Essential Technology: A GCS Blog

A recent project has forced me to analyze two cloud computing providers - Terremark and Rackspace. In this post I'll discuss my analysis of the two services and use a recently completed Private Cloud project to provide cost comparison.

Terremark's Enterprise Cloud service fit the needs of my client best. This is a fully virtualized environment that completely divorces the client from hardware concerns. The Enterprise Cloud enables rapid deployment of Virtual Machines. All management services from the OS up and managed by the client.  It consists of HP ProLiant servers with a 3Par SAN. Redundant firewalls and load balancers are included in every package. All equipment is shared. Virtualization is performed using VMWare ESX 3.5. Server management occurs through a web application and includes many tasks that you would find in VMWare's management tools. Terremark offers packages at fixed Ghz and GB or RAM (entry is 5Ghz and 10GB RAM). You then add storage, backup and bandwidth. There is no incremental charge per VM, only for the resources it consumes.

Rackspace's Platform Hosting takes a different approach. They supply a mix of dedicated and shared resources to create a similar environment. Firewalls, load balancers and servers are dedicated. SAN resources are shared. Rackspace allows access to the VMware infrastructure tools so all functionality is exposed. Rackspace's price plans vary based on hardware redundancy and resources required.

Some interesting points:

• Terremark offers technical support 12 hours per day. Rackspace's support is 24/7/365.
• Terremark is hardened to withstand a CAT 5 hurricane. Good thing since they are based in Miami.
• Pricing favored Terremark by 25-30% when comparing environments with similar features.
• Network configuration is limited at Terremark. There is a maximum of 4 VLANs.
• Both solutions offer use of existing licenses or their hosted licenses
• Neither were excited about voice applications due to QoS concerns.
• Rackspace does not offer a backup service in the Platform Hosting option. Backup will require a dedicated server and regular offsite downloads.
• Rackspace included 6 TB of download and unlimited upload in their base plan. They claim it was the equivalent of 20Mbps sustained for the entire month.

Honestly I'm afraid I have to end this blog post by changing the name to a braindump. I am beginning a 30 day demo with Terremark immediately. I will continue to assess the two providers and post the information here. Look for follow up posts soon.

Wikipedia?! Check out the article here. My only complaint is that I wasn't able to locate the Show Desktop button. That's because its not labeled with any visual indicator. Find the clock, go right about 5 pixels and hover. Viola! Transparency. Now add some gadgets to your desktop so you have a good reason to use that again.

For most users that skipped Windows Vista, the search features of Windows 7 will be an eye opener. I've been on Windows 7 for about two months. In those two months I have given up on browsing for ANYTHING. Search is faster, more accurate and grabs results that I didn't always expect (a newer version, etc). Search is much faster than browsing my start menu which is overloaded with dozens of apps. If I want to start OneNote, i just start typing One... and it filters the Start Menu for me.

More interesting are some of the advanced search features. WinExtra demonstrates extending the Windows search to automatically pull results from Twitter. The business value of Twitter may be suspect but integrating search to third party services is a heck of a feature.

The Xilocore offsite backup solution came recommended from another VAR out of state. When I saw them at the CompTIA Breakaway Summit I made a point to spend some time at the booth. If you're not familar with Xilocore, it serves the same purpose as an offsite SAN replication of VMs and data without needing the offsite SAN, servers, data center, firewall, bandwidth, etc. An onsite appliance is installed that makes a local backup and then replicates the data offsite. In the event of a server failure you can run the VM on the Xilcore box locally. If a more serious or prolonged outage occurs, Xilocore can stand up your VMs at their data center and provide Citrix-based access to those servers. Turnaround times are offered at 24 and 48 hour intervals.

I looked at this solution in comparison to a proposal I was working on that featured offsite SAN replication with offsite server hardware for DR. This was a Hyper-V platform with System Center Management Suite (including DPM). Xilocore had a compelling offer but this client already had collocation, an MPLS WAN and gobs of spare hardware coming after the virtualization project completes. Though not a fit for this client, I'll circle back and investigate more on upcoming opportunities. I'll be sure to post the outcome.

Reluctantly, I've become a big fan of Avaya's IP Office product. My early impressions of this product were not favorable. However it's mobility and remote connection features have developed into best-in-class features. The IP Office has always been very reliable. Finally, it is price competitive from ten - several hundred handsets. The IP Office is getting even better with the impending release of the 5.0 software upgrade. What's new in 5.0?

Failover: IP Offices can now failover between switches either geographically or within the same location. This is only supported with IP handsets.

Exchange 2007 Integration: Voicemail integration is now supported.

Web Based Telephony: Many users that previously relied on Phone Manager Lite will be able to access similar functionality over the web.

Conference Bridge: The conference bridge can be upgraded from 64 ports to 128 ports.

Small Community Network: IP Offices can now be installed at up to 32 individual locations and networked for 3 or 4 digit dialing between locations.

SIP Endpoints: Though I'm sure this feature has been heavily requested its impact on the market will be negligible. Additional licenses are required per SIP handset. Avaya's 16xx handsets rival SIP handsets in price, do not require an additional license and provide more features.

Licensing: Avaya has simplified the licensing by bundling user and phone switch licenses by user type. There are now three types of switch licenses. Essential uses the Embedded voicemail, which now includes Dial by Name directory. Preferred adds Voicemail Pro functionality. Advanced bundles call center reporting, recorded call management, conditional call routing and more. In addition to the switch licenses there are six types of user licenses - Mobile Worker, Tele Worker, Power User, Receptionist, Customer Service Agent and Customer Service Supervisor. Mobile Worker is essentially for remote extensions without any telephony or handset use. Tele Worker includes all licenses for remote IP phone or telecommuter access. Power User bundles Mobile and Tele Worker licenses. Receptionist adds the soft console application.

Support: IP Office 5 is only supported on the 500, 412 and 406V2 switches.

Anyone who has ever had to sit through the video of the lions chasing the gazelles in the African safari will appreciate this video. Verne Harnish, CEO of Gazelles, Inc.,  opened up his presentation at CompTIA's Breakaway Summit with a twist on that video:

Perhaps I'm on a 'failure' kick, but that word will appear heavily in this blog entry too.  What do you think are the most common design or management failures of a business network? Trends have developed through assessing hundreds of different networks from 1 to 1000s of PCs, Here is my list, in order of severity and also expense:

1) Data Backup: Is this surprising? I regularly run across companies that don't have a functioning backup system. Most of the companies have invested thousands of dollars into these non-functioning backup systems. Backup failures are split pretty evenly between design (never could have worked) and management (might have worked before).

2) Security: Does everybody in the office share the same password? Or maybe your file permissions allow Full Control to all users? If not, those than your users share accounts to access critical data. All of these and much, much worse are common.

3) Over-Spending: Sad but true, wasting money ranks #3 on my all-time failures list. Overstaffing is easily the most expensive form. Excessive hardware, unused licenses, and 'managed services' are all common budget busters.

4) Licensing: Though much improved in the last 10 years, licensing comes in at #4. Even small businesses can own a large number of licenses with various contract terms, quantities, installed locations, and versions. Figuring out what is owned can be surprisingly difficult. The Business Software Alliance campaign that awards $50,000 to those who turn-in an employer should make every owner think twice.

Many a technology implementation has been derailed by poor project management. In this post we'll look at some common failures of technology project management.

NOTE: This is the first article where I am specifically opening the kimono a bit. This should be an internal-only distribution but, frankly, that's stupid. For a little biz like GCS we're far better off spreading the word far and wide. We're a learning organization and tomorrow is another learning opportunity. A new PM is starting and needs to gulp down all of our accumulated knowledge while hitting the ground running. The failures listed below are the three most common failures of a GCS project.

 Failure #1: Communication

While hardly unique to technology PM, communication lies at the root of most project failures. With technology the communication must be more detailed, more repetitive and more direct. More details are required because the subject is so foreign to many of the recipients. More repetitive because recipients will not allocate the time required to understand the projects goals, benefits or requirements. More direct because 'I Told You So' is the only defense of a PM stuck between a successful project and an upset user.

Failure #2: Training

What percent of users attend 'mandatory' technology training in most organizations? Far less than half. And it is rarely those knowledge workers and executives most affected by the technology changes. The 'I Told You So' defense works less well in this area though. A user unable to use a system can't avoid the need to go to training. The training will have to be conducted with that user, typically at greater expense in a one-on-one method, to accomplish the project's goals.

Failure #3:  Hardware Specification

The level of complexity in a modern network implementation is the only reason cloud computing may gain a foothold. Is the variety of PCI bus types (PCI, PCI-X, PCI-E, PCI-64) really required to accomodate the very limited number of peripherals attached to a server? If that's the case why is every card available in every bus type? And then we're mixing SATA and SAS, internal and external with a cool dozen different connectors?

Failure #4:  Documentation

The easiest task to postpone is without a doubt the most costly. Failure to document dramatically increases the long term cost of support and maintenance. And though any documentation is better than no documentation, thorough documentation can take 2-5% of the project's hours.

The solutions to these failures? I hope they're obvious. None of these issues are too complex. If you want solutions, you'll either have to pay us for it or wait for a future blog post.

Windows 7's official release is imminent. Business Technologists must decide if they will deploy this new OS. Here are my official recommendations that are being made to my clients.

A Change is Required: Windows XP will not live on forever. Driver support is already waning. Technical support, including security updates, has a limited lifetime. If you have not transitioned to a 64 bit OS increased memory capacity for high end users will drive that conversion.

Users Will Love Windows 7: Most users are both technically uninformed and fickle. Vista's increased hardware requirements made it appear slow to most users. Windows 7 will not have the problem. It is aesthetically pleasing, fast and provides more efficient navigation. Users will love Windows 7 for the same reason many like Macs at home.

New Features: Can you quickly name the new features introduced in Windows Vista? Probably not, even though there were several great improvements. Windows 7 builds on that success with an even broader array of features including App-V/Med-V, Branch Caching, AppLocker and more.

If not 7, then what? Windows 7 will be the best option for the vast majority of PCs in the world. Linux desktops can't crack more than a few percent of the business desktop market. Mac OS X still lacks many network features and requires a new skill set for most IT departments.

Look forward to more posts concerning Windows 7 in the near future.

As a business asset the typical network infrastructure is valued at investment less depreciation. All design, installation and configuration costs are written off immediately. Is this a fair assessment of the value of the network?

On Forbes.com today a model for assessing the value of public/social networks is presented. They postulate that value of a network is "the net value of each user's transaction summed up for all users."  Can the same valuation be applied to business technology systems?

For many social networks the business IS the technology. You can't separate Facebook or Twitter from the application and infrastructure behind them. They are completely integrated. Can the same be said to modern business technology systems?

Most modern businesses can not function independently of their technology. Business processes have been defined, human resources selected and prices have been set based on the use of certain technologies.

So what is the value of a business's network? If $10 million of annual sales is 1) sold on Blackberries, VoIP handsets and email, 2) delivered using MS Project with parts procured on the internet and 3) accounted for on Dynamics GP (Great Plains) than "Beckstrom's Law" places the value of that network at the net earnings on that $10 million dollars. At a net margin of 7% - 10% that is $700k to $1 million dollars.

Why is this important? A $10 million dollar service company likely has no more than a $250,000 to $400,000 investment in technology. That's not a bad ROI.

Today launches a series of posts targeted at new businesses including boot-strappers and those with more financial resources. I'll review the many technology tasks required to launch your new business from selecting an accounting system to building out your first office. I'll talk about options you have at each stage and when it's appropriate to consider the more expensive options.

Password List: Before you do anything else download and use PasswordSafe. Many of the tasks below require you to setup new accounts. Most businesses lose this account information in the first months of operations and waste hours of time later proving they should have access to the accounts.

Domain: Acquiring a good domain name is a challenge as most of the prime domain names are no longer available. Find a detailed discussion about choosing a domain name here. A low cost provider, such as GoDaddy, offers the same product with a fine level of service. Do make sure that if someone is buying the domain for you it is registered in your name. Use an email address that you WILL ALWAYS have access to. This is a common frustration for young companies.

Email: Most companies begin life with a low cost form of email known as POP3 or rely strictly on a web-based provider. Hosted Exchange and Google Mail offer far superior options to regular POP3 email with relatively similar costs. Hosted Exchange is available from many vendors. You'll get better mobile device support, improved email/calendar/contact sharing and reliable data backup.

Telephones: Who needs a phone anymore? You will. Relying on cell phones becomes an extremely expensive proposition. While undoubtedly the tool of choice early on you will need phones on desks before too long. Hosted Voice over IP solutions have highly variable call quality, advanced feature sets and high recurring monthly costs. An in-office phone system is the choice of most businesses once they reach five or seven employees. Modern systems, such as the Avaya IP Office, offer advanced integration to mobile devices, telecommuters and remote employees. Advanced functional needs such as call center, call recording or specialized auto attendants may demand a phone system before staff capacity does.

Website: For a few thousand dollars you'll get a basic marketing page advertising your business. This should include several unique pages, a custom design and some ability for you to change site content without calling the design company. Expect to have to generate the text yourself.

Website Hosting: This will probably be provided by your design company. Expect to pay $15 - $30 per month for basic level hosting. Advanced sites featuring high traffic volume,
e-commerce or custom development may have hosting costs of a few to several hundred dollars.

DNS Hosting: DNS hosting is rarely mentioned by hosting companies other than they'll provide it. Many hosting companies, ISPs and technology service providers have low quality DNS systems. If DNS fails it will affect your email, website, remote access and more.

It is especially apparent at this late stage in VoIP adoption just how far off some early VoIP predictions were.  The mobile, free, ubiquitous connection that early VoIP proponents espoused is only marginally closer than it was 10 years ago. In fact today the generation-old PSTN provides more of these features than modern VoIP systems.

The remote VoIP handset still suffers many problems. Without point to point connectivity QoS can only be ensured at the endpoints. As many Vonage subscribers can tell you, this leads to dropped calls, distorted voice and static. Many vendors still require VPN connections between sites for these remote handsets to 'function.'

The Avaya IP Office has supported remote VoIP handsets, with an embedded VPN  client, for years. Recently they have improved their mobile solutions with 'old' technology - the PSTN and mobile phone network. New telecommuter features allow a home phone (PSTN, or otherwise) to receive calls directly while providing advanced telephony features through a remote connection to Phone Manager Pro (Avaya's premium telephony app). Great quality, advanced features and very reliable - that's tough to beat. In addition the Twinning functionality supports multiple endpoint connections. Call my DID to ring both my work phone and cell phone. By pushing the call across the 3G network I get a very good quality call that can reach me through my DID. Neither of these advanced voice features require an IP connection (excepting the remote connection to Phone Manager Pro).

Where is VoIP a fit? That might be the next blog post!

A new opportunity has forced me to look into virtualizing some or all components of SBS 2008. Up until our virtualization practiced has focused on opportunities a bit larger. I'm in a competitive bid situation and need to save some hardware costs from an onsite implementation.

Here is Technet article that reviews this scenario: http://technet.microsoft.com/en-us/library/dd239207(WS.10).aspx

The key points:

• SBS 2008 Premium includes 2 Windows Server licenses. You may configure this with Windows, Exchange and AD on the first box. The second box can be a Windows install with the Hyper-V role. You can virtualize another instance of Windows, on the second server, to host SQL Server.
• Microsoft also supports installing both SBS servers into VMs on one physical machine.
• It is supported to run a DC as a VM on the second box with some caveats.

And a few reminders:

• SBS 2008 reduced the maximum number of users to 50, from 75 in SBS 2003.
• SBS 2008 is 64 bit only installation. Virtualization is an excellent way to offer support for non-64 bit printer drivers and apps - such as Blackberry Professional.

Obviously the benefits of using virtualization in small deployments is limited and may add unnecessary complexity. By eliminating a server from my design specs I was able to shave about $3500 from a $15k deployment!

In this final installment on this round of M&A, I'll focus on preparing for the transition. These tasks can simplify the integration process while reducing your organization's risk. Click to read Part I and Part II.

User Security: Internal employee abuse is a major risk. Many unknown new employees will have access to your network and data. An aggressive computer monitoring solution can mitigate those risks. Logging all user activity tends to improve behavior on network systems. Improved behavior minimizes employment risks, such as sexual and racial harassment. Logging also deters intentional damage to your systems. Security cameras and door access control installations can add an element of protection to inventory and company assets. Door control systems allow you the ability to terminate an employee's access to buildings or areas instantly and completely.

User Limits on Technology: It is likely that your existing technology infrastructure has a user limit near your current utilization. Most technology vendors offer heavy discounts to small and mid-sized businesses. These discounts are removed at fixed employee increments. For instance, Microsoft no longer considers a business "small" after 50 employees. You may find that as you grow employee count, the per-user technology expenses increase substantially and suddenly. Investigate technology costs of the combined organization prior to the acquisition.

Accounting Security/Auditing: Quickbooks and other basic accounting packages offer limited user security within the application. Transactions such as invoices and purchase orders may be deleted. This leads to two of the most common forms of employee fraud. In the first, the employee erases invoices to steal the payment. In the second, fraudulent POs can be erased allowing the criminal to steal the ordered goods. Advanced accounting systems prevent this abuse and allow more granular security in user rights.

Accounting Transaction Limits: Every accounting system has transaction limits after which performance and reliability erode. There is a dramatic difference in the transaction limit and overall price of the first tier of accounting applications from the second tier.

Chart of Accounts Organization: As the complexity of your chart of accounts increases, you should consider a more advanced accounting package. One benefit of high-end solutions is advanced chart of accounts capabilities. Many can also manage multiple, independent organizations in a single database. This has been the mainstay of the oil and gas industry as well as other investment management organizations for years.

IT should have a prominent role throughout the M&A process. Not engaging them early enough presents significant financial risk.

In the first part of this series we started looking at the technical assessment process that IT should undertake prior to any M&A activity. In this second part we'll look at a some common financial risks which may escape some executies.

Non-Technical Assessment

Off-balance sheet leases: Equipment leases on computer networks and phone systems are very common. Leases allow the buyer to keep the liability off of the balance sheet and may be overlooked on the expense register. The most common lease, a Fair Market Value lease, has a balloon payment due at termination usually 36 to 60 months after purchase.

Telecom Contracts: Many companies go several years or more between negotiating telecom contracts. These companies can pay thousands of dollars per month too much. The company may be locked into long term contracts from 36 to 60 months. These services may be wholly incompatible with your needs. Termination fees are often the remainder of the contracted balance.

Microsoft Licensing: A popular Microsoft licensing method called Open Value requires the buyer to make three annual payments. It may not be easily recognized as an annual recurring transaction. This annual fee can easily exceed $50,000, and in some cases $100,000, in businesses with less than 100 employees.

Out of Support Technology: If equipment is out of manufacturer's support, it is prohibitively difficult to source parts. It is impossible to engage the manufacturer, which is often times required for assistance. Expect to replace or procure spare parts for all out of support hardware. Businesses that are good targets for acquisition will frequently postpone required hardware or software upgrades.

Usually IT is the last to find out about about a merger or acquistion. Most execs utilize the "We're already doing it so now make it work" mentality.  As any IT Director or IT Manager knows, technology costs represent a significant expense during acquisitions and mergers. Failing to anticipate these costs can significantly affect valuation models and cash flow projections. Execs have to engage IT during the assessment phase of M&A. To help with that goal I have created a three part series to help IT Directors and Managers prepare their systems for an acquisition or merger, assist with assessment of M&A targets and maximize the resulting business value of merged IT systems.

Assessment:

As the IT Director or Manager, you must participate in the financial modeling that the executive team is using to evaluate the merger or acquisition. Consider at least these major cost components:

Platforms: Even within niche markets there are a variety of technology platforms in use. Mixing platforms can increase the initial costs of integration and/or the recurring cost of support. Your Microsoft stack is not going to work with OESNetware without a significant amount of expense. It is not uncommon for organizations to run parallel systems for years after an acquisition or merger due to this cost.

Wide Area Networking: There are many types of connectivity used to link remote sites with other offices. Most are incompatible with one another. Assume a replacement of all firewalls and routers within the acquired organization.

Phone System: Most businesses merge their phone systems to accommodate new locations and offices. This almost always means throwing away one or more of the systems. Replacements can range in price from $7,000 for small remote offices to $100k or more for large sites.

Historical Access to Data: A major component of integration costs is integration of historical data to new or merged systems. It is much cheaper to have a "day forward" strategy, incorporating only new transactions into merged systems. This strategy's success depends on retaining the functionality of old systems for strictly historical data access. This generates substantially higher support costs, but defers major upfront expense.

Check in again for the next installment as we continue this topic.