CEO’s Quick Reference Guide!

As the person running the company, you need to know a few things about IT. Things like containing costs, knowing when to pull triggers, and knowing when to hold tight for something better coming around the corner.

First off, let’s look at costs. To be in line with industry norms, your costs should be somewhere between 2% at the low end and 5% at the high end of gross sales. The lower number is used when you have more basic needs such as e-mail, phones, a small web site presence, and maybe a server or two. In short, you’re not using an e-commerce model as your lifeblood. The higher number indicates that technology is not only key to your business, but you must continue to make strategic investments to not only sustain, but grow. In short, it’s your competitive lifeblood.

On the basic end, that is closer to 2% and sometimes even less, the real concern is whether you are under spending and not leveraging technology enough. Web sites need a refresh every two to three years, and the search engine optimization (SEO) must put your top twenty phrases on the first page of a Google search. Server and other infrastructure items like firewalls and switches have a useful life of about five years. Laptops and PC as well, but don’t try to save money by not replacing monitors as it’s a small price to pay to ensure you’re folks eyes work well! In short, as long as you’re keeping your equipment fairly current and on a plan to replace 20% of the items per year, it should be a pretty steady cash flow. Keeping software and hardware maintenance contracts is nearly always worth the money with few exceptions.

On the higher end of the spectrum, the question becomes not so much as to whether you need what you are buying, but more so about what you are investing in. Are your investments providing either a) significant savings or b) higher returns in your technology dollar investment than other technology spending? For instance, VMware saves a lot of outfits a lot of money. It involves using less hardware, less electricity, less cooling, with more disaster recovery (DR) ability. It’s a win from every angle possible. The harder decisions lie in weighing the benefit of more strategic items, like upgrading or changing an ERP system or swapping a large data center to 240V to save money on electricity which always increases in cost. This is where strategic planning takes place, and it’s what we do at Roundbrix. We look at the entire picture, but what exactly is that?

The entire picture consists of all the components and needs to be the basis for any metrics and improvements. Included are hardware purchases and leases, support costs, software costs, hardware/software support costs, telephony costs, annual technology-related contracts, ERP costs and others. If you can negotiate multi-year contracts for foreseeable expenses like ERP support, as long as you have the cash and the return is greater than most other investment vehicles, it may make sense to prepay for a few years. Let’s not forget the bills for phone circuit/usage and internet circuits, both of with should be reviewed as often times there are savings to be had there as well. For good measure, if you incur downtime, that too is a cost. We’re strong believers in understanding and planning software and hardware cycles to create the largest win possible. For instance, if you are moving to a different version of ERP application software that is newer, but a large change, buying a server creates a relatively inexpensive, yet strong fallback position. Another example might be that you’re moving. Do you spend $10-$20k out-of-pocket to move that 4-year old phone system? Another option is to buy new or possibly lease it, and only have a payment of $600 or so, saving you $10k-$20k for those larger out-of-pocket items as moves get pricey fast!

At Roundbrix, we’re in our 11th year and have a “been there, done that” set of skills through simply having managed the ship well through many a stormy sea. We know how to keep things afloat and can help you safely to shore!


When Two is Greater than Three or Disaster Recovery for Free!

This title reminds me of a childhood cartoon of Rocky & Bullwinkle when announcing the next episode, there were always two names for it. Here are a few examples:

Boris Lends a Hand or Count your Fingers!
Rocky and the Rock or Taken for Granite
Landslide on the Rails or Bullwinkle Covers His Tracks
All in Fever Say Aye or The Emotion Is Carried
Claus and Effect or Yule…Be Sorry

If you’re feeling nostalgic and need a bit more of this Rocky & Bullwinkle, here’s the YouTube link on Rocky & Bullwinkle starring Robert DeNiro.

To move on, we’ve been working to share the great news of the recent advancements in VMWare, specifically VSphere 5. But the very nature of this technology is so awesome it warrants another look, especially for your Disaster Recovery Plan and Property Use Tax bill, especially if you’re in Orange County!

Disaster recovery with VMWare. You’ll be pleasantly surprised when you get more functionality for less money. Remember that CPU utilization on an average server is only 15% unless it’s a heavily used database or application server. In summary, there are fewer and fewer scenarios where a Virtual Machine is not the solution. We firmly believe at least 75% of all servers should be virtualized.
So getting back to the 3 > 2, here’s the scenario.

In the above scenario on the left, if one of the three physical machines fail, you’re basically down in that area with all that it does. Not a good place to be if you’re planning on running a business. You get to react and perform damage control because you have just become a firefighter!

In the above scenario on the right using a VM Cluster, when one machine crashes on VMHost 1, it can automatically failover to the VMHost2 and life goes one. In being consistent with best practices, distribute your risk between VM Host machines. As is the case in life, flexibility and adaptability is what this is all about.

Orange County Use Tax. One of the areas I take issue with the most. When calculating use tax, it is based onPurchase Price, not what it is worth. So I have a 5-year old server that cost me $8,000 when I bought it, and today it is worth $500. The use tax is based on the $8,000. Not fair, but that is government. How you get even is with less physical machines as it’s just plain less tax. Go from ten physical machines to four, and your property use tax is reduced by 60% on these items for years to come, not to mention the savings in electricity! At the end of the day, monies paid in taxes could be better used for other business purposes or maybe give someone a raise – like me!