netherlands and has spent over twenty-five years working for organizations like IBM, KPMG, and most recently as CIO of several European companies. “The welfare of our society depends on innovation and social contribution. To create a better world everybody should be allowed to learn and find the best teachers. I am proud to represent EQMentor,” Said Peter Hanselman.

For additional information regarding the new offices and staff of EQmentor, please visit www.eqmentor.com

About EQmentor

EQmentor utilizes a unique and innovative approach to increasing the EQ (emotional intelligence) of working professionals through a non-traditional mentoring process, as well as an on-line community of professional peer collaboration. With custom-built technology, EQmentor is considered the next generation in professional development. EQmentor offers long-term mentoring, when you need it, through a confidential and anonymous mentor relationship. Mentees benefit from a certified mentor in a similar industry or vocation and can access the EQ Village, a collaboration of advice and ideas from working professionals, based on the daily changing needs of the individual. For more information, visit http://www.eqmentor.com, or call 704-896-2153. EQmentor is a privately-held company based in North Carolina.

Contact: Eva Rykr, 704-897-1362 or erykr@eqmentor.com

The whole world is impressed by the ease of use and the slick design of the iPhone. Everybody knows that there is an app store with a bunch of apps you can download for free or for a small amount of money. But are you really aware of what you can do with an iPhone?

Making a phone call or managing your email is something you can do with every other smartphone.

With apps available for the iPhone you can do almost everything you want. It is your portable personal digital assistant. Just ask yourself what kind of information you would like to have instantly on an average working day.

Here are some of my daily information requests and actions:

1. Wake me up with a nice music
2. Tell me the current weather and forecast
3. How is the situation on the road
4. Will my plane leave on time
5. What are the headlines of the news
6. What is the stock market doing
7. Today’s agenda
8. Urgent emails
9. Twitter messages
10. Make some urgent phone calls
11. Make a note of an needed action
12. Start a chat
13. Give me the direction to a new customer
14. Would like to know the name of the song and the band
15. What’s going on Twitter
16. Is thunder and lightning coming my way
17. What is on the TV
18. Order a cab
19. Want to play chess
20. Order some take away food
21. Check my bank account
22. Sell some stocks
23. Turn your iPhone into a remote control unit for playing music.

It is easy to mention many more information requests and actions. Take some time out of your busy schedule to find out yourself by checking the Appstore. It is simple and the Apps are really working. A wonderful world with all the information at your fingers tips will be yours.

Pilot with a Public Cloud Service

Many writers are making a distinction between Public and Private Clouds. Public Clouds deliver standard services to business users and consumers. Private Clouds are in-company clouds that deliver services to a specific company and its stakeholders e.g. customers and business partners.

The theoretical distinction sounds logical, but why should you invest in a Private Cloud when Public Cloud services are available? The Cloud provider invests in a secure and reliable service, makes its shared platform available and takes care of high speed Internet connections. Are you sure you can do a better job in terms of higher quality and lower costs?

Main Characteristics of a Public Cloud

In a former article I mentioned the following 6 main characteristics of a Public Cloud:

1. Virtualization
2. Shared Platform
3. Pay what you use
4. Flexibility
5. Automatic scaling
6. Standard solutions and conditions

Let’s have a quick look at your in-company IT infrastructure.

In-company infrastructure

I assume that you have your own data centre or data centres with a motivated professional staff and a CIO with a clear vision. That you have looked at different Outsourcing possibilities and that you have come to the conclusion that your cost of ownership is a competitive one. So you are in a good shape. Nevertheless let’s have a closer look at the main characteristics of Cloud services.

Virtualization

To benefit of the economies of scale the Cloud providers have built a complete virtual platform. Ask yourself what percentage of your servers and data are really virtualized? Twenty may be thirty percent?

Shared Platform

A shared platform is necessary for scaling up and down within a box and scaling out. Do you have realized a shared platform by strong standardization or do you have many different hardware and software platforms?

Pay what you use

A nice benefit of Cloud services is that you only pay for what you really use. Is this already the case within your company? Do you have a service catalog from which you can choose and order the service you want? Are you sure you don’t pay for the overcapacity of your data centre?

Flexibility

The Cloud providers are flexible in offering the services to you. You can easily scale up but also down, even till zero. Is this also the case within your company? Can you stop the service today and don’t get a bill anymore from your IT department?

Automatic scaling

Depending on the traffic level, Cloud providers scale automatically up and down. Does your internal provider the same for you? Or is this only possible with an elapse time that is too long and costly?

Standard solutions and conditions

Do you have standardized your application infrastructure or has every department its own ‘bespoke’ solution?

Private Cloud?

My careful estimation is that the majority of the companies have a ‘diversified’ infrastructure to put it mildly. So you need first to clean up your infrastructure and invest in a shared platform with adequate collaboration software. Get the right expertise in house and train your staff. A nice investment in a direction you are not complete sure of at this moment in time.

One of the advantages of Public Cloud Services is that it transforms your Capex into Opex. You will not have this advantage when you built up your own Private Cloud. Your operational costs will go up, because you need to invest in an upgrade of your infrastructure while your old stuff is still running.

So why should you experiment with a Private Cloud when there is a good alternative. Despite all the pro’s for Cloud Services you have to find out if it works for your company. You need to build your own business case in order to form a considered opinion and take a wise decision.

A pilot with a Public Cloud Service provider would be my first step.

Public Cloud for young businesses

What makes a service a Cloud service?

Scalability

Internet Technologies

Main characteristics of Cloud Services

1. Virtualization

2. Shared Platform

3. Pay what you use

4. Flexibility

5. Automatic scaling

6. Standard solutions and conditions

It is the limitless scalability and contract standardization

What you already can use

Latency kills response time

Last week, at the same day Steve Ballmer delivered his speech at the Washington University Microsoft launched the beta version of its Office Live Workspace. Reason enough for me to enjoy the blessings of Cloud Computing as a user.

I choose to work with Google Docs and Microsoft’s Office Live Workspace. To start with the latest offspring of the Cloud I opened Google Chrome and surfed to the free services of Office Live Workspace. After signing up with my own email address (you don’t need a MSN address) Microsoft surprised me, or not?

The first thing you need to do is to download IE 8! Although IE 8 was already installed on my computer the login process just stopped. So you need to use IE to sign up to the Live Workspace. The words ‘seamless integration’ that Microsoft uses in all the beautiful marketing material immediately gets another meaning. Seamless integration with Microsoft software that is what it means. What about interoperability between different vendors?

Live Workspace looks nice and does what it promise: free document sharing online. What I miss is the Microsoft Office Suite. It is not possible to use Word, PowerPoint and Excel. Yes, you can upload your documents and share it with the world, but you cannot create online Word documents, Excel spreadsheets and PowerPoint presentations. And that is what I want as a user. So you still need your own computer with Microsoft licenses to do your work. What\'s the use of Live Workspace?

Google\'s approach is different. You just can use Google doc\'s with any browser. So you don\'t need a fancy PC with expensive licenses. Fair to say that also Google uses a simple editor, but you can create on line almost anything you want, documents, spreadsheets, presentations, etc. With a simple browser you are up and running in no time and for free. The choice for a simple user or start up is not very difficult to make, but ..............

Latency

Unfortunately, there is a \'but\' connected to creations on line. Between the Mega Computer Centres of the vendors and your browser is a network connection called the Internet. When you start creating rich content, you will experience latency. Your workflow will be interrupted because your internet connection is not quick enough at a certain point in time, the server you are working with slows down under high traffic or there is just another hick up somewhere in the Internet.

Imagine a lawyer’s office with 50 very busy people and a lot of contractual work to be finished before a short deadline. When everybody is creating rich content under high pressure hick ups in response times are unforgivable. Within no time everybody will be fed up by this "Cloud Commuting" and open up his chute to land on the ground again.

Lesson learned

The choice of Microsoft to go for a mix of cloud services and local processing is not so bad. Google has got a lot of feed back from their customers and launched Google Docs offline. So you can create your work offline and upload it to the Cloud. The same principle that Microsoft uses with Office Live Workspace.

Working a couple of hours with both services learn you the humble lesson that searching for information on the Internet is something different than creating rich content! The last activity works quicker and better on an infrastructure with a high speed internal network and fast servers.

Eat your own dog food.

Last week I had the opportunity to visit the new Headquarters of Microsoft Nederland. The building is situated at Schiphol Airport and is called ……. The Outlook.

The purpose of my visit was to discuss Microsoft\'s vision on Cloud Computing. I got my first surprise when I entered the building. Not the usual procedure of presenting yourself to security guards behind big desks. No you are personally welcomed by a hospitality team. Immediately I got a pleasant feeling: respected and taken care of.

Shortly my host, Account Technology Strategist Ed Houweling, arrived and took me to a nice conference room. Modern, light and with the right equipment. There we discussed Microsoft’s vision on Cloud computing. Microsoft believes strongly in a mix of “traditional” software and services from the cloud.

To prove that Microsoft really believes in what they tell you my host took me on a tour through the new Headquarters. Immediately you will notice that nobody has an own room or own desk. Not even Theo Rinsema, the General Manager. It is an open office landscape, with a variety in “spaces” and interior decorations. It is designed for People! People who collaborates with other people like their customers, prospects, colleagues, friends etc. All using of course Microsoft software.

How do they collaborate? Right, by eating their own dog food. Every employee has a laptop or tablet PC, Smartphone, headset, webcam, keyboard, mouse and smartcard. With the smartcard you enter the Office Building and the Intranet. That is it. If you need a big screen? Just plug it to your laptop. No desktops and no old fashioned telephone equipment. Use built in webcams to collaborate with your colleague anywhere in the world. Do you need to have a meeting with a group of people scattered around the world. Just use Microsoft’s Roundtable.

So more than 900 Microsoft employees, exclusive part timers, are working out of an office where room for only 700 people is. In the old building 60% of the employees had an “own” desk. This means 17 square meters per employee, with an occupancy rate of 70%. Now it is only 12! Yet the Headquarters is not crowded, space enough and a relaxed but active atmosphere.

If you really have doubts about the possibilities of collaboration software take a couple of hours out of your busy schedule and visit this remarkable collaboration office. It is not an office of the future, but an office you can use now.

I do agree with you that Cloud Computing is a marketing buzzword. Don\'t believe that it will solve all my problems. To be honest, I do believe that it will increase my problems. Nobody has a total overview anymore.

Maybe I am old fashioned, but I do think that by integrating a lot of different software the security problems will increase. You might open the door to your business data! How do you properly control the access to sensitive data? Most people don\'t realise what an insight they give by using the social networks like Facebook, Hyves, etc.

So I don\'t believe that Cloud Computing takes care for a seamless integration of all the software in the world. Sure you can access a lot of data, but who takes care of all the legacy systems and exemptions? All companies has a whole lot of it. For integration you need interfaces. This means testing and maintenance. How do you support the different applications? How do you handle the different wishes of your customers? Everybody want something slightly different. So you stumble upon the discussion of standard versus bespoke software.

Pieter Riley

Hello Peter, 2010-03-01

Interesting article to read. However I do agree with the comments of Pieter. There are quite a few snags. The concept of Cloud computing exists already a couple of years. My expectation is that this concept will not be successful in the business area.

Especially because all the data is transferred over the Internet. Seamless integration sounds great, but looks at all the nice promises made by the introduction of SOA and ERP. Integration is not a piece of cake because a lot of applications are business specific. Even if you want to link SAP with SAP you stumble upon a lot of problems. Imagine what happens with other applications.

A long time ago Accenture has started to roll out SAP ‘as a service’ to water companies. It started well and was new. However …what is the state of the art now? Was this initiative successful?

The Cloud will not be used as long as companies stick to the traditional idea that their systems provide a competitive advance.

Henry van den Berg

Hello Peter,

I agree with Pieter Riley.
Using cloud computing takes you out of control of the reliability of your data and your computing capacity. If you want to create independency towards the outside world keep your computing capacity and your data inside! Security is the key-issue because there is very little information and experience available about security issues related to cloud computing.

In my opinion cloud computing is an alternative to outsourcing created by marketing campaigns. Outsourcing was not so successful as many suppliers do believe. Cost effectiveness was the buzzword related to outsourcing; it never turned out to be real.

There is also an other issue: while using cloud computing the infrastructure, application and architecture knowledge level within companies decreases; knowing the business is also important for employees that manages the infrastructure and applications.

So my opinion before using cloud computing as a vehicle: be aware of the pro’s, con’s and riscs for the continuity of your business! Involve the business in your decision!

Reaction on comments

Cloud Computing: IT management doesn’t believe it (yet?)

The comments on my first article on Cloud Computing and discussions I had last week give a clear signal. IT management does not believe the beautiful promises of the Cloud Walhalla.

In reality they do believe that their problems will increase. Here is why.

Security is the outstanding worry. How to protect your data and provide reliability? How to manage access to sensitive data? Indeed security problems will increase. A good solution is
not yet presented in the market.

The promise of seamless integration of all different software services is not believed either. Integration means building of interfaces and that means a lot of testing and maintenance.

Software as a Service is nice, but everybody knows the problem that your customers always want something slightly different than others.

Loss of control. Who will have the total overview and is able to control all the different pieces of the different services?

The last couple of years a lot has been written about the Cloud and a new Walhalla: Cloud Computing. If you read all the articles in the press and listen to the vendors, everything is possible nowadays. We don\'t have to worry anymore about technology. You can just buy it, like gas and electricity. Even better, it is cheap, reliable and scalable. Your wish is the Cloud\'s command.

So the business doesn’t have to worry about difficult IT projects. They just formulate what they want and the cloud provider implements the wishes within a very short period of time. No headache\'s about security and scalability, you order and gets what you want \'on demand\'. This is a real business Walhalla. At last people who do listen and act promptly. This is what we need. Is it?

If you don\'t want to put all your eggs in one basket, no problem: the cloud provider takes care for a seamless integration of your \'in house\' applications and the public cloud. You don\'t like a public cloud, don\'t worry the vendor provides for a private cloud. The possibilities are endless. Do we really believe this wonderful story? In the coming month’s we will check it.

What is a cloud?

If you look up to the sky the chance is that you will see some clouds. Small, big, clear, dark, nice and threatening. Far away and often amusing to look at. What has this to do with computing?

Everyday you and I are using \'the Cloud\' when we start Googling. We ask questions and get answers from people and businesses everywhere in the world. In order to use the wonderful Internet you need a connection. This connection leads you to a provider which connects you to the World Wide Web.

Just to simplify the complex world of the Web people started talking about \'the Cloud", as a metaphor for the Internet. So just think Internet instead of Clouds.

An interesting point here is the way everybody uses the Internet. Before it is possible to Google you have to start up your browser. This means that the most used interface between the human beings and the computer is the browser. Cloud computing makes use of this phenomenon by presenting the results of computing actions in a browser. In this way it is very easy for everybody to connect and to work in a cloud or to connect to multiple clouds.

What is cloud computing?

As we said before the term Cloud is a metaphor for the Internet and is already \'old stuff \'. New is the addition of the verb computing. Computing refers to the processing power of computers in general. Computers can process data and transfer this data in meaningful information. Information you need in your daily business life.

Until recently the business data were processed by the computing department, using mainframes and servers to crunch the data into useful information. Nowadays it is possible to process your data in the Cloud. This means that you don’t have your own computer centre anymore. Instead you are using the big mega centres of providers like Microsoft, IBM, Google, HP, etc.

The only thing you need is a browser like Internet Explorer, Firefox, Safari, just to mention a few, and an Internet connection. In no time you can access the Cloud and you are up and running to start processing your data. A ‘thin client’ will do the job. Peace of cake isn’t it? It is just like using your apps on the Iphone and the whole world is in the palm of your hand.

Conclusion

Cloud computing is a marketing buzzword. It means nothing more than using computer power on the Internet through the most used client interface, the Browser.

The meaning is so general and broad that it gives you the impression that everything is possible. Does Cloud computing solves all your IT problems?

Comments

Please react on this article by sending an email to hms@peterhanselman.com

Next

In the next article I will try to get both feet at the ground. We will speak with a number of vendors and find out what kind of offerings are already on the market.

In the coming month’s I’ll try to find out if the big vendors really believe that the browser will become the most important client interface. If they invest in Cloud computing and if they have already interesting offers on the market.

We will make a journey to the Promised Land and will discover the pros and cons. We will find out if the real decision makers believe that Cloud computing will lower their IT cost significantly.

Subjects like security, the impact on Outsourcing and the danger of a “deadly” lock in will be discussed.

Fasten your seat belts and stay tuned for the bumpy ride into the Clouds.

In a former article I promised to describe the measures which leading companies has taken in order to reduce their IT costs effectively and to realize a sustainable ROI.

This article describes a number of practical examples to reduce the IT costs effectively and sustainable.

How to start with IT cost reduction?

First of all you need a complete overview of all the IT assets in your infrastructure, hardware as well as software. Without this overview you cannot start developing a proper plan to earn money by cutting costs at the right places.

Many companies make assumptions to build a plan on instead of finding the real facts. We often hear that it is necessary because it is not possible to gather the facts in time. Other mentioned reasons: it is so complex and the available data are not complete and correct. Often the installed CMDB’s are incomplete or not used.

All the successful companies have started with fact finding. That can be done in a short period of time because there is software available that does the job for you. Software that builds a single version of the truth, through an agentless discovery process; all IP-connected devices are identified and categorized. Within weeks you create the desired overview of all the IT assets, enterprise wide! Now you have insight and you can start making a proper plan to earn money right away by cutting costs where it is possible.

IT cost reduction by virtualization

Leading companies have identified virtualization of their server environment as one of the key cost reduction initiatives across their enterprises. Most of them have established high goals of having 50% of their servers virtualized in the coming years.

Virtualization enables the consolidation of the hardware infrastructure and by doing this you will lower your total cost of ownership considerable. Besides this cost aspect it is easier for the IT function to adapt to a changing user environment by re configuration of hardware and re distribution of applications.

What benefits you can expect

 Less physical servers
 Less amortization
 Less maintenance
 Less energy usage
 Less cooling costs
 Less personnel costs
 Increased server utilization
 More flexible software environment

Through this approach, they expect to realize multi-million dollar savings on hardware and software costs, personnel costs (lower ratio of administrators to servers) and energy and cooling costs.

IT cost reduction by managing your software licenses

SAP, Oracle, Microsoft and many other software licenses are not cheap and you pay a nice amount on yearly maintenance. Take care of a good contract administration to begin with. If you don’t know what your rights and obligations are, you are not in a good shape to negotiate the best prices for your company.

After that, start measuring the usage of the software. Many people don’t realize that every user needs to pay for the use of software. Without knowing the costs, they allow user rights to too many people. So start communicating the costs of using software into your organization and start measuring the real usage.

In all my engagements I have not seen one company that was not under licensed or over licensed. Through adding users during the year you reach very quickly the boundaries set by your contract. So when the vendor starts measuring the real usage of their software, you can be unpleasantly surprised by an extra invoice with an amount of six zero’s.

In other cases companies do have too many licenses. In that case you can start using the licenses or sell the licenses back to the vendor.

One way or the other, by setting up a contract administration, measuring the software usages and communicating the costs of using software, any company can safe money by cutting unnecessary expenditures.

The software you need for this will pay itself back immediately.

IT cost reduction by managing your Outsourcing invoices

After tough negotiations you have signed an Outsourcing contract. Your new partner starts the transition and after a certain period you will get new invoices which are based on the signed contract.

I presume that the content of the invoices can be traced back to the signed contract. Sometimes even that is not the case.

If you want to check the correctness of the invoices you do need to understand the invoices completely in terms of numbers and prices. Let’s concentrate on the number of assets, e.g. the number of desktops or servers. Do you have your own source of information to check the correctness of the invoiced numbers?

Leading companies know that they have to check those numbers by actions of their own. There are too many examples in the marketplace that proofs that you can earn money by only paying for the number of assets you really work with.

Waarom zou een groot bedrijf Brinkhof selecteren voor een Outsourcing deal?

Allereerst wijst Eliane erop dat binnen Brinkhof de communicatielijnen, anders dan bij de grotere kantoren, kort zijn en dat de klant er op kan rekenen dat de gespecialiseerde partner de opdracht zal uitvoeren. Omdat Brinkhof voor zowel leveranciers als opdrachtgevers optreedt, hebben de advocaten een unieke mix van kennis en ervaring, welke het mogelijk maakt een zaak van beide kanten te bekijken. Brinkhof weet wat er speelt in de markt en door haar kleinschaligheid heeft zij minder last van ‘conflicts of interest’ dan de grote kantoren.

Kan Brinkhof alle soorten Outsourcing deals begeleiden?

Eliane beaamt dit volmondig. Een aantal advocaten bij Brinkhof heeft meer dan 20 jaar ervaring met IT gerelateerde transacties en vooral de afgelopen 8 jaar met Outsourcing trajecten. Wanneer er aspecten zijn die een gespecialiseerde advocaat noodzakelijk maken, dan wordt deze door Brinkhof ingeschakeld. Op deze wijze heeft de klant slechts een aanspreekpunt.

Aan welke aspecten moet ik dan denken?

Veel van de Outsourcing deals zijn zogenaamde activa/passiva deals, waarbij de IT assets en bijbehorende contracten worden overgedragen aan de insourcende partij. Daarnaast zijn er aandelentransacties, waarbij de aandelen van een interne dienstverlenende vennootschap worden verkocht. In geval van een aandelen transactie schakelt Brinkhof. een gespecialiseerde advocaat van een ander kantoor in die dan onder verantwoordelijkheid van Brinkhof dat deel van de transactie begeleid.

Heeft Brinkhof een standaard Outsourcing contract?

Gebaseerd op vele verschillende Outsourcing deals heeft Brinkhof een beproefd model ontwikkeld voor Outsourcing deals. Deze standaard MSA ( Master Services Agreement), wordt gebruikt als start model, welke wordt bijgeschaafd aan de hand van de wensen van de klant en de specifieke situatie. Het voordeel voor de klant is dat alle belangrijke onderwerpen direct op tafel komen, waardoor je gezamenlijk snel aan de slag kan gaan.

Wat zijn nu de belangrijkste knelpunten in een Outsourcing contract?

Eliane benadrukt dat de lastigste kant van Outsourcing de overgang van personeel betreft. Dit kost altijd veel tijd en ook emoties van het betrokken personeel. Vooral de pensioenen en het vergelijken van salarispakketten kan erg lastig zijn. Een ander knelpunt is dat het veelvuldig voorkomt dat de diensten, welke geoutsourced dienen te worden, niet of niet goed zijn beschreven. Welke diensten vallen nu wel en welke niet binnen de scope van het contract? Wat is het huidige niveau van dienstverlening? Het klinkt misschien wat raar, maar het komt meer dan eens voor dat het huidige niveau van dienstverlening niet is vastgelegd. In een Outsourcing proces dien je dan met de medewerkers, welke onderdeel gaan uit maken van de insourcende organisatie, vast te stellen wat het huidige niveau van dienstverlening is en erger nog dat je met diezelfde medewerkers gaat vast stellen wat het gewenste niveau van dienstverlening dient te worden. Brinkhof adviseert haar klanten dan ook om in een zo’n vroeg mogelijk stadium advocaten en consultants in te schakelen teneinde de diensten volledig en juist in kaart te brengen. Het is absoluut noodzakelijk een goede basis te creëren voor een MSA en de latere contractonderhandelingen.

Vormen veranderingen, welke onvermijdelijk gaan optreden, dan geen knelpunt?

Eliane vindt veranderingen, welke tijdens de contractperiode onvermijdelijk gaan optreden, geen knelpunt maar een potentiële valkuil. Een contract dient zodanig te worden opgesteld dat er voldoende marge is ingebouwd om de veranderingen op te kunnen vangen. Helaas komt het regelmatig voor dat klanten het onderste uit de kan willen hebben en dientengevolge een rigide contract opstellen. Het gevolg hiervan is dat de leverancier probeert ergens iets terug te halen. Tenslotte moet er ook aan de deal worden verdiend. De vraag hierbij is of dit in het belang is van de klant. Brinkhof besteedt in haar aanpak veel aandacht aan zorgvuldige procedures, die aangeven hoe er met veranderingen dient te worden omgegaan. Het is echter aan de contractpartijen, dat zij de overeengekomen procedures ook daadwerkelijk implementeren. Opvallend is dat advocaten worden ingeschakeld bij het maken van het contract, maar dat de betrokkenheid bij de uitvoering en implementatie van de gecontracteerde procedures gering is.

Welke zaken dient een bedrijf eerst op orde te hebben, voordat men begint aan Outsourcing?

Vanuit juridische optiek onderkent Eliane een tweetal belangrijke zaken. Allereerst dienen de diensten, die voor outsourcing in aanmerking komen, juist en volledig te worden beschreven. Daarnaast is het van belang een goede DD ( Due Diligence) uit te voeren. Een onderzoek, zowel op technologisch als op contractueel niveau. Technologisch is het van belang exact te weten welke IT assets erin huis zijn. Een onderzoek naar de contractuele situatie is van belang om de risico’s in een zo vroeg mogelijk stadium in te schatten. Daarbij is het van belang onderscheid te maken tussen een activa/passiva transactie en een aandelentransactie. Bij een aandelen transactie vindt er een ‘change of control’ plaats. Contracten dienen te worden onderzocht op de vraag of bij een ‘change of control’ de contracten gecontinueerd mogen worden. Wanneer er sprake is van een activa/passiva transactie dan dienen de software leveranciers toestemming te geven om de contracten aan de leverancier over te dragen of dat dit contractueel niet mogelijk is. Het is van belang de mogelijke risico’s tijdig in kaart te brengen, zodat dit bekend is voordat er wordt onderhandeld of een offerte wordt aangevraagd.

Vloeit de structuur van de MSA voort uit de structuur van de RFP of is het juist andersom?

Het is een feit dat Outsourcing consultants vaak eerder betrokken zijn bij de voorbereiding van een deal dan de juristen. Gevolg hiervan is dat er vaak een indeling van de RFP is gekozen, waarop de structuur van de MSA dient te worden aangepast. Eliane pleit ervoor om juist de structuur van de MSA leidend te laten zijn. Immers, er zijn tal van juridische constructies opgenomen in de MSA. Aanpassingen daarin leiden tot onnodig extra juridische kosten. Ideaal zou zijn om de volgorde van de bijlagen welke voor de MSA geproduceerd dienen te worden aan te houden bij de structuur van de RFP.

Is er een standaard MSA, welke door de meeste advocaten worden gebruikt?

De praktijk leert dat ieder kantoor haar eigen aanpak heeft. Anderzijds zijn de verschillen niet erg groot, omdat iedereen van elkaar leert. Een kenmerkend verschil zit vaak in het feit of het transactiele element al dan niet wordt meegenomen in de MSA. Eliane pleit voor twee afzonderlijke contracten. Immers, de transactie is eenmalig en een momentopname. De MSA beschrijft de services welke gedurende de looptijd van het contract dienen te worden geleverd. Niet eenmalig, maar doorlopend. Een ander argument om twee contracten te hanteren is het feit dat maar een beperkt deel van de organisatie werkt met het transactiele contract, terwijl een groot deel van de organisatie te maken heeft met de MSA.

Wat zijn de grootste valkuilen bij een Outsourcing deal?

Eliane noemt er spontaan vier. Allereerst de juiste en volledige beschrijving van de diensten, waarover hiervoor al werd gesproken. Vervolgens worden de juristen vaak veel te laat ingeschakeld. Daarnaast wordt er te weinig aandacht geschonken aan de inhoud van de bijlagen bij de MSA, terwijl de bijlagen juist van essentieel belang zijn voor de juiste service verlening. Tenslotte noemt Eliane het te strak uit onderhandelen van de prijzen, waardoor er te weinig marge overblijft om flexibel te kunnen reageren om veranderende omstandigheden tijdens de contractperiode.

Hoe kan je voorkomen om in deze valkuilen terecht te komen?

Het ligt natuurlijk voor de hand dat de voorbereiding beter georganiseerd dient te worden, met een tijdige inschakeling van een jurist. Hierdoor kan aan de eindverantwoordelijken tijdig duidelijk gemaakt worden dat er geen RFP moet worden verstuurd, wanneer de beschrijving van de diensten niet juist en volledig is. Hetzelfde geldt voor de MSA en vooral het tijdig beschikbaar hebben van de bijlagen. Een goed uitgevoerde Due Diligence werd al eerder genoemd. Hoewel voor de hand liggend, het is een feit dat de DD summier gebeurt, waardoor er tijdens de transitie fase allerlei ‘verrassingen’ boven water komen. Tenslotte vraagt Eliane nog aandacht voor de communicerende vaten van prijs en kwaliteit. Wanneer er echt een ‘rock bottom’ prijs overeengekomen is, dan kan je verwachten dat de kwaliteit daarop wordt aangepast. Een wijsheid die tijdens de hitte van de onderhandelingen maar al te gemakkelijk wordt vergeten

In a former article I promised to describe the measures which leading companies has taken in order to reduce their IT costs effectively and to realize a sustainable ROI.

This article describes a number of practical examples to reduce the IT costs effectively and sustainable.

How to start with IT costs reduction?

First of all you need a complete overview of all the IT assets in your infrastructure, hardware as well as software. Without this overview you cannot start developing a proper plan to earn money by cutting costs at the right places.

Many companies make assumptions to build a plan on instead of finding the real facts. We often hear that it is necessary because it is not possible to gather the facts in time. Other mentioned reasons: it is so complex and the available data are not complete and correct. Often the installed CMDB’s are incomplete or not used.

All the successful companies have started with fact finding. That can be done in a short period of time because there is software available that does the job for you. Software that builds a single version of the truth, through an agentless discovery process; all IP-connected devices are identified and categorized. Within weeks you create the desired overview of all the IT assets, enterprise wide! Now you have insight and you can start making a proper plan to earn money right away by cutting costs where it is possible.

IT costs reduction by virtualization

Leading companies have identified virtualization of their server environment as one of the key cost reduction initiatives across their enterprises. Most of them have established high goals of having 50% of their servers virtualized in the coming years.

Virtualization enables the consolidation of the hardware infrastructure and by doing this you will lower your total cost of ownership considerable. Besides this cost aspect it is easier for the IT function to adapt to a changing user environment by re configuration of hardware and re distribution of applications.

What benefits you can expect

 Less physical servers
 Less amortization
 Less maintenance
 Less energy usage
 Less cooling costs
 Less personnel costs
 Increased server utilization
 More flexible software environment

Through this approach, they expect to realize multi-million dollar savings on hardware and software costs, personnel costs (lower ratio of administrators to servers) and energy and cooling costs.

IT cost reduction by managing your software licenses

SAP, Oracle, Microsoft and many other software licenses are not cheap and you pay a nice amount on yearly maintenance. Take care of a good contract administration to begin with. If you don’t know what your rights and obligations are, you are not in a good shape to negotiate the best prices for your company.

After that, start measuring the usage of the software. Many people don’t realize that every user needs topay for the use of software. Without knowing the costs, they allow user rights to too many people. So start communicating the costs of using software into your organization and start measuring the real usage.

In all my engagements I have not seen one company that was not under licensed or over licensed. Through adding users during the year you reach very quickly the boundaries set by your contract. So when the vendor starts measuring the real usage of their software, you can be unpleasantly surprised by an extra invoice with an amount of six zero’s.

In other cases companies do have too many licenses. In that case you can start using the licenses or sell the licenses back to the vendor.

One way or the other, by setting up a contract administration, measuring the software usages and communicating the costs of using software, any company can safe money by cutting unnecessary expenditures.

The software you need for this will pay itself back immediately.

IT cost reduction by managing your Outsourcing invoices

After tough negotiations you have signed an Outsourcing contract. Your new partner starts the transition and after a certain period you will get new invoices which are based on the signed contract.

I presume that the content of the invoices can be traced back to the signed contract. Sometimes even that is not the case.

If you want to check the correctness of the invoices you do need to understand the invoices completely in terms of numbers and prices. Let’s concentrate on the number of assets, e.g. the number of desktops or servers. Do you have your own source of information to check the correctness of the invoiced numbers?

Leading companies know that they have to check those numbers by actions of their own. There are too many examples in the marketplace that proofs that you can earn money by only paying for the number of assets you really work with.

All top managers know that IT is important for the success of their company. They also know that IT is very complex and that it always takes a long time to introduce new functionality. Often there is a lack of clear management information, when important decisions regarding IT have to be made.
All important stakeholders, CEO’s, CFO’s, CIO’s, Procurement and IT directors will benefit when there is a complete set of management information that gives an understandable insight in the complexity of the IT infrastructure. To build this information was always a costly process that seemed never to end.
Nowadays it is possible to acquire this insight in weeks!

How to reduce IT costs

To start with you need a complete view of the IT infrastructure. There is software available in the market that builds a single version of the truth, through an agentless discovery process; all IP-connected devices are identified and categorized. This data is then combined with market data (e.g., support dates, warranty information, etc.) and corporate ownership information (location, department, etc.).
Within weeks you create a single system that provides enterprise-wide management information, which is needed to measure, manage and communicate with all the important stakeholders.

Based on this accurate and up to date management information top management directly can take measures to reach the following objectives:

• Improved sourcing of technology through consolidation of vendors
• Reduced maintenance costs through retirement of unused hardware and software
• Decreased compliance costs due to optimization of licenses
• Lower outsourcing costs through more accurate tracking of outsourced equipment and licenses
• Greater control and accountability via virtualisation and data centre consolidation to ensure that planned business benefits are in fact tracked and captured.

How to realize the needed ROI

In the coming weeks I will describe the measures which leading companies has taken in order to reduce their IT costs effectively and to realize a sustainable ROI.

If you would like to reduce your IT costs and maintains high availability and quality, don’t hesitate to contact us.

Despite all the efforts of IT management to standardize the IT infrastructure the Personal Computer, introduced in the 80’s of the last century, is still part of the standards of almost all companies. A lot of IT managers don’t realize that the TCO of a Personal Computer is more than 70 percent higher than the TCO of a Virtual display station.

A Virtual display station?

I bet that many IT managers don’t have a good idea what a virtual display station is. I bet that many people never have seen a virtual display station. It is just a screen connected to the network, without an operating system and without a hard disk at the workplace. That is the reason that the virtual display station doesn’t make any noise and hardly use energy, only 4 Watt, approximately five percent of the power consumed by a typical PC system.

As user you don’t realize that you work with a virtual display station. You still have your screen and your keyboard, you still have all your applications, the workplace is less warm and you hear the ticking of your quartz watch. Sounds good? It even becomes better.

A subject that will be discussed often during this interview with Gerhold Runneboom, IBM’s Director Strategic Outsourcing Benelux.

According to Gerhold you cannot call IT Outsourcing a commodity per se. Certainly, specific activities can be run like a commodity, e.g. desktop support but IT and Outsourcing is too complex to call it a commodity as some Outsourcing consultants like to do. The IT operation is complex and consists of thousands of components that need to work smoothly together. These components are not static but change overtime when new technologies do come in, when there is an upgrade of hard and of software so whilst you can commoditize at component level it is the integration of it that it is all about. Shortly, IT changes all the time and that is the main reason why Gerhold does not agree with the commodity statement. IT is always on the move and there are always service windows, so “always on”, like electricity, is not the reality withIT.

“After a period of consolidation EDS is growing again” says Peter Overakker, General Manager of the Nordics.

It is clear that the new boss is not satisfied easily. Totally focused on his customer needs Peter set ambitious goals for his team: minimal 100% growth in the coming 5 years. A team that is organized to shorten the time to market.

There are a lot of outsourcing vendors active in the market. One can divide the players in three categories, the Global/International players, the European/Local and the Indian players. Worldwide EDS belongs to the top 5 Global players. As a spin-off of GM, EDS was the first to start outsourcing services in the 60s. With a turnover of more than 20 billion in 2007, 135.000 employees worldwide and customers in 100+ countries, the company has always played in the World league. EDS sees Accenture, IBM and HP as its biggest competitors.

Global Outsourcing Strategy.
Taking over activities from companies and delivering reliable services is the core business of EDS, emphasis Peter Overakker. We are specialized in outsourcing and bring value to our customers on a Global and Local scale. Many people in the Netherlands think that infrastructural services are our strongest point. However, our application services are as good as our infrastructural services and form a big part of our turnover (38% in 2007). This balance between applications and infrastructure positions EDS as a strong system integrator. A value that is recognized well in the market:

Our Strategy is Global, so we offer the same services and quality in more than 100 countries. With this Global Strategy we do service our International clients as well as our Local clients. I’d like to stress that our Local customers benefits from this Global Strategy. What are these benefits?

Local benefits.
The Strategy on infrastructure is quality improvement, cost savings by economy of scale and standardization, in other words: higher efficiency! So the local customers can use the robust infrastructure at much lower cost than otherwise possible. On the application side EDS has invested much in Solutions, Quality and Security. A good example of this is the takeover of Mphasis, based in India. On all these aspects the local customer can leverage on the Global Best Practices.

EDS has an extensive best shore strategy with development premises around the World. India, South America (Argentina, Brazil) and Eastern Europe (Hungary) are good examples where development centers of EDS are located. The same goes for service desks which are situated in Belgium ((Mechelen), Hungary (Budapest) and Malaya (Kuala Lumpur).

As mentioned before Shell just granted EDS with an outsourcing contract for their desktops for a period of 5 years. As a consequence the EDS service desk in Kuala Lumpur will be merged with the IT operations of Shell.

Is EDS only looking for the big deals?
Certainly, a World class player like EDS is one of the few companies that can handle the real big billion euro’s deals. However, the main stream of its business consists of million instead of billion euro’s deals. Have a look at two Business Cases that illustrates the added value of EDS towards its clients. The business cases are attached at the end of this article.

Which companies are not on the radar screen of EDS?
It is clear that companies which are fond of implementing their own bespoke technical solutions and different processes are not the ideal customers for EDS. Unless they would like to transform to the Global standards and infrastructure. Neither are the very small companies. EDS doesn’t have the structure yet to manage these very small companies. More and more EDS focus on the middle sized companies which will benefit much from the Global investments of EDS. This leads to the question:

Does EDS only know One Way, the so called EDS’s way?
Although it is obvious that one get’s the biggest benefits when the customer implements the Global Best Practices, EDS is experienced and flexible enough to manage different infrastructures. Together with its alliance partners like Sun, EMC, Cisco, Microsoft, Oracle, Sap, Xerox, EDS spend a lot of time and money on R&D. Through these investments, together with its alliance partners, a standard platform and clear operational procedures are realized. The policy of EDS is to bring as much as possible customers to its own leverage environment where you can share cost, applications and solutions.

Focus on Solutions.
In the European market EDS focus on Solutions. The application solution sales are organized in different clusters for Finance, Manufacturing, Telecom, Retail and Transportation. They are supported by Competence Centers for Sap, Oracle, Soa, etc. In 2008 EDS is enlarging their application sales force and the number of consultants in order to grow.

EDS’s Market Focus in the Netherlands.

➢ Manufacturing
➢ Government
➢ Finance
➢ Retail
➢ Telco
➢ Transport

Does this mean that EDS aggressively will focus on growth?
The last two years the main focus of EDS was to satisfy its existing Customers. Peter Overakker claims that all his customers are very satisfied with the services. Based on this fact, check and meet the extensive references, EDS will grow its business by focusing on selling the many different solutions to its customer base and to new prospects. Only when customer satisfaction is safeguarded EDS will take on the new business.

Did you know that EDS is the biggest player in Airline Reservation systems? Did you know that EDS plays an important role in applications with Aegon, Ahold and Karlstad Quelle? Did you know that Vodafone has chosen EDS for the development and maintenance of their applications?

GM’s 3rd Generation Outsourcing Model.
Governance is key for the success of any Outsourcing deal. General Motors has learned a lot during the many years of Sourcing experience. They already work with the 3rd wave of Outsourcing. GM believes strongly in multi sourcing because this enhances innovation and competition. Therefore GM developed the 3rd Generation Outsourcing Model:

EDS’s Elevator Pitch:

➢ High Quality
➢ Stable
➢ Does what it promise
➢ Client and people oriented
➢ Business partner instead of vendor

EDS is the leading vendor and works according this model. In client engagements EDS discuss this successful GM model extensively. In the press release Shell and EDS states the following:

“To reduce management complexity for Shell, EDS will also act as operational integrator, collaborating closely with Shell’s other key IT suppliers. Approximately 1,500 IT professionals, including Shell full-time employees and contractors currently working for Shell, will join EDS, in 65 countries globally. “

EDS’s delivery model.
“Our strongest point is that our account executives act as General Managers” emphasis Peter Overakker. The account executive can act immediately on the needs of the client because he or she is responsible for the P&L as depicted in the following model (see attached pdf).

All the clients of EDS are clustered in Industry Groups. The account executive is P&L responsible and also direct responsible for the most important client. This means that the account executive acts like a general manager instead of a relationship manager as often seen in the market. All the general managers/account executives have followed an exclusive EDS training course.
Client satisfaction is on top of the appraisal of the account executives. At least 40% of their scorecard measures this leading element. It is not only how satisfied the clients are with the existing services, but Innovation and New Ideas are very important. Peter Overakker believes that this approach sets EDS apart from their competitors and it shortens the time to market considerably.

Pieter Buijs is the CTO of Atos Origin Netherlands, a European IT services company with more than 50.000 people worldwide. Atos Origin is one of the interesting players in the field of Outsourcing. During this interview Pieter explains what Atos Origin would like to be to their customers, discuss the changing market conditions and the relationship between customers and vendors. Pieter makes interesting statements on the issue of business- IT alignment and the role of the CIO. We will start out with the market.

Nowadays almost every company has Outsourcing on its Radar, when did it all start?

More than 20 years ago big companies were faced with increasing IT costs and growing back logs. Therefore they were looking for possibilities to improve their IT performance. They turned to IT providers to diminish their back logs and decrease the IT cost significantly. Atos Origin was one of the companies that provided outsourcing services to the big companies and started to grow on the emerging outsourcing market. More than 80% of the turnover comes from say 60 big customers. Pieter calls this the “traditional” outsourcing. The traditional outsourcing is aimed on improving the efficiency, focuses on the total IT operations and in most cases there is only one provider involved. This is not the case anymore in 2008. The markets are changing.

How is the outsourcing market changing?

Anno 2008 most big companies don’t select one provider as their outsourcing partner. The customers do look very carefully at the portfolio of each provider. They would like to know which solutions contribute best in terms of costs and quality to the success of their companies. So they are not putting all the eggs in one basket anymore. This leads to the question which provider has the best solution for a specific part of the IT infrastructure. Multi provider policies are quite common in the outsourcing markets today. So the relationship between customer and provider is changing.

Can you describe the different phases in the relationship between customer and provider?

Pieter uses a very clear model to explain the changing relationship over time between the customer and provider. He likes to share his thoughts with our readers by explaining his Relationship Growth Model, depicted as follows:

(see pdf for the Relationship Growth Model)

Phase 1 is the traditional outsourcing focused on IT cost reduction. Often the whole IT operation will be outsourced with a guaranteed cost reduction during the contract period.
When the customer becomes more selective in phase 2 they will shift their focus to the Total Cost of Ownership. Not only the IT costs, but all the related business costs are in scope. The customer will ask the provider to improve its business processes. A Solution portfolio is important for the provider to distinguish itself from its competitors. Both phases 1 and 2 are characterized by the focus on efficiency. It is all about cost savings.
Phases 3 and 4 are focused on improving the effectiveness of IT in order to enable customers to earn more money. It is about innovative thinking, how to enable the business with IT solutions that gives the business a competitive advantage. It is not easy to transform from the efficiency phases into the effectiveness phases. It is business driven, what is the added value of IT solutions and how much money can we earn?

Is Atos Origin only focusing on big customers?

Referring to his Relationship Growth Model Pieter emphases that each phase has its own characteristic. In the first two phases a company makes more general choices than in phases 3 and 4. The choices you have to make become more specific the higher you are in the Growth Model. The strategy of Atos Origin is to differentiate on customer behavior in the different phases. For the bigger companies the relationship model for phases 3 and 4 applies, while the smaller companies are served with the model described in phases 1 and 2. This means that almost all companies above 500 employees are potential prospects.

What are the most important business questions you get from the market?

Almost all business leaders mention the complexity of IT operations which leads to slow reaction times, while the market changes are increasing. It takes too long to introduce new products and concepts into the market. So often is asked to improve afore mentioned situation.
In order to reduce complexity it is wise to standardize the technical infrastructure. On the one hand you earn money by lowering the operating costs and on the other hand it is an enabler for the simplification of the application portfolio of the customer. Historically grown every big company has a lot of different applications, which leads to high maintenance costs and slow reaction times. The simplification of the Application landscape leads to an increase in effectiveness and flexibility.

What is your opinion on business IT alignment?

According to Pieter there is still a nice gap between business and IT thinking. The nature of an IT expert is to explain how the beautiful technical solution works, while the business people like to know what you can do with it. Pieter hopes that services oriented thinking will help to close the gap between the Demand and Supply side of IT.
It is important to focus on the business solution side instead of keeping the beam lights on the technological solution. It will not be easy to shift the attention because the technological solution provider will tell everybody that their technique will solve the business problem. Pieter is very clear in his statement that everybody should focus on what you can do with the solution instead of the how to build it.

It is not easy to close the gap between business and IT, how does Atos Origin tackle this problem?

Like many of its competitors Atos Origin has bought a consultancy business, namely the business division of KPMG. In its approach of business IT alignment Atos Origin has integrated the consultancy approach in the way it creates Solutions. Through its Consult, Built and Operate approach Atos Origin delivers Life Cycle Solutions to its customers. A prerequisite is that the customer has an open mind and likes to evaluate their business processes in order to improve effectiveness. Part of the problem is the cultural aspect. Not many top managers are really interested in business processes. Pieter believes that this cultural problem solves itself when the new generation managers take the lead in the business. They are accustomed to work with IT from their childhood and they demand solutions to work with instead of technological explanations. Talking about the cultural aspect Pieter reminds us of a nice comparison between the evolution of IT and the evolution of mankind. With the consent of Gartner he depicts this as follows:

(see pdf for Gartner model)

Starting in the 60’s with the complex mainframes, followed in the 70’s by the minicomputer and in the 80’s by the personal computer. In the first three decades of IT the depicted men are not walking erect. Only in the 90’s the IT manager, who is still a man walks erect. The big change comes in the new 21st Century. Gartner introduces the Google manager and that manager is not a man, but a woman! With Google mankind just uses IT instead of asking how it works. Just ask question in every form you like and you will get an answer. Young people are used to do this at home and they will introduce this behavior into the companies. The power shifts to the users who will tell IT what they want instead of being dependent of a technical solution. So whether we like it or not change and innovation are on its way.

What is the approach of Atos Origin towards Innovation?

Being a favorite subject of Pieter, he likes to answer this question with the following diagram:

(see pdf for diagram)

Innovation of products/services and processes is important for a company to realize a healthy growth. The innovations can be driven by the business or the technology. When people talk about innovation they often mean technology driven innovation like the introduction of a new technological platform likes Vista. But if it is not clear what the business can do with all the new possibilities the introduction will be a failure. So if innovation comes from the technological side you have the obligation to focus on new business processes in order to benefit from it.
It is the wish of Pieter that the CIO will act as a Change Agent. That he or she will focus on the business critical processes and ask what kind of innovation is necessary to improve the effectiveness in order to earn more money. More business driven innovations are the key to success.

Although KPMG is the number One in Sourcing of the Big Four Auditing Firms in the World, it doesn’t belong to the top Sourcing players in the Netherlands. One of the reasons for this is market image, says Gaston Vankan, who is responsible for Sourcing Solutions and is a member of KPMG’s Global Sourcing Network.

 

Market positioning

Gaston sees at the top of the market the Strategic vendors like McKinsey and at the bottom of the market the Operational vendors like Atos Origin. Both vendor categories are strong in their specific fields. But there is a gap to bridge between the strategic advice and the operational reality. Here is where KPMG comes in. Gaston depicted this as follows:

 

Strategic Services: McKinsey, Booz Allen, etc

How to bridge this Gap?

Operational Services: Atos Origin, Capgemini, etc

 

With its Sourcing Services KPMG translates the Strategic advice into operational results. This means that KPMG develops a clear project plan how to reach the strategic goals within time, including all the practical aspects like procedures, asset inventory, contracts, financial impact etc. Gaston emphasis that besides the wide scope of the Sourcing Services the independency of KPMG is an added value for its customers.
A peculiar thing is that the Sourcing market sometimes perceives KPMG as a competitor of the operational vendors. KPMG is an Audit, Tax and Advisory firm and not an IT operator. Therefore it's unique selling point is that KPMG can always put it's client's interests first, without considering which way the sourcing deal will go.

 

Who are the real competitors of KPMG?

Spontaneously vendors like Equaterra (former Morgan Chambers), Quint and Everest are mentioned. All vendors with a proven track record in Outsourcing for the last ten years.

 

What makes KPMG Outsourcing so special?

All the Sourcing experts of KPMG have a strong business background. Business cases are build from a business and not from an IT perspective. The broader scope of our services and our independency differentiates us from our competitors, says Gaston. In addition to that, the availability of KPMG's Global Sourcing Network means that whether you are outsourcing to European countries or to countries in the Asia Pacific or the Americas, KPMG will always be able to put in knowledge of the local markets.

 

This leads us to the question which Sourcing services are most wanted by the market?

 

Re-evaluation/Service evaluation.

There are already many companies entering the second and third wave of Outsourcing. Based on the experience with the first vendor they often have the need to evaluate the existing contract. This service evaluation and sometimes re-evaluation is a big part of the engagements of KPMG.

 

In a Sourcing contract there are a lot of vendor obligations. It sounds peculiar, but customers do not have always sufficient insight in the real KPI’s upon which the invoices of the vendors are built. This is also confirmed by the KPMG Global Sourcing Survey (www.kpmg.nl/sourcing). The aim of the service evaluation is to provide the client with more grip on the actual services levels and the performance indicators in order to create services the client initially desired when closing the deal. In the end desired, actual and perceived service levels should all be the same.

 

In Outsourcing contracts the vendors guarantees a certain level of performance described in Sla’s. The customer can have the right to perform a third party audit to assure himself that the vendor really has taken the right measures to live up to his guarantees described in the contract. Many customers do exercise this right nowadays and not without reason.

 

Some quality vendors do think ahead and deliver a so called SAS 70 report regarding the quality measures they have taken to safeguard the interest of their customers. A good advice is to check your Outsourcing contracts on the obligation of the vendors to issue such a SAS 70 statement. If you don’t have it, please do renegotiate this obligation! Not all the big vendors do have the right procedures to issue easily a SAS 70 statement and to make this more complex the capability to issue a SAS 70 report can differ per country with the same vendor.

 

What can you expect from a SAS 70 statement?

Statement on Auditing Standards No.70 (SAS 70) was issued by the American Institute of Certified Public accountants. It gives the Sourcing vendor a means to provide insight in the quality of the internal controls to provide reliable outsourced services. It is also an opportunity for the vendor to distinguish itself from its competitors. In the short run it can also be a competitive advantage. Within a few years it will be common practice and a disqualifier if you don’t have a SAS 70 or TPS.
When an organization prepares itself for a SAS 70 examination, the internal control structure will be visible and more transparency and uniformity will be introduced into the processes. So when you request a SAS 70 report you can see if the vendor gives value for money. Bear in mind that you have two types of SAS 70 reports, type I the so called ‘snapshot’ statement and type II, a statement regarding a specific period.

 

Sourcing Lifecycle Methodology

For all Sourcing engagements KPMG uses its Sourcing Lifecycle Methodology.
Through its worldwide presence KPMG has competencies and track records with clients regarding all the phases of the Sourcing Lifecycle Methodology. We will not describe the methodology in this article but we just pick out some important statements of Gaston. First it is important to formulate the Sourcing Strategy before you decide to go for it. If you don’t know the reasons why you choose for Outsourcing the results will always be disappointing. Be clear about your main reason(s): is it to safeguard scarce knowledge, cost reduction, quality improvement, better procedures and so on? Although it may seem as an open door, often this so called "Why" question is not answered adequately.
When you have finally signed the contracts and prepare for migration it is a Must that you have a 100days plan. How and when will the IT operation be transferred to the vendor. What is your Day One scenario? You should be very clear what will change from Day One on. When there is an incident need the business to call an other phone number? What changes will there be in the billing process, etc?
And last but not least how do you organize your Service Level management? From Day One on the retained organization needs to function on an other level. There is a change from tactical/operational towards tactical/strategic way of working. Sometimes vendors do report on facts that are not measured at all, says Gaston. What to think of a case that a vendor do report on the availability of a network, that was subcontracted without any information from the subcontractor? It pays of to look into kitchen of the provider.

 

Is KPMG the ideal partner for the contract negotiation phase?

To answer this question we must divide the negotiation phase in two parts: the legal issues and the money issues. Since it is by law forbidden that audit and law firms are part of the same organization, KPMG does not deal with the legal issues. However, with its Sourcing Lifecycle Methodology KPMG can be of great help and gives you "value for money".