If your business isn’t completely dependent on technology, then you are in the minority these days. Given this dependence, protecting your business from an IT failure should top your priority list.
“Having been in the IT business now for 16 years, I’ve seen my fair share of close calls and, unfortunately, my fair share of outright disasters when it comes to IT,” says Zack Schuler, founder and CEO of Cal Net Technology Group. “There are three particular disasters that stick out in my mind. In each of these three cases the companies were taking nightly backups of their data, and they thought this was enough.”
Smart Business spoke to Schuler about how businesses can avoid these kinds of mistakes.
What are some of the worst disasters you’ve encountered?
The first case was a company that had a sprinkler break right above its servers. While it was taking a daily backup, the company left the tapes on top of its servers. The tapes were drenched and basically unusable after the downpour. The server hard drives were sent to data recovery, and after several days the company was up and running again. Had the tapes been taken off site, the downtime would have been significantly less.
The second case was a company that had its building burn down. Its current tapes were stored on site; however, the company had an older set that was taken off site. After a painful data reconstruction process, and several months later, the company was able to get back on its feet.
The last case was a company that experienced an Internet outage for a week when a major telephone company had its T1 down. This was the company’s only connection to the Internet, and its business was highly dependent on email, so this outage had a significant impact on its business. The company lost a percentage of its revenue as a result of the outage.
Needless to say, none of the above companies were prepared for the type of disaster that they suffered, yet all of them were backing up their data.
How can businesses avoid costly downtime?
Here are three important questions that you can pose to whoever manages your IT, and some tips that will get you one step closer to being truly prepared in case of emergency.
1. What is your plan in case of a lengthy Internet failure? The smart thing to do is to make sure that you have multiple connections to the Internet, over different mediums. Having a connection via a T1 and a DSL line is not a smart move, as they both traverse over the strands of wire. An Internet connection through a telephone company and another through a cable provider is the way to go.
2. What is your plan in case of a physical site failure, such as a fire, earthquake, etc.? Something as simple as a long-term power outage in your building can be a lot more common than one would think. On more than one occasion we’ve seen a building lose power for several days, and companies basically send their employees home. We had a client that was prepared in this scenario. It sent its employees to work from home, as it had a hot-site set up that employees were able to connect to from home.
3. What is your plan in the event of a major hardware failure? Even if your equipment is under warranty, if a particular part fails on a server, and the vendor is out of stock on that part, you could see some downtime. In this scenario, you should have a transition plan documented whereby you can easily move the data from one server’s backup over to another server, perhaps in a virtualized environment, to keep running.
What is the most common issue you’ve encountered with companies’ backup plans?
Perhaps the biggest overall error that I’ve seen companies make is that they don’t have any documented plan in place to recover from any of the above scenarios. Most companies simply don’t test their backups by going through a simulated failure. They assume that the backup is running as they’ve been told. The smartest action that you can take is to go through a simulated failure. Pretend that any of the above scenarios has happened, and try to recover from them. We assist IT departments with this type of work frequently, and we’ve never walked into a disaster recovery test whereby we didn’t make a tweak of some sort to make the plan better, thus more recoverable.
Zack Schuler is founder and CEO of Cal Net Technology Group. Reach him at firstname.lastname@example.org.
Insights Technology is brought to you by Cal Net Technology Group
Installing the redundancy measures necessary to make sure company data is available 24/7, regardless of calamity, is prohibitively expensive and requires a great deal of know-how, which is why many organizations outsource their data protection to companies that are specialized to guard it.
“We live in an age where data has a critical role in our lives on a daily basis. Losing access to that data, whether from being knocked offline or because of a catastrophe, can be terminally disruptive, so having backup systems in place is critical,” says Pervez Delawalla, president and CEO of Net2EZ.
Specialized data centers are dedicated buildings constructed to house server equipment that hold data — business or personal, critical or otherwise. They are designed for redundancy in physical functions, such as power and cooling, as well as network redundancy to keep data available to its customers. But what separates one from another?
Smart Business spoke with Delawalla about how to grade data centers to ensure you find one that offers the best protection for your most valuable commodity, your data.
What are the differences between data centers?
The biggest misconception is that all data centers are built the same, which leads many to ask the question, ‘Why would I pay more for one when I could get it cheaper down the street?’ The answer lies partly in Tier rating.
What is Tier rating?
Tiers represent the availability of your data based on the probabilities of system failures in a given year. Tier 1 guarantees 99.67 percent data availability in a year. Tier 4 is 99.995 percent availability. These percentages are based on the life expectancy of equipment such as power and cooling systems and distribution panels.
So that 99.67 percent represented by Tier 1 equates to, in any given year, 29 hours that systems could be offline and data inaccessible. While that might not sound like much, if you’re doing the volume of online business Amazon does, you can’t afford that. In instances where customers are trying to get to your site nearly every minute of the day, it needs to be up all the time to accommodate them, so you need the maximum level of redundancy for protection.
Tier 4 data centers, on the other hand, guarantee a maximum of 2.4 minutes offline in any given year. The percentage differences, measured in tenths, may seem negligible, but it accounts for a big difference when your data is affected.
How reliable is a Tier rating?
Data centers can have their Tier rating certified by a third party. Certification bodies include the Uptime Institute, as well as more traditional auditing firms such as Deloitte and Ernst & Young, which have technology arms capable of making an assessment. There’s also SSAE 16 certification for service organizations, which is used for reporting on controls.
How can companies ensure they have the highest level of data protection?
There are different methods for achieving redundancy. For instance, you could employ multiple Tier 1 data centers that fail over to each other. But that can be expensive. It might make more sense to use two Tier 4 data centers, one of which can serve as a geographic redundancy — it should be located a great distance from your main office and your primary data center to guard against failure caused from natural disasters, such as earthquakes.
What else should companies ask?
Make sure you’re aware of a data center’s redundancy for its network — the physical fiber that comes through the building — and how it interconnects with the rest of the network and Internet exchange points.
Also consider the support environment. Not all centers have 24/7 on-site engineering support to take care of the back of the house, such as the generators. While customers often overlook it, it’s critically important to have someone physically monitoring those systems and on hand to react to any major outages or prolonged system failures. Similarly, it’s great to have engineering and technical support on the server and router side of it to work directly with customers.
Pervez Delawalla is president and CEO at Net2EZ. Reach him at (310) 426-6700 or email@example.com.
Insights Technology is brought to you by Net2EZ
About six years ago, Doug Dunn and some his peers at other bus dealerships around the country began to sense that their industry was undergoing a significant shift. So a group of them sat down to take stock and talk things over. They concluded that while their market was quickly maturing, their branch of it — the dealership sector — wasn’t keeping pace.
“I had gotten into this business back in the 1980s when it was just getting started,” says Dunn, CEO of Atlanta-based Alliance Bus Group, a company that today operates seven dealerships in the southern and eastern United States and generates annual revenue of $120 million. “Transportation needs were starting to explode in a lot of cities, and most people bought buses that were converted school buses or they just ran 15-passenger vans. Transit budgets were starting to really catch some wind, and the commercial needs around airports were exploding. It was a good business to be in.”
By 2007, however, the bus industry was starting to grow up. Most of it was, anyway.
“We started seeing some consolidation on the manufacturers’ part,” Dunn says. “And the customers started getting a lot more mature too. They started knowing a lot more about buses than they did before. As a dealership, you needed a lot of infrastructure to keep up with these changes.
“One of my favorite sayings has always been ‘Volume speaks volumes.’ You need a lot of volume and a lot of product to catch the attention of manufacturers, from the areas of support and pricing. It wasn’t easy operating as independent, single dealerships.”
It was time to get bigger or get out.
Unite the colonies
Dunn’s company at that time was simply called Bus Group. It operated dealerships in Atlanta, New Orleans and Jackson, Miss. Those dealers operated almost as if they were separate companies, with outdated software systems, too much overhead, inadequate service facilities and no centralization of business functions to achieve efficiencies.
Getting bigger wasn’t going to be easy. While several other dealers had shown an interest in joining forces with Bus Group, the company saw that it would need to integrate these outposts into a more smoothly functioning unit first.
“We began to see that we wanted to make the transformation from a locally owned and managed dealership into one more national in scope, with all of the benefits that come from that,” Dunn says. “The synergies would make a lot of sense: being able to consolidate inventories, to have better training programs for our salespeople, to achieve the economies of scale of insurance consolidation and things such as that. All of this made a lot of sense, so we decided we wanted to pursue it. But, first, we would have to lay the groundwork and get organized.”
The key elements to achieving this expansion plan were centralizing the company’s operations by creating a corporate office in Atlanta, investing in a dealer management software system, expanding and upgrading the dealerships’ service facilities, and then, after all of that groundwork was laid, leveraging buying power by expanding and acquiring new dealerships.
“We designated Atlanta to be the corporate office for functions such as accounting, finance analysis, HR and legal,” Dunn says. “We reached out and used some different sources to add an assistant controller, some other accounting people, an HR manager and some financial people to help us run the business as an ongoing, larger organization.
“Getting the right people on the bus — pardon the pun — was a major focus for us.”
The task of centralizing the company’s operations and making the outposts operate more uniformly forced Dunn to change his management style.
“This is one of the things that has been a challenge for me,” he says. “I had to almost completely change the way I operate. I had always been very hands-on with my dealerships: everything from parts inventory all the way up to dealing with the largest fleet customers. As you start getting larger, though, you need to start assembling a different kind of team.”
One of the toughest challenges Dunn faced was taking the dealer principals he had been working with — “the lone rangers,” as he calls them — and showing them how to work within the framework of a large corporate entity.
“It was a difficult transition, and it took time to get it working smoothly,” Dunn says. “To go from basically running your own shop for many years to becoming part of a team running an integrated auto distribution business in a more corporate environment, with all of the associated checks and balances in place, has been a challenge for all of us. But these guys have been wonderful to work with. All along, they’ve had the right attitude to make this happen. And I’m very proud of where we are right now.”
The dealer management software system proved to be a challenge to install and get running smoothly. The system, which centralizes all of Alliance Bus Group’s data and operations and is accessible 24/7 from any computer with Internet access, enables Alliance’s personnel to address customer service questions immediately with reference to any of the company’s departments.
“We launched the software system in 2010,” Dunn says. “It’s a complete dealership management system, similar to what automobile dealers use. It drives our entire process.”
The software system has a wealth of features. It has a contract manager for Alliance’s sales force. It interfaces with the company’s website so that as employees add and delete inventory items, the information is immediately uploaded to the site.
On the parts and service side, the system handles all of the company’s shop tickets and parts orders. It also manages Alliance’s service work orders and its accounting functions.
“One the best things about it is that it’s all in the cloud,” Dunn says. “The information is on the software company’s server, and we can connect to it through the Internet from anywhere. It has completely changed the way we do business.”
In the two years since Alliance centralized its corporate operations and installed the dealer management software, the company has acquired dealerships in Lewisville, Texas, Carlstadt, N.J., and Orlando, Fla. These acquisitions bring Alliance’s total number of business locations to seven.
Blending the new dealerships into Alliance’s corporate system, especially with regard to the dealer management software system, has been problematic, but it is growing less so as the company gets accustomed to the process.
“The integration of the new dealerships is getting less difficult as we do each one,” Dunn says. “With the first one, you know, you almost want to kill yourself, the second one, you just get real sick, and the third one, you sort of catch it in stride. That’s the way the process has gone for us.”
Dunn says conviction, clear communication and decisiveness have been keys to Alliance’s ability to successfully integrate the new dealerships into the company’s corporate structure.
“You can’t lose the faith,” he says. “It can be lonely at the top, and it’s easy to get discouraged, but I’ve learned that when you start feeling a little uncertain, you need to start communicating more. Get out and really research the situation, and then go at it with everything you’ve got.
“Gather as much data as possible, analyze it quickly, decide what’s important, follow up expeditiously, and then make the best decision you can. And once you make a decision, go for it. Don’t back off.”
That last point — not pulling back from decisions once they’re made — was especially important to Alliance as it moved through the process of acquiring the dealerships and assimilating those organizations into the company.
“If you make a decision and then you back off from it, everybody will start to question all your decisions,” Dunn says. “It can make it difficult to pursue an effective course going forward when people … you know, they may not necessarily lose confidence in you, but they may start to think you’re not as committed to something as you should be.”
With seven locations in six states spanning from Texas to New Jersey, Alliance Bus Group has expanded its reach from what was once a group of small, loosely connected “lone ranger” dealerships to a large regional bus distribution network. The greatest advantage Alliance has gained as a result of this expansion is its ability to offer more interesting and potentially lucrative opportunities to its employees.
“This is a different game now,” Dunn says. “I have the ability to take a good sales manager in Texas and promote him to be the general manager in New Orleans or Orlando. I’ve never had that opportunity before, and when you start talking about a company and the opportunities for people inside it, you know, that’s pretty special.
“As I’ve gotten older and seen things, what gives me the greatest pleasure is to see people that have come on board in the organization, worked hard and developed, and then benefited from it, for themselves and their families. That’s what gets me fired up most nowadays.” ?
How to reach: Alliance Bus Group Inc., (866) 287-4768 or www.alliancebusgroup.com
THE DUNN FILE
Chairman and CEO
Alliance Bus Group Inc.
Education: Mercer University, bachelor’s degree in political science; Vanderbilt University, MBA
What was your first job, and what business leadership lessons did you learn from it?
I was an intern for a natural gas company my second year at Vanderbilt, and the senior vice president made me an offer to stay and fill a hole, which was director of personnel for a 600-employee utility. One of the first things I had to do was negotiate a contract with a pipefitters’ union. So I went from the academic world down to the front line about as fast as you possibly could go. I got instant management experience, immediate personnel experience, and more legal stuff than I cared to know about. That worked out well for me. It was a great springboard into what I’ve done since.
Do you have a central business philosophy that you use to guide you?
I try to rally the troops constantly by staying in communication with them, and I strive for clarity to make sure people understand what I want. Also, I’ve always been a data hound. I try to stay on top of as much relevant data as I can get.
What trait do you think is most important for an executive to have in order to be a successful leader?
I think it’s perseverance. Staying with it; staying on top of the important things. Deciding what’s important and what’s not. You don’t want a dollar chasing a dime.
What’s the best advice anyone ever gave you?
That would be from my father, who has passed away. He was an executive for 48 years with Delta Airlines. His advice to me was, ‘Decide what you want to do, do what you like and never worry about the money, because it will always come.’ That has always worked for me.
What is sustainable IT? As many companies deploy sustainability strategies aimed at improving energy efficiency, preserving natural resources and lowering operating costs, IT is becoming a major part of this initiative.
“Over the past few years, many companies have focused on LEED Certification and sustainable design methods to achieve these objectives,” says Rich Garrison, Senior Principal at Alfa Tech. “Now, IT organizations are continually pressed to deliver more by way of applications and content, while being asked to lower capital and expense costs. This is combined with the fact that for many organizations, IT is one of the largest consumers of energy and natural resources to operate data centers, labs and office environments.”
Smart Business spoke with Garrison about the impacts of sustainable IT in today’s business world.
How does sustainable IT work?
Information technology leaders are turning to sustainability-focused initiatives to reduce costs and align with corporate sustainability strategies. Sustainable IT is simply the process of planning, designing, and implementing technologies that improve efficiency and reduce environmental impact.
How is virtualization and cloud technology impacting sustainable IT?
Sustainable IT examples include the wide adoption of virtualization technologies intended to reduce the number of physical servers and increase the utilization of these hardware assets. The next level beyond virtualization is the adoption of private or public cloud service offerings, which allows companies to utilize computing hardware, often hosted by third-party service providers. The primary objective is to have ‘just in time’ capacity, improved reliability and more predictable costs. While cloud is not for everyone, the adoption rate is high and on the radar for most IT professionals.
What role can Wi-Fi play with sustainable IT?
Another technology having a significant impact is wireless or Wi-Fi technologies. In today’s workplace, employees have an average of three wireless devices each. With the adoption of smartphones, tablets and laptops, some analysts predict conventional desktop workstations will be obsolete within the next five years. This adoption of wireless devices in the workplace combined with the evolution of a more collaborative workspace means there’s a demand for more reliable wireless networks with adequate bandwidth.
With new or remodeled facilities, it’s important to weigh the impact of architectural considerations on the performance of wireless technologies. The selection of materials and the building’s physical layout can significantly affect the wireless network’s performance. Predictive tools can help design a wireless solution during the building project’s design phase and eliminate potential issues in advance. As companies adopt wireless solutions, it also creates an opportunity to reduce and, in some cases, eliminate traditional structured cabling systems. From a sustainability perspective, this has major advantages when eliminating the use of copper material.
How are building monitoring and automation systems influencing sustainable IT?
As facilities organizations focus on building monitoring systems (BMS) and automation systems (BAS) to optimize the use of lighting, HVAC and other energy consuming resources, these BMS and BAS solutions are becoming more advanced and sophisticated. The products are becoming more network-enabled and require more advanced and reliable network infrastructure to support them.
For many companies, building management and control systems have become critical applications requiring the same level and support as traditional business applications. As part of the IT sustainability strategy, IT organizations also are leveraging these systems to monitor and trend their consumption of power and energy efficiency. There’s a significant need to engage IT professionals earlier when designing buildings or data center facilities to provide input or solutions for a well-architected network capable of supporting these building systems and applications.
While other IT-related sustainability initiatives can be considered, virtualization, wireless and BMS are greatly impacting both IT organizations and facility planning.
Rich Garrison is Senior Principal at Alfa Tech. Reach him at (408) 487-1209 or firstname.lastname@example.org.
Insights Technology is brought to you by Alfa Tech
In today’s world, few things change as quickly as technology. Add to this the fact that technology change is usually toward greater complexity, and it becomes easy to see why some executives throw up their hands in exasperation when attempting to manage technology. Technology, however, is a key driver in execution and in maintaining your company’s competitive advantage — it can’t be ignored or delegated.
“One of the keys to managing technology is to not lose sight of the fact that it is a means to an end, not an end itself,” says Kirk O’Hara, vice president, consulting services at Executive Career Services.
“Executives need to understand the essential purpose of technology in their business, be able to incorporate it into their strategic plan and know how to easily and efficiently adapt new technology into business systems and operations,” he says.
Smart Business spoke with O’Hara about what executives need to know about integrating technology into their companies.
What should executives understand about technology and using it to execute business functions?
Leveraging technology starts with an understanding of how it can be used as a strategic resource. Every strategic plan should have a section devoted to technology and its role in driving the mission. This means that the IT department needs to be integrated into the company’s mission and not seen as an ad hoc department to go to when there are problems. In this respect, IT can be seen as going through the same sort of transformation that human resources did a couple of decades ago. Prior to that, HR was typically called ‘personnel’ and was seen as a necessary evil to avoid problems. Today, HR is viewed as a valuable strategic partner and talent management is a major concern of most executives. It is time for IT to be elevated to the same position.
Most executives do not need to get into the details of how technology works, but they should be familiar with the basic input, throughput, output cycle. For example, what data need to be collected for the input of business systems such as accounting, inventory control and customer relationship management? Remember the IT adage ‘GIGO’ — garbage in, garbage out. Collecting the data necessary to run a business is essential to maintaining a strategic advantage.
How involved should executives be with a company’s technology?
Executives should be intricately involved in the output. What reports are needed to properly manage cash flow, maintain optimal inventory levels and keep an eye on customer relationships? Part of the value of technology is that it can spew out a tremendous amount of information. In this regard, it is easy for executives to request too many reports and get lost in the information overload. The same can be said of business unit leaders and departmental managers. Monthly and quarterly reports accumulate over time and may never be used to make business decisions. Executives may want to try this simple technique. Occasionally discontinue a report and see if anyone notices it is missing. If no one complains, it is a safe bet that the report isn’t necessary.
Should a company make sure it has the latest hardware and software?
Throughput considerations will typically involve matters of technology, such as hardware and software upgrades. While it may seem wise to always have the latest and greatest technology, this isn’t always the case. Software updates often have bugs and new hardware may have higher failure rates. Unless your company is very technology dependent, it may be wise to put off updates until they have proven themselves in the business world, and only then when it is clear that the upgrades will have material benefit.
Leveraging technology isn’t all about systems. Executives also need to be sure that they are using personal technology efficiently and effectively. Smartphones and tablets are quickly replacing laptop PCs. Text messaging is replacing voicemail and email is a ubiquitous part of everyone’s work life. In addition to ensuring that technology is used as a strategic resource for the company, executives need to be sure that their personal use of technology is efficient.
How much should a company rely on technology to do business?
Above all, executives should ensure that in-person face-to-face communications aren’t lost in the crush of today’s workload. In-person meetings are essential when forming new teams, creating and nurturing new relationships and/or discussing areas that are emotionally laden or when intended messages can be easily misinterpreted. Email notes have their advantages, to be sure. They allow for a wide distribution where everyone receives the same message and they serve as historical records for documenting what was said.
Too many managers, however, try to manage through email, and this is poor technique. In particular, some executives will rely on an email note to convey a difficult message, for example, to address a conflict. A good executive will never opt to use email when a personal conversation is indicated.
Technology has pervaded — some will say invaded — virtually every aspect of our professional lives. We don’t need to get tangled up by it, however, if we keep the focus on how it can be used as a strategic advantage and never allow it to replace interpersonal interaction.
Still having trouble getting your head around technology? Find an IT liaison who speaks your language. After all, they are people, too.
Kirk O’Hara is a vice president of consulting services at Executive Career Services. Reach him at email@example.com.
Many organizations have in-house IT staff that has been around for a long time. However, if the organization has not invested in employee skills, there is a tendency for complacency and stagnation, says Lou Rabon, Cal Net Technology Group’s information security practice manager.
“This stagnation comes in the form of believing that solutions the in-house IT people are providing are the best ones out there based on their experience,” Rabon says. “For loyal IT staff, their experience is usually only in one environment, and if no new education or experience has been acquired, then an element of risk is introduced into the organization. Not only will the organization be getting outdated and inadequate service and solutions, but the risk introduced may prove to be fatal to an organization’s data, as well.”
Smart Business spoke with Rabon about how to spot IT staff stagnation and what steps to take to address the problem.
How critical is the need to update IT skills?
Information technology experiences paradigm changes over very short periods of time. New, disruptive technologies are appearing all of the time, sometimes in as little as months. In information security, this trend is even faster, where minutes and seconds can separate effective solutions from completely inadequate, and expensive, defenses.
What are signs that IT staff might have stagnated?
If your IT person has been doing the same thing since 2007, you can be assured that there are going to be problems. Large and small companies should take stock and ask:
• Does current IT staff/policy favor convenience over security?
• Are there direct remote connections to machines because a virtual private network or remote access solution was considered too complicated or not possible?
• Are there passwords that are not complex or do not change?
• Do easy-to-remember — and therefore easily crackable — administrative passwords exist that have access to sensitive data?
• Is there a lack of visibility on the network?
• When problems occur, is root cause rarely determined and downtime frequent?
• Is there resistance to change?
• Are overly technical and confusing answers given when approached for advice or questions?
These are just some of the more obvious ways to determine if your current IT staff might need a knowledge refreshment or replacement. Unfortunately, most internal IT staff will believe everything is being done right, despite evidence to the contrary. This is what psychologists call the Dunning-Kruger effect, ‘in which unskilled individuals suffer from illusory superiority, mistakenly rating their ability much higher than average.’
What steps can be taken to address this problem?
The first might be to look at how staff is managed. Maybe the reporting structure should be changed. In many growing organizations, IT will typically be CFO-led. Ideally, IT staff should fall under a COO or, better yet, a dedicated CIO who can look at the big picture of where an organization is headed and drive this strategy.
Another option is training. Incompetence of any staff might be a failing of the organization itself to properly invest in its work force. Picking the right training can be a challenge, but there are a number of solutions. Vendor training is an option and can typically be obtained at a reasonable cost, especially if the organization has used one vendor’s technology over a long time and can leverage fidelity for a reduced training cost. New vendors also can be looked at to displace existing technology and they may throw in training as part of a purchased bundle. Many specialty organizations offer training such as A+. For security, the SANS Institute has an excellent Security Essentials Boot Camp, which can start to embed some of the basic tenants of security for any staff working with sensitive information or information technology. Finally, continuing education at a local university and even some of the free courses released by institutions such as Stanford might be a good way to stimulate critical thinking and encourage the staff to refresh its skills.
Another solution, which could be the easiest, is to augment the staff with outside talent. Bringing in an outside consulting firm can give an internal IT department a kick in the pants. Personnel will respond differently to this, with some seeing it as a threat and others embracing the help. Both perceptions can be helpful. An outside firm will help you navigate the technology, but more importantly, a good outside firm will help you identify who in the organization you should keep and who should go.
What about outsourcing all IT work?
Some organizations are much better off going in this direction, depending on what internal resources are available. IT, in and of itself, is a business, and, if you’re a small to mid-sized company, you might want to ask yourself, ‘What business am I in?’ For those organizations that prefer to concentrate on their core competency, outsourcing is a great solution. Doing so can help dramatically reduce costs, increase efficiency and productivity, and increase the security posture of an organization. A good IT outsourcing company is continually investing in its team, and because it sees many different IT environments, it is in a unique position to see what works best and provide those best practices to its clients.
Risk in any organization must be managed and mitigated as much as possible. Continuing to employ or engage unskilled or inadequate IT resources introduces an unacceptable level of risk. Your first step is to take a hard look at your organization, and evaluate whether or not you need to invest in IT skills or bring in external resources to best manage the information assets of the organization.
Lou Rabon is information security practice manager for Cal Net Technology Group. Reach him at (818) 721-4414 or firstname.lastname@example.org.
Five years ago, Andres Ruzo was on the verge of pulling the plug on Link America Inc. The company, whose operations revolved around manufacturing and refurbishing telecommunications switching equipment, had fallen on hard times.
After riding the wave of the telecom boom in the late 1990s, Link America had been slammed by the dot-com crash in 2001 and had been on the decline since. Its revenue, which peaked at $12 million in 2001, had plunged to $3 million by 2007. Many manufacturers, unable to compete with China’s dirt-cheap wages, were moving their operations to the Far East.
Ruzo detected that trend gathering momentum and consequently was trying to transform Link America from a telecommunications equipment manufacturer to a provider of related services. But the plan wasn’t working well and time was running out.
“We were losing money, cutting costs, racking up debt,” says Ruzo, who started Link America as a one-man operation working out of his son’s bedroom in 1994. “The demand kept getting smaller because people were learning to dispose of equipment and replace it as opposed to repairing it or refurbishing it. Up until then, I had always thought repair was a recession-proof business. It turned out to be the opposite.”
Link America kept sinking, and Ruzo wondered how much further down rock bottom might be.
“It was painful,” he says. “I saw that we could no longer manufacture four lines of products and be successful. We couldn’t compete with companies in China paying workers $2 an hour when we have to pay $14 bucks an hour here. It’s impossible.
“So we went from four buildings down to one, and from 100 employees down to five. I even cut myself for six months without salary to keep the other four people working. I was just trying to stay in the game. That was 2007. I think we touched bottom there. I almost bankrupted the company.”
Turn the tide
At about that time, Link America won a contract to build five communications towers at a military base in El Paso. That tided the company over for a while as Ruzo looked for strategic partners to help him convert Link America from manufacturing to services.
Eventually he concluded that his plan to gradually convert the company’s operations from manufacturing to services wouldn’t work. Link America had to bite the bullet and plunge all the way into services, head-first.
“I started looking for an opportunity to sell all of our manufacturing and repair assets,” he says. “We had to jump all the way into the pool and swim — swim into services. After a while, we found a buyer. We sold our assets to a company called CTDI, and that company became our partner.”
CTDI not only bought all of Link America’s manufacturing assets, it also permitted Link America to leverage its balance sheet to obtain lines of credit to help it pursue its plan to become purely a service provider.
“CTDI came to the table and bought a piece of our company and bought in to our vision,” Ruzo says. “They gave us the funding necessary to do the turnaround, and they gave us the financial wherewithal and lines of credit so we could start doing large transactions and grow quickly.
“In reality, they saved us. It’s like building a 15-story building: We knew we had the footprint. We knew we had the design. But we needed someone to help us build the foundation, someone to say, ‘OK, I will fund the construction of the first floor. You do the rest.’ If we hadn’t found that, I wouldn’t be here.”
Ruzo’s vision included converting Link America into a service provider in two market segments related to its already-established expertise in manufacturing telecom equipment: No. 1, offering warehouse management solutions for large telecom carriers such as AT&T and Verizon, and No. 2, building wireless communication networks for public and private emergency service providers.
“The warehouse management solutions part of our business is basically logistics,” Ruzo says. “We support logistically the deployment of hundreds of networks nationwide for optical gear, and we also provide heating, rack and stack, and many other things. That’s one of the two main types of service we provide.
“The other type of service we provide is we build networks for first responders — police, fire, EMS. We build their networks, we provide their radio, we do the installations, we do the engineering, we do the provisioning of all the radios, and we do the support and maintenance.”
The conversion of Link America from a product-based company to a service-based one has worked remarkably well. Once the new model was in place, Link America started growing again immediately. Revenue bounced back from $3 million in 2007 to $12 million in 2008, then leaped forward to $40 million in 2009, $136 million in 2010 and $214 million last year.
“How do you know you’re doing well?” Ruzo says. “Well, I’ve always followed the money. You know you’re doing well when the money starts coming in. And that started for us in 2008. We started landing some contracts — some serious, sizable contracts.”
Among the earliest of those sizable contracts was a pact with a router company called Redback Networks, which has since been acquired by Ericsson. Other large clients quickly came on board, including Fujitsu, Ciena, Dallas Area Rapid Transit and Dallas County Community College. All along, keeping abreast of the latest technological trends has been a key element in Link America’s success.
“We were able to invest in a lot of technology to enable us to be profitable,” Ruzo says. “A large portion of our business is big-volume, low-margin, and what you have to do to be successful in that type of environment is you have to leverage technology in a big way.
“Technology is your enabler. We do thousands and thousands of shipments, and with those types of volumes, everything has to be digital. All of our invoicing, our receivables, our payables, our notifications — everything is electronic. We don’t do anything on paper. If we did, we would need 10 people just in accounts receivable to do invoicing. We have two.”
Link America is committed to keeping its operation lean and scaling up with as few newly hired employees as it can manage.
“We have systems such that, if we scale up on the back-office side, we don’t have to add much,” Ruzo says. “At one point, we added $10 million a month in sales, and we only added one person in accounting. Of course, we had to add a few more people to move the physical product, but we only added one in accounting. That’s crazy. That’s unheard of. And that’s exactly what I mean by leveraging technology.”
Ruzo attributes Link America’s success to its approach of forming strategic partnerships with its clients by showing them how to use cutting-edge technology to manage their inventories more efficiently and, in so doing, to become more profitable by increasing their sales, cutting their costs or both.
“A big part of it has to do with moving a lot of product using just-in-time inventory systems,” Ruzo says. “You have to move the stuff very quickly so that the carriers can order hundreds of thousands of products and you can drive costs out of their supply chain.
“The other part of that is showing them how to increase their sales incrementally. It’s about increasing incremental sales on the top line, and then driving costs of their operations by doing everything cheaper, faster and better. If we do one or both of those things, we increase their profit. And when you do that, you become not only a vendor, you become a strategic partner, because you’re bringing constant innovation to their processes.”
Faith — in the spiritual sense — has also played a major role in Link America’s turnaround, Ruzo says.
“My spiritual life has helped me,” he says. “If you want my secret recipe, it’s human effort and the grace of God working together. I try to be a spiritual person and to always strive to do the greater good — to help our community, to help other people, to treat the world good.
“Paul Coelho has a book called “The Alchemist.” In it, he says that if you always try to do good and to do the right things, the universe will conspire to help you, because the universe is always looking for those kinds of people and for the type of positive energy they’re putting out. When you do the right things, other things will start to flow for you. I believe that. I’ve seen it happen.”
Perseverance has been another key driver in Link America’s success.
“You have to persist to see things through,” Ruzo says. “There have been times when it has come to the point that if the door was shut, I would open a window. If the window was shut, I would go through the roof. If the roof was shut, I would dig a hole. That’s what it takes. You can’t give up. You have to be extremely persistent.”
Recognizing future trends and being willing to cut ties with one type of technology and move on to the next is essential, not just in the telecom business but in many other markets driven by technology.
“It’s good to be in love with your business, but don’t fall in love with the technology,” Ruzo says. “You have to constantly morph yourself and keep up with innovation and collaboration and value co-creation, and you have to always be ready to jump onto the next wave.
“Business comes in waves. You catch one and you ride it for a while, and then that wave starts going down and a new technology starts coming in. You have to constantly be on the lookout for what’s coming next so you can decide where to put your time and resources and when to staff up with the right people to stay successful.”
Courage and decisiveness are other key traits that have helped Ruzo shift Link America and drive it back into growth mode.
“Business changes constantly,” he says. “If you see that writing on the wall and you don’t act, you’re doomed to failure. You’re going to be a dinosaur. You have to keep a close eye on the situation, and when you see it’s time for change, act immediately. Make the decision, formulate a new strategy and implement it — now.
“The other thing is do not be afraid. Sometimes leaders are afraid to call it like it is and make hard decisions. You have to be decisive and make the right decisions ahead of time. Don’t assume things are going to get better. If you have to cut, cut. Don’t wait until the last minute. Don’t keep saying, ‘It’s going to get better,’ and then another month passes and another, and before you know it, you’ve racked up millions of dollars in debt. Take the pulse of your business monthly, weekly, daily. Be smart, be shrewd, be fast. Make strong decisions from the get-go.” <<
How to reach: Link America Inc., (972) 463-0050 or www.linkam.com
THE RUZO FILE
Link America Inc.
Born: Lima, Peru
Education: Bachelor’s degree in engineering, Texas A&M University
Looking back over your years in school, what important business leadership lessons did you learn?
The main thing I learned was that when you don’t have the answer to question, you have to have the discipline and the know-how to go find the right answer. That’s the key thing the university gave me: If you don’t have the answer, here’s how you go find it.
Do you have a central business philosophy that you use to guide you?
Basically, our tagline says that we are in the business of powering sustainable solutions through innovation, collaboration and value co-creation. Those are the three things that are very dear to us.
What trait do you think is the most important one for an executive to have in order to be a successful leader?
Laser focus and persistence. If you can be laser-focused and persistent, you’ll get there. Another important one, especially for entrepreneurs, is you have to be careful not to drink too much of your own Kool-Aid. I’ve had partners and have known people with companies that have grown incredibly, and they start thinking that they can do everything and be everything, and they don’t watch the ball, and eventually they lose their company. Entrepreneurs in particular have to watch out for this. You have to find people to challenge you, in terms of your beliefs and your vision. People that ground you. People that don’t think like you. It’s important to always have somebody who can help you keep your feet on the ground.
What’s the best advice anyone ever gave you?
Live in the present and do your best. Also, invest in yourself and invest in the things that you can control. Believe in yourself. That advice was given to me by a guy I knew when I was working in the real estate business many years ago.
As a provider of outsourced IT services, BlueWave Computing LLC regards service as the core of its mission and its key competitive advantage. The company, guided by CEO Steve Vicinanza, ensures that its service is the best available in its market segment by adhering to four concepts:
- Hire the best staff possible to deliver the company’s services.
- Provide the training and processes to ensure consistent service delivery.
- Develop service metrics that allow BlueWave to continually improve the quality of its services.
- Apply recommendations from BlueWave’s customer panel to support quality development.
BlueWave has implemented a rigorous recruiting process that focuses on connecting with college placement offices to find the top students available in its field, and then it pairs its new hires with seasoned company veterans to reinforce customer service concepts and adherence to proven processes. The company’s training program provides a focus on teaching its outstanding young engineers “The BlueWave Way” to ensure that its customers are consistently satisfied with the service they receive from the company.
BlueWave considers every one of its customers a VIP and strives to deliver top-quality service to each of them. The largest customers are assigned a technical account manager whose responsibility is to make sure that the customer’s complex IT environments are managed appropriately and effectively.
The results are self-evident. A third of BlueWave’s clients have been with the company for five years or more. And Ecolink, BlueWave’s first customer when it launched 15 years ago, has continued as a customer through three changes in corporate ownership.
“I have seen BlueWave grow from a small five-person IT shop to become one of the largest IT firms in Atlanta,” says Brandon Pelissero, Ecolink’s COO. “So many companies grow quickly but lose their ability to deliver high-quality service. I’m delighted to say that has definitely not been the case with BlueWave.”
How to reach: BlueWave Computing LLC, (770) 980-9283, www.bluewavecomputing.com
The wholesale distribution business in the United States is changing at warp speed. The recession hit wholesalers hard; only the most robust, best-capitalized distributors made it through the downturn in good fighting shape, and now that they have emerged, they’re facing a flurry of new competitors and new technologies.
The biggest, strongest and smartest distributors — let’s call them the lucky few — are making the investments needed to keep pace with the changes. Many other distributors are looking for more affordable ways to stay relevant. And some are cashing in their chips and finding something else to do.
“Distributors’ customers’ demands are changing,” says Brent Grover, managing partner with Evergreen Consulting LLC in Cleveland. “They want to be able to call you or access your website and find out three things immediately: ‘Do you have the product I need?’, ‘What’s the price?’ and ‘When can I get it?’ And they don’t want to wait around for somebody to fumble through their system and figure out what the price is supposed to be.”
Sophisticated online sellers with roots in retail, such as Amazon and Staples, have starting moving into some wholesale markets, and those sellers’ technological expertise has upped the ante for traditional distributors.
“Keeping up with those companies and their advanced systems requires a big investment in information technology,” Grover says. “The traditional ERP [enterprise resource planning] systems that distributors have been using don’t necessarily have the capability to provide all of these options to the customer. So distributors have to change their business processes and their support systems to make that happen. And it requires an investment in IT that some distributors may not be able or willing to make.
“But I think most of them will decide that they like adaptation a whole lot more than they like becoming irrelevant.”
The new technological requirements are forcing distributors to come up with answers to difficult questions and make tough decisions.
“It takes capital and management acumen to make these types of changes happen,” Grover says. “In the wholesale distribution business, the companies that are not big and well-capitalized have three choices in front of them: get bigger so they have the ability to afford these IT investments, get very specialized so customers will deal with them for reasons that don’t have to do with technology but because the customer needs their specialized knowledge, or get out — in other words, sell your business.
“All of this pressure, coupled with the low interest rates we’ve been seeing and the fact that banks have money to lend, has led to a lot of merger and acquisition activity in wholesale distribution.”
Guy Blissett, a wholesale industry expert with the IBM Institute for Business Value and a fellow with the National Association of Wholesaler-Distributors’ Institute for Distribution Excellence, underscores Grover’s points about the technological and economic shakeout taking place in the wholesale distribution business.
“We’ve seen the economic crisis drive many distributors out of business and damage others to the point where they’re struggling to grow now that the economy is starting to turn around,” Blissett says. “Unfortunately, some of those distributors now are not in a position to make the investments that they’ve been deferring.
“The key challenge that wholesaler-distributors face is simply continuing to drive their relevance in the supply chain. The traditional source of their value proposition — the ability to stock all the products their customers want and get those products into their hands quickly and efficiently — is still critically important, but it’s no longer enough. There’s so much transparency now with product pricing, product availability and individual company capabilities that distributors are having to think very differently about what will differentiate them over the next five to 10 years.”
The game changers
Amazon and Staples are the two most visible new players in the wholesale distribution market, and their technological sophistication is changing the rules of the game.
“AmazonSupply.com, in particular, has definitely had an effect on people’s psyche,” Grover says. “It’s not that they’re stealing everybody’s business, at least not so far. Our view of AmazonSupply.com is that it’s really for unplanned purchases of maintenance, repair and operating supplies for the noncontractor segment.
“Is AmazonSupply.com going to decimate anybody’s business? Probably not. Was it reasonable that the stocks of distributors, such as Grainger and Fastenal and MSC Industrial, took a hit when the news about the launch of AmazonSupply came out in April? No, it really didn’t make a lot of sense.”
Sensible or not, those distributors’ stocks did take a dive when the online giant came on the scene.
“When AmazonSupply.com was announced, the splash was that here was a business-to-consumer-style website appearing in the distribution world — and we all know about the bells and whistles Amazon has,” Grover says.
“Here they were repositioning themselves as a distributor, coming on-stream with prices that weren’t really low, but they were decent prices, and they were offering free two-day shipping for orders of $50 and up, which, I mean, that’s crazy, and a 365-day return privilege — a new feature. And they were offering a toll-free number to call during business hours for support, so you could actually talk to somebody at Amazon. That was a new thing. They’ve emerged with 14 different product lines and a half-million items in stock.”
Analysts who follow the stocks of publicly traded distributors overreacted to the news, Grover says.
“They reacted like, ‘Boy, this is terrible news for these distributors and AmazonSupply.com is going to come in and crush everybody,’” he says. “My personal view is I think that while AmazonSupply.com is the real deal and they’re going to be here for the long run, they’re not going to destroy anybody’s world, at least not right away.”
While Amazon is not expected to immediately cut a swathe across the old-line distributors’ business, the deep-pocketed gatecrasher has raised the technological stakes in the industry, and the other distributors will have to step up their games to compete effectively.
“The issue for distributors is that if they have an online portal, it’s probably something fairly rudimentary, a typical business-to-business-type Web experience,” Grover says. “The bar has definitely been raised by AmazonSupply.com bringing a business-to-consumer electronic commerce experience and putting it out there. For all of the other distributors, if they don’t have a good e-commerce portal, it’s going to make whatever they have look pretty bad. So they have to step it up.”
Blissett agrees that distributors will have to make serious investments to improve their e-commerce sites if they hope to compete with the new competitors moving in.
“Distributors have to ask themselves, ‘How do I sell my products to my existing customers, as well as new customers, using mobility, using the Web, using other channels of distribution?’” Blissett says.
“In some ways, customers’ demands are the same as they’ve always been — they’re just more acute now. So pricing continues to be key. Customers demand low prices. The difference now, I think, is that with more products being able to be purchased over the Web, price transparency has become a much more real tool that customers can use against distributors — if pricing is what they’re primarily focusing on.”
New ways to compete
There are several strategies that wholesale distributors are hatching to differentiate themselves in the new competitive landscape. An interesting new tactic is the use of vending machines to distribute supplies.
“This is a trend that’s just starting to emerge,” Grover says. “Distributors are placing vending machines in their customers’ industrial plants or in hospitals for nursing staff supplies. The employees use an ID card to get the needed supplies out of the vending machine.
“For example, in an industrial plant, let’s say a worker needs some safety goggles or some gloves. Instead of going all the way to the tool crib or having to fill out a requisition form, they can just go to the vending machine near their workstation and put their ID card in, and they can pick what they need out of the machine.
“It tracks who got the item and when they got it, and it also electronically signals the distributor when it’s time to replenish the machine.”
Blissett points to the use of data analytics as an exciting untapped opportunity for distributors to serve their customers in a new way in the future.
“Some distributors are looking at their role in the supply chain and the tremendous amount of information and data that flows through their organization and they’re realizing that can be a potential source of differentiation going forward,” Blissett says.
“They’re looking for ways to capture that data, do some analytics on it and turn it into something meaningful for their customers and suppliers. They’re starting to wake up to this potential and invest in it.”
Some distributors are envisioning that within the next five years they could reposition themselves as an information provider for their line of trade similar to companies such as IHS Global Insight and IRI Nielsen, Blissett says.
“They would be able to aggregate information from suppliers, information about customer interactions, as well as macroeconomic data and other information that they have access to,” he says.
“Their ability to pull all of that together, do some analytics on it and make some sophisticated forecasts and projections about where the overall economy is going and where individual facets of the economy and particular commodity prices are going — they could provide a lot valuable information by doing this.”
Economic modeling is just one area among many in which distributors could apply data analytics to create useful information for customers and suppliers.
“It’s essential, now more than ever, for distributors to understand their cost structure and all of the different activity-based costing elements of their supply chain and to be able to drive down the cost as much as possible, and then be able to go to their customers and have a fact-based conversation about that,” Blissett says.
“That allows a distributor to go in to a customer armed with a great deal of information and insight about their own cost structure and how things work, and they can use that to surface some inefficiencies in their customer’s supply chain that the customer might not even have been thinking about.”
Whether it’s in the supply chain, pricing, labor management, fleet optimization or customer segmentation, the opportunities for distributors to drive revenue to the bottom line via the application of analytics are many.
“We’re seeing many distributors make investments in this area,” Blissett says.
“As they get their basic data and their core IT infrastructure in place and they have either a packaged or a homegrown ERP system that’s robust and comprehensive and they can start to do some analytics on top of that, we’re seeing some exciting examples where distributors are challenging long-held perceptions about how to most efficiently move products through the supply chain and how to do things differently and capture a significant value along the way.
“Analytics is a potentially huge source of differentiation for wholesale distributors. Going forward, that type of role for these companies is pretty exciting.” <<
How to reach: National Association of Wholesaler-Distributors, www.naw.org; IBM Institute for Business Value, www.ibm.com/services/us/gbs/thoughtleadership; Evergreen Consulting LLC, www.evergreenconsultingllc.com
When hiring a member of the IT team, weeding through all of the candidates out there is a tremendous challenge. Particularly if you are a smaller organization, it is likely that a non-technical person is doing the interviewing. In that case, it is very difficult to determine whether or not the person you are talking to actually knows their stuff. Even someone with a very technical background can be fooled by an impressive resume and a smooth talker.
“IT people are weird. I should know — I’m one of them,” says Zack Schuler, founder and CEO of Cal Net Technology Group. “They are the hardest to hire and even harder to retain, and are sometimes hard to fire, as many of them make themselves indispensable as they convince management that their skills are unique. Many of them have technical egos that are larger than life.
“At Cal Net, we have roughly 35 talented IT engineers that we had to hire, train and retain. And we’ve had to let some go over the years. We would like to think that we have this down to a science.”
Smart Business spoke with Schuler about the best process for hiring and retaining the right IT people.
Should IT people be interviewed differently than other potential hires?
Like with any position, you should be screening for the personality traits. An egocentric IT person is the last person you want on your team. Some interviewers are naturally talented at sniffing this out. For others, I would recommend a personality profile. In my opinion, personality is more than 50 percent of what you should be screening for.
Another of the most important traits is good communication skills. We have all experienced the IT guy who wants to sit in a closet somewhere to minimize his contact with humans. If they do make enduser contact, it is usually a painful experience, as they will say the least amount possible so that they can head back to their cave. You should have the expectation that your IT person will be able to communicate as effectively as anyone else in the organization.
How should a company screen an IT person?
Start with, ‘Tell me about your IT environment at home.’ If they give you an answer along the lines of ‘I have three physical servers, running seven VMs for testing, and I’ve got my own mail server running Exchange, and I’m running VDI for my primary workstation,’ then that is a good first step. They view this as their ‘sandbox.’ If they respond, ‘I’ve got a laptop at home and I try to stay away from the computer as I get enough of it at work,’ then they probably aren’t a good technical fit. You want your IT folks to be passionate about technology, and most of them do their best research and learning at home, after hours.
The second easy way to screen is to have a short technical quiz that can be administered by anyone. Feel free to email me for our quiz.
Last, and perhaps the most time-consuming and difficult process, is to put them through a technical lab. We require that our new hires come in and build a network in an eight-hour time period. We have a point system that scores the candidate, as no one ever finishes the lab. This gives us an excellent assessment as to what they do know, and what it is that they need help with. Depending on what you are looking for, there are companies that will administer these sorts of labs for you. If you are testing on Microsoft infrastructure skills, we can administer this sort of lab.
What are some of the challenges of retaining IT people?
In general, IT people are motivated by advancement and the quest for knowledge. In organizations where there isn’t any room to move up nor is there anything new to learn, IT people will stagnate and usually move on.
Good IT people are always looking to explore and learn the latest and greatest technologies. Just as they have a sandbox at home, they want to work for an organization that invests in IT and gives them an opportunity to learn.
Good IT people are also looking to move up the food chain. While some IT folks are motivated heavily by pay, many are more motivated by an increase in title and responsibility.
How can these challenges be overcome?
Quenching the IT person’s quest for knowledge isn’t always the easiest thing to do. There are two ways to attack this. First of all, if you hire someone who is a master of all of the technologies that you are currently running, you’ll get someone who can hit the ground running, but you will also get someone who becomes bored quickly. On the other hand, if you hire someone with like experience and aptitude, but not exact experience in the technologies you are running, you will give someone an opportunity to learn. You will obviously have to weigh the business risk in doing this — and while they are learning you may want to supplement their skills with a consultant — but it can be well worth it in the long run. In short, I recommend slightly ‘under-hiring’ for the position.
The second way to attack this is to give your IT person some latitude when it comes to decision-making. If they want to implement a new technology that is reasonable from a cost standpoint, and delivers business value, I would err on the side of letting them do it. Even small concessions can give your IT person a sense of worth and something new to learn.
Last, in terms of advancement, don’t ‘over-title’ a person. Don’t call your lone IT person ‘IT director’ right away. Create a career path: network administrator, senior network administrator, IT manager, IT director and so on. Even very large IT organizations should be using this model. Look for increases in responsibility along the way, along with small increases in pay. Thinking out a career path before you hire someone will go a long way in making sure that they hang around for a long time.
Zack Schuler is the founder and CEO of Cal Net Technology Group. Reach him at ZSchuler@CalNetTech.com.
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