THE ALL-TIME

IT Mistakes Costing SMEs FORTUNES EVERY YEAR

BEFORE ANY TECH-TALK AND HOW TO AVOID MAKING THEM

TOP 10

Lowest Cost & Best Return to help you rival large Companies.
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The SME Decision Makers NON-technical IT Guide:

Avoiding 10 Costly IT Mistakes most SMEs make

Recently voted Top 5 Managed IT Services Provider in Africa by MSP Mentor - Numata Business IT - a small South-African group of business-IT specialists reveal the 10 Costly IT Mistakes SMEs with 10 - 150 staff make.

Most SME Owners consider IT too technical a conversation, delegating it to those concerned with buzzwords, budgets or keeping their jobs - rather than the holistic insight or feedback to superiors. We estimate 80% of IT problems facing SMEs to be management related and NOT technical. Subsequently 10 IT Management Myths exist in the SME sector. We see this daily - even in well-known, mid-sized operations with fairly high earnings. - Numata Head of Operations, Ruan de Lange.

This e-book is a culmination of daily efforts stretching 7-years to illuminate 10 IT Mistakes most SMEs make, so you can reclaim IT from the expense column, revive IT as a strategic weapon, and rival Giant Corporations with no IT skills necessary - whether you employ 5 or 500 staff.
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The Million-Dollar IT Question Every SME Executive Asks

Recent polls reveal as many as 54 from 100 South African Companies (mostly SMEs) rely on some type of IT outsourcing, suggesting its stressful enough to run your own business than still worry about Cloud Computing, Virtualisation, and a gazillion other complexities IT spawns every single day. By the time youve mastered one buzzword five others seem to have replaced it. One would think with more inventions than we could use, theyd at least have mastered the basics by now; how to NOT let an internet link or email server bomb out as you click send on that vital quote, proposal or invoice. Wouldnt it be great if instead of 100 new technologies, IT mad scientists invented ways NOT to have to pay an IT technician hundreds by the hour for fixing what seems in 10 clicks and 5-minutes, to be the same common, recurring IT problems? You spend thousands on hardware, thousands on software, thousands on making them work together, thousands on KEEPING them working, thousands on fixing them when they break, thousands on replacing them, and for all the bills while you know theyre important you still
Numata proactively handles everything a complete in-house IT department would handle, for a fraction of the cost of hiring even one full-time employee. By giving you the freedom to stop worrying about your technology and focus on running your business, our strategic IT solutions are the key to unlocking greater success. If youre ready to end network downtime and computer problems once and for all, Numata has the solution.
2012 Numata Business IT.

cant see any cash value or number IT really adds to your profits every month? How, on top of this, do you still justify a budget for improving or expanding IT, if all it seems to do is add to your expense column? How do you remove hard-earned profits from core operations and spend them on a cash drain instead? What could an IT Strategy possibly add towards your cash flow when even the basics seem to deplete a large chunk of it every month? Why invest in IT, when all it seems to do is distract from your core business?
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The Million-Dollar IT Question Every SME Executive Asks

While theres a strong case for large companies to invest fortunes in strategic advantage from IT, how can the small business owner really benefit? These IT questions and more have bugged SME Executives for almost 2 decades.

This e-book answers 10 that hurt SME bottom lines the most...

Contents
1. 2. 3. 4. 5. 6. 7.
Numata proactively handles everything a complete in-house IT department would handle, for a fraction of the cost of hiring even one full-time employee. By giving you the freedom to stop worrying about your technology and focus on running your business, our strategic IT solutions are the key to unlocking greater success. If youre ready to end network downtime and computer problems once and for all, Numata has the solution.
2012 Numata Business IT.

IT is not a profit-generator. IT adds no business value. IT Strategy is not important for SMEs. If IT aint broke, dont fix IT. IT is difficult to budget for. IT requires large investment. Buying on Specification and Price IT demands onsite technical expertise. Cutting IT Costs VS. Total Cost of IT

8. 9.

10. Short VS. Long View on IT 11. Conclusion 12. How to Overcome the 10 IT Mistakes
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Top-10 IT Mistakes Costing SMEs Fortunes

Ever calculated your true cost of IT being offline, for 1-hour?

Mistake #1

IT is not a profit-generator...
For most companies, IT is just a tool and not a source of revenue. So when drafting your income sheet, it goes into the expense column. The figures that dont make it are the cost- & time savings IT contributes to operations and customer service; as well as downtime losses incurred when IT is offline or performing sub-optimally, usually at the most inopportune of times - like when you need to send urgent invoices, proposals, or make online transfers. Even though IT is not seen as a profit generator, most customer- and supplier-centric businesses come to a screeching halt when staff systems, networks, e-mail or web services are offline losing fortunes in productivity & recovery costs. IT might ultimately not generate your profits, but it certainly can destroy them, when services are not working as steadily or reliably as they should.

SIMPLIFIED - the most significant losses to an SME, would be labour and potential revenue:
LABOR COST = P x E x R x H P = number of people affected E = average percentage they are affected R = average employee cost per hour H = number of hours of outage LOST REVENUE = (GR/TH) x I x H GR = gross yearly revenue TH = total yearly business hours I = percentage impact H = number of hours of outage

Have you calculated your hourly cost of IT downtime yet?

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Top-10 IT Mistakes Costing SMEs Fortunes

Best-Practice IT Frameworks like ITIL list the following measurable contributions IT makes in business:
Run the Business (RTB)
Maintaining Current Operations Increase Efficiencies

Mistake #2

IT adds no business value

Because IT is listed as an expense by most SMEs, they have no way of measuring any contributions IT makes to the business. The longer you think of, classify, or treat IT as an expense, the longer it stays one. IT Standards like ITIL, COBIT and others, deliver concrete indicators for calculating business value of IT, in line with business goals for ANY type and size of business. Shifting perspective to the importance of IT in pursuit of business goals, and the difference you want IT to make in your company, is supported and measured by IT frameworks suiting your business goals.

Grow the business (GTB)

Grow the scope of services Find New Customers

Transform the business (TTB)

Create new capabilities Enter New Markets

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The majority of Large Corporations today, all have internal IT Departments costing them a fortune, which evolved on-demand over many years, tied to legacy systems and methods which often inflate operating costs, rarely offering much competitive advantage anymore.

Mistake #3

IT Strategy is not important for SMEs

Working in IT with SME clients, we often uncover the misconception that IT Strategy is only practical for large Corporations, and not SMEs with only a few PCs or network users. Conversely, consider some of the actual areas left today, in which small companies can still rival the Giant Corporations. It is certainly not always likely to be cost, price or value, as large companies often have the benefit of: Economies of scale Immense purchasing power Rigorous quality assurance Cash flow and Credit Facilities Distributed networks and footprints Dominant Market share

This is where SMEs have the advantage. They are agile, responsive and lean on resources, when managed smartly. IT is probably the single largest unmanaged expense in which SMEs can recover inefficiencies.

Gartner Says Effective Management Can Cut Total Cost of Ownership for Desktop PCs by 42%
For a large company, the cost of purchasing a desktop PC may be only $1,200, but, kept for four years, the total cost of ownership (TCO) could be as much as $5,867 per year, according to Gartner Inc.

Egham, UK, March 10, 2008

Non-core activities like IT are fast becoming the new little hidden pockets of untapped potential for SMEs, in which to make the BIGGEST difference when taking on the giants.

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Top-10 IT Mistakes Costing SMEs Fortunes

Annual cost of IT failure:

$6.2 trillion
By Michael Krigsman | September 30, 2009, 6:10am PDT

Mistake #4

If IT aint broke, dont fix IT

Youre not likely to buy a new Mercedes, run it down without fuel, oil, service and a periodic detail, or race it off the showroom floor without any insurance, right? Why should your IT systems be different?

The total annual cost of worldwide IT failures is $6.2 trillion dollars, according to calculations performed by Roger Sessions, ber-expert enterprise architect and CTO of ObjectWatch. According to the World Technology and Services Alliance, countries spend, on average, 6.4% of the Gross Domestic Product (GDP) on Information Communications Technology, with 43% of this spent on hard0077are, software, and services.

Some studies estimate that every R1 you spend on IT hardware & software today, will ask an additional R4 spent over the next 3-to-5 years for maintenance, repairs and user support - not to mention cost of downtime, or loss of productivity. Would it not make sense then to provision SOME funds for preventative measures, to increase the lifespan, value and utility from your IT purchases & services, PROTECTING your investment - no matter HOW small?

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Top-10 IT Mistakes Costing SMEs Fortunes

IT Governance

Mistake #5

IT is difficult to budget for

The only reason you should find IT difficult to forecast or budget for, is when you wait for systems to fail before spending money. This can often be a symptom of: 1. 2. 3. 4. 5. No defined IT strategy, or goals No business-IT alignment No IT service improvement plan No pro-active IT maintenance plan No IT measurement or reporting

Strategic Alignment Link your business goals to IT goals. Value Delivery Optimise your IT costs. Prove the value of IT to business. Resource Management Optimise your IT Investment. Optimise your IT Management Maximise Applications, Information, Infrastructure, People. Risk Management Understand compliance needs. Assess your appetite for risk. Ensure Transparency of risks. Performance Measurement IT Resource usage & performance Report IT Service Delivery Value

Standards like COBIT offer further clues:

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Case Study
The IT Strategy Group from an international banking and managed investment firm has decided to address the current economic downturn, by reducing investment into the IT organisation and Service Portfolio. As a result the quality of some key services fall, with the support organisation struggling to respond effectively to all calls for assistance. After a few months of lowered quality of service, the organisation loses a number of major customers to their primary competitors. In response to the loss of these customers, further budget reductions are planned to counter the decrease in revenue earned. By failing to realise their customers value perception of services through service quality, the organisation became caught in a negative cycle with potentially serious long term consequences.

Mistake #6

IT requires large investment

Unless youre building a new datacentre, and paying cash up front, IT does NOT require large investment. IT DOES however require CONSTANT investment, no matter how small, linked to an IT Strategy aligned with your business goals - constantly measuring Return on Investment.

For SMEs - IT is not always about spending money, as much as organising, managing and reporting on systems & services in use already in a smarter, more profitable way

There are also IT financing options available today for larger infrastructure or project needs, helping you to spread and recover your costs over time when you dont have surplus funds available, some even tax-deductible as part of operating expenses. Coupled with the proliferation of Managed IT Services Providers (IT outsourcing that eliminate IT Staff or Expertise needs), you dont even need to own IT anymore, to profit from using it today.

- ITIL V3 Foundation Complete Certification Kit

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Top-10 IT Mistakes Costing SMEs Fortunes

Alex - sales rep for ABC Inc. - needs a new notebook

After some deliberation it comes down to price, with ABC subsidising 50% of the notebook purchase price, yet agrees to any support & maintenance costs incurred, as Alex will use it mainly for business. Fortunately, Alex has a friend who sells computers, from who he picks up a reasonably powerful, brand new notebook with 1-year warranty, and many extras, for nearly R 1200 less than any equivalent in-store. Delighted, Alex hands it over to ABCs IT Department for setup, only to find that the newly purchased notebook cannot be added to the companys network domain, because of its Home version OS loaded. This notebook will proceed to become problematic for Alex & ABC, costing them TRIPLE, to support and maintain, as it would if they bought a business class notebook for R 1500 more

Mistake #7

Buying on speification and price

Buying on price and specification alone cost SME companies fortunes every single year. It is not until you come to appreciate Total Cost of Ownership (covered later) that this will start making sense. Essentially, saving R 1000 now on the price tag of a new notebook, could cost you twice that over the next year, if that notebook does not ship with a manufacturer-supported warranty, guaranteeing parts availability locally, or does not conform to business support standards to lower the cost of maintenance, repairs and upgrades for its lifespan. Many entry-level notebooks sold at retail outlets ship with a Home operating system to reduce cost, yet limiting networking functionality options. Conversely, business class notebook ranges ship with a Pro OS, and extended 3-Year Next Business Day Onsite Service, where a technician is dispatched to replace faulty PC parts, at your place of business, the very day after reporting such fault.

Buying on price can cost you a fortune in IT

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Top-10 IT Mistakes Costing SMEs Fortunes

Gartner, Inc.
Egham, UK, January 18, 2010 Over the next two years, business demand for IT-driven growth and innovation will outstrip the supply of qualified people to fulfil job roles and as result traditional IT tasks are moving outside the IT department, said Debra Logan, vice president and distinguished analyst at Gartner. The future of IT lies outside the IT department. Increasingly CIOs are coming from the business and users are taking control of their own information delivery infrastructure. By the end of 2010, Gartner predicts that 40 per cent of people who report into IT in a matrixed fashion or directly will have substantial business and non-IT experience. Organisations need staff with different skills from the ones they were originally hired for. These are not IT people as organisations know them. Staying relevant in this changing environment will require a new way of thinking about organisational models and staffing in IT projects, added Ms Logan.

Mistake #8

IT demands onsite technical expertise

Rising hiring & placement costs, a shortage of skilled candidates, and accelerating IT complexity mean fewer SMEs can afford to appoint permanent IT staff today. Instead, many are now outsourcing some, if not all, of their IT support and services, eliminating operational & staff overheads or risks they would face with in-house IT. Service Level Agreements make it possible to outsource your entire IT department to an external provider, bound to guaranteed response times and service levels, reported back in regular IT Management meetings. Managed IT Service Providers also offer advisory, strategic, managerial & financial capabilities as part of a total outsourced IT Service Portfolio - some able to deliver corporate-class IT services to SMEs better than most inhouse IT departments, for a fixed monthly fee, and very minimal risk. Outsourcing this way can offer measurable advantages & savings if managed smartly.

2012 Numata Business IT.

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Top-10 IT Mistakes Costing SMEs Fortunes

Gartner, Inc.
Egham, UK, January 18, 2010 Over the next two years, business demand for IT-driven growth and innovation will outstrip the supply of qualified people to fulfil job roles and as result traditional IT tasks are moving outside the IT department, said Debra Logan, vice president and distinguished analyst at Gartner. The future of IT lies outside the IT department. Increasingly CIOs are coming from the business and users are taking control of their own information delivery infrastructure. By the end of 2010, Gartner predicts that 40 per cent of people who report into IT in a matrixed fashion or directly will have substantial business and non-IT experience. Organisations need staff with different skills from the ones they were originally hired for. These are not IT people as organisations know them. Staying relevant in this changing environment will require a new way of thinking about organisational models and staffing in IT projects, added Ms Logan.

Mistake #9

Cutting IT Costs VS Total Cost of IT

Cutting IT Costs can create huge problems, if you overlook its impact on Total Cost of Ownership. Where cutting costs, concern price or spend alone, Total Cost of Ownership considers lifetime costs thereafter, and all related expenditures associated.
Sometimes, cutting costs on IT services or purchases could actually increase your Total Cost of Ownership.

Example: A new notebook loaded with Pro operating system, and purchase price of R 6,900.00 will have a Total Cost of Ownership which adds the following to initial cost: 1. 2. 3. 4. 5. 6. Maintenance costs over its lifespan Power Consumption Repairs/upgrades User and technical support costs Software licensing fees Notebook accessory purchases

Should you now swap the Pro operating system for Home in attempt to cut costs on the Notebooks purchase price, youd effectively only double the support & maintenance costs, when trying to manage such Home Notebook on a Pro network

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Top-10 IT Mistakes Costing SMEs Fortunes

How to create a successful longterm IT strategy

CIO Jeff Steinhorn transformed energy company Hess Corp.s short-term IT project approach into a five-year plan to sync up with business objectives. When Jeff Steinhorn joined Hess Corp. as CIO of its marketing and refining division in the summer of 2006, he discovered within the first two months of his tenure that the IT organization had historically taken a short-term approach to project planning. That approach did help the IT group to determine the equipment it would need to buy and the personnel it would require to support those nearterm initiatives. But project plans focused on the separate needs of each business division, says Steinhorn, so there wasnt a comprehensive evaluation of how each project might affect the overall IT infrastructure. And it hadnt become clear how Hess IT projects fit into its longerterm business objectives as the company diversified from its roots in petroleum and expanded into natural gas and electricity over the past decade. It became pretty clear that we needed to lay out a long-term strategy that would allow us to figure out how IT could support our businesses strategies over the next five years, says Steinhorn, who was previously CIO at Linens n Things Inc. and was recently promoted to corporate CIO at Hess. The situation that Steinhorn walked into when he joined Hess is far from unique. The bulk of CIOs are in a predicament where they come into an [IT] environment that doesnt have a long-range plan, says Bobby Cameron, an analyst at Forrester Research Inc.
2012 Numata Business IT.

Mistake #10

Short VS Long View on IT

One of the biggest management problems facing SMEs today in managing IT expenditure and value is not lack of technical quality as one would expect but rather the business & financial strategy and controls absent in 8 out of 10 IT infrastructures. This is proven by the fact that IT remains one of the leading unmanaged expenses in the SME sector today. It does present an opportunity for those willing to move beyond a transactional view of IT one of price and cutting costs - to a more sustained, business enabling, value adding and long-term profit-driving perspective and strategy. Do not underestimate what you can achieve in other areas of your business in only 3 years, once adopting a Total Cost of Ownership perspective on IT and the value it delivers in line with your chosen business goals, to your bottom line. The results will astound you, and the good news is that it is indeed measurable. Once you realise how central and instrumental IT really is to facilitating customer service, productivity and profitability, the long view on IT becomes much more sensible, and a business-aligned 3-5 year IT strategy more viable and obvious.

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Top-10 IT Mistakes Costing SMEs Fortunes

Conclusion

What we have covered

Because IT is not seen as a profit-generator (while indeed it can deplete profits when offline, or not working optimally) most SME executives fail to identify or prove any business value added by IT to their business goals, discarding any possibility of competitive advantage from IT, meaning it gets relegated to the expense column, where it remains a cash drain. Regarded predominantly as a technical conversation, most executives delegate IT to tech-heads or financial officers more concerned with either buzz words, cutting costs or simply plain keeping their jobs. Consequently, SME owners never get the needed, honest feedback or visibility regarding the strengths, weaknesses, opportunities and threats of IT. As a result, they adopt a kind of If IT aint broke, dont fix IT mentality, making IT difficult to budget for, as the only time money is spent is when something has to be replaced due to lack of maintenance or optimisation, often requiring large investment at inopportune times, further eroding the confidence in IT as a source of strategic advantage. In such instances, purchase decisions get made on price and specification only, often lacking the needed technical expertise or business and financial perspective for the long term, resulting in constant cost reductions, killing productivity and customer service, instead of attempting to lower Total Cost of Ownership, offering a holistic view of IT through its entire value- and life cycle, to produce the results needed in pursuit of your business objectives.
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Bonus Segment Tips on

How to Overcome the TOP 10

IT Mistakes Costing SMEs FORTUNES
and start competing with the Giants AND HOW TO AVOID MAKING THEM

If youve read this far chances are youre interested in more than the problems facing SMEs in IT More specifically, you are interested in the SOLUTIONS.

Top-10 IT Mistakes Costing SMEs Fortunes

Bonus Contents
1. 2. 3.

How to Overcome the 10 IT Mistakes

Adopt a Profit-Centre view of IT Set IT goals, in line with business goals Invest in preventative measures (IT insurance) 4. Reduce variable IT expenses to fixed monthly costs. 5. Diversify your IT Investment & Service Portfolio 6. Calculate Total Cost of Ownership & Cost of Downtime 7. Secure the right IT skills pool - technical & otherwise 8. 9. Measure Return on IT Investment Create a Strategic IT Roadmap for the next 3 Years. 10. Formulate and enforce a clear IT Policy

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Top-10 IT Mistakes Costing SMEs Fortunes

Is Your IT Department a Cost Centre or Profit Centre?

By Avish Parashar Most organizations view IT as a cost centre; a necessary evil that paradoxically helps the business while taking focus away from the real business of making money. IT limits access, forces people to switch to unfamiliar systems to standardize, and pushes for expensive investments in software that others dont want and dont realize they need. You and I may know the value of your IT initiative or software package purchase, but that is not nearly enough. As long as the business views you as a cost centre, you will always meet resistance. Its important to realize that we are talking about perception here. IT will always be on the expense side of budgets. If you work for an IT company, then your contribution to the bottom line may be clearly evident. But if your department is one piece of a large corporate machine that doesnt specialize in technology, then you must prepare yourself for the fact that in a straight bookkeeping sense, IT will be seen as a cost centre. Since you cannot change the accounting, you have to change peoples perception. The more people in your organization who start to perceive IT as a profit centre, the better off youll be.

Tip #1

Adopt a Profit-Centre view of IT

It might be hard to believe that the very first step in turning IT into your weapon of advantage has little to do with technology, business or finance - but instead a paradigm shift - Psychology. Only once youre truly willing to consider a new perspective, will knowledge, skill & measurement present itself. Its really that simple to start with. Are you truly willing to adopt a new view on IT in pursuit of your ultimate goals? Or will you give it up in a month and relegate IT back to the expense column, where most find its fate? Decide or accept today, that IT even though you might not be technically inclined is indeed a centrepiece to customer service, operations and workforce productivity. IT determines to the largest extent how profitably you will serve staff, customers AND suppliers with the most critical business resource of all information.

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Organisational Objectives Bussiness Processes IT Services IT Service Managment Technical Activities

Tip #2

Set IT Goals in Line with Business Goals

Lets explore this by using an example courtesy of ITIL V3 Foundation Kit: Core business: Fashion Store. Business Goal: Fashion Store. Business Processes: Fashion Store. Business Processes: Retail/sales Marketing Manufacturing Procurement Finance HR Critical IT Services: Websites & Intranet Communication e-Procurement Portal Point of Sale Systems

If we dont manage critical IT services appropriately we cannot rely on them to be available when we need. If too many disruptions occur, we cannot adequately support our business processes effectively or efficiently. Used properly, IT Service Management can optimise the time, effort and other resources spent performing technical activities, ensuring that all staff actions are working in accordance to agreed business priorities and objectives. This is just a simple example used to illustrate the relationship between IT Service Management and the organisation. Any approach to improve ITSM practices should always be carefully considered to ensure the plans suit the organisation in terms of: Size: (staff, customers, IT devices) Geographical Dispersion Culture and Ethos IT Maturity & Capability

IT Services must be: What we need (Service Level) Available when needed (Operating Level) Provided cost-effectively (IT Accounting)

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Unified Threat Management Tools to curb IT spending:

1. 2. 3. 4. 5. 6. Firewall Web Proxy Service Web Monitoring Service E-mail Spam Filter Network Monitor Bandwidth Monitor

Tip #3

Invest in Preventative Measures (IT Insurance)

It is estimated in some cases that as much as 25-40% of IT spending often starts from: 1. 2. 3. 4. 5. Unsecure Networks, vulnerable to Malware Unprotected PCs, infected with Viruses Unmanaged bandwidth & network usage IT illiterate staff losing critical work or data Abuse of company email & Internet by staff

According to IDC, 30-40% of internet time constitutes leisure browsing. 60% of online purchases are made during office hours. 64% of staff say they use the Internet for personal interest during office hours 70% of all Internet porn traffic occurs during the nine-to-five work day. 37% of workers say they surf the Web constantly at work. 27% of companies dismissed staff for e-mail/Internet abuse. 65% sited disciplinary action. 90% of staff say the Web can be addictive, 41% surf at work more than 3-hours per week. Around 80% of data crime originates from insiders. 60% behind the Companys Firewall. Most studies show 70% of companies had sex sites accessed using their network. When asking staff Should employers regulate Web access at work? over 60 % said yes. On average, staff spend 21 hours a week online at the office, and 9.5 hours at home 27% of Fortune 500s have defended against sexual harassment from inappropriate email. Proving duty of care toward unacceptable staff activity can minimise potential liability. Chevron faces a $2m lawsuit from an employees email allegedly including sexist content. A company with 1,000 users can lose $35 million annually from just an hour of daily Web

surfing by employees

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Top-10 IT Mistakes Costing SMEs Fortunes

Financial Management - Variable IT Cost Dynamics

Variable Cost Dynamics (VCD) focuses on analysing and understanding the multitude of variables that impact IT service cost, how sensitive those elements are to variability, and the related incremental value changes that result. Below is a very brief list of possible variable service cost components that could be included in such an analysis: Number and type of users Number of software licences Cost/operating footprint of data centre Delivery mechanisms Number and type of resources Cost of adding 1 more storage device Cost of adding 1 more end-user licence. The key value derived from this body of knowledge focuses on more precisely determining what fixed and variable cost structures are linked to an IT service how a service should be designed and provisioned, and what value should be placed on a service. Courtesy of: http://www.itilfoundations.com/

Tip #4

Reduce variable IT expenses to fixed monthly costs

One of the biggest financial headaches for SMEs still remain erratic IT spending bills varying up & down monthly, making IT impossible to forecast or budget for, asking cash injections at inopportune times. This mostly results from lack of visibility on the health status of your systems, services and consumption - with no defined IT strategy, planning, monitoring or reporting. This supports evidence that the majority of IT problems are not technical by nature, but rather strategic, managerial and financial.

How can you fix this?

By spreading & levelling out all IT expenses evenly over the mid-term, in exchange for an IT strategy with measurable IT performance goals, and service improvement plans. (preferably for 2-to-3 years)

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Top-10 IT Mistakes Costing SMEs Fortunes

The 3 Strategic IT Investment Categories:

Tip #5

Diversify Your IT Investment & Service Portfolio...

Starting with what little IT budget you might have currently, one goal for your mid-term IT Strategy will include maximising value & coverage for IT spend, but also adding or expanding systems & services through small incremental savings & gains you realise from current optimised IT, gradually expanding IT budgets for future coverage demand.

1. (RTB)
Maintaining Current Operations Increase Efficiencies

This works exactly like an investment fund, re-investing dividends & interest back into the principle, for compounded returns. As your business grows, so will your demand for critical processes & services IT will support or bring competitive advantage to. This tends to sneak up on you when you do not make it a continuous, incremental effort catching many SMEs off-guard, and asking larger capital investment at inopportune times, if you dont have solid plans in place.

2. (GTB)
Grow the scope of services Find New Customers

3. (TTB)
Create new capabilities Enter New Markets

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Top-10 IT Mistakes Costing SMEs Fortunes

IT Downtime Calculator
Calculating your hourly cost of IT downtime gives you an indication on how and where to prioritise IT spending.

Tip #6

Calculate Total Cost of Ownership & IT Downtime...

One of the vital questions we would ask any prospective client in a consultation is how much it costs them per hour if even one staff members system is offline mostly met with blank stares. If you cant put a value to that, how will you be able to prioritise spending? From experience it would seem 9 out of 10 SMEs do not know this answer, therefore having no foundation for their IT strategy. The four IT downtime cost points include: lost wages, lost productivity, lost revenue & cost of IT recovery. Its fairly simple to calculate. Another question which often goes begging is how much one single staff workstation costs over the entire duration of its useful lifespan? This would include user support, software, licensing, training, repairs, upgrades, power consumption, maintenance & disposal.

Total IT Cost Calculator

Gives you an idea of what you actually pay for a notebook or PC, over its lifespan, allowing better-informed IT purchasing decisions.

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Possible IT Skillsets in demand by SMEs.

Service Roles Helpdesk Systems Admin Developer Security Process Roles Business Analyst Risk Manager Consulting Change Manager Sales Governance Role Team Leader Manager Personality Strengths Analytical Organised Assertive Visionary Leader Personable Patient Creative

Tip #7

Secure the right IT skills pool technical & otherwise

An estimated 1-million tech-jobs remain vacant in the European IT sector, demand far outstripping supply of skilled candidates. On paper there are more than enough certified job hunters, most falling short of the practical skill, business acumen and soft skills marking todays IT Service requirements. Even for a field technician tech-skills are only the entry price. With no communication, business insight or emotional intelligence, such technician will be unable to guide users through the entire lifecycle of modern IT service calls. The IT technician of the future has outgrown the screwdriver-operator stereotype. ITIL now lists the IT engineer skillset in the following order of importance:

1. 2. 3.

Communication Skills Technical Skills Business Understanding

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Return on IT: Real-Options

In IT, investment cycles are long, and technology life cycles are short. How can you be sure to make the right bet? What does the right IT strategy look like? And what is the risk of having the wrong strategy? As we cannot foresee the future, these questions cannot be answered. In fact, they are the wrong questions to ask. The right questions are, How can we adapt to changing circumstances? and How can we measure the value of that agility?

Tip #8

Measure Return on IT Investment

Three steps in taking IT out the expense column and turning it into a competitive weapon is to MEASURE where you are now; FORECAST where youd like to be; then MONITOR progress, until hitting your target. So what exactly would you measure? Financial How much are we spending on IT? What IT Budget do we have available? What is our Cost of Downtime? Operational Whats our ability to recover from a disaster? Are our business processes supported by IT? Do our systems promote or demote productivity? Strategic Scalability of our systems in line with goals? Agility to upscale or downscale? Does IT support our vision?

There continues to be a very important relationship between IT resources and improved operational efficiencies/organizational effectiveness because IT has the most potential to provide new and better efficiencies and effectiveness through IT solutions and applications. However, this is not enough. Competitive advantage is created through organizational agility. It is possible to quantify the benefits of intangible assets, such as organizational agility and IT architectures, through the use of Real Options. Real Options is a relatively unknown methodology, but it can create significant competitive advantage. Using Real Options in putting together the business case for IT initiatives can lead to dramatically different insights and decisions.

Taken from: An Oracle White Paper June 2010 Return on IT: Measuring Agility
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Top-10 IT Mistakes Costing SMEs Fortunes

Continual IT Service Improvement, Measurement & Reporting...

IT Service Strategy Demand Management Financial Management

Tip #9

Create a Strategic IT Roadmap for the next 3-years

With the most important principles covered, it is now time to set some IT goals and map the path. What are the benefits of a 3-year IT plan, as opposed to a 1-year or 5-year plan? Essentially, you want your technology plans to keep pace with your business goals, and your business goals to stay appropriate to your technology. Although there will be a series of shorter goals inside your 3-year plan, 1-year will probably be just too short for making a meaningful, correlated measurement, while in 5-years, your technology might be obsolete. A 3-year plan also offers financial sensibilities. Most IT infrastructure & service agreements can be distributed over this period to offer affordable spread payments without any residual eclipsing its useful lifespan and utility. Refer to the left column, to get an idea of items appropriate for consideration in your roadmap.

IT Service Design Supplier Management Security Management Catalogue Management Service Level Management Continuity Management Availability Management Capacity Management

IT Service Transition Knowledge Management Deployment Management Configuration Management Change Management

IT Service Operation Event Management Request Management Access Management Problem Management Incident Management Service Desk IT Operations Application Management echnical Management

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Top-10 IT Mistakes Costing SMEs Fortunes

Can an employer be liable for cyber-porn and sexual harassment in cyberspace of employees?
By Mr Sizwe Snail, attorney at Couzyn Hertzog & Horak Undesirable and unlawful possession, use and/or decimation of pornographic material and/or child pornography at the work place is a punishable offence for which an employer may summarily dismiss an employee However, the enquiry does not end here as the offender might have sent the indecent electronic material to fellow employees or third parties outside the organisation. This could seriously offend them and exposes the owner of the originating e-mail address to delictual claims for infringement of the employees and/or the third partys dignitas and fama. The possibility of an employee sexually harassing a fellow employee with the aid of obscene pornographic electronic material can also not be excluded and could result in the employer being held vicariously liable in a civil action as the employer has a duty to ensure sufficient measures are in place to prevent sexual harassment occurring at the workplace. Employers should make use of electronic content filters regularly to filter out suspicious and offensive electronic content to avoid its decimation on the local intra-net and or the larger world wide web through any of the employers communication devices. Regular content checks should be carried out and informal disciplinary action should be taken against offenders. Where it is clear that an informal warning cannot suffice, the institution of formal disciplinary proceedings should also commence. Endnote: SP Van Zyl (2006) An Employer vicarious liability with reference to e-mail and the internet De Jure 39 (1), p.127
2012 Numata Business IT.

Tip #10

Formulate and enforce a clear IT Policy

An IT Policy Manual is a staff handbook & contract outlining acceptable as well as prohibited practice in usage of company IT resources, a cornerstone to protecting IT investments and staff productivity. Depending on how central IT is to your conduct of business and the investment you have made in IT to facilitate your business, it is recommended that signature of an IT Policy by all staff, be a basic condition of employment. Without it, you face tremendous risk financially, operationally and legally, and will not be able to initiate any internal disciplinary investigations or legal action, involving private communications. Points of interest include, but are not limited to: Suitability of Information E-mail and Internet usage Privacy and Monitoring Network and Software usage Home and Mobile usage Passwords, Security & Confidentiality Remote IT Support and Service Requests Duty of care

Top-10 IT Mistakes Costing SMEs Fortunes

By simply adopting a Profit-Centre view of IT in your business, as opposed to a cost centre, you can set measurable IT goals, in line with business goals and invest in preventative measures which can reduce your variable IT expenses considerably, and transfer them to fixed monthly costs, with guaranteed IT performance, service and operating levels. Monitoring this helps diversify your IT Investment & Service Portfolio for future growth and IT demand, ensuring that your IT capabilities keep trend with the growth of your business, so you wont need to invest large capital amounts at inopportune times. By calculating Total Cost of Ownership & Cost of Downtime, you are can prioritise IT spending and secure the right skills pool for the best possible Return on your IT Investment. Creating a Strategic IT Roadmap for the next 3 Years can help you with forecasts and budgets, as well as spreading purchase costs and payment over the lifespan of your infrastructure. Formulating a clear IT Policy on top of this, as a basic condition of employment, helps you eliminate any financial, operational and legal risk, helping you protect & optimise your IT investment.

Conclusion

2012 Numata Business IT.

IT Focus

IT Outsourcing and Managed IT Services

Courtesy ITWeb & Business Connexio

A total of 162 people responded to the survey, key demographics for the respondents have been broken down as follows:
Job function and level within the organisation. 28.73% of respondents were either business owners, or belonged to executive management. 32.76% of respondents hold middle management positions. This means that the vast majority (61.49%) of respondents hold middle management positions or higher. Size of organisation.
TechAdvisory.org SME Reports sponsored by

Most respondents work either for small organisations with fewer than 21 staff members (25.29%) or very large companies with over 500 staff members (44.25%).

IT Service & Sourcing Distribution:

Numata proactively handles everything a complete in-house IT department would handle, for a fraction of the cost of hiring even one full-time employee. By giving you the freedom to stop worrying about your technology and focus on running your business, our strategic IT solutions are the key to unlocking greater success. If youre ready to end network downtime and computer problems once and for all, Numata has the solution.
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IT Focus - IT Outsourcing and Managed IT Services

Key Findings
Executive Summary
Service being used most: Managed services, is the service most used, with 29.59% respondents saying that it is used by their organisation. This is followed by hosting, used by 26.63% of the respondents organizations. The third most used service is multi-sourcing, with 15.98% of respondents selecting this. Important factors when considering outsourcing services: Of the factors listed, most respondents saw SLA based services (fit for purpose) as being the most important when considering outsourcing services, with 36.30% of respondents rating it a five (very important) on a scale of one to five. This is followed by cost / potential savings, rated a five by 30.82% of respondents. The third most important factor for respondents was the ability to leverage supplier expertise to improve quality, rated a five by 26.03% of respondents. View on Software-as-a-Service: 34.25% of respondents organisations are already using SaaS. An additional 21.92% are investigating these services. 19.18% have no plans to implement these services within the next six months. 9.59% have no plans to implement SaaS at all. 15.07% of respondents were unsure of their organizations plans regarding SaaS.

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IT Focus - IT Outsourcing and Managed IT Services

View on cloud computing: Most organisations have a positive view on cloud computing with 24.66% of respondents saying that their organisation has embraced it and are acquiring services. An additional 28.77% of respondents say their organisation is considering applications for the cloud. 19.86% of respondents say that on premises ownership is still preferred. 4.79% of respondents are reluctant to adopt due to security issues and an additional 7.53% of respondents organisations are reluctant to adopt it due to other issues Most favoured deployment model: A hybrid cloud is the most favoured deployment model amongst respondent organisations, with 34.62% of respondents selecting it. This is followed by own private cloud, selected by 23.08% of respondents. Private cloud is next selected by 21.54% of respondents. Only 6.15% of respondents indicated that a public cloud model was preferable. 14.62% of respondents indicated that they were unsure as to which model; was preferred by their organisation. Services most likely to be put in the cloud: The top three services that organizations are most likely to be put into the cloud are: E-mail, selected by 70.00% of respondents Service desk, selected by 48.46% of respondents CRM, selected by 47.69% of respondents Security was the service least likely to be put in the cloud, selected by only 28.46% of respondents.

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What can Managed IT Services include?

Guaranteed IT Support Response Unlimited Remote Technical Support Proactive Network Maintenance Desktop Monitoring & Reporting Server Monitoring & Reporting Network Monitoring & Reporting Asset Management Patch Management Anti-Virus Help Desk Facility Onsite Support Managed Data Backups IT Preferential Procurement Plan Software Licensing and Management Warranty and Supplier Management Virtual CIO Services IT Policy Formulation & Enforcement IT Advisory Services IT Cost-Accounting Unified Threat Management Strategic IT Planning and Reporting IT Compliance Services Consulting Services Project Management Infrastructure Analysis IT Investment Management IT Service Portfolio Management Many more

What is Managed IT?

Managed IT Services are delivered by Managed IT Service Providers (MSPs) to companies of all size & industry whether you employ 5 or 5000 staff connected to a computer network, enabling partial or full IT outsourcing on a subscription pricing model with benefits extending well beyond the scope of traditional IT departments or outsourced IT companies . Besides the technical aspects to IT, Managed Service Providers sometimes offer upgraded financial & management capabilities that can turn IT from a cost, into a strategic weapon so you can rival large companies without the cost, risk or complexity of managing IT in-house. A useful analogy to help understand the difference between outsourced IT, in-house IT departments, and MSPs, would be the difference between an accountant and a chartered accountant. Both can perform the technical task of bookkeeping, but the latter offers greater business insight & value. Now imagine if you were able to rent a chartered accountant full-time, for a fraction of the cost to company, of a normal accountant. This is the principle of Managed IT Services. Managed IT Services is a fresh approach in managing IT, especially useful to SMEs. You can almost see it as renting an IT department with access to IT services only Corporations would have previously, yet at a fraction of the cost, risk, effort & staff management hassles. Conventional outsourcing IT companies only make money if your systems are down billing you per hour for

2012 Numata Business IT.

IT Focus - IT Outsourcing and Managed IT Services

What can Managed IT Services include?

Guaranteed IT Support Response Unlimited Re

support. Managed IT Services are beneficial to both the client and the provider, almost working on a profit-share basis. The pricing model is constructed so that both you AND THE PROVIDER lose money, when your systems are down or not working optimally further incentivising partnership, uptime, reliability, productivity and efficiency. The Managed IT Services offering provides customers a virtual IT department managed remotely from a NOC (Network Operations Centre) with remote control technology meaning all maintenance, repairs, monitoring & support of your systems & users happen online, without any engineers needed onsite drastically reducing your staff, infrastructure, support, maintenance and downtime costs. Just as mission control on a space station can launch, navigate and place a satellite into orbit or perform diagnosis & maintenance at the click of a button from earth, without needing to man the shuttle, so a Managed IT Service Provider can dial in, access and take control of your entire computer network and any device on it, right down to the serial number on your hard drive, through a single internet link and management software without having to be located at your business or network physically. This eliminates time wasted in waiting for IT technicians to arrive onsite, and their need to charge call-out fees, travel and other expenses. Does this pose any security or privacy threat? What about sensitive data or communications?

2012 Numata Business IT.