Wednesday, December 17, 2014

The IT MOAB Effect


Internal IT - Your Friend or Foe?

It is rather amazing to see how unnecessarily bloated IT spending has become over the years in Corporate America.  We see it time and time again how the internal IT departments in large corporations block and tackle their own customers.  They are supposed to bring reasonably priced solutions and work in cooperation with their end users to solve their business problems.  Reasonably priced and work in cooperation are indeed the operative words here.
 
Case in point, we just recently had a discussion with a customer who is getting handed a "ginormous" (h/t Elf, after all it is Christmas season) per server Christmas present from their IT department to support an internal ECM application.  To complicate matters, this particular customer outsources their IT infrastructure and day to day management to a third party under the direction of corporate IT leadership.  They need three servers to run their existing legacy ECM application - which by the way has been deemed end of life by the manufacturer.  The existing hardware infrastructure is outdated and can't adequately support the latest version of the application software.

The Oracle database is also outdated and IT has mandated an upgrade to Oracle DB Version 11. Microsoft is terminating Windows 2003 Server support on July 14, 2015 in which the current application is installed upon.  All this information is news to the business end user who was not prepared nor made aware all of these unfortunate events.  Further, they were not being proactively addressed by IT - the application was neglected.  But wait.... that is not the end of their bad news.  $300,000.00 is the price tag that IT is proposing to charge the internal business user to support and standup three new virtual servers that are required. On top of that, the end user needs to spend consulting service dollars - around $35,000.00 for the ECM vendor to perform the application upgrade to the current release.  So the total project cost for an application upgrade is north of $335,000.00, not including annual software maintenance.  This is why I call it the IT MOAB effect - utter shock and awe news delivered to the end user courtesy of their IT Department.  No advanced warning, no planning, just the deliverer of very bad news. 

What is the end user going to do in light of their holiday gift?  Sit and spin - they didn't see that price tag coming.  Simply amazing! Sound familiar?  From our standpoint, its a broken record, we see Corporate IT behave like this time and time again.

Plan B - Cloud to the Rescue
This client can consider taking a Blue Sky approach - which can equally serve small, mid-sized and enterprise organizations - and in this particular case can serve as an effective alternative to internal IT.  Plan B can quickly and cost effectively solve this end user's dilemma - essentially firing internal IT.  The Cloud represents an immediate opportunity for this end user to gain a significant competitive advantage by getting the solution they need now rather than continue to wait for IT to do its job which in this case, they clearly didn't.

Cloud solutions can be rolled out in days or weeks rather than quarters or years.  With the Cloud (unfair) advantage, this end user no longer has to deal with ongoing internal IT struggles such as hardware, software, maintenance, bureaucracy or bloated charge backs for the organization's internal IT department's fast/friendly service.

The Math doesn't Lie - Lower your Costs
Let’s revisit some of the other harsh realities of an on‐premise solution model: You are still left with having to put in place the necessary infrastructure to operate the ECM application — people, processes, support systems, and of course, vendor software and equipment. Those are some of the hidden costs behind why IT is hitting the end user with such a hefty price tag. After that initial capital contribution, it’s also your job to budget each and every year thereafter for your ongoing support maintenance contracts, software upgrades, hardware/servers/OS refreshes, patching, hot‐fixes, etc.


In the Cloud model, you typically are not required to procure any hardware or software; you may or may not be required to sign a multi‐year agreement (multi-year agreements are a means of negotiating lower pricing in exchange for a commitment), pay a nominal setup charge, agree to a monthly recurring fee and away you go. And, you the end user are now out of the business of dealing with internal IT struggles around upgrades (hardware and software), patches, hot‐fixes and internal IT support nightmares and exorbitant charge backs. Remember, all that non–money making series of necessary events and tasks to maintain an on‐premise solution must be accounted for and performed by someone one way or another.

In the Cloud, the provider who is the resident expert provides that service for you directly.  Your IT department are generalists and value added is likely spent elsewhere within the organization.  ECM is not a generalist application, it requires experts who are proficient in the industry. The Cloud provider has a built in "carrot and stick" to make you a satisfied customer unlike internal IT - you are probably considered a cog in a very large wheel. 

Am I being tough on IT departments in Corporate America here? You bet, but it is well deserved and after 20+ years in the industry seeing this scenario play out over and over, I think it is time the Business End Users are provided with viable and affordable alternatives that work - ECM in the Cloud. 

Best,


Paul
 








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