Quick Takes for the Week of August 17

August 24, 2009

August 21: Of course, nobody knows the fate of healthcare reform. But any overhaul to the system would be great news for the IT industry in general and the BI sector in particular, according to Forrester Research principal analyst Boris Evelson. He begins this InformationWeek piece with a look at what is wrong with modern IT and describes the role BI can play in the solution.

August 20: It’s an unfortunate reality that print newspapers are stressed to the point of breaking and need all the help they can get. This press release is interesting in showing how BI can help even this old and staid industry improve its prospects. The claim is that Alterian’s integrated marketing platform – which includes targeted segment analytics – has helped the Milwaukee Journal Sentinel increase its direct mail subscriber acquisition rate by 36 percent and cut expenses by 41 compared to last year.

August 19: SearchCIO-Midmarket.com offers an exhaustive and well done look at the current state of BI deployments. The story focuses on the Montana State Fund, TiVo and the Grafton School, a healthcare non-profit. The bottom line seems to be that much progress is being made, but that much remains to be done. Says writer Christine Cignoli: “[Companies’] road to nirvana — stores of clean, rich, integrated data accessed easily by those who need it — is a journey that’s barely begun.”

April 17: Larry Zagata of MiPro Consulting uses this post to discuss the best way approach to business intelligence requirements gathering. The key, he says, is to take a deep look at the business processes involved and identify key questions raised by those processes. Zagata illustrates with an example in the packaged goods/retail sector.

–Carl Weinschenk

Written by Carl · Filed Under Uncategorized | Leave a Comment

Quick Takes Archives

April 24, 2009

Previous Quick Take columns:

Written by Carl · Filed Under Uncategorized | Leave a Comment

Five Minutes of News: LogiXML, Virginia and the Stimulus

March 18, 2009

Editor’s note: This podcast, one of an ongoing series focusing on significant news in the business intelligence and related sectors, focuses on a deal between LogiXML and the state of Virginia. The press release follows the podcast link:

Listen to the Podcast:

LogiXML, Inc., the leader in purely Web-based, truly unified Business Intelligence (BI) dashboard, reporting, and analysis solutions, announced today that the Commonwealth of Virginia has employed its product in support of President Obama’s recently passed Stimulus Package. The Commonwealth of Virginia launched an interactive web site which went live on Monday, Feb. 16.

Created using Logi Info, the site reports project ideas submitted by citizens wishing to weigh in on how Virginia should use federal stimulus dollars and has generated a great deal of interest both within and outside of Virginia. “Several other business intelligence software vendors called us offering to help us create a site,” said Kathy Graham, the Commonwealth’s Business Intelligence Competency Center Manager, “but we had to tell them, it’s already done!”

In August 2008, LogiXML was awarded a contract by the Virginia Information Technologies Agency (VITA), allowing agencies and public bodies within the Commonwealth of Virginia (and other public bodies outside of it) to purchase licenses, support and services for LogiXML’s signature enterprise-grade business intelligence solutions. The contract, which includes five optional one-year extensions at the end of the initial 5-year period, provides the Commonwealth with the complete line of LogiXML products and support services, including an enterprise-wide license option available to Virginia’s executive branch agencies.

Podcast: Reimagining the Datacenter

September 8, 2008

The transformation of the data center is gradual and evolutionary. Rich Lechner, the Vice President of Marketing & Strategy for Enterprise Systems at IBM, says that the transition–which eventually leads to dynamic and agile data storage infrastructure and flexible management tools–impacts people, process and technology. It all begins with an assessment of pain points by IT, finance and the rest of the organization.

Written by Carl · Filed Under Uncategorized | Leave a Comment

CFOs and CIOs Should Work Together on Licensing

August 8, 2008

Today, the role of the CIO has been elevated to that of executive management. Obviously, expectations for IT are on the rise. Unfortunately, CIOs are frequently set-up to focus on the wrong things and tackling the impossible - anywhere from building on an infrastructure that’s older than Methuselah to struggling with a shrinking budget against the needs of a growing company. What CIOs should be focusing on is governance, oversight, perception and cost control.

The role of the CIO in partnership with the CFO: Often, the CIO is balancing budget against technology priorities. In many cases, IT goals are met and completed based on the company’s business priorities. Not surprisingly, the most profitable divisions get the most attention and a larger share of the budget, creating a challenge to meet the IT needs of other groups. The insightful CIO will understand that the key to success is to become a strategic partner with the CFO and, ultimately, part of the executive management decision-making process.

Aside from the accounting and financial software being in good working order, most CFOs won’t understand the intricacies of what IT investments are needed. This should be no surprise as most people only care about the fact that technology is working. However, if you talk about budgeting, cost savings and performance metrics, you bet the CFO will pay attention.

Why should a CFO care about software licensing agreements or service-level contracts?: Companies will spend nearly $160 billion on software purchases this year with an additional $100 billion-plus spent on enterprise software maintenance costs including licensing fees. That number will grow to $137 billion by 2010, representing nearly half of software vendors’ revenue, according to IDC. Software maintenance fees are approximately 20 percent of the original software purchase price and can easily exceed the initial enterprise software purchase in a short period of time. With those numbers, how can the CFO not participate in vendor contract discussions?

By inviting the CFO to participate in the negotiation process, the CIO can essentially accomplish four goals:

Eliminate the IT paralysis-analysis that happens when the CFO and CIO are at opposite ends of the playing field in terms of budgets, IT investments and priorities.
Strengthen the alliance between the finance function and technology operations.
Help drive governance, which is often managed and approved by the CFO and driven by IT assets in the background.
Create a greater understanding of IT finance, overall, and the challenges faced by the CIO

Prepping for the negotiation process: When negotiating (or renegotiating) a software licensing agreement, it is best to walk in with a strategic plan and specific roles for both the CIO and the CFO. There’s some prep work that needs to happen before software vendor discussions begin. Much of it will be accomplished by the CIO:

Conduct an internal audit because what you don’t know will cost you. Companies are usually over-licensed or under-licensed. Either scenario is not cost-efficient. Increasingly, software vendors are auditing companies, specifically to ferret out non-compliance issues. If you are out of compliance, there can be hefty fine - anywhere from hundreds of thousands to millions of dollars. Companies are only beginning to understand the impact of software vendor audits. Adobe, Microsoft and Oracle are three companies that audit frequently.
Understand the business objectives and corporate priorities. By understanding the big picture, the CIO will have the ability to deploy the right applications with the correct amount of licenses over a period of time. This information can lead to cost savings during the SLA negotiation process. Failure to understand where the business is going – short- and long-term – will lead to nonessential purchases of software and licenses, resulting in thousands of dollars worth of “shelfware.”
Understand your software license vulnerabilities. Establish a repository for software asset management. You may want to consider implementing a discovery tool to identify what software is installed on which servers and desktops. In addition an automated database and applications management program will maximize intelligence and flexibility, while feeding assets management data into the repository. On an ongoing basis, the IT organization should monitor the enterprise regularly to identify changes.

Finally, as a last preparatory step, the CIO and CFO should work together to strategically plan out the IT budget and agree to earmark specific funds for IT vendors. At this meeting, there should be a discussion on the IT planning process, metrics, and a review of vendors and contracts.

Negotiating the complex world of software licensing and maintenance: So you’re sitting at the table ready for negotiation. Here are some tips on how to negotiate the complex world of software licensing and maintenance, while mitigating the risk of software license compliance:

Don’t be seduced by seductive discounts. Before you walk into the meeting, remind the CFO that there is more to IT contracts than a 20% discount. Though you may seemingly end up with less of a discount or even spending more, you won’t be left with excess shelfware.

Build flexibility into your SLA. In some cases, an enterprise might not want to buy licensing for more than a six-month period as priorities change. In other cases, negotiate a long-term, multi-year contract, but make sure you have the ability and flexibility to work with the software vendor to make changes in licensing seats and modules during the length of your contract as IT needs change.
Avoid purchasing “pre-packaged” discounted SLA’s, which will (again) give you unused licenses across the enterprise. If you look at the total cost of ownership of shelfware, those are wasted dollars. Don’t make empty threats about replacing the enterprise software. It is unlikely to happen due to the great expense and resources needed.
Maintenance and Support Costs: The average spending on maintenance and operations is up to 80% of all IT spending, according to Forrester. Take a close look at your existing annual support costs. Many companies have support costs for products that they aren’t even using!
Once you sign the contract, keep track of all licenses, rule changes and internal developments. The office of the CIO should review performance quarterly and continuously manage software assets.
Working closely with the CEO and CFO, the CIO should ensure that IT has kept up with corporate changes and is still aligned with the company’s objectives. By working closely with the CFO during these changes, there will be a growing understanding of the resources – both financial as well as human – needed to accomplish projects.

Software licensing and pricing is still too complex and costly, according to the “Trends 2008: Application Licensing and Pricing” report by Forrester analysts Ray Wang and Elisse Gaynor. Like everything else, software and maintenance costs are going up. The complexity of enterprise software is keeping the price of licensing and maintenance high. In fact, maintenance costs are increasing to 30% of licensing costs (instead of the standard estimated 20%).

By working together during a vendor negotiation (or renegotiation), the CIO and CFO can take the opportunity to control costs by using sound procurement practices. After all, most multiyear software contracts will impact the bottom-line for both executives.

About Scott Rosenberg: Scott Rosenberg is responsible for creating and driving the vision of Miro Consulting, which he founded in August 2000. With more than 20 years of engineering and operations experience, Mr. Rosenberg’s leadership has fostered significant company growth. Today, Miro Consulting has over 250+ clients across North America and has overseen more than $700 million in Oracle and Microsoft transactions.

Prior to Miro Consulting, Mr. Rosenberg was a founding principal and driving force behind Cintra, a highly successful Oracle consulting company with over $20 million in revenues.

Written by Carl · Filed Under Uncategorized | Leave a Comment