Tuesday, August 23, 2005

Contract Management: Sign for Savings

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Aug. 23, 2005
Most companies rely on Microsoft's Excel to manage their contracts. In doing so, they could be passing up some big savings.
Also in this Issue
CRM ROI Revisited
Establish Cost Accounts to Manage Large Budgets
SOA Blueprints to Aid Early Adopters
 
Top Insights

Computerworld: Up to 80 percent of business-to-business deals include some kind of a contract, according to the Aberdeen Group. So it's surprising that so few companies have automated their contract management processes. Toyota Motor Sales U.S.A. has realized some $14 million in savings since implementing contract management software in 1997. Much of the automaker's savings come from better tracking of maintenance agreements with automatic rollover clauses, some of which were for systems Toyota had stopped using. Toyota is the exception; Microsoft's Excel is the leading application for contract management.
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ADDITIONAL READING:
CIO Today: Early customer relationship management software packages from vendors such as SAP, PeopleSoft and Siebel Systems failed to yield the returns users expected. However, analysts say companies' perceptions of CRM are becoming more positive, largely due to the availability of on-demand solutions. In many cases, companies are disappointed in CRM systems' performance because they fail to adequately establish their goals. A Forrester researcher says ambitious goals tend to lend themselves better to an on-premise system, which offers more flexibility. But such systems require larger up-front expenditures and ongoing maintenance. Also, many of the benefits of on-premise software are erased if it does not integrate with other systems. Hosted CRM is cheaper and easier to customize but has limited functionality. A chief advantage of on-demand software is the speed to market it offers, since applications do not have to be installed locally. With either hosted or in-house systems, ROI results from three areas: increased contact-center efficiency, increased revenue and increased customer satisfaction.
 
ADDITIONAL READING:
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IT asiaone: Research by analysts such as the Radicati Group and META Group (now owned by Gartner) shows a rapid uptake of instant messaging in the workplace. The biggest benefits cited by employees include a faster response time than e-mail and ability to tell whether a coworker is available online. A Microsoft rep interviewed in the article says IM facilitates decision-making. The biggest knock against IM'ing at work is security, a problem exacerbated by employees' tendencies to IM for personal reasons at work and for work purposes at home. While about half of all corporate employees use IM at work, only a quarter of companies have deployed a formal IM solution, according to the Radicati Group.
 
ADDITIONAL READING:
CIO Insight: It's every sys admin's and CIO's dream: a single converged network for voice, data and video that is easier and cheaper to manage than separate communications networks. However, because there is not yet a truly converged platform, efforts may end up adding cost and complexity. Integrating communications applications with each other, not to mention with legacy systems, is tough. A Minneapolis law firm spent $1 million to roll out a messaging platform that includes VoIP, calendaring and Web conferencing. The good news is that the lawyers love it. The bad news is that the system costs 3 percent more to maintain than the old one. Vendors say such a unified communications platform could cost more than $60 per employee just for the license; Gartner says installation, consulting and other fees could drive the cost up to $400 per user. Companies that are achieving ROI with such systems are using them to address very specific needs. Help is on the way. Analysts expect integration problems to ease with vendor adoption of the SIP and SIMPLE standards for IP telephony, IM and presence awareness.

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TechRepublic: Many projects have a single budget that encompasses all of the estimated costs. While this approach is OK for small and medium-sized projects, the article says it isn't an effective approach for bigger projects. It helps to break down those budgets into smaller increments, which offers more control and transparency. The article suggests using cost accounts and explains two ways this can be done. One approach is to simply divide the different types of costs in separate cost account budgets, while the other method involves allocating the overall budget based on groups of related work, like project phases. Both can help companies better classify expenses and capital purchases and also quickly identify cost overruns in individual categories.

Slashdot: In response to a query from an information manager for a 20-person firm who has been asked to prepare a technology budget, Slashdot readers — a colorfully named crew with monikers like "Anonymous Coward" and "nolife" — dispensed a torrent of sage advice. One reader says there is no "magic formula" for determining budget, since much depends on a company's specific IT infrastructure. He suggests that while per-employee spending and spending as a percentage of revenue are good metrics for measuring spending against other companies, they shouldn't be used to determine a budget. Another reader suggests creating "need to spend" and "want to spend" lists and assigning each item a priority ranging from "must have" to "would be nice." Several readers emphasize the importance of factoring in unexpected expenses, what one calls the "Oh God, that damn thing just died" category.

Tekrati: Since Gartner recently purchased a consulting rival, the META Group, Tekrati apparently feels some former META clients or other companies may be seeking an alternative to the Gartner juggernaut. It gave representatives of seven other firms — usual suspects IDC, AMR Research and Forrester Research and the somewhat lesser-known Burton Group, Info-Tech Research Group, the 451 Group and the Advisory Council — an opportunity to toot their horns, from both vendor and end-user standpoints. While much of it reads like a pretty forward bid for business, at the very least it gives you a chance to peruse the pitches at your leisure and in private. Best case scenario: You can match your company's needs to the appropriate consultant. For instance, if personal attention is important to you, AMR Research says it assigns every account a dedicated researcher who is responsible for managing all inquiries.

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3 QUESTIONS:
Be Prepared — Anywhere

With Robert J. Alcorn, chief operating officer of n|Frame Inc., an Indiana-based provider of business continuity services, including data center, business-class backbone Internet connectivity and a workplace recovery center. One of the company's newest products is a mobile recovery unit that can accommodate 10 to 1,000 workers.

Question: Can you offer some examples of situations in which companies have used your mobile recovery units?
Alcorn: The Agility mobile recovery units are ideal for businesses facing any number of emergency situations because they bring the entire recovery unit to the doors of businesses in crisis. These situations include tornadoes, fires, flooding, pipe bursts and sewage backups that render a building inaccessible or unsafe, as well as air conditioning, heating, power, Internet and telephone outages that render a facility useless. Other instances where these recovery units become a critical backup option for businesses include major construction, office-wide virus infection or large-scale technology migrations that require key employees to relocate.
     We have found incredible demand for this mobile disaster recovery approach in rural markets. Companies operating outside major metropolitan areas face a variety of unique risks and challenges. These organizations tend to face utility outages on a frequent basis; this includes everything from water, electricity, phones and Internet. So their chance of "disaster" is much higher. Also, many rural areas do not have local disaster recovery or business continuity providers.

Question: Explain how a company would go about using one or more of these units. Do they own or rent them, and how much do they cost?
Alcorn: End users, in essence, "time-share" the Agility mobile recovery units. They pay a monthly fee, which gives them the right to declare an emergency (of their definition) and have a customized unit deployed to a site of their choice within 24 to 48 hours. This pre-existing, membership-based relationship allows businesses to map out a disaster recovery plan, set technical specifications and determine an appropriate service level agreement well in advance of a crisis. While every unit offers a completely independent power source (via electric power or diesel generator), Internet and phone service (via satellite), furnished office space, bathrooms and heating/air conditioning, companies can specify a variety of other factors that include number of seats (from 10 to 48 per unit) to the type of computer terminals, operating systems, software and backup options.
     Because every business has a completely customized configuration designed specifically for their organization's risk tolerance and technical specifications, costs are hard to generalize. The basic cost structure includes a monthly per-seat fee, deployment costs to transport the unit(s) and a daily usage fee if the unit is required for longer than 60 days.

Question: Can the units be used anywhere?
Alcorn: Because the Agility mobile recovery units are completely independent command centers, they can be used anywhere, regardless of land-based power, phone or Internet supply. Each unit is pre-wired for satellite data and telecommunications and comes with the latest model desktop computers, diesel generators for immediate power, furniture, heat and air conditioning and many other creature comforts. Because these units are stored in 73 locations throughout the U.S. and 14 locations in Canada, they can be quickly deployed anywhere in North America. And based on a company's proximity to the nearest unit and its contract specifications, a mobile unit can be deployed to any site of its choice within 24 to 48 hours.

 
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By the Numbers

46.5 billion
Number of instant messages sent everyday in 2009, as forecast by the Radicati Group, up from 14 billion daily messages in 2005.
Source: Forbes

$130,000
Average monthly amount spent by enterprises to battle "greynet" — unsanctioned applications like instant messaging, RSS and peer-to-peer file sharing — according to FaceTime Communications.

$14 million
Amount that Toyota Motor Sales U.S.A. figures it has saved since implementing contract management software from Contract Management Solutions in 1997.

Breaking Headlines

SearchSAP.com: While it's hard to argue with service-oriented architecture's promise of creating flexible Web services that can be reused, saving companies money, there have been maddeningly few details on how to undertake such a project. That may be about to change, with OASIS' formation of the SOA Adoption Blueprints Technical Committee, which seeks to provide concrete advice on implementing SOA based on real-world, vendor-neutral deployments. Miko Matsumura, vice president of marketing for Infravio, will lead the committee. He hopes to complete a basic blueprint by the end of 2005 and then begin creating more specialized plans, perhaps targeting specific vertical industries and all based on actual user issues.

Tekrati: IT spending is growing at a healthy clip, with a compound annual growth rate of 5.9 percent between now and 2009, according to IDC. The firm expects spending to increase to $1.3 trillion by the end of 2009, with the government, manufacturing and banking sectors dropping the most cash. Other big spenders will include the health care, communications and media industries. Consumers may outpace business; IDC is forecasting double-digit growth in consumer spending on IT services, peripherals and PCs during the period.

ZDNet: In an effort to boost the number of patent applications that are submitted electronically and to sift through a backlog of some 850,000 patent applications, the U.S. Patent and Trademark Office will beta test a new Web-based application system in December and go live with the system in March. Currently, only about 2 percent of patent applications are submitted electronically; the Patent Office is the largest recipient of overnight mail in the world. The current e-filing is too complex, requiring users to download and install five pieces of software, which hog about 51 MB of hard-drive space, and to export files from one program to another. The primary users are geeks who swap tips on mastering the system on online bulletin boards. The Patent Office gathered suggestions for improvement during three public forums, which led to the creation of the new and simplified system.

Emerging Trends

ADTmag.com: Making the point that custom-built business intelligence applications will require more attention than other types of homegrown software, the author says smart CIOs will take into account the need for periodic testing and refactoring. Those who don't will jeopardize ROI and, quite possibly, the profitability of lines-of-business. An example is given of an unnamed Fortune 100 company that added a requirement for its BI application to do server-side raw data analysis and performance reporting, which created a strain on processing power that affected other apps. A software engineer with an IT services firm interviewed in the article says it is important to remember that such tweaking may result in productivity losses and increased system maintenance costs.

TRNmag.com: IBM researchers are trying to make it easier than ever to save a soul — no Faustian deals with the devil required. As a bonus, the portable USB disk the researchers call the SoulPad would make life easier for business travelers or other folks using multiple PCs. The disk holds a user's personalized data and applications — the "soul" — and makes it possible to transfer it to any "body," or PC. When plugged into a PC, the computer boots from the SoulPad to put a user exactly where she left off when she last used the device. It employs some pretty snazzy technology, including an auto-configuring operating system and suspended virtual machine software. The prototype includes such cool features as encryption software that minimizes the risk of leaving sensitive data on a PC after disconnecting and the ability to designate a particular PC to perform incremental backups of SoulPad data every time it is connected.

internetnews.com: Enterprises spend an average of $130,000 a month in IT time fighting spyware-related issues caused largely by employees downloading unsanctioned applications like instant messaging, RSS and peer-to-peer file sharing. According to a survey by security software provider FaceTime Communications, most employees surveyed said they believe they have the right to install such apps — so-called "greynet" — and feel IT organizations have the problem under control. According to the survey, 78 percent of employees now use one or more greynet applications and the number will grow to 93 percent within six months. Employee education program, anyone? Frank Cabri, vice president of marketing at FaceTime Communications, said companies will likely add more network security to the perimeter and in front of the network in an effort to keep unsanctioned apps from entering the premises.

IT Business Edge: Maximizing IT Investments
Issue 34, Vol. 3
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About the Editor

Ann All covered a variety of business topics as a newspaper reporter before switching to automated teller machines — which, unbelievably, are just beginning to migrate to a Windows-based platform and more modern networking technologies like TCP/IP — as the editor of online trade publication ATMmarketplace.com. She can be reached at investments@
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