Saturday, January 10, 2009

The BIG day didn't come

Right up to the final day I was in the office before the holidays, we were working on this deal. The end result was we deferred making a decision because the numbers didn't make sense and it didn't feel right, yes making the right decision is part gut feel and not just a hard numbers game.

Here is a bit of detail on what we are looking at doing and why it didn't make sense

Heart of the deal

After many revisions what we were looking to do is revamp our infrastructure as our lease had come due after 36 months, our typical leasing term.

The resulting solution has gone from an Intel server (yes you read that right), to a SAN with blades and multi baby power systems from IBM including 1 model 520 i system, to the end result after a few product announcements to a 8 way IBM i to continue the path we have travelled with Linux LPARS and AIX on the box because the VIOS hyper visor controls virtualization and not the i5 OS which has worked for us in the past but been fraught with performance concerns. It also included a N series SAN from IBM with 4 Intel servers, 2 task oriented and 2 large virtualization boxes using VMware plus network enhancements with large cisco boxes on the top of the network stack adding 1GB to the network and POE capabilities.

That is the bulk of it.

What about virtualization?

The i box from IBM would of course do virtualization with i5OS, AIX, and Linux in the mix. The large intel based X series boxes from IBM where of course going to use VMware for intel based linux and windows virtualization.

Is SaaS really outsourcing by another name?

In short I say yes. But let me clarify that although I believe that that it does have its place in today's business. For the last 2 years our US division has used a vertical solution for that part of the business with great success. Sometimes it seems we get caught in a flurry of past success and perhaps start to assume that maybe it works in other cases.

Part of the journey I have been traveling is the detailed analysis on not just 1 solution but multiple, some at my bosses (I have two folks I report to in parallel) request, and others at my own desire to change the way we do things.

In the end the overriding decision was that to consider the primary role of the software for our Canadian division and evaluate the vendors newer SaaS based offering for the same software. The financial analysis said that currently I run the operation at about 1/2 the cost they offer their service at. But be clear when evaluating SaaS it isn't just about cost. The solution has to be looked at in relation to many things, let me give you an example of our first analysis a few years ago:

- The vendor we had was not responsive, The SaaS vendor appeared to be responsive

- The software was old and behind the times, vendor had no clear direction; The SaaS vendor had a modern application and as we discussed emerging compliance issues they had answers.

- We were missing tools that customers wanted; The SaaS vendor had the tools and potential clients agreed to do business with us if we acquired that solution so they could use it.

In short the decision was strategic and not just financial. As I said 2 years later we were right and we are glad we did it.

So back to my story on the BIG decision. It wasn't strategic, what it was changing the location of where you run the application. In the end it wasn't a starter even though by current estimates we are or are close to being the only customer still running it on their own hardware, that is a risk and one I am watching very carefully because that can become strategic if things change.

But as I said this wasn't a one horse race. I have also looked at and made recommendations as part of this whole deal on other things;

> Moving our email front end security and filtering to Webroot over Google for many reasons besides cost., currently we run that a virtual linux partition. Missing is GUI front end, sphere of control, Archiving and Discovery Tools, and Web based DR site capabilities, not bad for a single bundle.

> Moving our traditional edi processing to vendor side, I save $1700/month in trouble shooting labor a month and he charges only $700 more for that. I redeploy the labor to other tasks so that isn't a real saving but the impact was enough to consider to off load work.

> Moving to for web based top notch customer service/help desk solution

In the end all that along with the storage in the SAN, Network Upgrades, some education and other items didn't create enough of a business win to justify the increase in cost of a lease to cover those items. We are reviewing the whole deal quarterly through 2009 and if the economics change for the better or I can create greater corporate value for the deal we will make the change.

Now like everyone else, I have to work with what I got in 2009 and do more with less, ah well

Thanks for listening . . .

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