For those that have not yet worked
on server consolidation initiatives,
they may be costing their companies money. Companies with data centers with 100 or more servers deployed
will receive significant gains in savings
and reduced overall costs of ownership.
Smaller companies can also realize gains
that offset the costs. Some estimates
indicate that servers typically run at 5 to
15 percent of their capacity.
“Through server consolidation, companies will have fewer infrastructures to
maintain and lower total costs of ownership (TCO),” says Geoff Hanson, practice
director of servers and storage for
Pomeroy IT Solutions. “Other benefits
include time-to-market improvement and
better management of the overall environment. They also position themselves
much better for disaster recovery.”
Why should companies be concerned about
Many IT organizations are interested in
the benefits that a server consolidation
initiative provides. One of the major benefits is operating cost reductions. Operating cost reductions are numerous.
Costs associated with facility space,
power, A/C, storage, network infrastructure, warranty support and administration will be decreased by reducing server sprawl through server consolidation.
Other major benefits include improved
system management, increased utilization of server resources, and better service levels and agility.
What is server sprawl?
Over the years, IT organizations have
been deploying one server per application. In addition to being deployed on a
production server, this may also include
dedicated development and test servers.
These servers tend to operate at only 5
to 15 percent of their total capacity. As
organizations grow, the costs for their
server environments’ footprint, power,
A/C, storage, network and administration can escalate substantially. This results in server sprawl, where servers
are underutilized and operating expenses exceed their justification.
What is server consolidation?
Server consolidation is multifaceted.
One aspect of server consolidation is
achieved through the technology refresh
of the existing server environment. By
replacing older end-of-life servers with
new, state-of-the-art, energy-efficient
servers utilizing multicore processors,
IT organizations can reduce their footprint, power, A/C, management support
costs, cable management, network infrastructure and extended warranty services. Another aspect of server consolidation is achieved through the use of virtualization products. Virtualization products, such as VMware, Microsoft Virtual
Server, Solaris containers, IBM logical
partitions, HP Integrity Virtual Machines, have increased in maturity and
are being deployed through IT data centers. These virtualization products combined with new energy-efficient server
technologies provide IT organizations the ability to maximize hardware utilization and facility footprint, minimize
power and cooling, maintain application
separation and security, rapidly deploy
new application environments, and centrally manage and maintain data.
What is the difference between server consolidation and virtualization?
Server consolidation is the reduction in
the number of physical servers, the number of operating systems and the number
of applications. Multiple workloads can
be moved from several servers to a single server. Multiple workloads can be
consolidated under a single operating
system. Also, multiple applications can
be combined into a single system.
Virtualization is software that enables
IT organizations to virtually carve up the
physical server hardware with mutually
exclusive virtual partitions, thus maximizing their hardware investment.
Virtualization allows IT operations to be
performed with better economies of
scale. This allows infrastructures to be
managed efficiently even while a company undergoes high rates of growth,
while maximizing the utilization of existing resources.
Is there an expected ROI in server consolidation?
IT organizations can realize an ROI
from 30 to 50 percent through server
consolidation. Savings will be realized
through reductions in server counts,
warranty services, facilities, facility
operating costs and labor. Gains will be
realized through rapid provisioning and
time to market, centralized administration, increased security, improved service levels and agility. Some companies
report that 70 percent of their TCO for
typical data centers is for labor and outsourced services. One of the most effective ways to lower TCO is through server consolidation.
GEOFF HANSON is the practice director of servers and storage at Pomeroy IT Solutions in Cincinnati. Reach him at (602) 690-6376
As with most other areas in today’s
world, going green in the data center is a hot topic. There are a number of reasons to go green, energy efficiency being just one of them.
In fact, a study by Lawrence Berkeley
National Laboratories for the American
Council for an Energy-Efficient Economy
determined that data centers can be as
much as 40 times more energy-intensive
than conventional office buildings.
“There are three Es to consider — environmental, energy and efficiencies,” says
Geoff Hanson, practice director of
servers and storage for Pomeroy IT
Solutions. “With the right green initiatives, you can help the environment, save
energy (and dollars) and create efficiencies that will also save money and help
the bottom line. The green movement is
starting to affect the IT department in a
Smart Business spoke with Hanson to
glean further insights into greening up
the data center.
What exactly is a green data center?
A green data center is one designed
with the mechanical, lighting, electrical
and computer systems for maximum
energy efficiency and minimum environmental impact. The construction and
operation of a green data center includes
advanced technologies and strategies.
Does it cost or save to be green?
You can definitely save by becoming
green. Yes, there are investments needed,
but when properly planned and implemented, the savings can offset those
costs. The time it takes to realize maximum offsetting savings depends on a
number of factors.
What are the first steps to take to be green?
The first step a company can take does-n’t cost a dime and is not difficult. You
can easily start saving money by simply
turning off your desktops and monitors
at the end of the day. Companies can also
look at their server environments.
Through server consolidation and virtualization and implementing multicore
blade server technology, you will
improve the utilization of your server
hardware investments while reducing
your data center footprint, power, heating and cable management costs. Also,
through emerging technologies and
power management by chip manufacturers, servers can be powered down when
not utilized, thus realizing additional
Another step would include consolidating and virtualizing storage into shared
storage pools and by implementing such
tools as de-duplication of data to save on
disk space. This helps to reduce the overall storage requirements and backup
costs and simplify data recovery.
A fourth step would include virtualizing
the desktop infrastructure and implementing Energy Star-compliant PCs,
monitors and/or thin clients. Companies
will realize energy-efficient gains in
power as well as improvements through
centralized systems management. Desktops also have the ability to be powered
down either manually or through automated tools to help reduce electrical use
and heat dissipation.
Other steps to take to move toward
going green would include the procurement area, changing the way equipment
is purchased. Procurement procedures
could be put in place to seek out Energy
Are there other things that you can plan for
as you make changes or upgrades?
Many companies are building new
data centers and/or disaster recovery
facilities. As these facilities are being
architected, designed and constructed,
they should be looking at efficient structures and materials during the build out
process. There are new and improved
air handlers, water-cooling systems,
environmentally controlled computer
racks and energy-efficient hardware
available for tomorrow’s data centers
today. In many data centers, cool air is
pushed by air handlers through raised
computer room floors and drawn up
through perforated tiles into cabinets
and the hot air pulled through ceiling
return air ducts. Cables under the raised
floors that are spread throughout
restrict the flow. Companies are now
addressing cable management under
their raised floors to improve airflow.
Better cable management, cable trays
and/or air conduits are being utilized for
more efficient cooling.
A strong recommendation to organizations moving forward is to have assessments performed of their IT facilities’
environmental and energy footprints. It
is also extremely important to have
assessments performed on their servers,
storage, desktops, printing and networking infrastructures. These assessments
would allow them to better understand
their hardware utilization and the cost
savings that can be realized through consolidating and virtualizing their environments with new energy-compliant and
energy-efficient technologies. Regular
audits of the infrastructures should be
performed as a follow up to ensure
everything is being fully utilized.
GEOFF HANSON is the practice director of servers and storage for Pomeroy IT Solutions in Cincinnati. Reach him at (602) 690-6376
For the past several months, the slowdown of residential sales has dominated headlines of newspapers, nightly news reports and political debates. The effect of this slowdown on the economy ranges from moderate to severe depending on whom and where you ask. Experts’ answers and explanations are varied as they try to predict the impact on the economy from both a macro perspective and its effect on the average family.
“One sector that is impacted by residential activity is the retail market globally, since goods are primarily imported from China and other countries, down to the locallevel where spending habits change,” says David Conn, a retail specialist with CB Richard Ellis in Tampa.
Smart Business talked with Conn for his insight about the retail sector, its response to current market conditions and how the industry plans to serve changing consumer demographics.
What is the current effect of the slowdown in the housing market on retail?
After a period of significant growth, the downturn in housing came very quickly, so we are just starting to see the effects as third quarter results are reported. It appears that most retailers are experiencing or expect a decline in recent same store sales. A major portion can be attributed to the drop in housing activity. Purchases normally associated with setting up a new residence have obviously been the most affected.
However, there are a number of other factors contributing to declining sales at other retailers. These include high real estate taxes, rising insurance premiums and rising fuel prices. These all put pressure on disposable income. A drop in consumer confidence is also often cited by experts. Despite the negative news and disappointing third quarter sales, many retailers are still predicting anywhere from moderate drops in sales to moderate gains in same store sales for the holiday season.
How does the retail sector address such forces in play?
In those markets where residential activity has slowed dramatically, retail developments may get delayed, scaled back or even cancelled if retailers can’t get comfortable with sales projections. Fortunately for those of us living in Florida, most retailers continue to believe in Florida as a growth market and see the housing slowdown as a temporary event. However, there are other influences that affect retail sales. Two such influences include an increasingly diverse consumer market and opening new stores. Products and fashions have relatively short life cycles, so buying decisions, product placement and competitive pricing are critical in the face of increasingly compressed life cycles.
At the same time, retail developers face increasingly longer time-lines when developing new centers due to a variety of factors. These challenges include finding affordable land, increasing construction costs, impact fees and increasing opposition from homeowners, and lengthy and expensive entitlement processes. These challenges make it harder for retailers to quantify their expansion plans and deliver new stores as promised to Wall Street.
What are some of the major changes you have seen from the shopping center environment itself?
Probably the most evident is the physical changes in shopping centers themselves. The total redevelopment of Clearwater Mall five years ago transformed a nonperforming, older enclosed mall into a vibrant new outdoor center and is an example of the new generation of shopping centers. These centers are anchored by discount department stores, such as Target, as well as specialty anchors, like Bed Bath & Beyond, The Sports Authority and Staples, each with a unique offering to customers in a setting that allows for convenient parking. In some cases, these centers combine lifestyle retailers, such as Chico’s, Coldwater Creek and Talbot’s that were once found inside regional malls, but now prefer the convenience and lower occupancy costs of outdoor centers. Even successful regional malls are adding outdoor expansion areas that typically include restaurants and non-typical mall anchors to draw shoppers that might otherwise bypass the mall.
What is the impact of online shopping?
Without question, online shopping continues to grow as consumers seek convenience and ways to save time. In addition, the young people of today are very computer-savvy and use the Internet in almost every facet of their daily lives. That said, there are some limitations, since you cannot touch or feel items. A picture and text of an item is not always adequate. Now retailers are complementing their physical stores with an online store, so they can reach customers 24 hours a day. It really is the best of both worlds.
DAVID CONN is a retail specialist and executive vice president with CB Richard Ellis in Tampa. Reach him at (813) 273-8440 or firstname.lastname@example.org.
How much thought do you give to the continuation of your business beyond yourself? What if someone expresses an interest in buying your business? What is your plan if a freeway or some other project displaces your business? These questions could go on for the rest of this page.
None of us live forever. We should be thinking of all types of contingencies. And we should know what our business is worth.
“Every business owner should be planning for how the business will continue beyond the founder’s dreams,” says Lara White.
The senior vice president and diversified commercial banking manager for SunTrust banks, Inc. says, “Selling a business is usually a very emotional event. It is best to remove all emotion from the process of an eventual sale.”
Smart Business talked with White for more of her insight on what business owners should consider as they evaluate their business.
When should business owners start considering the value of their businesses?
Early and often. All business decisions should be based on the future of the business. You want to be prepared for any opportunities that come up throughout the life of a business. An excellent opportunity might be missed because you were not prepared. You have to look at all options based on your goals. You might plan on working for 40 years and cashing out. Maybe your goal is to operate the business as long as you can and then turn it over to your children. You might want to merge with another business to optimize your combined strengths. Whatever your goals, you need to define them and plan in order to meet them. You need to make sure that you are positioning yourself for any and all options.
What are the steps in determining the value of a business?
The first step is to find and select a professional to assist you. You need people who are familiar with your market. They also need to know the ins and outs of mergers and acquisitions. They need to know the valuations of businesses similar to yours.
The next step is to gather the appropriate information. You need to have good, accurate financial records. You need to know how to tell the story of your business. You need to describe the business potential. You need to know how to present the numbers. You must know how to explain why you are entertaining options. You need to find out who might want your business. All of this will help you determine the right time to sell.
How do I know that I am getting the most for my business?
The experience of your professional will help provide the assurance. He or she can help you understand the buyer’s approach. The professional can provide good advice on negotiating with different types of potential buyer.
Strategic buyers and financial buyers are going to have different approaches. Strategic buyers are interested in buying your business, with little or no changes. They plan to continue operating it as is or integrating it into their existing business. Financial buyers would plan to make any adjustments they want to make the business more attractive and sell it at a profit. Either can be the right fit depending on your objectives.
What are the different ‘currencies’ used in acquisitions and what is the ‘value’ of each?
These include: cash, seller notes, earn-outs, equity, ESOPs and any other that might fit the situations and any combination thereof. Much will be determined by what the buyer, the business and the seller can do. Besides the asset value of the business, all of the intangibles must be considered. The currency used will be based on all of the various financial considerations of the acquisition.
How are professionals compensated for their expertise and time?
They typically receive a flat fee for their services. It is also common practice to pay a percentage of the proceeds above an agreed upon minimum sales price. These details are worked out during the exploratory discussion.
Another important discussion point is determining your objectives. Price, time and confidentiality are three important ones.
Once you have determined what is most important to you, your professional can help you keep the process focused and on track.
Your professional should also do all negotiating with the potential buyer’s representative. While you have put your heart and soul into your business, it is better to keep that emotion out of the eventual selling process.
LARA WHITE is senior vice president of SunTrust Banks Inc. and diversified commercial banking manager for SunTrust banks, Inc. Reach her at lara.white@SunTrust.com or (813) 224-2465.
Business is good. Is it time to start looking at expansion? Should you set up new locations, expand your production lines, add to your product mix or open new offices to attract more clients? How do you determine what steps to take and when do you start thinking about expansion?
According to Jim Kimbrough, chairman, president and CEO of SunTrust Bank, Nature Coast, “Take care of today but plan for the future. Tomorrow is definitely going to provide different challenges and opportunities. This is especially true in a growth state like Florida. You never know when a door may open that provides an opportunity for corporate or personal expansion. You need to be ready.”
Smart Business talked with Kimbrough for more insight into areas a person should take into consideration as they think about expanding their business.
How important is it for a business to plan for growth?
It is critical for the most efficient growth of a business. Planning should reduce, if not eliminate, the problems of too little or too late. There are five things that you don’t want too little or too much of if you are going to successfully grow your business. They are inventory, staff, facilities, capital and debt. A good business plan, updated at least annually, can be a key ingredient to efficient growth. At the very least, it will eliminate some of the bumps. It is also imperative to be open to change as the plan and time evolve.
What are some of the basics to keep in mind as you ‘expand your territory’?
What is the forecast for the demand of your products or services? What is the economic forecast? Who is your competition? What have been the reasons for their successes or failures? What can you do differently to maximize your potential? What will be the cost of facilities? Consider land and building costs as compared to rental costs. Determine your options and how they fit your business plan. Also, will you be able to maintain your profit margins in the expanded territories?
How important is cash flow management?
It is a major key to the success of any business. You have to make payroll, pay suppliers, service your debt requirements and meet the demands of owners/stockholders. You have to cover the cost of inventory to supply demand. You have to be prepared to weather the storm during lean times and stock up during good times.
What are some strategies for restructuring debt to improve cash flow?
Identify idle company assets that might not be contributing to the business in the years to come. Outdated equipment, buildings, etc. should be sold to raise cash. Excess or outdated inventory also should be disposed of to help cash flow.
Re-amortizing or extending debt over an extended period or consolidating loans can have a substantial positive effect on your cash flow. Infusion of cash from owners may be needed. Sometimes this infusion of cash from owners may be the only way to grow the business.
Who should be involved in the decision-making as you plan for growth?
The CEO and other substantive shareholders. Those within the company should include the CFO, sales and/or marketing manager and others that might have responsibilities and insight on potential expansion. Outside advisers should include the CPA and company banker.
What does a loan officer look for when processing applications for growing companies?
Earnings history and the future outlook for the products or services are important. Credit rating, ownership structure, current debt to equity ratios, and how the company is handling past and current debt are reviewed. Diversification of assets, products or services, and client or customer base are all considered. The makeup of assets can be important. Last, but not least, the loan officer considers how prepared the company is to handle change.
Are there specific ways your banker can help as you consider growth potential?
The banker is going to look at what has fueled growth or been your catalyst for success to date. He or she can help analyze personnel to be sure that you have the right people on board and might be able to assist in finding the new people you need for expansion. They’ll help analyze your company finances and help determine if you have the money, can get it readily, or are willing to take on debt or find partners or additional owners.
JIM KIMBROUGH is chairman, president and CEO of Sun Trust Bank, Nature Coast. Reach him at email@example.com or (352) 754-5505.
Finding the right people for your company is very important. The entire process of recruiting, interviewing,hiring and training is time-consuming and expensive. Losing newcomers before they ever become productive can be devastating. The best way to assure that once you find the right people they will perform well and stick around for the long haul is to get them thoroughly indoctrinated into your company’s philosophy and culture. If they feel an early sense of commitment and ownership, they are much more likely to stay with the company.
“Effective onboarding is one of the keys to employee retention,” says Dr. Michael Wesson, Department of Management, Mays Business School, Texas A&M. “The more quickly employees adapt to your culture and become fully productive, the better chance you have that they will become long-term employees.”
Smart Business talked with Wesson for more insight on effective onboarding.
What is onboarding?
Onboarding should be seen as the process by which employees are brought up to speed in terms of work performance and become organizational ‘insiders.’ It is not something that simply happens during the first week of employment; for most jobs the process can take from six months to up to a year. In order for an individual to become immersed in your culture and assimilated into the business, there are six key areas that newcomers need to thoroughly understand and adapt to. These areas are organizational goals and values, history, politics, language (slang and jargon), people, and performance proficiency.
Why is onboarding important?
Research clearly shows that effective onboarding leads to higher levels of organizational commitment, job satisfaction and lower levels of turnover among organizational newcomers. Employees tend to be overwhelmed when they start a job with a new company. There is a lot to learn in a very short period of time, especially when you expect them to start performing well right away. Simply having them fill out a W-2 and showing them where the restrooms are won’t cut it. It is potentially the single best period of time to share with employees what the values and goals of the organization are and what is expected of them. Too many companies squander this unique opportunity.
What are some of the keys to proper onboarding?
Planning is one of the main keys to success. What are the most important things you want your employees to adapt to and learn? When is the optimum time for them to learn this information, who is the best person to provide it, and what is the best method to convey the information to them? Many companies are moving towards providing computer-based orientations. My research shows that while this can be effective in delivering some types of information, it is sorely lacking in its ability to deliver much of the socially rich content that is arguably the most important. Bringing in people as part of a group helps them to adjust they have an immediate network of employees in a similar situation and they are more willing to ask questions.
Involving the CEO or other high-level managers is also important it sends new employees a signal that they are important to the organization and that the values being shared with them are not simply words on a written page.
What are some of the most common mistakes in onboarding?
The most common mistake is assuming that employees will just ‘pick it up’ in a short period of time. Managers mistakenly think that a good orientation program is too expensive. However, the cost of losing employees because their expectations aren’t met or are taking longer to master their jobs, and the amount of time supervisors spend poorly covering the same information is much more expensive to organizations in the long run. One other major mistake is assuming that your experienced new hires don’t need onboarding help. I have research that shows that new employees with significant amounts of experience are perhaps the most difficult group to truly socialize to values of their new company partly because they think they know everything already.
Understanding that the socialization process starts well before new employees show up on their first day is also important. Research shows that impressions newcomers get during the recruitment and selection process, and even the signals companies send during salary negotiations, affect incoming expectations and attitudes. These attitudes are hard to change once a new employee starts work. Let employees in on the company culture up front. Send them information after they are hired, but before they actually start. Give them as much information as possible.
DR. MICHAEL WESSON is in the Department of Management at Mays Business School, Texas A&M. Reach him at (979) 845-5577 or Wesson@tamu.edu.
“While we all have to be aware of and follow all the various laws that affect our business, it is just as important to know what legislation is being considered that could potentially impinge on our business,” says Fred Dobbins, city president, Wealth & Investment Management, SunTrust Bank in Tampa. “It is much easier to help shape a bill than it is to change a law after it goes into effect.”
Smart Business talked with Dobbins for more insight on how we can be effective in making sure our thoughts are considered in any new legislation.
How do I find out what laws are being considered?
Don’t wait until bills are introduced. The earlier in the process your concerns are known, the better chance you have of influencing a positive outcome.
Get involved in your local Chamber of Commerce. It monitors business impacts by government at the local, state and national levels. Devote as much time as you can to finding out what issues are being considered by the various governmental entities. At least scan the newspapers and review your Chamber’s governmental summary. Know what committees are working on. Look for comments by legislators that might indicate their interest in passing new laws to solve a perceived problem that crops up from an event that has received media attention.
What are some additional ways to obtain this information?
Become active in local, state and national associations that represent your business segment. Talk to your business banker, express your concerns and enlist help through his or her contacts and associations. Subscribe to a good legislative summary service that is specific to your business. It should provide weekly or at a minimum monthly electronic updates to what is happening on the legislative level that might affect your business.
Encourage all employees, and especially key employees, to become active in associations that represent their business responsibility. Regularly obtain feedback from these employees on what they see on the horizon as far as legislation that could potentially affect your business.
How involved should I get in the legislative process?
It depends on the size of your business and the time you have available. You may only have one hour per week to build your knowledge, but start now and your impact will grow. Devote as much personal time as possible and supplement that with the assistance of your peers, colleagues and others with similar interests.
What should I do when I hear about legislation that could potentially affect my business?
Even before that, get to know your representatives at all levels. Also get to know the administrative officials that might be involved in implementing or enforcing regulations.
Officials elected, appointed or hired need to hear from their constituents. They want professional input that will help them. Even if they don’t agree with you, they’ll usually welcome your input and at least consider your thoughts, especially when you contact them in a professional manner. Attend public meetings and events to facilitate networking with these individuals. Talking to the legislators in their element will help you get to know each other on another level.
When legislation is being considered, contact your representative and express your thoughts. Attend public hearings or at least send a representative. Participate in political action committees. If there is not a PAC that represents your interests, you can form one.
Besides being keenly aware of how any particular legislation might affect your business, try to look at the big picture. When you know what legislators are thinking and why they have an interest in a particular bill, you’ll have a better chance of influencing them in a way that might help them come up with a solution that helps them, their overall constituency, your business and yourself.
SunTrust Private Wealth Management is a marketing name used by SunTrust Banks, Inc., and the following affiliates: Banking and trust products and services are provided by SunTrust Bank. Securities, insurance and other investment products are services are offered by SunTrust Investment Services, Inc., an SEC registered investment adviser and broker/dealer, and a member of the NASD and SIPC. Securities and insurance products and services are not bank guaranteed. They are not insured by the FDIC or any other government agency, and they may lose value.
FRED DOBBINS is city president, Wealth & Investment Management, SunTrust Bank. Reach him at (813) 224-2601 or firstname.lastname@example.org.
“I like to use the comparison of a custom-service restaurant to a high-quality buffet to easily explain SOA-I,” says Omar Yakar, CEO of Agile360 Inc. “Imagine being hungry and going to a nice restaurant where there is no menu, and you order anything you like. The chef must prepare the meal, perhaps going out for ingredients that may not be easily available, which could take a long time. However, a high-quality buffet lets you choose just what you want from available items and you get to eat right away. Which one do you think is more economical and satisfying?”
Smart Business talked with Yakar for further clarification as to what SOA-I is and what it can mean to a business.
How do you analogize SOA-I to a high-quality buffet?
Before SOA-I, you could go to your IT staffers and give them a problem to solve or tell them what you wanted to accomplish with technology. They would most likely design a solution that would do just what you wanted, but would be incremental to your other IT systems. This approach is like the fancy restaurant. You get what you want but it might take awhile until you can start eating, and it’s really expensive.
You choose one item to be your appetizer, one as your salad and an entrée. The waiter takes your order back to the chef so he can custom prepare your meal. If one of the ingredients in the menu description is not in the kitchen, the chef has to send for it and wait. If he doesn’t know how to prepare that item, he tries his best. Customization takes time and adds to the cost of the meal without ensuring quality.
SOA-I is like the high-quality buffet. The restaurateur individually prepares each of the items on the buffet and you just dish up what you want and sit down to eat it. If you don’t want lamb, you don’t pick it up or dish up anything containing it. If you want prime rib and a salad, you just add it.
With SOA-I, various technology components have been de-coupled. You pick what you want, plug it in and start using it as a service.
How does this help the company?
It costs the restaurateur more to custom prepare each meal and to have numerous ingredients on hand. It also takes more people to custom prepare each meal. If the kitchen runs out of a particular ingredient, the food preparers either have to send someone out to get it or disappoint you by not filling your order.
The same goes with the old paradigm of custom filling any IT needs.
With SOA-I, the buffet operator has already prepared different items ahead of time and placed them on the buffet table to satisfy a variety of diners. You decide what services you need such as remote Web access, processing power, storage, security or regulatory options, or any other services desired to fill an order. The information needed to fulfill the order may be supplied from various applications, all seamlessly working together without the cost of customization.
Service-oriented companies can show significant savings in maintenance, personnel, software and hardware costs while providing technology solutions that are agile and can rapidly change to fit their customers’ needs and potential emerging markets.
How do we automate so business analysts can order off the buffet themselves?
It starts with the SOA-I framework, or mindset, where the IT provider publishes individual technology components and the business analyst picks only what he or she needs to deliver a new application. We call this provisioning connecting technology components to turn on a business service. At the buffet, the end user provisions the meal. In SOA-I, the end user provisions software as a service.
With clear goals, you can dramatically improve time to value, drive down costs and improve business agility.
OMAR YAKAR is CEO of Agile360 Inc. in Irvine. Reach him at (949) 253-4106 or email@example.com.
Choosing a retirement plan for your business can be a daunting task, requiring the consideration of a range of business and personal needs and goals.
“The sooner you set up a retirement plan for your business, the longer you and your employees will be able to contribute,” says Jamie Richardson, vice president of View-Point Investment Group, a division of ViewPoint Bank and registered principal of Raymond James Financial Inc. “This can make a significant difference upon retirement. For many businesses, the question is not ‘Should I implement a plan?’ but ‘Which plan is right for my business?’”
Smart Business talked with Richardson about some of the things businesses should consider in developing their retirement plans.
What are the options in types of retirement plans?
The choices are many. They include SEP, profit sharing, 401(k), SIMPLE IRA and defined benefit, just to name a few. Selecting a suitable plan is a crucial step, and providing one has many benefits.
What are the major differences between these plans?
There are many differences between these types of plans. However, qualified retirement plans fall into two broad categories: defined-benefit plans and defined-contribution plans. SEP, SIMPLE IRA, 401(k) and profit-sharing plans are all considered defined-contribution plans. For small businesses wishing to minimize administrative costs, a SEP or SIMPLE IRA might be appropriate. For an employer wanting a plan that allows employee elective deferrals without nondiscrimination testing, a Safe-harbor 401(k) might be attractive. Safe-harbor 401(k)s allow owners and highly compensated employees to maximize their contributions to the plan.
What are the main considerations in setting up a plan?
A number of considerations should be evaluated when selecting a plan. Working with a qualified adviser to establish strategic solutions for your financial needs is crucial no matter what stage of growth your business is in. Key issues in plan design include the type of business and ownership information, employee eligibility, funding, contribution limits and nondiscrimination testing.
In addition to plan design, a number of components must be coordinated to help ensure the most effective benefit for your employees. These include investment alternatives, record-keeping, administration, employee communication and trustee selection.
What is the adviser’s role in setting up a plan?
Retirement plans have many different moving parts that must be coordinated to run smoothly and potentially meet the needs of the organization. An adviser’s role is to help you set reasonable expectations, select the most appropriate plan, then manage all the components on an ongoing basis to help ensure a successful plan.
How often should the overall plan be reviewed for potential adjustments?
Annual plan reviews are imperative. This includes overall service, operations, participation, nondiscrimination testing and investment performance. It is also important to review your plan in light of any regulatory updates, legislation, Department of Labor and IRS matters. In August of 2006, President Bush signed the Pension Protection Act of 2006 into law, which brings many changes to shore up retirement plans.
What are the main criteria for selecting a retirement plan?
You must listen to the needs of your employees and then select the appropriate service provider at a reasonable cost, determine the optimal plan design provisions, choose and monitor investments, keep up with legislative changes, help ensure the plan is administered properly, and educate and inform plan participants. All of this will hopefully result in a plan that inspires employees to reach their retirement dreams, while helping you recruit and retain valuable associates.
Of course, not all financial planning needs can be met by a company retirement plan or benefits. An adviser can integrate qualified plan goals into a customized financial plan for business owners and senior executives.
Securities are offered exclusively through Raymond James Financial Inc. Member NASD/-SIPC, an independent broker/dealer, and are not insured by the FDIC or any other bank insurance, are not deposits or obligations of the bank, are not guaranteed by the bank, and are subject to risks, including the possible loss of principal.
JAMIE RICHARDSON is vice president of ViewPoint Investment Group, a division of ViewPoint Bank, and a registered principal of Raymond James Financial Inc. Reach him at (972) 398-3472 or Jamie.firstname.lastname@example.org.
Registered principal, Raymond James Financial Inc.
How might the loss of a key employee affect your business? Will the business survive if a partner becomes disabled or passes? Do you want your legacy to include a business that survives years beyond you, or a business that folded because you didn’t protect yourself against the loss of a key employee or partner?
“Almost every company’s success depends on a few key employees and/or partners,” says Karl Hamilton, senior vice president and regional manager for SunTrust Investment Services in Tampa. “A certain employee’s knowledge is key to the business. One or two sales people may account for a large percentage of sales. A partner’s heirs may have no interest in remaining in the business. It is imperative that business owners consider these eventualities and put plans in place to protect themselves and their business.”
Smart Business asked Hamilton for insight on how business owners can protect themselves should a key employee or partner not be available to the business for any reason.
What consideration should a business owner give to protecting themselves against the loss of a key employee?
While all employees should be, and usually are, important to the success of any business, some are most important or ‘key’ to its success. The owner should analyze who those key employees are. What does each employee bring to the business? What would happen if this one or that one were lost? How would that impact the operation? What would it take to replace that individual? How long and at what cost would it take to find a replacement employee?
As each employee is analyzed, the cost of protecting a potential loss is weighed against the projected cost of the loss if the person were not available for their job. Disability and life insurance should be considered. The amount of coverage will be determined by the analysis.
What additional considerations should be given to the potential loss of a partner in the business?
Besides the potential loss to the business because of the partner’s knowledge and responsibilities, the value of their share of the company must be considered. If the partner becomes disabled or dies, family members may want their share of the business in cash rather than ongoing ownership.
What is the value of the business? Is there sufficient cash available to buy the partner’s share? Most businesses rein-vest their cash into the business rather than placing it in a restricted fund to buy out a partner. Insurance may be a good option to maintaining a large cash reserve. Without proper planning, it might be necessary to sell off assets or the entire business to pay the family.
How are the cash or insurance needs determined?
It is important to do this analysis on a regular basis, especially in situations such as volatile property values or rapidly increasing sales and profits. It is generally recommended that partnerships consider re-analysis of the value of the business when the financial results of each business year are available. Besides profits and potential profits, current property values should be determined. Each partner should be covered by cash or insurance to pay off his or her share on a current basis. In no case should re-evaluations be made less than every two years.
How can a business protect against the loss of a key employee to another business?
Create defined benefit plans and retirement plans that are owned by the business and not portable. Because many of these benefit’s costs are based on age at time of inception, your cost may be much lower than it would be for another company to establish equal benefits when trying to hire a key employee who has been with you for a number of years.
What are the tax considerations on insurance and retirement plans?
In most cases, the cost of insurance and most benefit plans are an expense to the business and are therefore tax deductible. Be sure to discuss those things with your CPA to assure they are set up properly.
SunTrust Investment Services, Inc., Sun-Trust Banks, Inc., their affiliates, and the directors, officers, agents and employees of SunTrust Investment Services, Inc., Sun-Trust Banks, Inc. and their affiliates are not permitted to give legal or tax advice. Clients of SunTrust Investment Services, Inc., SunTrust Banks, Inc. and their affiliates should consult with their legal and tax advisor prior to entering into any financial transaction.
Securities and insurance products and services are not insured by the FDIC or any other government agency. They are not bank guaranteed. They may lose value.
Services provided by the following affiliates of SunTrust Banks, Inc.: Securities, insurance and other investment products and services are offered by SunTrust Investment Services, Inc., an SEC registered investment adviser and broker/dealer and a member of the NASD and SIPC. Insurance products and services are offered by Sun-Trust Insurance Services, Inc., a licensed insurance agency.
KARL HAMILTON is senior vice president and regional manager of SunTrust Investment Services in Tampa. Reach him at (813) 224-2517 or email@example.com.