Cincinnati (1116)

Monday, 25 June 2007 20:00

Strategic thinker

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In 1978, when Tom Thieman took over as president and CEO of his father’s stamping business, Thieman Stamping Inc., he had plans to grow the business. Over the years, he’s done that, but he’s done so by maintaining the company’s focus and not getting lost in the short-term gains that some opportunities can present.

He’s made two strategic acquisitions over the years, which created Thieman Tailgates Inc. and Thieman Metal Tech LLC. But acquisitions alone don’t grow a company. Thieman has employed a strong dedication to both customers and employees.

For customers, warranties aren’t challenged. He says it costs less to replace something than it does to argue about it. This creates a strong sense of trust. For employees, he pays their life insurance policies, and while the company used to pay 100 percent of health benefits, they’ve been able to absorb most of the rising costs, and employees now pay just $40 a month for their and their family’s coverage.

Thieman has had his share of challenging times, too. After a manufacturing recession in 1998, he lost six figures worth of money when a major customer filed for bankruptcy. He was determined not to let that happen again, so today no customer can account for more than 25 percent of the company’s revenue. When one starts to approach that mark, he finds other services to expand into to maintain a balance and ensure future success.

HOW TO REACH: Thieman Stamping Inc. and Thieman Tailgates Inc., (419) 629-2612 or www.thieman.com

Monday, 25 June 2007 20:00

Lighting growth

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Larry Powers is always on a quest for a new challenge or opportunity.

In 1979, as president of a small company, he turned the business around, which led to an acquisition by Bairnco in 1983, which created Genlyte Group Inc. in 1984.

Genlyte struggled initially and amassed high debt while going through five presidents until Powers was appointed president in 1993.

Upon his appointment, he first met with the board of directors to create a turnaround plan for the lighting company. He organized the company into decentralized business units and gave each division manager complete authority and responsibility for that division, all the way down to the profits and losses. Each manager was also charged with new product development and driving those products into their appropriate niches in the marketplace. This approach has created a very entrepreneurial culture within the company.

Powers focuses the group’s growth on expansion and acquisitions. Last year, it introduced more than 20,000 new products in more than 380 new product families. It also released 80 new customer catalogs and brochures.

As a result of Powers’ efforts, Genlyte has been handsomely rewarded in the marketplace. As chairman and CEO, he has doubled Genlyte’s revenue. The company has also made Forbes magazine’s Platinum 400 list of the best big companies for the past five years. Additionally, the magazine named Genlyte the best-managed company in the capital goods industry category last year.

HOW TO REACH: Genlyte Group Inc., (502) 420-9501 or www.genlytegroup.com

Monday, 25 June 2007 20:00

The natural

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Kevin Vasquez has always known how to work hard. After his father died when Vasquez was just 9 years old, his mother moved him and his three siblings to North Carolina. Even at that young age, he felt an intense desire to provide for his family and keep them off of government support while his mom struggled to make ends meet. Vasquez did everything he could to help, from cutting grass to working as a janitor and spending long days working in the Carolina tobacco fields. The long hours instilled not only a solid work ethic but also fueled a desire to succeed.

After putting himself through college, Vasquez found himself working f o r D i a m o n d Shamrock/Fermenta. He worked his way up to the executive vice president role and was asked to move to Germany. He declined the promotion for personal reasons and was instead offered a chance to turn around the company’s largest channel/distribution partner, Butler Animal Health Supply LLC. In 1999, he was appointed executive vice president and chief operating officer. The company was family-owned, and it was on the verge of bankruptcy. In 2003, he teamed up with a private equity firm and acquired Butler. Vasquez immediately redefined the company’s mission and vision, and implemented a profit and loss discipline that was critical to ensuring longevity. Within a year, sales were increasing. Through a key acquisition, Butler has now become the largest veterinary distribution company of companion health products in the United States, and maintains a 98 percent satisfaction rate among its customers.

HOW TO REACH: Butler Animal Health Supply LLC, (800) 282-5162 or www.accessbutler.com

Monday, 25 June 2007 20:00

Partnering for success

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Bob James and Tony Izquierdo used to work for competing companies, but over the years, despite the competition, they respected and admired each other, and a friendship was born. Eventually the two found themselves working for the same company, and they bonded even more through a common idea for a business venture to start an infusion company.

After investigating the market and seeing it had a shrinking profit margin, James and Izquierdo didn’t give up. They modified their idea from an infusion company into a home health care provider, now known as Care Connection of Cincinnati.

When they started, James performed all the patient care because he’s a registered nurse, and Izquierdo handled all the marketing. They both went through six months of being on call 24 hours a day, but at the end of that period they started to see a positive cash flow. Care Connection is now the largest independent, locally owned home health care provider in the Greater Cincinnati area, and was named to the Top 500 “HomeCare Elite” list by Home Health Line magazine. The magazine evaluated close to 7,000 agencies across the nation and ranked Care Connection in the top 7 percent.

James and Izquierdo pride themselves on how they’ve gotten to where they are, but they know they also have to continue looking forward. They invest in research to discover, test and develop new treatment options and approaches to care to help them continue providing the best service for customers.

HOW TO REACH: Care Connection of Cincinnati, (513) 842-1101

Monday, 25 June 2007 20:00

Driven to succeed

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For two decades, Ernst & Young and the Entrepreneur Of The Year® (EOY) awards have honored entrepreneurial men and women and the companies they build and grow. During that time we have chronicled their capacity to transform organizations, create new products and industries, enrich individual lives, and contribute to the vibrancy of national economies.

Each year, the South Central Ohio & Kentucky EOY finalists and award recipients demonstrate incredible depth of character as they develop new technologies, create faster ways to distribute goods and services, and improve the quality of life for people around them. The individuals we honor this year are no exception.

This year’s EOY program participants have succeeded through turbulent economic times and emerged even stronger. As they forged ahead, they may not have listened when told it couldn’t be done, and they continue to take chances that average people consider too risky. They are leaders rather than followers. We are inspired by their achievements.

As we look toward tomorrow’s entrepreneurs, join us in congratulating the leaders of today, the innovators that have achieved their American dream. The following pages highlight those individuals who pursued this coveted distinction.

Congratulations on your continued success.

ALAN GREENWELL is program director for the Entrepreneur Of The Year South Central Ohio & Kentucky awards.

Saturday, 26 May 2007 20:00

Loyal sovereign

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When it comes to a business like The Hillman Cos. Inc., it would be ridiculously easy to make a lot of bad puns related to its business. Even Mick Hillman, the company’s president and CEO, can’t resist a chuckle at a corny nuts and bolts gag.

The Hillman Cos. supplies retailers with the most fundamental types of hardware products: nuts, bolts, screws and all manner of fasteners, key blanks and about 45,000 other low-priced, but nonetheless critical items for their customers.

When the company was sold in 1982 to an investor group and some company executives, it was doing about $8 million a year in sales. In 2006, The Hillman Cos. net sales were $424 million, and Hillman expects to hit the $450 million mark this year

“This company has never had a year where sales and earnings have not been better than the year before,” says Hillman of the company his parents founded in 1964 with $2,000 of borrowed money and no experience in the business.

As revenue continues to grow as it acquires other firms and its customers add hundreds of stores to their retail networks each year, it has required careful management of its work force to keep up.

“I think the challenge is to both mold the people who have been loyal and dedicated and committed to the company to be able to grow with the organization, and at the same time recognizing that some people cannot grow at the rate the company is growing, and so you have to infuse some talent when necessary,” Hillman says. “So it’s a combination of balancing loyalty with the need to step up as the business grows.”

Hillman’s approach has been to emphasize the basics and be consistent, all while making sure to reward loyalty to keep the core of a strong culture.

Creating loyalty

Hillman says he’s used a variety of strategies to ensure that his employees remain loyal and stick with the company for the long haul.

“We’re very good at attracting talent, polishing talent and retaining talent,” says Hillman. “I don’t lose people to competitors or to people leaving to go to other opportunities. We do not lose good people around here.”

Hillman has some compelling facts to back that up. “I’ve got 400 people who work in my retail stores that do routine service work and the industry standard there says you’ll lose 40 percent of those people every year,” Hillman says. “My turn rate is less than 10 percent.”

The company holds onto employees by rewarding their performance and loyalty, and by providing a rewarding work environment and flexibility to move within the company.

“First of all, at the senior level, they have equity in the company,” says Hillman. “The other thing is we allow people a fair amount of autonomy and authority, so they are able to make important decisions. Again, I think being able to give them a change in terms of their responsibilities, so they can work on different areas of their skill set, I think that helps.

“One of the things that we’ve used is we’ve allowed people to change spots in the organization, so we’ve had IT guys going to operations, sales guys moving to other positions, so it’s really been rounding out everybody’s exposure to the company.”

Because the business is complex and difficult for newcomers, Hillman prefers to develop his existing employees to advance to higher levels.

“It’s very difficult for someone to come in here at a director level or executive level and make a meaningful contribution inside a couple of years,” says Hillman.

To help with employee development, the company added a training department staffed with training professionals a few years ago to develop and evaluate its talent using testing and techniques like 360-degree reviews. When weaknesses are detected, employees go through additional training and coaching to help them develop their skills.

“We’ve got a professional trainer and we get feedback based on his interaction with the folks as to whether they’re capable of going to the next level or not,” says Hillman.

For those who aren’t capable of moving up, Hillman has a philosophy of moving people to other slots in the company where their talent and skill levels are better suited, even if it’s at a lower level. He won’t reduce salaries, but he might cut back on raises or freeze their pay levels.

“I think one of the things that we’ve done to maintain the culture here — and some people might look at this as a bad thing — if somebody couldn’t jump up, we would always find a spot for them within the organization, so we didn’t have to eliminate people,” says Hillman. “If we didn’t feel like they could move to the next level, we would find a position for them that was meaningful, that fit their skill set. So I think what came out of that was a fair amount of loyalty and there’s a fair amount of seniority in the company.”

Hillman rewards that kind of loyalty, even for those employees who might not be performing up to par in their jobs.

“If you’re committed to the company, if you’re loyal, if you’re hardworking, I will find a spot for you,” Hillman says. “And people know that, they recognize that.”

But that’s not to say that working at Hillman provides a guarantee of a lifetime job. Laggards simply don’t last, even those with long service records.

“Now, just because you’re tenured, if you’re not loyal, if you’re not a hard worker, you won’t last,” says Hillman. “I’ve gotten rid of people who were here 20 years when they’ve decided not to work anymore.”

When the company needs to go outside for talent to meet its growth needs, Hillman hires people who he deems are overqualified. His rationale is that hiring to meet the needs of the current level of the business will nearly ensure that the business won’t move past that level. Similarly, he adds people in anticipation of additional business rather than waiting until the existing work force can’t handle the increased volume.

Some of the incentives that the company uses to reward its workers across the board are events that involve employees on every level. Companywide picnics or free lunch days are offered a half a dozen times of the year, and there are also gifts for longevity and hitting certain goals.

It’s important to have rewards that everyone within the company can enjoy. Hillman points to their annual all-expenses-paid trip for top sales and service people and for long-term employees as an example.

This year, the company is taking about 70 couples to Puerto Rico for five days. The group is made up of top sales and service people, as well as every employee that’s been there for 25 years or more.

“So, the interaction between senior managers who have equity, salespeople who are making $50,000, $60,000 or $70,000 a year, service people who are making $30,000 a year and the guy who’s out there putting screws in a box for $13 an hour, all going on a pretty high-end trip with all expenses paid, that’s just an example of how we’ve done a very, very good job of keeping good people in the organization.”

The combination of rewards and recognitions provides some of the glue that keeps its employees connected to the company.

“All of that, I think, tends to tie you in with the company,” says Hillman. “I think these are the kinds of things that make people want to stay at the company for their entire career.”

Share the financials

Hillman also makes employees feel like a part of the company by sharing financial information about how the company is doing.

“We openly communicate the results of the company,” Hillman says. “People know whether the company’s doing good, bad or indifferent. So I think if you know what the situation is, if you give people the facts, you don’t have to draw out the conclusion for them. They can draw their own conclusions. If you don’t give them the facts, if you don’t communicate, then you have a whole set of other issues.”

Hillman shares that kind of information at quarterly meetings with all the employees, on bulletin boards and through e-mails and a company portal accessible by employees, where they can view statistics like daily sales results and earnings versus projections.

“People at almost every level know whether the company’s doing well or not.” Hillman says.

He says that while it can be a double-edged sword to be that open with the financials, on balance it’s better to share it than to keep it hidden.

“I think it’s critical to share that information,” says Hillman. “The danger in it is when things are very good, people will expect more. The positive in that is when things aren’t good, people know not to ask for more. You’ll pay more on the upside, and you’ll pay less if things are not good. It’s a double-edged sword.”

Hillman offers that while companies need to change to remain viable, there are some things that should remain the same to ensure continuity over time.

“The advantage that we’ve had is we’ve had the same consistent leadership philosophy over the whole life of the company,” says Hillman, a pattern he says started with his father at the helm. “When you act the same way over a long period of time, people know what to expect. I think what happens with some companies is that they change leadership and people wonder where it’s going with the new leadership. I think that’s been the advantage here because people — employees and customers — know what to expect.”

HOW TO REACH: The Hillman Cos. Inc., www.hillmangroup.com

Wednesday, 25 April 2007 20:00

Making change

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When Claude Davis arrived at First Financial Bancorp as its president and CEO in 2004, there wasn’t much mystery about what the company needed to do.

First Financial had gobbled up smaller banks and other financial businesses as the industry consolidated. It had made 18 acquisitions in four states over the years, but some of those deals weren’t profitable, and the synergies that were supposed to come from consolidation weren’t being realized.

“The business had gotten to the point where we weren’t leveraging the power of one brand and one message, and we weren’t leveraging some of the synergies associated with one organization,” says Davis.

Davis knew the bank needed to take advantage of some economies of scale, present a single brand to its customers, shed unprofitable businesses and start restructuring to eliminate redundant positions. But to do so meant a lot of change, something the work force wasn’t necessarily prepared to handle. Employees and managers alike were going to have to not only work through the overhaul of the business, they were going to have to change their whole method of thinking.

“Culture change is very hard and it takes a long time, and really working through with people how to think differently about the business and think differently about the organization has been the greatest challenge,” says Davis.

Transforming the culture at First Financial required emphasizing growth, even as some necessary cutbacks and divestitures were made, and keeping employees informed about as many of the changes as possible.

Emphasizing growth
Changing names, selling off businesses and making job cuts can easily be perceived throughout an organization as only negatives, undermining the progress and success of any reorganization plan.

“It’s really important to have a balance when you’re going through this process,” says Davis. “One of the first things we did was, as part of the strategy, a growth plan. We felt it was important not only to go about the process of reorganizing but to make it clear that our objective long term was to grow the company. It’s important, especially for associates of the organization, to understand that the goal and objective is to be a high performer, that we want to both grow the business as well as provide superior returns to shareholders.”

One of the first steps in the reorganization was to open new operations in Cincinnati and Dayton, two markets where First Financial had not had a presence. Davis says doing so reinforced the notion that the company was on a growth track. It also added people with specialized skills in its existing markets.

“In addition, especially in the commercial banking area, commercial lending and treasury management, we recruited several new staff people in both the new markets and in existing markets to demonstrate that we were trying to grow the business, even though we were reducing costs in other parts of the business,” says Davis. “We’ve also been adding sales staff in our wealth management group to try to expand that business.”

While headcount reductions were inevitable to eliminate redundancies, Davis wanted the layoffs to place minimum stress on the organization and avoid the loss of key employees who might fear that they would be the targets of future cuts.

First Financial made sure that employees in the organization knew as soon as possible when changes were going to occur so that they could plan accordingly.

“First of all, we tried to make sure that people understood why we were making the changes and why they were important,” says Davis. “Second was to make sure we communicated the change or the decision as soon as we possibly could to provide ample lead time for individuals. Third, we tried to have a fair severance package for those people who were affected.

“Considering the level of change, we were fortunate that we lost very few employees as the result of the reorganization, and we were simultaneously able to recruit several new very talented associates.”

Delivering the message
Davis doesn’t underestimate the ability of an organization to absorb and deal with change, as long as employees comprehend the changes and understand the rationale for them.

“I believe that when an organization is in significant need for change, that the associates know it better than anyone else,” says Davis. “It’s not the changes they have a problem with, it’s understanding where we’re going to be through this change.”

For that reason, communication has been the single most critical factor in making the changes successful at First Financial. The organization, which has $3.4 billion in total assets and $125 million in net interest income in 2006, accomplishes it at several levels, including Davis communicating directly with employees, indirectly through his senior management team and through video and print messages.

“I communicate to a broader group of senior managers, which is about 35 or 40 people, where we’re trying to get the message to them so they can deliver it out in more of a cascade communication approach,” Davis says. “I’ve done three different videos where there’s an all-employee message. That’s quickly turned around and sent out in DVD form to every branch and every department.”

Additionally, the company has used a series of ongoing newsletters that identify the key points about particular initiatives. For example, a series of newsletters about the IT conversion provided explanations of why the changes were being made, how it would affect the growth plan and covered the key points of the new system. A separate newsletter was used to facilitate announcements about the strategic plan.

Davis says he also spends a lot of time in the field, meeting with employees to explain the strategy and answer questions.

While the effectiveness of its communications hasn’t been formally measured, Davis says he can judge through his own interactions with managers and line employees how well the message is being communicated.

“I will tell you that most of how we’ve measured that has been anecdotal from the standpoint of, we’re constantly asking our managers, ‘How’s morale? What are the concerns?’” says Davis. “We try to create environments where people can ask questions. I’ve always said since I got here that I’ve got an open door, people can send me e-mails, call me, do whatever they want in terms of trying to understand the issues and the message. So we are constantly asking the questions.

“Whenever I’m out at a town hall meeting, I always have a lot of time for Q&A so I can understand what’s on people’s minds, and usually from those questions I get a sense of how people are feeling, and also if people are understanding what we’ve been communicating.”

Davis says it is important to keep in mind that newcomers to the organization are hearing the message of growth and reorganization for the first time, and that they need some context to understand what the company’s goals are going forward. Without understanding that a business unit sale is tied to the larger growth strategy, employees might reach the wrong conclusion when news of a divestiture comes out. So as the reorganization has unfolded, the company has taken steps to provide the back story to new employees.

“What we can’t forget is we have a group of people who are continuously new to the organization, because at entry levels, you have higher turnover rates,” Davis says. “You can’t forget that some percentage of your work force just joined you in the last month or two or three and they didn’t hear the previous five messages about the strategy.”

The measures are a combination of providing materials that explain the company’s reorganization strategy and a concerted effort by Davis and his managers to reinforce the strategy at every opportunity.

“We made some early videos of the importance of the plan,” Davis says. “We make sure they get those. Whenever I do a major issue or address, I always remind people of the core elements of the plan. We ask managers to make sure that people understand the plan and what we’re doing and why.”

Davis says the practice of reinforcement is valuable not only for newer employees but for the veterans, as well.

“As much as people get thrown at them, they only remember a certain percentage of it, and you have to keep reinforcing it so that they eventually understand,” Davis says. “I would tell you for the most part, because we have done a lot of communication, people do understand the strategy and understand what we’re trying to accomplish.”

Cognizant of the fact that as a service business, the bank needed to continue its day-to-day operations as usual during the reorganization, even as it was making fundamental changes such as transforming IT systems, Davis structured the management to make sure that client service remained a priority.

“We made sure there’s a group of managers whose sole focus is the clients and that they are not focused on the transition process,” says Davis.

And as with its employees, careful and thorough communication with customers was a must.

“Because you are going through a transition in a live environment, you have to make sure that each of them is executed in a way that has as minimal impact on the client as possible — and it will have client impact. If it’s a new system, that the system does what you think it’s going to do and that you communicate that change to the client.”

As the reorganization strategy that Davis rolled out not long after his arrival has taken hold, visible changes have occurred. First Financial put forth a new branding effort, uniting all of its operations under the First Financial banner. It sold off a bank, several branches and some poor-performing operations and paid off nearly $300 million in long-term debt in the process.

Changing the organization is ongoing and hasn’t been easy, but if the bank had failed to meet the challenge of change — both structural and cultural — First Financial’s competitiveness likely would have suffered. “I think growth would have continued to be a struggle, and the organization was falling behind competitively with its products and services, which I think over time would have affected margins and things like credit quality,” he says.

For Davis, the key was to make the necessary changes as quickly as possible because dragging it out can hurt a company.

Says Davis: “Quickly develop a plan, do not be afraid to make quick, drastic change and do it in a defined period of time, because I think every organization has a certain capacity for change over a certain time frame. If you extend it too long, I think it’s damaging to the organization. Keep communicating why you’re changing and how it relates back to the strategy.”

HOW TO REACH: First Financial Bancorp, www.bankatfirst.com

Wednesday, 25 April 2007 20:00

Limiting loss at your doorstep

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Insurance is all about risk management and limiting loss. So how do insurance companies limit the risk within their own businesses? The answer is reinsurance — insurance for insurance companies.

“Policyholders transfer their financial risk to their insurance company,” says Tom Hudock, risk manager with Westfield Insurance. “The company retains some of that risk and transfers, or cedes, the remainder to other insurance companies called reinsurers. Reinsurance is primarily insurance for an insurance company. Large self-insured businesses can also purchase reinsurance to reduce their risk.”

Smart Business discussed with Hudock the purpose and the impact of reinsurance in the insurance industry.

Why do insurance companies purchase rein-surance?

When an insurance company issues a policy, it promises to pay for future claims that may occur. In order to deliver on these promises, an insurer must remain financially sound. Reinsurance preserves policy-holders’ surplus (retained earnings).

There are three main reasons why insurance companies purchase reinsurance: capacity, stability and catastrophe protection.

 

  • Periodically, an insurer will purchase reinsurance on a single large risk, e.g. a $50 million building. This is called facultative reinsurance. It provides the insurer with the capacity to insure a risk that might otherwise be declined.

     

     

  • Treaty reinsurance is another type of reinsurance that insurance companies buy to stabilize their underwriting results for their portfolio of risks. Loss experience varies from year to year, and reinsurance helps smooth earnings.

     

     

  • Insurance companies are exposed to very large losses from catastrophes, like hurricanes and earthquakes, which could result in bankruptcy. To protect its policy-holders’ surplus, an insurer will purchase catastrophe reinsurance that limits its loss from a single event to a predetermined amount.

 

How does reinsurance work?

The insurance company provides the reinsurer with loss exposure data, claims experience and the amount of risk that the insurer wishes to retain. The reinsurer then determines the reinsurance premium. A portion of the premium that is collected from the policyholder is ceded to the rein-surer in payment for the risk assumed by the reinsurer.

For example, the insurer may retain the first $1 million of loss and the reinsurer(s) may agree to pay the next $4 million. If a policyholder were to incur a $5 million loss, the insurer would pay its policyholder $5 million, and then be reimbursed $4 million by the reinsurer.

How does reinsurance affect business insurance policyholders?

Depending upon the size, location and type of risk to be insured, a business may have difficulty finding affordable insurance due to the availability and/or the cost of reinsurance. Smaller insurance companies depend more on reinsurance than the large national insurance companies. In some cases, even the largest insurer may not be willing to offer insurance due to the lack of reinsurance.

For example, a business occupying the Sears Tower in Chicago may not be able to buy terrorism insurance because reinsurance for a terrorist event is not available.

How is reinsurance related to industry cycles?

The reinsurance industry also goes through hard and soft markets. In the two years following the World Trade Center attacks in 2001, total losses — including from hurricanes and other long-tail liabilities — exceeded $50 billion, and capital losses from the global fall in equity values exceeded $180 billion. This created a hard market for reinsurance in which demand for reinsurance exceeded supply, causing premiums to rise. This contributed to the hardening of the primary insurance market.

Due to the increase in reinsurance rates, and because 2006 was a very profitable year for reinsurers due to a mild hurricane season, there are signs that the reinsurance market may be softening. This will ease pressure on primary insurers’ pricing.

What else should businesses know about reinsurance and industry cycles?

Most reinsurers write business worldwide, while most U.S. insurers only write business in the United States. The U.S. insurance and reinsurance cycles are linked together but do not move perfectly in sync. Softness in reinsurance pricing contributes to the depth and length of the soft market for primary insurers. Usually, the market does not begin to harden until reinsurer pricing rises.

TOM HUDOCK, CPCU, ARM, ARe, risk manager, can be reached at (330) 887-0654 or tomhudock@westfieldgrp.com. In business for more than 159 years, Westfield Insurance provides commercial and personal insurance services to customers in 17 states. Represented by leading independent insurance agencies, the product we offer is peace of mind and our promise of protection is supported by a commitment to service excellence. For more information, visit www.westfieldinsurance.com.

Monday, 26 March 2007 20:00

License to succeed

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You’ve purchased software and read the licensing agreement that pops up on the screen. The lengthy notification asks you to check a box to indicate that you “agree” with the terms.

“Virtually no one reads and they click ‘next,’” says Ron Herd, Microsoft Practice director for Pomeroy IT Solutions in Hebron, Ky. Herd meets with many clients who struggle with understanding their options related to Microsoft licensing and how to maximize their investment in Microsoft technologies. “A lot of people think licensing is mundane and tactical. But when you evaluate your business goals and the technology you will need over the next three to five years, you will maximize your Microsoft investment by licensing it under a program that makes the most sense for your business.”

Smart Business asked Herd to discuss Microsoft licensing options and why it is critical that business owners choose the appropriate agreement for their business needs.

What is a license exactly?

You don’t actually buy software — you buy a license to run the software. For the vast majority of software publishers, including Microsoft, that license is governed by an End-User License Agreement (EULA). That is the statement that pops up when you install a program and says ‘Read this first and check the box before continuing.’ So, you are actually not purchasing software, but rather, a license that says what you can and cannot do with the programs.

What are the risks of not licensing software appropriately?

First and foremost, the risk is not being in compliance. Most businesses are in compliance, or want to be, but sometimes the complexity of understanding all the options can be daunting. The second major business risk is not being in the right licensing program. Entering into the right program based on your business goals and objectives will ensure that you are receiving the greatest discount as well as maximizing your investment in Microsoft technologies.

When do most business owners confront licensing issues?

A lot of times, customers don’t think about licensing until they are ready to buy new software or upgrade versions, or as needed. It’s strategic if they focus on it from a programmatic perspective and map their business goals and objectives over the long run to the right licensing program to help them achieve those goals and objectives.

How do you outfit a business with the best licensing option?

We sit down and try to understand what Microsoft programs the company currently runs. What version are they on? Does the business have a migration plan in place for those products? We help make sure that each account understands the features and functionality of the software they own, and how they may be able to take better advantage of it to increase revenues, decrease costs and enhance communications.

For example, a lot of our customers today are looking for ways for their field-based service employees and salespeople to have access to information anytime, anywhere. These salespeople need the ability to connect with customers quickly with the right information. They may just have cell phone coverage today but they want to take a look at enhancements to improve their messaging and mobility. This may sound like it has nothing to do with software licensing, but it is vital information to help ensure we match the right licensing vehicle to each customers’ business needs, especially over a longer period of time.

What are some licensing agreement options?

Agreements depend on the size of the business and its goals, as well as its need for flexibility. Without going into tremendous detail here, Microsoft has several different types of licensing agreements. It’s a double-edged sword for them because, on the one hand, these options provide a lot of flexibility to meet each customer’s needs, but the increased flexibility tends to create confusion as well.

Do business owners realize that there is much more to licensing than agreeing to terms during software installation?

It really helps to sit down with someone who can match a business’s goals with its software needs and then help understand the options. The cost savings of making the right choice are significant. For example, we helped one of our larger clients avoid $5 million in unnecessary expenses. In a small business situation, the impact can be just as great.

RON HERD is Microsoft Practice director for Pomeroy IT Solutions in Hebron, Ky. Reach him at (800) 846-8727 or rherd1@pomeroy.com.

Monday, 26 March 2007 20:00

Green up, America!

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Green buildings offer companies the opportunity to maximize both economic and environmental performance. Potential economic benefits include reduced operating costs and improved employee productivity. Environmental advantages include resource conservation and improved air and water quality.

The term “green building” can be used to describe various aspects of a building, says Norm Bertke, managing director of asset services for CB Richard Ellis.

“Aspects of green buildings can include items such as the site that is chosen, the construction materials selected and the design of the asset’s infrastructure,” he explains.

Smart Business spoke with Bertke about green buildings, the financial benefits that can be achieved with them and how to get started in locating a suitable property.

Why are green buildings gaining popularity in the corporate world?

One reason green buildings are gaining popularity is simply the cost savings that can be associated with operating an efficient building. Efficient building systems result in lower consumption of utilities and, therefore, cost savings.

There is also data that suggests that because green buildings are often constructed to mitigate dust and other allergens in the indoor air and efficiently utilize natural light, the occupants are often healthier and happier than the occupants of non-green buildings. This leads to cost efficiencies for the occupants because of improved recruiting, reduced sick time and less turnover.

Finally, many corporations simply think that being green is the right thing to do and as long as it is at least cost-neutral, these corporations prefer to be green.

What are some of the financial benefits that can be realized from using a green building?

Green buildings often leverage the use of efficient systems to save on utilities. Variable-frequency drives offer an improved ability of the operator to control the heating and air-conditioning system. Flushless urinals mitigate the use of water. New light bulb technology allows the lights to burn more efficiently and last longer. Occupant sensors allow lights to turn off when the rooms are not in use. All of these items reduce utility consumption and lower costs.

However, the cost implications of lower turnover and reduced sick days can be much more significant. Many buildings operate at approximately $2 per square foot for utilities. It is reasonable to assume that it costs an employer $200 per square foot for personnel-related costs and that some sales professionals generate $20,000 per square foot occupied in revenue. If an employer can execute tactics via a green building to keep their employees on the job, the payback could be huge.

How do the costs of a green building compare to that of a traditional building?

This is a function of how green do you want to be and what kind of green? A certified building (one certified by the U.S. Green Building Council) can have almost no incremental cost if a green strategy is implemented from the conceptual phase. However, if the goal of being as green as possible is executed without factoring costs, the incremental costs can be significant. In other words, the technology exists, at a price, to build extremely efficient, environmentally friendly buildings, but there is a point of diminishing returns as it relates to a monetary payback.

How much can be saved on energy bills?

If an existing building is already efficient, sometimes there is little to no additional savings to realize. However, many buildings can achieve energy savings in the 10 percent to 30 percent range. In many cases, older buildings can be ‘recommissioned’ or set back to operate within their original design parameters to capture savings and the capital investment associated with new infrastructure investments is not necessary.

How has energy-saving technology improved over the past decade or so?

There have been technological improvements in the way HVAC systems operate. Variable frequency drives allow the operator to turn up or down the rate at which the systems run. Economizers allow building equipment to adjust their use of the environment by more efficiently using outside air to control interior temperatures. Lighting technology has also improved dramatically with the advent of low-mercury bulbs, electronic lighting ballasts and occupancy sensors that turn lights on and off automatically. In the realm of plumbing, low-flow, auto-flush valves and aerators allow building operators to decrease their use of water.

NORM BERTKE is managing director of asset services for CB Richard Ellis. Reach him at norman.bertke@cbre.com or (614) 430-5069.