Executives can’t control the fluctuating economy, rising cost of raw materials or shifting customer preferences. But savvy leaders are taking control of a key business cost — energy — by choosing an energy supplier, selecting a product structure to support their business needs and eliminating financial uncertainty by negotiating long-term energy supply contracts that provide them the price and product structure that meets their needs.
Reducing energy costs by even a small percentage can create a hefty competitive advantage. According to a 2011 report by Aberdeen Research, energy costs make up 25 percent of total operational costs in large U.S. plants, and IBM says that office buildings account for 70 percent of U.S. energy use. The authors note that managing energy costs is a top priority for 68 percent of business executives, and while the top-performing companies are exceeding their goals by 20 percent, the laggards are falling short by almost 11 percent.
“In Pennsylvania, it’s hard for executives to control operating costs if they purchase energy from their regulated utility because their default service prices, in many cases, change every 90 days,” says Annette Durnack, director of Retail Energy for PPL EnergyPlus. “Pennsylvania companies that purchase their energy from a competitive supplier can lock in rates for a term that meets their needs and select from a variety of cost-reducing products, rather than only one product offered by the utility.”
Smart Business spoke with Durnack about how to create a competitive advantage by choosing an energy supplier and complementary product structure.
Why should businesses be thinking about their energy supply?
Energy costs are a significant portion of total business costs for many companies. In Pennsylvania, businesses are not at the mercy of regulated utility rates. Opportunities abound to reap savings by choosing an energy supplier in the competitive market and to realize additional savings by requesting quotes now because prices have dropped 25 percent since the market peaked in 2009.
In addition, businesses choosing a competitive supplier can benefit from a customized slate of products and services that support their business plan. For example, if a company wants to woo new customers by launching a green initiative, it could partner with a supplier that offers renewable energy sources and agree to purchase a portion of its supply from a renewable component. Or if a customer needs to lock in the price of the product they produce for three years and energy is a big part of that cost, locking in an energy supply price can help achieve that objective.
When is the best time to buy energy?
The spring and fall months are traditionally the best time to buy because prices drop as demand ebbs. Beyond optimizing seasonal price differences, companies can garner additional savings by choosing an energy supplier in the competitive market. Companies that don’t choose a supplier will see energy rates fluctuate because regulated utilities change their rates for default service — the service you get if you don’t select a competitive supplier — every three months.
In turn, businesses may have to raise prices for goods and services, which can impact customer loyalty, revenue and margins, and create a climate of financial uncertainty. Companies that partner with a competitive supplier enjoy a competitive advantage because they can contractually lock in prices for 12, 24, 36 months or longer, and choose a product structure to meet their unique business needs.
What products and services can providers offer beyond energy supply?
A competitive supplier can offer renewable energy options that help businesses reduce their carbon footprint, run a green operation and market their environmental stewardship to the community. Some providers also offer companies the opportunity to earn revenue or credits by participating in demand response programs if they are willing to curtail consumption when high electricity use strains the power grid. Companies can select a demand response product that best suits their needs and earn consistent, predictable revenue, even if an energy curtailment event never materializes. Some providers also offer weekly market updates so companies can stay on top of trends in the energy market, request quotes and time their energy purchases to capitalize on falling energy prices.
How can a demand response option benefit businesses?
Companies know the prices they’ll be charged and the discounts they’ll receive when they sign a long-term contract with a supplier and select an appropriate demand response program. And because energy costs make up a significant portion of a company’s operating budget, long-term contract pricing allows them to confidently forecast future expenses and bolster revenue by consummating multiyear deals with their customers. Not every state has a competitive electricity market, so companies that take advantage of Pennsylvania’s open market and demand response programs can get a leg up on the competition.
What are the advantages of bundling energy supply and energy services?
Buying bundled services provides the convenience of one-stop shopping and the opportunity to negotiate an advantageous deal by leveraging your total energy expenditures and purchasing power. Partnering with a supplier offers additional benefits, as a partner is more likely to build a relationship, understand your business plan and challenges, and then recommend a customized slate of services and products that will help your company compete. And an energy partner will help your business tailor your energy purchases to best meet your individual needs.
PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corporation. PPL EnergyPlus is not the same company as PPL Electric Utilities. The prices of PPL EnergyPlus are not regulated by the Pennsylvania Public Utility Commission. You do not have to buy PPL EnergyPlus electricity or other products in order to receive the same quality regulated services from PPL Electric Utilities.
Annette Durnack is director of Retail Energy for PPL EnergyPlus. Reach her at AMDurncack@pplweb.com or (610) 774-3182.
The business world is filled with reports of vibrant companies that persevered through change and fleeting memories of defunct organizations that couldn’t adapt to shifting market conditions. In fact, D&B reports that over 96,000 U.S. businesses failed during 2009 and more than 80,000 failed in 2010, proving that a lack of change management is a risky proposition.
Unless executives provide employees with a model of the future state and a roadmap leading to the goal, workers may resist change or languish amid uncertainty.
“You can’t guide an organization through change by winging it,” says Kimberlie England, principal and national practice leader of Communication and Change Management at Findley Davies. “Executives need a strategic plan that moves people from being aware of change to embracing it, by weaving new ideas into the organization’s culture.”
Smart Business spoke with England about her reliable methodology for driving organizational change in today’s turbulent business climate.
What’s the first step toward effective change management?
Executives must anticipate change and follow a series of sequential steps to shepherd their company through any transformation. First, they should assess the organization’s current state and readiness for change, using surveys or focus groups. This evaluation process pinpoints the underlying causes of employee fear or reluctance and allows leaders to proactively eliminate potential barriers to change by introducing targeted solutions. Don’t make assumptions when assessing your organization’s readiness for change; rather, review fresh data and devise innovative solutions.
How can executives bolster support for change?
Unless leaders openly embrace change, employees never will. Executives must build the case for change and help employees connect with new ideas by modeling the way. In fact, the perception of a double standard can foster an unhealthy ‘us versus them’ mentality and cause employees to resist a beneficial change.
For example, a CEO can’t announce a new wellness initiative and expect employees to modify their habits. He or she has to emphasize the benefits of a healthy lifestyle, lead by example, and outline a host of tantalizing rewards to motivate employees. Remember that line managers and stakeholders play a critical role in fostering organizational change, so make sure they’re committed to your plan before launching a major initiative. Finally, be sure to stop at critical junctures to measure your team’s progress. Otherwise, you may lose people along the way and never reach your final destination.
How can executives create a future vision?
Employees will respond favorably to change if they know where they’re headed, and because most people are visual learners, use a model to communicate your vision in addition to words. Paint a picture of the future state and provide a roadmap with milestones leading to the desired goal, so employees can chart the company’s progress and stay focused, especially during a complex change that may take months. Knowing where you want to go also benefits leaders, because it helps them develop a strategy for achieving their vision. Finally, support employees during the journey by acknowledging each milestone achieved and continually reinforcing the benefits of the change.
What constitutes a successful strategy?
A successful change strategy includes these critical elements.
- Stakeholder involvement: Include key stakeholders during the planning phase so they embrace ideas, become advocates for change, and help push the company forward during the implementation phase.
- Quantifiable objectives: Define the specific objectives of the initiative along with a series of interim milestones, so employees can use the plan as a roadmap to chart their progress.
- Defined audiences: Identify groups of key influencers, such as line managers and union leaders, and use targeted messages and tailored benefits so they fully understand and endorse your plan.
- Targeted communications: A successful strategy should define the specific communication channels for reaching various audiences. Consider e-mail, blogs, webinars, online chat, and social media to invite an open dialogue about the proposed change.
How can executives author specific goals or metrics to measure interim progress?
Consider the steps that lead to the ultimate goal and how the change will look and feel to establish interim measures during the strategic planning process. For example, you’d expect to see an increase in visits to a new website when the company announces a transition to self-service benefits. Next, move to more sophisticated measures, like an increase in employee registrations and growth in online claims to chart your actual progress. Change is not a linear process, so employees may slip back or temporarily revert to old habits, but executives can persevere by reinforcing the need for change and providing additional motivation until the transformation is complete.
What are the final steps?
Continue to reward and recognize new behaviors when you reach the implementation phase, but don’t get lost in the minutia. Focus on the final goal and stick with the strategy. Use testimonials to cite examples of success and illuminate the path toward the new state by providing frequent updates and noting when employees pass important landmarks. You’ll know you’ve reached your final destination when the plan is no longer an idea and becomes an integral part of the organization’s culture.
Kimberlie England is a principal and the national practice leader of Communication and Change Management at Findley Davies. Reach her at (419) 327-4109 or firstname.lastname@example.org.
Projectization is increasingly embraced by companies to cope with the challenges of the competitive global environment such as tighter budgets, diminishing resources, aggressive time constraints and competition to improve efficiency. The short-term ventures allow companies to maximize precious resources and tools while responding quickly and efficiently to changing market conditions. But today’s burgeoning portfolios pose tactical and strategic challenges that can create an operational nightmare or, worse yet, produce a string of project failures that can derail an entire company.
“Managing multiple projects is a competitive necessity,” says Dr. Vish Hegde, associate professor of management for the College of Business and Economics at California State University, East Bay. “But unless executives provide direction so projects are prioritized and aligned with the company’s strategic and financial goals, they can create an operational mess and cause project managers to fail.”
Smart Business spoke with Hegde about the challenges of managing multiple projects and how executives can avert operational meltdown by providing guidance and considering multiple characteristics when organizing projects.
Why is multiple project management so challenging?
Occasionally a project is so large and complex it requires the undivided attention of a single manager. In many companies, it is not uncommon to see project managers have to simultaneously juggle as many as five to 13 mid-size projects without dropping the ball. Their mission is complicated by the fact that projects are constantly being added, changed, or removed in response to changing market conditions, which alters the dynamics of the portfolio and forces managers to cope with an inefficient workload or fight for limited resources. Executives need to consider several characteristics when grouping projects or assigning resources, and provide project managers with the tools to balance multiple priorities and make prudent decisions on the fly.
How should projects be grouped to create synergies?
Grouping projects randomly can create inefficiencies, so most companies evaluate tactical characteristics when organizing projects. Certainly managers should consider project duration and complexity as well as technical and functional similarities when grouping projects, but they also need to consider the objectives and goals of the project, time pressures, workflow and resource availability to optimize every possible synergy. It’s imperative that executives provide guidance so project managers can balance tactical needs with strategic considerations and optimize efficiencies by sharing common resources.
What should executives consider when assigning projects?
Realistically, project managers can’t handle too many simultaneous projects without affecting quality and efficiency. If they’re juggling too many ventures, project managers will spend most of their time transitioning and won’t have time to dive into detail, devise a plan and actually lead the project. In fact, they’ll be inclined to simply go with the flow, which is symptomatic of an over-leveraged project manager. Balance a project manager’s slate of assignments by considering the mix, types and phases of the various initiatives in addition to his or her capabilities, because a project manager needs a broad range of technical and non-technical skills and the ability to multi-task in order to master a complex portfolio.
How can resource allocation and planning create efficiencies?
Sometimes CIOs launch multiple projects without considering the availability of critical resources, so employees struggle to balance conflicting priorities as project managers haggle for their services. Consider projected completion dates and the number of projects in the queue when evaluating the availability of shared resources as well as the organization’s overall capacity to handle a large portfolio. Help project managers avoid conflict and optimize scarce resources by providing benchmarks or a decision template that spells out the company’s priorities and the best way to schedule and allocate shared resources in various situations.
How does resource scheduling fit in?
Team members have to refocus and get their bearings each time they switch assignments, which impacts productivity and may ultimately delay the project portfolio. Executives should consider these challenges when scheduling shared resources and provide training in time management and multitasking to enhance their basic competencies. It’s important to control costs by leveraging the cost of human capital, but, at some point, over-scheduling critical resources becomes counter-productive.
Should project managers consider project interdependencies?
Certainly executives want to maximize the savings from working on several interdependent projects and select ventures that maximize investments. To achieve this important objective, the CIO should provide guidelines to help project managers select interdependent projects from a bank of possibilities, since their priorities and schedules could change as projects are added or removed from the process. Project managers should evaluate several criteria when making their selections, including the project’s benefits, available resources and technical synergies.
Dr.Vish Hegde is an associate professor of management for the College of Business and Economics at California State University, East Bay. Reach him at (510) 885-4912 or email@example.com.
More than 90 percent of American businesses are classified as small, but don’t under-estimate their power. Collectively, these enterprises employ more than half of all private sector workers, generate more than half our nonfarm gross domestic product and have created 64 percent of our economy’s net new jobs in the last 15 years.
In fact, the success of small business owners is so integral to the health of our overall economy that back in 1953 Congress created the U.S. Small Business Association (SBA) to serve as their personal advocate.
“The SBA offers owners a bounty of resources to help their small business grow,” says Anna Chung, senior vice president and SBA manager at Wilshire State Bank. “They not only help owners find funding, they’ll even help them write a business plan and navigate the lending process.”
Smart Business spoke with Chung about the opportunities to grow your small business through an SBA loan.
When should small business owners consider an SBA loan?
The SBA offers a number of financing programs to help small businesses grow. Established business owners usually apply for a 7(a) or a 504 loan. A 7(a) loan offers financial help for businesses in many different areas while a 504 loan provides long-term, fixed-rate financing to purchase major fixed assets for expansion or modernization. Although 504 loans can’t be used for operating capital, many owners use the funds to purchase a large building or second location, which helps free up money for expansion by allowing them to lease out the extra space. If you sign a large contract that requires purchasing additional inventory or equipment, call your banker right away so he or she can review your credit history and contract to see if you can finance the purchases with an SBA loan.
Do SBA loans offer better terms than other commercial loans?
An SBA loan is a standard commercial instrument that offers some very favorable terms. For example, the loans feature higher loan-to-value ratios, longer repayment periods and no balloon payments, yet still allow owners to partner with their local banker. Borrowers can purchase property by putting 10 percent down and pay back the loan over 25 years, which is better than most commercial mortgages. An SBA loan is ideal for growth as long as small business owners anticipate their future needs. Because if you wait too long to apply you could end up running out of cash, and owners need to show adequate working capital to qualify.
How does the SBA support banks in granting loans to small businesses?
SBA loans were designed to help small business owners who couldn’t qualify for a standard commercial loan, either because they have a smaller net worth or less working capital. So if an owner has access to other financing at reasonable terms he may not qualify for an SBA loan. The SBA guarantees up to 75 percent of the loan amount, which encourages a banker to lend, but the banker is responsible for meeting the SBA’s strict underwriting guidelines that are designed to mitigate risk.
How does the SBA qualification process differ from other commercial loans?
Owners still need to furnish a business plan, resume and copies of tax returns and financial statements, but these guidelines differ from standard commercial loans.
- Collateral. The loan must be collateralized if the borrower has collateral to offer, because the SBA requires bankers to mitigate risk whenever possible.
- Ownership. If the borrower owns several companies or controls several affiliates, lenders must review tax returns for those enterprises in addition to the owner’s primary concern.
- Down payment. Lenders must determine the source of a borrower’s down payment, even if the funds have been deposited into an escrow account. So owners need to provide documentation tracing the origin of a down payment.
- Tax returns. Owners must supply three years’ tax returns instead of two to qualify for an SBA loan.
- Criminal records and green cards. If a borrower has an arrest or conviction record the loan must be submitted to the SBA for approval. And an applicant’s green card must be validated by the INS before his or her loan is approved.
- Processing time. Most SBA loans are underwritten and approved in 30 to 45 days. But if the owner plans to purchase property, which requires an appraisal or an environmental impact report, the underwriting process may take 60 to 90 days.
Does the SBA offer other support to small business owners?
The SBA provides Small Business Development Centers (SBDCs) which offer owners free and confidential assistance with financial, marketing, production, organization, engineering and technical problems and feasibility studies. Many centers partner with local universities and engage local CPAs, retired executives and consultants to advise small business owners. In fact, the staff can even recommend a banker and help an owner develop a business plan or create a sales forecast to qualify for an SBA loan. The SBA also provides mentorships and free counseling services through a nonprofit organization called SCORE. SCORE has more than 389 chapters and 11,000 volunteers serving urban, suburban and rural areas. Keep in mind that the SBA also offers specialized assistance to women and veterans, so why not unleash the power of your small business advocate by visiting a local office.
Anna Chung is the senior vice president and SBA manager at Wilshire State Bank. Reach her at firstname.lastname@example.org or (213) 637-9742.
Are we entering a golden age of gas? The International Energy Agency seems to think so, citing the environmental qualities, ease of use and competitive prices of natural gas in a recent report.
New technology is creating plant efficiencies and the evolution of shale harvesting is increasing supply and reducing transportation costs, says Terry Crupi, director of Natural Gas Marketing and Trading for PPL EnergyPlus.
“Natural gas is increasing its prominence in the U.S. energy landscape,” says Crupi. “And Pennsylvania executives have an added advantage, because the region offers a straightforward platform for choosing a provider and managing energy costs.”
Smart Business spoke with Crupi about the evolution of natural gas and what it means for Pennsylvania business.
How is natural gas evolving to meet rising energy demands?
Traditionally, natural gas served as a home-heating fuel and feedstock for the industrial manufacturing sector, which caused demand to soar during colder months in northern regions of the country and highly industrialized cities. By the early 2000s, there was a dramatic surge in the construction of gas-fired power generation facilities, many of which use modern, fuel-efficient, combined-cycle technology. As a result, power grids rely on gas-fired power plants nearly as much as traditional baseload generation facilities fueled by nuclear fission and coal.
This dramatic increase in demand for natural gas has altered consumption and changed the way gas is used by region and season. Although summer demand used to be driven by the need to fill storage caverns for peak winter months, peak flow conditions along the pipeline now occur in summer as well as winter, as gas-fired power plants are used to meet rising summer electricity demands. This has greatly increased the importance of natural gas in our country’s overall energy picture, and lower prices are causing many customers to switch to natural gas. Also, the momentum toward natural-gas-powered vehicles offers tremendous potential for gas to increase its prominence in the U.S. energy landscape.
How do Pennsylvania businesses purchase natural gas?
The structure of the region’s natural gas market has been in place for several decades and provides customers with the opportunity to choose a competitive gas supplier and manage their energy costs. The regulated side of the market includes pipelines and local distribution companies that transport natural gas to end-users, but their rates and returns are controlled by state or federal agencies.
Customers of all shapes and sizes can optimize savings by purchasing natural gas from unregulated companies, because they aren’t required to purchase gas from a local utility. Gas suppliers typically collaborate with customers to develop a flexible pricing structure that meets their needs and optimizes current market conditions.
What should customers look for when choosing a natural gas supplier?
Because the composition of natural gas doesn’t vary, customers should select a supplier based on other characteristics, including:
- License. Suppliers should be licensed by the state regulatory commission.
- Financial stability. Assess a supplier’s tenure, history and financial health, as well as the financial condition of its parent, because it needs excellent credit to procure large quantities of gas at favorable prices in the wholesale market.
- Customer service. Ask to see a sample invoice and review the supplier’s responsiveness to orders for triggering or fixing prices and process for issuing confirmations. Will the supplier help you set hedging strategies? Who will be servicing your account? Remember, the salesperson may not be your contact once you’re a customer.
- A straightforward contract. Make sure there are no hidden renewal options in favor of the supplier and that any index pricing is appropriate and utilizes standard industry publications. The tone of the contract is indicative of a supplier’s approach, so take note if it seems one-sided.
How can natural gas consumers protect themselves from pricing volatility?
Natural gas is an actively traded and highly volatile commodity, which helps customers lock in favorable prices, but that also makes it difficult to craft an effective risk mitigation strategy. Some customers set price targets that align with corporate budgetary objectives, while others study the market and determine pricing points to capitalize on dips in the market. Still others are simply content to receive market-based pricing by purchasing gas at index-related prices. Customers can employ options to establish some limits on gas price floors and ceilings, but the best practice is to set a strategy that aligns with your risk appetite and execute it well.
How will Marcellus Shale natural gas production impact Pennsylvania energy?
Pennsylvania gas consumers are already seeing benefits from the Marcellus Shale, because the increased supply and proximity to the market is lowering transportation costs and overall natural gas prices. In terms of the total energy picture, it’s also having an effect on electricity markets because plentiful natural gas, coupled with increasing costs of coal, is causing many older coal-fired plants to retire in favor of gas-fired generation. In fact, Pennsylvania is becoming a prominent natural gas producing state, largely due to the Marcellus Shale.
PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corp. PPL EnergyPlus is not the same company as PPL Electric Utilities. The prices of PPL EnergyPlus are not regulated by the Pennsylvania Public Utility Commission. You do not have to buy PPL EnergyPlus electricity or other products in order to receive the same quality regulated services from PPL Electric Utilities.
Terry Crupi is director of Natural Gas Marketing and Trading for PPL EnergyPlus, a competitive gas supplier serving industrial and commercial customers in Pennsylvania, New Jersey, Maryland and Delaware. Reach him for wholesale and retail inquiries at PPLRetailGas@pplweb.com or (610) 774-2310.
If a disaster struck your company, could you recover? Do you have a place to store your data so it’s safe and accessible, and do you have a way to recover it after a disaster without bankrupting the company?
Investing in redundant infrastructure and hiring specialized staff to protect yourself is hard to justify in today’s business climate, especially when the rising cost of disaster recovery pushes other critical projects to the back burner. But the answer may be in the cloud, says Ram Shanmugam, senior director of product management for Recovery Services at SunGard Availability Services.
“Recovery in the cloud is offering customers reliable and cost-effective options to increase application availability,” says Shanmugam. “It’s no longer a matter of do you need higher application availability but how can you do it effectively and efficiently compared to traditional recovery models.”
Smart Business spoke with Shanmugam about the advantages of outsourcing disaster recovery to the cloud.
Why is the cloud advantageous?
Organizations require consistent and reliable availability of their recovery infrastructure to match the business value of their full range of applications and data. These range from mission-critical to less critical. Disruption and outages in the availability of mission-critical applications do the most damage to organizations financially and in terms of impact on quality of service, lost reputation and competitive advantage. To design and implement a recovery plan, the IT organization must determine the recovery point objective (RPO) and recovery time objective (RTO) for each mission-critical application. The RPO is the amount of down time and data loss the company is willing to sustain after a disaster, and the RTO establishes the timeline and priority for restoring critical business processes and applications. Finally, to meet the RPO and RTO requirements, the IT organization must invest in space, capital equipment and software, and hire experienced staff to replicate or back up data, then try to ensure recovery by executing rigorous testing protocols.
In contrast, cloud-based recovery offers a reliable and affordable alternative for achieving RPO and RTO requirements and ensuring higher availability for mission-critical applications. Cloud-based recovery solutions offer access to low-cost or pay-as-you-use recovery infrastructure, which can be provisioned on demand to recover mission-critical applications in the wake of failure events, with sufficient security and guaranteed performance.
What should executives consider before outsourcing disaster recovery to the cloud?
- Cost savings is a significant driver.
- RPO/RTO. Companies often forsake their RPO/RTO requirements because in-house solutions are cost prohibitive. The cloud offers the ability to significantly improve application availability in a cost-effective manner.
- Reliability. The ROI of a recovery environment is in the reliability of its performance at the time of disaster. Compared to in-house solutions, managed cloud solutions offers higher reliability in recovery of mission-critical applications after failure events, with sufficient security and guaranteed performance.
- Skilled resources. In-house recovery solutions require investment in talent to support the infrastructure. In contrast, the cloud eliminates the need for that investment, freeing up resources to focus on value creation.
Does migrating to the cloud create a loss of flexibility?
No. In fact, the cloud allows IT organizations to optimize their investment and resources by offering configurable options to meet the individual availability objectives of each application or business process.
IT organizations also have the flexibility to customize a cost-effective hybrid recovery environment by integrating cloud with dedicated internal infrastructure to support availability of large, complex applications and business processes.
What should CIOs consider when evaluating prospective partners?
Ask these questions to evaluate potential cloud partners when considering cloud-based recovery options.
- Does it offer meaningful service level guarantees for recovery of mission-critical applications? Can it reliably recover mission-critical applications in the wake of failure?
- Does it support heterogeneous computing platforms (e.g. Windows, Linux) and hybrid architectures that meet the recovery needs of the entire IT portfolio?
- Does the staff have hands-on disaster recovery experience? Has it recovered from a disaster? Does it understand the entire disaster recovery lifecycle? Can it provide audit-ready test reports?
- Can the partner support a broad portfolio of RPO/RTO requirements in its cloud solution? Does it provide options for high availability, as well as less critical applications, in a heterogeneous environment?
- What is the range of options supported for moving data to the cloud? Does it use monitoring and automation tools to ensure rapid and effective response to failures?
- Can the cloud partner handle your current and future needs? Can it expand and contract on demand, handle sudden growth or support large amounts of application data?
- Can clients pay as they go?
Is data in the cloud secure?
A cloud partner should offer multiple levels of security and service options to fit your needs. For those concerned that some data are too sensitive for the cloud, despite security, they can use a private cloud, while selecting a shared cloud for everything else.
One size doesn’t fit all, so a cloud partner should offer a range of private, hybrid and physical environments to make sure your data is secure and can be recovered after a disaster.
Ram Shanmugam is the senior director of product management for Recovery Services at SunGard Availability Services. Reach him at email@example.com.
Executives across the Silicon Valley received a wake-up call in January, when Eric Schmidt stepped down as the CEO of Google. Rumor had it the tech giant and former Wall Street darling had missed the social network boom and lost its innovative edge, as Schmidt focused on day-to-day operations while digressing from Google’s legendary 70-20-10 rule, which requires technical staff and management to devote 10 percent of their time to dreaming up new ideas.
Although leadership is the catalyst and source of organizational innovation and creativity, busy executives don’t need a complex plan to inspire and encourage an imaginative culture, as long as they’re willing to shake things up and not punish failure.
“Creative leadership is about giving people permission to dream and encouraging them to try something different,” says Dr. Terri Swartz, dean and professor of marketing for the College of Business and Economics at California State University, East Bay. “You get there by shaking things up and not letting employees settle into the status quo.”
Smart Business asked Swartz to describe the activities and behaviors that inspire and promote an innovative culture.
How can executives inspire creativity by shaking things up?
Although bureaucratic processes and formal protocols create the organizational discipline, which often produces short-term productivity gains, they actually threaten a company’s long-term financial health and stability by discouraging outside-the-box thinking and the development of new products and services.
Give people permission to dream by launching meetings with a brain teaser instead of a reading from the latest financial report and allow them to play with simple, creative toys like Legos, pipe cleaners and Silly Putty during conferences instead of leaving them to text message co-workers or read e-mails.
Next, invite new perspectives on old problems by holding meetings outside traditional conference rooms. Stroll the campus while you meet, congregate in a local park or shake up a stale routine by asking participants to sit in different seats. Finally, change the menu in the cafeteria and even the background music in the office on a regular basis, so employees learn to anticipate and embrace the unexpected.
What other simple, cost-effective techniques incite innovation?
Employees need breaks and a change of scenery to get their creative juices flowing; otherwise, they’ll spend all of their time with routine activities and putting out fires instead of dreaming up new ideas. In fact, carving out creative time and changing venues were simple but effective practices under Google’s 70-20-10 rule. Technical staff were asked to spend 70 percent of their time on core activities, 20 percent of their time on secondary business pursuits and one day each week in a different room or locale, just so they could focus on new ideas. Yet all too often, companies put the kibosh on telecommuting or non-traditional work schedules that break up daily routines and actually encourage forward thinking.
How can executives encourage risk-taking and companywide participation?
It’s easy for companies to digress into a culture that shuns risk and thwarts new ideas as they become mature and successful. But executives can dissuade group thinking and invite companywide participation by maintaining an open door policy and soliciting everyone’s opinions once an idea is suggested. Keep naysayers from getting the upper hand by scripting the positives as well as the concerns when weighing the merits of an idea. And don’t allow risk managers or lawyers to quash new products or ideas until they’re fleshed out.
Finally, travel the hallways and visit the cafeteria to solicit new ideas from everyone. Encourage new behaviors by writing down employee suggestions and recognizing every submission.
What else can executives do to encourage innovation?
First, hire and retain the right people. At first glance this may seem simple, but think of the relationship between elephants and fleas. Elephants are big, organized and successful systems, much like today’s corporations, but they are established and set in their ways. They cannot survive change without fleas. Fleas represent creative individuals or groups. They see themselves as different and want to make a difference. Unfortunately, bureaucracies often isolate or suffocate ‘fleas,’ killing off their ideas and passion, ultimately leading to their own demise.
Second, encourage and reward creative ideas from any source. Also, encourage employees to play together because participating in outside activities or playing group games during lunch breaks builds familiarity and trust, which is essential to the creative process and aids in the acceptance of new ideas. Use instruments, candid feedback and pulse surveys to gauge your open-mindedness and temper your reaction to new ideas and departures from the status quo. Executives may unconsciously quash new ideas by expressing a contrarian view or allow personal biases to interfere with their objectivity.
Next, lead the way by changing your routine and asking line managers to do the same. Finally, be willing to invest in the future. Although investments in dream time and allowing employees to roam the property may not produce immediate financial rewards, there’s no doubt that encouraging innovation will yield dividends in the future.
Dr. Terri Swartz is the dean and a professor of marketing for the College of Business and Economics at California State University, East Bay. Reach her at (510) 885-3291 or firstname.lastname@example.org.
Before the financial meltdown in 2008, prospective home owners breezed through the lending process while pursuing the American dream. Now, even veteran borrowers can be stymied by today’s strict lending environment, especially if they rely on previous knowledge and experience to navigate the process. Fortunately, education, preparation and a little perseverance can help novices as well as seasoned borrowers surmount modern obstacles and realize their dreams.
“The pendulum has swung too far the other way and now lenders are looking for picture-perfect borrowers,” says Janette Mah, senior vice president and manager of the Residential Mortgage Group at Wilshire State Bank. “Borrowers can avoid frustration and disappointment by educating themselves on the underwriting process, meeting with lenders and securing pre-approval for a loan before they start shopping for a home.”
Smart Business spoke with Mah about the current mortgage climate and why borrowers need education and preparation to prevail.
How has the lending climate changed, especially in the greater L.A. area?
Lenders are being somewhat cautious because the economy and the housing market are sending mixed signals about their overall health. Unemployment is still very high, the economy is struggling and some areas in Southern California are still working through a backlog of foreclosed properties, which is keeping residential real estate prices from stabilizing. While the federal government will continue to play a role in securitizing long-term mortgages, the future of Freddie Mac and Fannie Mae is up in the air. After synthesizing all this information, it’s clear that homebuyers and lenders must approach the market with caution and diligently assess the risks before finalizing a transaction.
What should borrowers know about the current underwriting rules and mortgage qualification process?
Borrowers can no longer state their income; they must provide sufficient documentation to verify their earnings and assets in order to prove they can repay the loan. In addition, lenders are using a new set of standards to underwrite and evaluate risks, and while the requirements may differ for some programs including FHA loans, these are the general guidelines.
- Minimum credit score of 640 to 660 and a history of financial responsibility and saving. Borrowers can drive a better deal if their credit score is 740 or higher.
- Employment stability.
- Sufficient liquid assets to survive a temporary financial set back.
- Minimum down payment of 20 percent, and the funds must be in the borrower’s account for at least two to three months.
- Total monthly housing costs for principal and interest, taxes and insurance should not exceed 33 percent of gross income, while total monthly expenditures for all liabilities should not exceed 45 percent. Remember, even deferred payments on a student loan will count toward your monthly liabilities.
How can borrowers prepare for the lending process?
First, know your credit score by pulling a copy of your report and taking the time to clear up any issues before you approach a lender.
Second, research the various loan products to identify one that meets your needs. If you plan to stay in your home for more than seven years, then a 30-year or 15-year fixed rate mortgage might be the best choice, while a loan that offers a fixed rate for just five years might be appropriate if you plan to sell the property in a few years.
Third, study the lending process so you’re familiar with the paperwork and the requirements you’ll have to satisfy along the way.
Finally, calculate your income-to-debt ratio and research the real estate market, so you know how much money you need to buy a house and approximately how much you can borrow before you meet with a lender.
What’s the best way to approach a lender and avoid mortgage scams?
Contact two to three lenders to request face-to-face meetings and a quote. While it’s a good idea to survey the market by searching the Internet, borrowers generally get the best deal from a bank where they have an existing relationship. Vet the contenders by asking for their license number and searching for information on the licensing authority’s website. New legislation has granted consumers additional protection from fraud and scams following the crisis of 2008, so now mortgage originators are required to register and undergo a background check in order to comply with the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act).
Total out-of-pocket costs for a 30-year fixed rate loan should average $1,500 to $3,000 and buyers should ask for a written estimate before agreeing to a deal. Lock in your interest rate for as long as possible so you can boldly tout your pre-approved status to realtors and sellers and negotiate with confidence when shopping for a home. Finally, remember to allow plenty of time when you finally locate the home of your dreams, because the underwriting and escrow process takes a minimum of 30 days.
Janette Mah is a senior vice president and manager of the Residential Mortgage Group at Wilshire State Bank. Reach her at (213) 427-1490 or email@example.com.
There’s been no shortage of threats to business continuity over the past decade; terror attacks, hurricanes and tornadoes are constant reminders of the need for a well-honed disaster recovery plan. But the era has also featured two devastating recessions and a rash of corporate downsizings, leaving executives with fewer resources to guarantee the timely restoration of critical business operations and databases.
“The events of the past decade have taught us that businesses must deal with disaster recovery in a pragmatic way,” says Kerwin Myers, senior director of product management at SunGard Availability Services. “Otherwise, companies may make critical mistakes and may never recover from a disaster. Conversely, overspending on disaster recovery can also pose a threat to your company.”
Smart Business spoke with Myers about how to ensure business continuity by taking a realistic approach to disaster recovery.
How have the events of the last decade impacted disaster recovery?
Executives seldom thought about disaster recovery before Sept. 11. Now, they recognize the need for planning, but restoring a network and recovering data require professionals with specialized skills, and the rigorous process often takes a back seat to day-to-day operations. Additionally, companies must now adhere to governmental regulations and industry mandates designed to ensure organizations develop business continuity plans.
What are the typical pain points that organizations face when recovering from a disaster?
Recovering from a disaster hinges on accurate and current disaster recovery procedures. Many organizations fail to recover or take longer to recover because these procedures are not accurate or not current. Production Information Technology environments are constantly changing. This means that an effective change management practice that includes a process for updating recovery procedures and recovery configurations is a crucial component to successful restoration. Changes in the production environment happen daily, impacting recovery. As a result, the recovery plan must be kept up to date with day-to-day production changes.
In many cases, organizations depend on the same staff for production and disaster recovery. This requires production to be redeployed to restore critical applications and data during a disaster. But the event may prevent workers from reaching the facility or inflict personal hardships or injuries that keep them from working.
Last, IT professionals spend most of the time maintaining and updating applications, so restoration efforts may be hampered by a lack of knowledge of restoration practices.
What are the key planning elements to help ensure a seamless recovery?
Recovery plans should be customized to individual businesses but should include these critical steps to ensure effective recovery.
- Create specific and sequential recovery processes and procedures. Employees need clear procedures to restore critical IT services.
- Establish priorities. Some mission-critical applications and technical functions must be restored immediately to minimize financial loss. Consider cost/performance trade-offs, estimated recovery times and business needs when establishing post-event priorities.
- Close skill gaps. Staff members must take on specific roles and duties during recovery, but there’s no time for training once disaster strikes. Inventory the required skills to execute the plan and close gaps through training or by contracting with external providers.
- IT organizations must ensure production changes are being replicated in recovery configurations and procedures.
What mistakes may impede or prevent a complete recovery?
An outdated recovery plan can stymie recovery. Companies need to reconcile the plan with the changing technical configuration and update procedures and priorities to align with the business requirements on a quarterly or semi-annual basis, as recovery may fail if the plan elements aren’t tested and refined.
Should all data be recovered in the same way?
Most data centers are a collection of new and legacy systems and applications from multiple vendors, which means all data can’t be recovered in the same way. For example, data from critical tier-one applications may be replicated on servers in other locations, which is expensive, but the investment practically eliminates down time after a disaster.
Applications that run in the cloud can be accessed from any location and the provider assumes responsibility for disaster planning and recovery. Tier-two apps could run on separate servers and are restored from tape backups or a virtualized environment.
How are virtualization and cloud-based solutions impacting backup and recovery processes?
The emergence of the cloud and virtualization has created new rapid recovery options at a better price point. Applications that run on Web-based platforms can be supported by third-party providers with hundreds of servers, so recovery can be as simple as switching to another site. The best providers take a holistic approach by considering the interdependency between legacy and Web-based applications and offer a comprehensive solution.
What should an IT manager look for in an outsourced disaster recovery service provider?
Beyond price and equipment, an IT manager should evaluate the following criteria.
- Experience and expertise in processes and procedures.
- Commitment and conviction backed by guarantees and SLAs.
- Track record. Has the firm been tested by a real disaster? Was the recovery successful?
- Testing and audits. A provider should conduct hundreds of tests and audits each year, so ask to review its documentation before committing.
Kerwin Myers is a senior director of product management for SunGard Availability Services. Reach him at firstname.lastname@example.org.
The introduction of Pennsylvania’s competitive energy market in 1996 was intended to aid businesses (and consumers) that were hampered by electricity rates that exceeded the national average by as much as 15 percent.
But despite the fact that companies have been able to request bids from competing suppliers and purchase electricity supply at lower prices, many continue to pay more than they need to because they haven’t shopped for services or capitalized on falling energy prices by requesting new quotes from competitive suppliers.
“Pennsylvania’s energy market has come back with a vengeance since 2009, but optimizing the potential savings requires new habits and a changed mindset,” says L. Gene Alessandrini, senior vice president of marketing for PPL EnergyPlus. “Just getting online and requesting a quote from trusted suppliers can produce substantial savings for businesses with very little risk.”
Smart Business spoke with Alessandrini about the opportunities to immediately reduce your company’s electricity costs and control future costs by shopping the retail market and partnering with a savvy provider.
Is this a good time to be shopping for electricity?
Absolutely. Wholesale power prices have dropped in 2011, as new companies enter the market and the state-imposed temporary rate caps expire.
Companies that initially shopped the market and signed contracts back in 2009 or 2010 may be able to obtain lower electricity supply costs today by requesting new bids, while companies that haven’t shopped for services can reap immediate savings of 5 percent to 20 percent by doing so. Once they select a provider and sign a contract, smart business executives can turn their attention toward continuous improvement and controlling future costs by finding ways to increase efficiencies and reduce energy consumption. And because companies can lock in electricity rates and easily create energy savings, they free up cash for reinvestment purposes.
How can businesses save money on their energy bills by shopping for supply?
The move to a competitive energy market affords businesses greater control over their operating costs. Today, businesses can select from more than 25 providers in many parts of Pennsylvania and partner with a suitable supplier who understands their business and works with them to make it more successful.
Competitive electricity suppliers are still licensed and regulated by the state, but they are incentivized to purchase energy at the lowest possible price and offer customers top-notch service, as well as education and energy-saving recommendations and tools, because they have to market their services and compete for customers.
But the process could be overwhelming for small to mid-sized companies that aren’t used to vetting suppliers and requesting bids for services. That’s why it is a good idea to secure quotes from a handful of trusted suppliers and then sign a contract to get the ball rolling. Achieve the savings available to you today and then work to improve your knowledge and use of the competitive market.
What do businesses need to know before they shop for electricity?
Buying electricity in Pennsylvania now encompasses three phases. First, buyers request bids to garner immediate savings. Next, they work toward future cost reductions by considering investments in lighting systems, new heating and air conditioning systems or more efficient manufacturing equipment.
Finally, executives should monitor the energy market and request new pricing during the contract term to see if they can secure even lower rates by capitalizing on Pennsylvania’s competitive market.
How do businesses go about shopping for electricity?
The website for the Pennsylvania Public Utility Commission (www.papowerswitch.com) offers buyers a wealth of information, but it’s easy to navigate the procurement process by following these easy steps.
- Briefly research the market, then complete the online authorization form and request bids from two to three suppliers that you know and trust.
- Suppliers will be able to review your company’s historical energy usage and expenditures and will discuss with you your company’s projected needs and service requirements.
- After reviewing the bids, simply select the provider and service package that best meets your company’s needs, then make note of the renewal date and be sure to repeat the process during or prior to the contract expiration.
What should businesses look for in an electricity supplier?
First, executives need to be concerned with business continuity and the financial strength and stability of their electricity supplier. But you should also select a savvy partner that offers more than a commodity. You should look for educational programs, a variety of product and service options and a consultative approach to suggest industry-specific, energy-procurement and energy-saving ideas.
There’s too much opportunity available to businesses for them to sit on the sidelines when, with a little hard work or even just a few clicks of a mouse, they can yield immediate and substantial savings on electricity.
L. Gene Alessandrini is senior vice president of marketing for PPL EnergyPlus. Reach him at email@example.com or (610) 774-4483.