With the election done, the news has turned into a large-scale version of “Inside Edition” when covering the Obama transition, particularly when getting a sandwich makes the news.  I’ve been spending more time looking at how the overall economic situation is affecting business decisions around budgets for the next 12-18 months.  

Because I work in IT, I am usually the gatekeeper for technology spending, which makes up a substantial portion of any company’s capital expenditures.  As I noted earlier, one cost-cutting measure is delaying computer upgrades for a year.  More broadly, business leaders are looking out at service-based software options (aka software-as-a-service or SaaS) as a means of getting services more cheaply and with predictable pricing.  Five years ago, I probably would have hated this idea (”my servers! my storage!”).  Now, I think this model is worth examining.

The key here is “examining”.  SaaS is not a cure-all anymore than other technologies with funny acronyms (SAN, NAS, iSCSI).  The questions leaders need to ask include:

1. What do I really need from this service?  If you can’t answer this question, there are larger problems than SaaS vs. in-house.  Too much technology is purchased and deployed without a solid understanding of what is really necessary.  In these times, people should consider whether the cool and expensive features of any product are really necessary and worth the extra expense.
2. What are my requirements for data integrity, management, and protection?  The discussion really needs to shift in this direction.  For instance, many companies are now using Microsoft Outlook/Exchange in a SaaS model (at this point, even Microsoft is offering this as an option for companies that can’t afford the software).  But remember, that data (i.e. all those messages, meetings, and contacts) is all outside your datacenter and outside your direct control.  Before placing your data with another party, it is imperative that you create a contract that ensures your compliance with any external regulation or internal policies.
3. What are my requirements for security against malicious attack?  All applications and services need to be considered in a context where new vulnerabilities and exploits are identified every day.  Regardless of where your service is hosted, you need to know about the security parameters and how your company is being protected.
4. Does it add value for my company to have my highly-skilled IT team manage this service?  To use Outlook/Exchange again, the service is already very expensive to buy and maintain, unless your organization is very large.  At the same time, service providers are making it cheaper every day to compete for your business.  On the other hand, an application may require hands-on, in-house management because of the complexity or customization of the application to your company’s requirements.  As IT teams are challenged to do more with less, it’s important to make sure that their time is spent on activities that (as much as possible) help company profitability.

IT teams will continue to be needed — experienced technologists can lead to true points of differentiation for your business.  In fact, IT can be crucial to examining SaaS options alongside more traditional offerings by helping to ask the questions above and advising you on whether the answers are satisfactory to your requirements.  The resulting outcome will likely be the most appropriate for the entire organization.

Taking a break from politics (now that the election is finally over after 200 years), the WSJ BizTech blog has an interesting (to me, at least) post on delaying the PC lifecycle:

http://blogs.wsj.com/biztech/2008/11/14/how-old-is-your-work-computer/

I’ve been through this a number of times in the last 10 years, and short-term cost cutting always wins.  In a way, it makes some sense if the timing is right (for instance, when it’s year-end and delaying the purchase by a month or two can improve the balance sheet).  But delaying by a year or more becomes expensive, particularly when those computers are used by non-salaried employees or when deadlines are affected by slow computing resources.  Unfortunately, it’s harder to quantify the money lost by workers twiddling their thumbs than the fixed purchase of computers, so cost cutting wins.

Companies are even more likely to not buy computers (and other assets) because of the declining economy.  But this is the exact time to buy!  Computer vendors are going to be desperate to sell anything, and prices are better than ever.  Also, computers are assets and should be depreciated over at least three years, so the hit to the balance sheet is low.  The hard part for managers will be to overcome the natural hesitation in a recession to stop doing anything when doing nothing just feeds the downward spiral.

All right, I’m done being a computer (and business) geek for the moment.